California's Democratic Party on Sunday endorsed Proposition 40, a November ballot measure that would impose a one-time 5% tax on the state's roughly 200 billionaires. The endorsement, which came after two failed attempts, breaks with Governor Gavin Newsom and several major labor unions, underscoring a deepening divide within the party over how to address wealth inequality.
The party's executive board initially failed to reach the 60% threshold needed for endorsement, but after additional lobbying—including efforts by Representative Maxine Waters at the San Diego meeting—supporters secured enough votes. The measure, spearheaded by SEIU-United Healthcare Workers West, has drawn limited support from top elected officials, with Representative Ro Khanna being the only member of California's congressional delegation to publicly back it.
Union and Party Reactions
Dave Regan, president of SEIU-United Healthcare Workers West, hailed the endorsement as proof of grassroots support, citing polls showing over 80% of registered Democrats favor the tax. Rusty Hicks, chair of the state party, defended the deliberative process, stating that every endorsement is earned and reflects members' values.
Senator Bernie Sanders and Representative Khanna have championed the measure, arguing that revenue should fund healthcare for low- and middle-income Californians. However, Newsom has been a vocal opponent, telling the New York Times earlier this year that the measure "will be defeated." He has instead advocated for a federal billionaire tax, writing on Substack in June that wealth is mobile and would flee to lower-tax states.
Opposition and Broader Ballot Fight
The opposition coalition, which includes gubernatorial candidate Xavier Becerra, the California Teachers Association, California Professional Firefighters, and Planned Parenthood Affiliates of California, called the measure an "unreliable, untested" scheme. The party also voted to oppose two billionaire-backed measures designed to undercut Proposition 40, intensifying the ballot-measure battle.
For financial advisors serving high-net-worth clients in California, the outcome of this measure could have significant implications. As noted in probate costs and trust adoption, California's high-fee environment already drives estate planning strategies, and a new wealth tax could further influence decisions. Advisors may need to monitor how clients respond to potential tax changes, especially given the state's already complex tax landscape.
Newsom's Financial Disclosure
The intraparty fight comes on the heels of Newsom's release of four years of tax returns, showing that he and his wife, Jennifer Siebel Newsom, earned between $1.7 million and $2 million annually from 2022 through 2024, paying roughly $500,000 per year in combined federal and state taxes. Their income has remained relatively stable since 2019, except for 2021 when the sale of a Marin County home boosted earnings to $4.2 million.
Most of the Newsoms' income derives from winery and restaurant holdings in a blind trust, not the governor's $200,000 salary. The PlumpJack Group, which he owns, is now managed by his sister and cousin. This disclosure adds a personal dimension to the debate, as Newsom's opposition to the tax contrasts with his own substantial wealth.
As the November election approaches, the endorsement battle highlights the challenges of balancing progressive priorities with pragmatic governance. For advisors, the measure's fate could signal broader trends in wealth taxation, potentially affecting retirement planning strategies for high earners. The outcome will be closely watched by both supporters and critics of wealth taxes.
