The California Democratic Party voted Sunday to endorse Proposition 40 — a one-time 5% wealth tax on the state's roughly 200 billionaires — openly defying Governor Gavin Newsom and several powerful labor unions in a party split that reveals just how far left California's Democratic base has moved, and how little Newsom's remaining political authority can hold it in check.
The executive board vote, taken during the final day of the party's general session in San Diego, passed by a margin of approximately 61.7% — barely clearing the 60% threshold required for ratification, and only after an initial vote at 59.2% failed. The narrow passage reflects genuine Democratic division over a measure that would impose an emergency levy on California billionaires — including tech titans such as Mark Zuckerberg, Jensen Huang, and Larry Ellison — to fund healthcare services and public education at a moment when federal Medicaid and program cuts have strained the state's budget. Supporters, including SEIU-UHW, the healthcare union backing the campaign, framed the vote as proof of broad grassroots Democratic support. Former Labor Secretary Robert Reich and Sen. Bernie Sanders have endorsed the measure. Rep. Ro Khanna, a leading 2028 presidential contender, also backs it.
"Capital follows confidence — and right now, capital is following it out of California." — California business leaders opposing Proposition 40
Newsom has been unambiguous. He has publicly vowed to vote no on Proposition 40 and said the measure "will be defeated," signaling his willingness to campaign against it in a state where he remains the most prominent Democratic officeholder. His objection is notably narrow — not that taxing billionaires is wrong, but that the measure dedicates nearly all of its projected revenue to a single category of spending rather than giving the legislature flexibility to address the state's $60 billion structural deficit more broadly. It is a sophisticated fiscal argument that lands awkwardly in a party where the base increasingly views opposition to wealth taxes as a litmus test for ideological seriousness. A Democratic polling firm found that Newsom's opposition could cost him 28 points in national favorability among Democratic primary voters — an alarming data point for a man widely expected to seek the 2028 presidential nomination.
Business groups and tech industry leaders warn that the measure could accelerate the already visible migration of high-net-worth individuals and companies from California — a state that has already lost billions in IRS-measured adjusted gross income to Texas, Florida, and Nevada over the past several years. Google co-founders Larry Page and Sergey Brin have reportedly reduced their California ties. The concern is that a one-time tax applied to unrealized or illiquid wealth could force asset sales or trigger domicile changes that permanently reduce the state's tax base.
Proposition 40 would affect approximately 200 Californians with net worth above $1 billion. At a 5% rate, Nvidia CEO Jensen Huang could face a tax bill of approximately $8 billion and Mark Zuckerberg approximately $12 billion. The measure is projected to raise between $20 billion and $100 billion depending on which estimate is used, with revenues designated primarily for healthcare programs. Opponents include not only Newsom but also several major labor unions that typically back progressive ballot initiatives, reflecting divisions within organized labor over whether the measure's revenue dedication is sufficiently flexible.
California's billionaire wealth tax is bad policy and good politics — at least within a Democratic base that has decided taxing the wealthy is a moral imperative regardless of economic consequences. The evidence that high-tax policies accelerate the exit of the very wealth they target is not speculative. It is visible in California's own migration data. A one-time 5% wealth tax on 200 people will produce either a massive one-time revenue windfall or a permanent reduction in the state's billionaire population — and nobody can be certain in advance which outcome prevails. Newsom is right to oppose it. The fact that doing so requires courage within his own party tells you everything about where California Democrats currently are.