The California Democratic Party officially endorsed Proposition 40 this Sunday, an initiative that proposes applying an extraordinary 5% tax to the wealth of the state's billionaires, a decision that marks an open disagreement with Governor Gavin Newsom and the Democratic candidate to succeed him, Xavier Becerra, both opponents of the measure.
The decision was approved during the party's state convention held in San Diego, after a divided vote that reflected the differences between the progressive wing and part of the Democratic leadership. After several attempts, the proposal managed to overcome the 60% threshold required to receive the official support of the political organization.
The initiative's promoters celebrated the result as a sign that the Democratic base supports the creation of a new tax to finance health programs, while its detractors warned that the measure could affect California's economic competitiveness and accelerate the departure of large fortunes from the state.
A vote that showed internal division
The session was marked by intense negotiations between delegates, unions and political groups. In a first vote, Proposition 40 obtained around 59.2% support, insufficient to achieve official party support. Subsequently, the delegates refused to maintain a neutral position and, in a second round, approved the initiative with 145 votes in favor and 90 against, equivalent to approximately 61.7%.
U.S. Rep. Maxine Waters participated in the executive board meeting and, by various accounts, championed key support for the initiative to gain partisan support. The proposal has also received support from Senator Bernie Sanders, Congressman Ro Khanna, Teamsters California, AFSCME California and the California Young Democrats.
The main promoter of the measure is the SEIU-United Healthcare Workers West (SEIU-UHW) union, which maintains that the tax would raise around $100 billion to offset federal cuts to the health system.
“This endorsement disproves the notion that California Democrats are not united over the billionaire tax — they are,” said Dave Regan, president of SEIU United Healthcare Workers West. “Polls show that more than 80% of registered Democrats support this crucial solution to our health crisis.”
Newsom and Becerra maintain their rejection
Despite the party's support, Governor Gavin Newsom previously reiterated his opposition to a state wealth tax, believing that it would place California at a disadvantage compared to other states and favor the departure of taxpayers with higher incomes.
The president has defended on different occasions that a federal wealth tax would be a more effective alternative to prevent billionaires from transferring their tax residence.
Xavier Becerra, Democratic candidate for governor, also confirmed that he maintains his rejection of Proposition 40 and, instead, supports Proposition 3, a measure that seeks to make permanent the income tax surcharge for taxpayers with higher incomes for the purpose of financing public education.
Opposition to the initiative also includes the California Teachers Association, Planned Parenthood California, the California Professional Firefighters and various business groups, which maintain that the new tax could reduce investment, affect economic growth and reduce future revenues.
A political action committee opposed to the proposal has raised more than $118 million to fight it, with contributions from entrepreneurs and billionaires, including Google co-founder Sergey Brin.
Proposition 40 will appear on the state ballot on November 3 and outlines one of the most contested political campaigns of the year in California, pitting two visions on how to finance public services and distribute the tax burden among taxpayers with the greatest resources.
