This was surprising to see.
California Democrats have publicly broken with Gov. Gavin Newsom after officially endorsing a controversial billionaire tax that both the governor and Democratic gubernatorial nominee Xavier Becerra oppose. The decision highlights growing divisions within the Democratic Party ahead of the November election and sets the stage for one of California’s biggest political battles of the year.
Delegates at the California Democratic Party’s convention in San Diego voted to endorse Proposition 40, a statewide ballot measure that would impose a one-time 5% tax on approximately 200 of California’s wealthiest billionaires. Supporters say the proposal would generate billions of dollars for healthcare funding, while critics warn it could drive investment and jobs out of the state.
The endorsement represents a significant split between the party’s grassroots activists and some of its highest-profile elected officials, with Newsom and Becerra remaining firmly opposed to the measure.
California Democratic Party Chairman Rusty Hicks defended the endorsement, saying the party’s decision reflected its member-driven process.
“Every endorsement we make is earned, not given,” Hicks said. “California Democrats take a deliberative approach to our endorsement process that puts our values first and ensures our members have a meaningful voice in shaping the future of our state.”
Democratic Delegates Approve Proposition 40
The endorsement came only after an intense debate on the convention floor.
An initial vote fell just short of the 60% threshold required for an official endorsement after receiving approximately 59.2% support. Delegates then rejected a proposal for the party to remain neutral before holding a second vote.
On the second ballot, delegates approved the endorsement by a vote of 145-90, giving Proposition 40 roughly 61.7% support.
The lengthy debate exposed disagreements within California Democrats over tax policy, government spending, and the state’s economic future.
Gavin Newsom Opposes California Wealth Tax
While progressive activists celebrated the endorsement, Gov. Gavin Newsom has consistently argued against a California-only wealth tax.
The governor has warned that imposing such a tax at the state level could encourage wealthy residents and major investors to relocate to states with lower taxes, reducing California’s tax base over time.
Instead, Newsom has repeatedly argued that any wealth tax should be enacted at the federal level to prevent billionaires from avoiding the tax simply by moving to another state.
His position puts him directly at odds with many activists inside his own party who believe California should take the lead.
Xavier Becerra Also Rejects Proposition 40
The Democratic Party’s endorsement also conflicts with the position taken by Xavier Becerra, the party’s nominee for governor.
Becerra reaffirmed his opposition to Proposition 40 while announcing his positions on several statewide ballot measures Friday. Rather than backing the billionaire tax, he endorsed Proposition 3, which would permanently extend California’s existing income tax surcharge on high earners to continue funding public education.
His campaign later confirmed that Becerra remains opposed to Proposition 40 despite the California Democratic Party’s endorsement.
Supporters Say Tax Would Protect Healthcare
Supporters estimate Proposition 40 could generate approximately $100 billion through a one-time tax on roughly 200 billionaires living in California.
Advocates say much of that revenue would be used to offset reductions in federal healthcare funding tied to President Donald Trump’s tax-and-spending legislation.
The initiative has attracted support from several progressive organizations and elected officials, including Sen. Bernie Sanders, Rep. Ro Khanna, Teamsters California, AFSCME California and the California Young Democrats.
Supporters argue California needs additional revenue to preserve healthcare services and protect access for millions of residents.
Opponents Warn Of Economic Risks
Critics argue the proposal could have unintended economic consequences.
Business organizations and taxpayer advocates have warned that imposing a one-time billionaire tax could discourage investment, encourage wealthy residents to relocate, and make California less competitive compared with lower-tax states.
Opponents also argue that California has already experienced an outflow of businesses and high-income taxpayers in recent years, raising concerns that another major tax increase could accelerate that trend.
A political action committee working to defeat Proposition 40 has reportedly collected more than $118 million, with a significant share of the funding coming from billionaire contributors, including Google co-founder Sergey Brin.
The proposal has also divided organized labor and Democratic activists, with some questioning whether supporters built broad enough support before qualifying the measure for the statewide ballot.
Republican Candidate Steve Hilton Responds
Republican gubernatorial candidate Steve Hilton sharply criticized the Democratic Party’s endorsement, arguing the proposal reflects what he described as another step toward higher taxes and expanded government spending.
Hilton said California has already lost businesses, investment and tax revenue as companies and wealthy residents move elsewhere, warning that Proposition 40 could worsen those challenges if approved by voters.
He also criticized Democratic leadership, arguing the measure would place additional pressure on employers, entrepreneurs and small businesses throughout the state.
California Democrats Face Internal Divide
The endorsement marks one of the clearest public disagreements within California’s Democratic Party during this election cycle.
Progressive activists have rallied behind Proposition 40 as a way to generate new revenue for healthcare programs, while Newsom, Becerra and other prominent Democrats continue warning that a state-only wealth tax could undermine California’s long-term economic competitiveness.
The divide underscores broader disagreements within the Democratic Party over taxation, government spending and how California should address future budget challenges.
Supporters Celebrate The Vote
Dave Regan, president of SEIU United Healthcare Workers West, said the endorsement demonstrates strong support among Democratic voters.
Regan said the party’s endorsement demonstrates that California Democrats are largely united in support of the billionaire tax. He also pointed to polling that he said shows more than 80% of registered Democrats back the proposal as a way to address the state’s healthcare funding challenges.
Suzanne Jimenez, who serves as the initiative’s official proponent and chief of staff at SEIU United Healthcare Workers West, said the proposal is based on the belief that those who have gained the most from California’s economy should help support the state’s healthcare system.
California Voters Will Make The Final Decision
Despite winning the California Democratic Party’s endorsement, Proposition 40 remains one of the most controversial ballot measures facing voters this year.
Newsom’s office did not respond to requests for comment before publication.
Meanwhile, Becerra’s campaign confirmed that the Democratic nominee continues to oppose the initiative despite his party’s official position.
California voters will have the final say when Proposition 40, formally known as the California 2026 Billionaire Tax Act, appears on the statewide ballot on Nov. 3.
The outcome is expected to shape not only California’s tax policy but also the national debate over wealth taxes, making Proposition 40 one of the most closely watched ballot initiatives of the 2026 election cycle.
