Over the past weekend in San Diego, the California Democratic Party Executive Committee convened and voted with 145 in favor and 90 against to support the controversial “Proposition 40,” which proposes a one-time 5% wealth tax on California billionaires. This proposition is one of the 14 ballot measures that will be ultimately decided by California voters on November 3rd.
As of the beginning of 2026, nearly 200 California residents and trusts with net assets exceeding 10 billion dollars are the targets of this proposed tax. The aim is to raise $1 trillion, with 90% allocated to healthcare and the remaining 10% for food assistance and education. The proposition is spearheaded by the Service Employees International Union United Healthcare Workers West (SEIU-UHW).
Supporters within the Democratic Party include Vermont Senator Bernie Sanders, the California Truck Drivers Union, the AFSCME California Consortium of County and City Employees, and the California Young Democrats (CYD).
The proposition argues that federal funding cuts over the next five years will lead to around a $1 trillion decrease in healthcare expenditures in California. The SEIU-UHW stated in a release that Proposition 49 is intended to save California’s healthcare system from collapse: “We urge California billionaires to step up and pay a one-time 5% emergency tax to prevent the collapse of California’s healthcare system and help fund California’s K-14 public school education and food assistance programs.”
The California Young Democrats, who support the proposal, claim to represent fewer than 3 million Democratic people. Their political positions include lowering the voting age from 18 to 17, lowering the voting age for school district commissioners to 16, reparations for descendants of slaves, investing in free public transportation, implementing progressive taxes on commercial and residential properties, providing a pathway to citizenship for all immigrants wishing to contribute to America, among others.
Some officials also favor the proposal. Michael Lullen, the Mayor of Calipatria in Imperial County, California, and a member of the California Democratic Party Executive Committee, stated, “The billionaire class should not exist, so let’s catch them and tax them hard.”
On social media, some netizens commented, “Why only tax them once? They (the billionaires) should pay their share every year.”
There is strong disagreement within the California Democratic Party regarding this proposal. Opponents include Governor Newsom, governor candidate Xavier Becerra, the California Teachers Association, and the California Medical Association, among others. Opponents argue that billionaires and businesses are leaving California, taking with them good jobs and causing the state to lose $25 billion in tax revenue.
The non-partisan independent agency of the California legislature, the Legislative Analyst’s Office (LAO), believes that much wealth is tied to stocks, which fluctuate constantly, making it difficult to determine tax liabilities. Billionaires also have to pay state income tax, and their response to the new wealth tax may indirectly reduce their income tax spending. Some billionaires may choose to leave California, no longer contributing their income tax to the state, leading to reduced state revenue.
Ahmad Thomas, CEO of the Silicon Valley Leadership Group and one of the leaders of the California Business Alliance, expressed concerns about the tax proposal in a comment on the CalMatters website. He called the tax a “stopgap measure that could jeopardize long-term economic growth,” emphasizing the need to bolster reasons for businesses to establish themselves in California rather than sending signals for entrepreneurs to leave. He warned that if businesses relocate from California, the state will lose not only employment opportunities, investments, technological advancements, but also future tax revenue.
Elon Musk, the billionaire founder of SpaceX and Tesla, addressed questions about the taxation of the wealthy in May of this year. He stated that he paid billions of dollars in taxes within a year, a figure unmatched in history. When he sells stock options, he needs to pay a combined 45% federal and state income tax; and upon passing away, a 40% estate tax needs to be paid, saying, “Overall, I may end up paying tens of billions of dollars in taxes.”