Gov. Gavin Newsom is going after Silicon Valley with a sweeping proposal to expand the state’s sales tax into cloud software, AI platforms and digital applications — a move projected to generate more than $1 billion in its first year and reshape how the digital economy is taxed.

The plan does not create a new standalone surcharge, it broadens California’s existing sales tax system so it applies more consistently to software products sold online.

The state’s base sales tax rate is 7.25%, with local taxes able to push the total higher depending on where a buyer is located.

Gov. Gavin Newsom is going after Silicon Valley with a sweeping proposal to expand the state’s sales tax into cloud software, AI platforms and digital applications AP Photo/Jeff Chiu

The plan does not create a new standalone surcharge, it broadens California’s existing sales tax system so it applies more consistently to software products sold online.…