California Democrats find themselves at odds with their own governor over a proposed billionaire tax that will appear on November’s statewide ballot, after the party’s executive board voted this past weekend to endorse the measure despite objections from Gov. Gavin Newsom and his likely successor, Xavier Becerra.
The measure, Proposition 40, would impose a one-time 5% tax on California’s roughly 200-plus billionaires, generating an estimated $100 billion. Most of that money would go toward shoring up Medi-Cal, the state’s health program for low-income residents, which faces steep cuts under federal budget legislation signed by President Donald Trump last year.
The proposal has been contentious since a healthcare workers’ union first floated it late last year. It quickly drew fire from some of the state’s wealthiest residents, including Google co-founder Sergey Brin, who has since relocated business holdings outside California and funneled money into efforts to defeat the measure.
Sunday’s vote by the California Democratic Party’s statewide activists and officials didn’t come easily. An initial tally fell just short of the 60% support needed for a formal endorsement, prompting a push from some members for the party to take no position at all. David Atkins, a member of the Democratic National Committee, argued that neutrality would look weak and reinforce voters’ suspicions that Democrats are too cozy with corporate interests and the ultra-wealthy.
After a tense pause, two attendees switched their votes, pushing the measure over the threshold and securing the party’s official backing.
“It was cinematic,” Atkins said of the moment. “It was sort of a movie moment.”
Dave Regan, president of SEIU United Healthcare Workers West — the union that championed the measure — called the vote proof that California Democrats stand behind the tax, despite the visible rift with top party leaders.
That rift is significant. Newsom, who is widely expected to run for president after leaving office this year, opposes Prop. 40, as does Becerra, the frontrunner in the race to replace him. They’re joined by an unusual coalition of Democratic-aligned groups, including Planned Parenthood, doctors’ associations, and several labor unions. The 750,000-member SEIU California opted to stay neutral last week rather than take a side.
Critics argue the tax could push wealthy residents and their money out of California altogether, undermining the income tax revenue the state already relies on heavily, given its progressive tax structure. The nonpartisan Legislative Analyst’s Office has warned the measure could actually shrink state revenue over the long run. Others object that the funding is earmarked almost entirely for healthcare, leaving out other priorities like public schools.
“It’s not stable, it’s only temporary,” said David Goldberg, president of the California Teachers Association, in an interview last month. He noted the measure specifically excludes education funding from receiving any of the proceeds.
The campaign against Prop. 40 has downplayed the significance of the party’s endorsement, noting that California Democrats opposed Proposition 36 — a tough-on-crime measure — in 2024, only to see it pass by a wide margin. The party also backed a minimum wage increase, Proposition 32, that year, which ultimately failed at the ballot box.
“Gov. Newsom, Xavier Becerra, CTA, California Professional Firefighters, Planned Parenthood and others are against Prop. 40 because it’s bad for our budget, bad for our economy, and bad for our future,” the No on 40 campaign said in a statement.
Even so, opponents acknowledge they’re fighting an uphill battle against a broader national mood. Chris Hannan, president of the State Building and Construction Trades Council, spoke against the measure during the party’s weekend meeting but conceded its popularity.
“It’s a popular idea within the party,” Hannan said. “There’s a lot of passion along with the populist message.”
That populist energy isn’t unique to California. Nationally, progressive Democrats have increasingly pushed for taxing extreme wealth as economic inequality widens. Data from the Federal Reserve shows the wealthiest 1% of Americans now control nearly a third of the nation’s household wealth, up from 22% in 1989, while the bottom half’s share has shrunk from 3.5% to 2.5% over the same period. Prop. 40 has drawn attention from national tax-the-rich advocates, including U.S. Rep. Ro Khanna and Sen. Bernie Sanders.
A May survey by the nonpartisan Public Policy Institute of California found that 54% of state residents — and more than three-quarters of Democrats — supported the billionaire tax concept, even before it had officially qualified for the ballot.
Newsom, for his part, has tried to channel that same populist sentiment into federal policy proposals rather than the state measure. He has floated what he calls a “national billionaire’s tax,” which would roll back the 2017 Trump-era tax cuts, establish a minimum tax rate for those earning more than $100 million annually, and close loopholes that let wealthy individuals borrow against unrealized investment gains without paying income tax. He has also spoken about capturing revenue generated by artificial intelligence and redistributing it to workers displaced by the technology.
The No on 40 campaign points to a competing measure, Proposition 3, as a preferable alternative. That initiative would permanently extend the state’s current top income tax rates on high earners, with revenue flowing into the general fund — about 40% of which is constitutionally dedicated to education, a detail that matters greatly to groups like the California Teachers Association.
Still, many within the party argue the moment calls for action rather than caution. Jane Natoli, a member of the party’s resolutions committee, said she understood the concerns raised by opponents but felt the party couldn’t afford to appear indecisive on an issue so central to its base.
“Prop 40 is not perfect. I don’t think anyone will tell you it is,” Natoli said. “Maybe it doesn’t work, but at the same time, it just doesn’t really feel like a moment where we can be sitting on our hands and saying, ‘Eh, let’s go back and work at it another two years.'”
Not everyone agrees. Nancy Tung, chair of the San Francisco Democratic Party, voted against the endorsement, warning that the split among Democratic institutions runs deep.
“This is not a kumbaya measure,” Tung said. “There are very serious disagreements among Democrats and Democratic institutions that are opposed to each other over the measure.”
With Election Day still months away, the debate over Prop. 40 is likely to remain a flashpoint within California’s Democratic Party — and a test of how far the state’s most reliably blue voters are willing to go in taxing its wealthiest residents.
Original source: CalMatters
