Thursday, 6 August 2026, 17:36
California's Democratic establishment is at war with itself over Proposition 40. The state party's endorsement of the billionaire wealth tax has put activists on a collision course with Gov. Gavin Newsom and some of California's most powerful labor unions.
At a meeting in San Diego, the party's executive board endorsed Prop 40 by a 61.7% vote, just above the 60% threshold. The first vote fell short at 59.2%, and a motion to take no position also failed. Nancy Tung, chair of the San Francisco Democratic Party, said the narrow result showed the measure barely passed.
Prop 40 was placed on the ballot by SEIU United Healthcare Workers West. It would levy a one-time 5% wealth tax on people worth more than $1 billion living in California on Jan. 1, 2026. The tax would be paid in 2027, with an option to spread payments over five years at a higher cost.
Newsom opposes the measure, saying it could push billionaires out of California. The nonpartisan Legislative Analyst's Office estimates that could cost the state "hundreds of millions of dollars or more per year" in revenue. Newsom wants a federal wealth tax instead.
His position puts him alongside Google co-founder Sergey Brin, who has given $82 million to the opposition PAC Building a Better California. That committee has raised $118 million to defeat Prop 40.
Opponents include Planned Parenthood Affiliates of California, the California Teachers Association and the California Professional Firefighters. Democratic gubernatorial candidate Xavier Becerra has called it "sketchy policy." His Republican opponent, Steve Hilton, is also against it. Rep. Ro Khanna is the only member of California's congressional delegation backing it, according to the campaign. No statewide officials support the measure.
The California Labor Federation endorsed the tax by voice vote. AFSCME California and Teamsters California support it, while SEIU California's executive board took a neutral position. The teachers union and the State Building and Construction Trades Council oppose it.
Supporters frame Prop 40 as part of a national movement to tax extreme wealth. The top 1% of U.S. households held 22% of household wealth in 1989; they now hold nearly a third. The bottom half's share fell from 3.5% to 2.5%. Rep. Ro Khanna and Sen. Bernie Sanders have proposed national wealth taxes.
"Governor Newsom is trying to walk an impossible political tightrope," said Tracy McCreery, a Sacramento nurse on SEIU-UHW's executive board.
Polls show broad support. A Public Policy Institute of California survey in May found 54% of likely voters and 76% of Democrats would vote for the tax.
In San Francisco, labor leaders say Newsom is out of touch. "People are suffering right now," said Kim Tavaglione of the San Francisco Labor Council. Supporters also held a Los Angeles campaign rally with musician Tom Morello. In Sacramento, the stakes are the state budget and Medi-Cal, which could lose coverage for 2 million Californians under federal cuts.
California's reliance on income tax from the wealthy makes the billionaire tax a risky bet. The Legislative Analyst's Office warns it could reduce long-term revenue. Party endorsements have not always decided California races: Democrats opposed Prop 36 in 2024, which passed overwhelmingly, and backed Prop 32, which failed.
Californians will decide Prop 40 in November. The fight between the party's activists and its leaders is a test of whether populist energy can overcome institutional opposition. With more than $100 million already spent against it, the outcome will shape California's approach to taxing wealth for years.
