California's billionaire tax is losing ground — with top Democrats leading the charge against it

California voters head to the polls on November 3 to decide whether the state's more than 200 billionaires should pay a one-time 5% tax on their wealth — and the campaign against it has become one of the most expensive political battles in state history, with opponents raising nearly $368 million to supporters' $36 million. Leading that opposition: some of the state's most powerful Democrats.

Proposition 40 would impose the tax on billionaires who resided in California as of January 1, with nine-tenths of the estimated $100 billion in revenue earmarked for Medi-Cal, the state's low-income health program, to backfill federal Medicaid cuts approved under President Trump's budget bill. The measure was crafted by SEIU United Healthcare Workers West, and has the backing of the California Democratic Party, Sen. Bernie Sanders, and Rep. Ro Khanna. It is opposed by Gov. Gavin Newsom, Democratic gubernatorial nominee Xavier Becerra, the California Teachers Association, Planned Parenthood, and California Professional Firefighters — as well as the billionaires bankrolling the No campaign, with Google co-founder Sergey Brin alone accounting for nearly half of opposition funding, according to the Guardian.

The split is stark. A high-quality poll conducted midway through the summer found California Democrats supported Proposition 40 by more than 4 to 1, according to the Guardian. A Public Policy Institute of California survey in May found 76% of Democrats backed it. Yet a UC Berkeley Institute of Governmental Studies poll co-sponsored by the Los Angeles Times, released in late October, found overall support among likely voters had slipped to 42%, with 50% opposed — a significant reversal from six weeks earlier, when the measure was narrowly leading.

The increase in opposition to Proposition 40 is broad-based and spans virtually all major segments of the electorate.— Mark DiCamillo, Director, UC Berkeley IGS Poll

DiCamillo warned that support registering below 50% is itself an ominous sign, since undecided voters tend to break against a measure. 'It's below 50%, and it's trending down. Both of those are ominous signs,' he told the Times.

The opposition campaign is built around three interlocking ballot measures. Proposition 40 is the wealth tax itself. Propositions 41 and 42 — both backed by the same billionaire-funded campaign — would nullify Proposition 40 if either passes and receives more votes. Proposition 41 would require audits of new state special taxes and bar new taxes exempt from a state spending limit. Proposition 42 would prohibit new taxes on retirement holdings, individually owned assets, and personal savings. In the latest Berkeley poll, voters have shifted against Propositions 41 and 42 as well, though both remain close.

Newsom has led the Democratic opposition, arguing that the tax would prompt wealthy residents to leave California, destabilizing a state budget already heavily dependent on top earners. He has proposed instead a package of federal tax reforms he calls a 'national billionaire's tax,' including reversing the 2017 Trump tax cuts, a minimum tax rate on anyone earning more than $100 million, and closing loopholes that allow the wealthy to borrow against unrealized capital gains without paying income tax, according to CalMatters.

When it comes to Newsom and Becerra opposing the billionaire tax, you need know only two things. First, Newsom needs billionaire money for his presidential campaign. Second, Becerra needs to pay back the billionaires that made him governor. The rest of the corporate Democrats in office are some version of these stories.— Amar Shergill, former chair, California Democratic Party Progressive Caucus

Several prominent Democrats have simply gone quiet. Senators Alex Padilla and Adam Schiff have not taken a public position. Former Vice President Kamala Harris and former House Speaker Nancy Pelosi have also stayed silent. The San Francisco Chronicle noted in mid-October that 'neither wants to alienate wealthy donors or their allies in labor by publicly opposing it,' but that 'their silence on such a high-profile measure is giving cover to the billionaires' fighting it, according to the Guardian.

The California Democratic Party's endorsement of Proposition 40 came only after a contentious vote among more than 200 state party officials. Supporters initially fell short of the 60% threshold required, before a second effort secured the endorsement, according to CalMatters. The No campaign dismissed the result, pointing to the party's 2024 opposition to Proposition 36 — a crime measure that passed overwhelmingly — and its support for Proposition 32, a minimum wage hike that failed.

This is not a kumbaya measure. There are very serious disagreements among Democrats and Democratic institutions that are opposed to each other over the measure.— Nancy Tung, Chair, San Francisco Democratic Party

Some opposition within the Democratic coalition is rooted in how the money would be spent. The California Teachers Association objects that Proposition 40 revenue is dedicated almost entirely to healthcare, bypassing the state's general fund — and therefore public education. 'It's not stable, it's only temporary,' CTA president David Goldberg said. 'It intentionally goes around public education funding, it cuts it out of receiving resources,' according to CalMatters. By contrast, Proposition 3 — which would make permanent an existing higher income tax rate on top earners — enjoys 54% support in the Berkeley poll, because its revenue flows into the general fund, roughly 40% of which is reserved for education.

The generational divide within the electorate is pronounced. Voters under 30 support Proposition 40 by more than two-thirds, while six out of ten voters 65 and older oppose it, according to the LA Times poll. Republican voters overwhelmingly oppose the measure; nearly two-thirds of Democrats support it, with more than a quarter opposed.

The broader stakes extend well beyond California. Activists and tax-policy advocates across the country are watching the vote closely as a test of whether a state-level wealth tax can survive a well-funded opposition campaign. The top 1% of Americans held 22% of the nation's household wealth in 1989; they now hold nearly a third, while the bottom half's share has declined from 3.5% to 2.5%, according to CalMatters. Whatever the result on November 3, the fight over Proposition 40 has laid bare a tension inside the Democratic Party — between a donor class that funds campaigns and a voter base that increasingly wants to tax it.

Why it matters — If Proposition 40 passes, it would be the first state-level wealth tax on billionaires enacted in the U.S., setting a precedent that tax advocates and opponents alike are watching for replication nationwide; if it fails despite broad Democratic voter support, it will sharpen questions about who the party's elected leaders actually represent.

Sources differ on Whether Proposition 40 would cause wealthy Californians to leave the state: Newsom and opponents argue approval would cause many of California's 200+ billionaires to relocate, harming the state budget. (latimes.com) vs Supporters and some economists argue warnings of 'millionaire flight' from proposed tax hikes are routinely overstated. (theguardian.com)

Reported by theguardian.com, thehill.com, latimes.com, washingtonpost.com, calmatters.org