California Democrats are moving closer to endorsing a proposed one-time 5% tax on the state's wealthiest residents, a measure that has drawn opposition from Governor Gavin Newsom and Attorney General Xavier Becerra. The California Democratic Party’s resolutions committee voted Saturday to recommend support for Proposition 40, a ballot initiative set to appear before voters in November.
If approved by a majority of delegates at the party's general session on Sunday, the recommendation would signal a divergence between the party's grassroots activists and its top elected officials. Governor Newsom has repeatedly stated his opposition to a state-level wealth tax, arguing that it could place California at a competitive disadvantage and prompt billionaires to relocate to states with lower tax rates. He has instead advocated for a federal wealth tax, which he believes would prevent such capital flight.
Becerra has also voiced disapproval of Proposition 40. On Friday, he reaffirmed his opposition while announcing his stance on other November ballot measures, endorsing Proposition 3, which would extend an existing income tax surcharge for high earners to fund education, but not Proposition 40.
The committee's vote highlights a growing divide within the state's Democratic Party between progressive activists pushing for increased taxes on the wealthy and more established party figures concerned about potential economic repercussions. Supporters of Proposition 40, including SEIU United Healthcare Workers West President Dave Regan and endorsements from figures like Senator Bernie Sanders and Representative Ro Khanna, argue that the tax is necessary to generate an estimated $100 billion to offset federal healthcare funding cuts. They contend this one-time tax is crucial for protecting healthcare programs, which they say have been impacted by significant federal reductions.
However, the measure has also divided organized labor. Several influential groups, including the California Police Chiefs Association, United Domestic Workers, and the California State Council of Laborers, have come out against Proposition 40. The SEIU California executive board recently voted to remain neutral on the proposal, and the California Federation of Labor Unions is expected to announce its position later this week.
The California 2026 Billionaire Tax Act, which is Proposition 40, will officially be on the statewide general election ballot on November 3, 2026. The final endorsement decision rests with the party delegates who will vote during Sunday's general session.