The California Democratic Party endorsed a November ballot measure to tax billionaires’ wealth, defying opposition from Gov. Gavin Newsom and several influential labor unions.
On Sunday, California Democrats’ executive board narrowly endorsed Proposition 40 after earlier votes to support or stay neutral failed. Rep. Maxine Waters (D-Calif.) helped rally support, while the measure had previously received limited backing from top Democratic leaders, including Rep. Ro Khanna (D-Calif.).
The party also voted against two billionaire-backed measures aimed at weakening Proposition 40.
Supporters initially failed to reach the 60% backing needed for the party’s endorsement but later secured enough votes. The union behind the proposed one-time 5% billionaire tax hailed the endorsement as a sign of growing grassroots Democratic support.
Both sides scrambled to secure support before the weekend vote, using endorsements, polls, and targeted outreach to sway undecided party members, reported POLITICO. Waters’ endorsement, following support from Sen. Bernie Sanders (I-VT), energized party activists, with some chanting her name during the voting, according to the report.
The measure, set for California’s November ballot, seeks to fund healthcare, food aid, and budget gaps, though its retroactive provisions are likely to face legal challenges.
Notably, while opposing California’s billionaire wealth tax measure, Newsom has backed a federal minimum tax on Americans with more than $100 million in assets. He argued that a nationwide tax would be harder to avoid than California’s one-time levy, as wealthy residents could simply relocate to another state.
Wealth Tax Divides Silicon Valley
Sanders said Meta Platforms Inc. (NASDAQ:META) CEO Mark Zuckerberg could owe about $10.5 billion if California voters approve a proposed billionaire wealth tax in November. Sanders argued the measure could help preserve healthcare for 3 million low-income people and joked that Zuckerberg would still have about $200 billion left after paying the tax.
California’s proposed one-time billionaire wealth tax has divided Silicon Valley. While venture capitalist Chamath Palihapitiya says he will stay in California and pay the tax, and Nvidia Corp. (NASDAQ:NVDA) CEO Jensen Huang has also urged wealthy residents not to leave.
However, tax adviser David Lesperance told Benzinga that seven billionaire clients have already left California ahead of the proposed tax, with more considering relocation before the November vote. He said clients are using legal strategies such as establishing residency outside California, funding lobbying efforts, restructuring assets to remain below the $1 billion threshold, or preparing court challenges.
Amazon.com Inc. (NASDAQ:AMZN) co-founder Jeff Bezos said taxing billionaires would not solve inequality, arguing the wealthy are unfairly cast as political “villains.” He also proposed eliminating federal income taxes for the bottom half of U.S. earners while replacing the lost revenue through other means.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: Sheila Fitzgerald / Shutterstock
