What is California's Proposition 40 billionaire tax, and why is it splitting the Democratic Party?

Seeing headlines about California Democrats endorsing a billionaire tax against Newsom's wishes. What does the actual measure do, and what's the disagreement about?

Proposition 40, the "Billionaire Tax Act," is a November 2026 California ballot measure that would impose a one-time 5% tax on the net worth of the state's roughly 200 billionaires. On August 2, 2026, the California Democratic Party's executive board narrowly voted to formally endorse it, after an earlier vote fell just short of the required 60% threshold. The disagreement runs through the party's own ranks: supporters, including SEIU-UHW (which has driven the campaign), Rep. Maxine Waters, and Sen. Bernie Sanders, argue it's a way to make the ultra-wealthy contribute more, with proceeds aimed partly at offsetting federal healthcare funding cuts. Opponents — notably Governor Gavin Newsom and Democratic gubernatorial candidate Xavier Becerra, along with groups like the California Teachers Association and California Professional Firefighters — argue a wealth tax should happen at the federal level rather than state-by-state, warning that billionaires could simply relocate to avoid it and take their tax revenue with them, and that it complicates a separate, already-planned ballot measure taxing the wealthy to fund schools. The party's endorsement doesn't decide the outcome — voters will ultimately settle it in November.