California Democrats divided on billionaire tax

Billionaire tax divides California Democrats, draws myriad questions

California voters this midterm cycle will decide whether the state will i mpose a wealth tax on billionaire residents, as wealthy Californians organize against the measure and experts say its potential broader impact on the state’s economy is nuanced.

By voting “yes” on Proposition 40 , Californians would support a one-time 5 percent tax on billionaires’ wealth.

The government revenue from the wealth tax — which no state to date has imposed — would primarily go toward state healthcare programs, with the remainder earmarked for food assistance and education initiatives.

The Golden State would collect “tens of billions of dollars” from the wealth tax on the roughly 200 billionaires in the state, per an analysis from the nonpartisan state Legislative Analyst’s Office (LAO), which noted the increase in revenue would be “ spread across several years .”

But polling indicates it is unclear the measure will receive the simple majority support needed to pass. Even if it does, questions remain about next steps for the state and downstream effects.

“When you see eye-popping numbers like that, I can see how that looks … very appealing,” Tracy Gordon, the director of the Urban-Brookings Tax Policy Center, told The Hill. “But I think the concern is … what would the response be, both legally and economically, in terms of people leaving the state?”

The revenue from the tax, the group argues, could offset cuts to California’s federal funding under the One Big Beautiful Bill Act , which President Trump signed into law in July 2025.

The law could result in the state losing $30 billion in federal funding annually through 2028, per an analysis from the California State Assembly’s Committee on Health.

The measure, however, has not quite unified Democrats in the state. While the state Democratic Party along with the AFL-CIO and Teamsters unions support Proposition 40, California Gov. Gavin Newsom (D) is against it.

Newsom, a potential 2028 presidential contender, wrote in a June Substack post that he supports a federal billionaire tax. But the outgoing California governor noted the state ballot measure “dedicates almost all of the revenue” from the tax to healthcare.

The Hill’s Max Rego has the full story .

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