California's Democratic Party resolutions committee voted to recommend endorsing a one-time 5% tax on the state's roughly 200 billionaires, defying both outgoing Gov. Gavin Newsom and gubernatorial nominee Xavier Becerra, who oppose the measure.
The committee's Saturday vote puts Proposition 40, formally titled the California 2026 Billionaire Tax Act, one step closer to an official party endorsement ahead of the November 3 ballot. But the recommendation is not final. Full endorsement requires at least 60% of delegates to approve it during Sunday's general session, where delegates could also vote to take no position, a move that needs only a simple majority, or pull the recommendation for a separate floor debate.
Either way, the committee's action exposes a sharp rift inside California's ruling party over how far Sacramento should go in taxing its wealthiest residents, and whether doing so would protect state programs or simply chase money across state lines.
Newsom has repeatedly opposed a state-level wealth tax, arguing California would put itself at a competitive disadvantage by acting alone. His reasoning is straightforward: billionaires could simply relocate to lower-tax states. He has instead advocated for a federal wealth tax, contending a nationwide approach would close the escape hatch.
Becerra staked out the same ground. On Friday, the day before the committee vote, he reaffirmed his opposition to Proposition 40 while announcing positions on several other November ballot measures. He endorsed Proposition 3 instead, a measure that would permanently extend an existing income tax surcharge on high earners to fund education, but declined to back the billionaire tax.
The resolutions committee voted to recommend it anyway.
That puts the party's rank-and-file activists on a collision course with the man who currently holds the governor's office and the man who wants it next. For a party that controls every lever of state government, the internal divide is notable. Newsom and Becerra are not battling Republicans. They are battling their own base.
Proposition 40's champion is Dave Regan, president of SEIU United Healthcare Workers West. His union has driven the measure from qualification through the current endorsement fight. Supporters frame the tax as a necessary response to what they describe as approximately $100 billion in federal healthcare cuts under the Trump administration. The proposition is projected to generate an estimated $100 billion in revenue from roughly 200 billionaires.
Sen. Bernie Sanders, Rep. Ro Khanna, AFSCME California, and the Teamsters California have all endorsed the measure.
But the labor coalition is far from unified. The California State Council of Laborers opposes Proposition 40. So does United Domestic Workers. The California Police Chiefs Association has also come out against it. And SEIU California's own executive board, the statewide arm of the same union whose healthcare local is leading the charge, recently voted to remain neutral.
The California Federation of Labor Unions, a heavyweight whose position could tip the balance, is expected to decide later this week.
Strip away the political maneuvering and the math is blunt. Proposition 40 would impose a one-time 5% levy on approximately 200 California billionaires. Backers say the revenue, an estimated $100 billion, would offset federal healthcare funding losses.
Opponents, including Newsom and Becerra, warn that concentrating a massive tax burden on a tiny group of highly mobile residents is an invitation for those residents to leave. California already has the highest top marginal income tax rate in the nation. A one-time wealth tax layered on top of that rate would test whether the state's billionaires value living in California more than they value keeping 5% of their net worth.
Newsom's preferred alternative, a federal wealth tax, would eliminate the relocation problem by making the tax inescapable nationwide. It would also require an act of Congress, which makes it functionally theoretical.
The resolutions committee recommendation now moves to the full delegate body. Three outcomes are possible on Sunday: delegates approve the endorsement with 60% or more, delegates vote by simple majority to take no position, or delegates pull the recommendation for a standalone floor debate.
If the party endorses Proposition 40 over the objections of both the outgoing governor and the incoming nominee, it will send a clear signal about where power sits inside California Democratic politics. The activist base and public-sector unions would have overridden the party's two most prominent elected leaders on a flagship economic question four months before the general election.
Becerra, who will need those same delegates and union volunteers to win in November, would then face a general-election campaign in which his own party's official position contradicts his own.
When a party's grassroots openly defy its standard-bearer on a hundred-billion-dollar question, the disagreement is not a policy nuance, it is a fault line.
