The California Democratic Party endorsed Proposition 40, a proposed billionaire wealth tax, following a narrow vote by its 380-member executive board in San Diego. The measure, which targets the state’s wealthiest residents to fund healthcare and food assistance, now moves toward a November ballot despite vocal opposition from Governor Gavin Newsom.
The road to the endorsement was marked by internal friction. Before the executive board’s final decision, the state party’s resolutions committee spent 90 minutes in a contentious debate on Saturday night. While the board eventually cleared the 60 per cent threshold required for support, earlier attempts to endorse the measure had failed.
The Mechanics of Proposition 40
Proposed by the Service Employees International Union United Healthcare Workers West (SEIU-UHW), the tax is designed as a one-time levy. If approved, it would impose a 5 per cent tax on approximately 200 billionaires living in California.
The financial stakes are significant. The measure aims to raise $100bn (£75bn) over five years. To prevent loopholes, the tax would retroactively apply to residents who lived in the state as of Jan 1, 2026, and possessed a net worth of $1bn (£750m) or more by the end of the current year. Notably, the calculation of net worth excludes directly owned real estate.
The revenue is earmarked for critical social services. According to reports, 90 per cent of the funds would go toward addressing healthcare cuts resulting from a Medicaid overhaul signed by President Donald Trump last year, with additional funds supporting food assistance programmes.
Newsom’s Opposition and Political Stakes
Governor Gavin Newsom has emerged as a primary critic of the levy. He argues that the tax will drive the wealthy out of the state. This opposition puts him at odds with the party’s base; a May poll from the Public Policy Institute of California found that 76 per cent of Democrats and 54 per cent of all voters supported the tax.
The friction extends beyond the governor. Xavier Becerra, viewed as Newsom’s probable successor, and organizations like the California Teachers Association and California Professional Firefighters have also opposed the measure. Newsom previously attempted to persuade SEIU-UHW to withdraw the proposal, while the union offered to do so only if the governor backed a smaller wealth tax.
This divide is particularly sharp given Newsom’s own political trajectory. Widely expected to run in the 2028 presidential election, Newsom has raised more than $1.7m (£1.3m) for critical state parties. His fundraising prowess is evident in South Carolina, a likely first primary contest for 2028, and through grassroots efforts that have brought in over $300,000 (£225,000) for the state party.
A Coalition of Labor and Youth
While the governor pushes back, a coalition of labor unions and youth activists is driving the measure forward. The California Young Democrats, the party’s official youth wing for those 35 and under, voted to back the tax on July 11.
Maiya De La Rosa, President of California Young Democrats, stated that Proposition 40 is about ensuring that billionaires, who have benefited the most from the state’s economy, contribute their fair share to protect the life-saving medical care that millions of Californians rely on every day.
The push is further bolstered by U.S. Sen. Bernie Sanders and Rep. Ro Khanna. For the SEIU-UHW, the party’s endorsement is a validation of their strategy.
Dave Regan, President of SEIU-UHW, said that this endorsement puts to rest the idea that California Democrats are not united by the billionaire tax and confirmed that they are.
Internal Party Divisions
The debate within the Democratic party isn’t just about the tax itself, but about the strategy for governance. Some members of the resolutions committee expressed concern that the billionaire tax lacks alternatives to counter cuts from the 2025 Republican megabill.
Chris Hannan, president of the State Building and Construction Trades Council of California, argued against Prop. 40, suggesting that the real solution is legislative.
Chris Hannan, President of the State Building and Construction Trades Council of California, stated that they need to win back Congress and hold the president accountable.
That perspective was sharply rejected by others, such as Calipatria mayor and board member Michael Lullen, who asserted that there should be no billionaire community and urged the party to tax them heavily.
The Path to November
The endorsement from the executive board provides a significant political lift, but the measure still faces a fragmented landscape of support. While the youth wing and the state party are on board, the California SEIU recently voted to stay neutral.
The next critical hurdle occurs on Tuesday, when delegates from roughly 1,300 unions within the California Federation of Labor Unions will decide whether to offer their official backing.
Ultimately, the decision rests with the voters. Californians will decide whether to approve or reject the initiative on the November ballot.
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