WHAT KIND OF PRESIDENT WOULD GAVIN NEWSOM MAKE IF ELECTED IN 2028?
California Democrats Endorse the Billionaire Tax Over Newsom and Becerra - But Prop 40 Is Now a Three-Way Fight Over Revenue, Flight and Ballot Rules
Gavin Newsom has spent much of 2026 trying to position himself as a national Democratic leader.
California Democrats just handed him a very public reminder that his own party's activist base is not always interested in following his lead.
The dispute is Proposition 40, California's proposed one-time 5 percent tax on billionaires.
Newsom opposes it.
Democratic gubernatorial nominee Xavier Becerra opposes it.
The California Democratic Party now officially supports it.
That last point updates the political situation substantially.
The proposal was not merely advanced by a party committee or left awaiting a later floor vote.
On Aug. 2, the California Democratic Party formally endorsed Proposition 40 after the measure cleared the party's required 60 percent threshold.
The party's own final endorsement sheet lists Proposition 40 as "Support."
It simultaneously lists Proposition 41 and Proposition 42 - two measures that could interfere with the billionaire tax - as "Oppose."
That creates a genuine intra-Democratic split.
California's sitting Democratic governor and the Democratic nominee seeking to replace him are now campaigning against a ballot measure their state party has endorsed.
The disagreement is not mainly about whether the wealthy should pay more.
Newsom has proposed a national tax framework aimed at billionaires and ultra-high earners.
His objection is to trying to impose a wealth tax in one state while wealthy residents can move elsewhere.
"The fight to make the wealthiest Americans pay more in taxes is not one we should be fighting state by state," Newsom wrote earlier this summer.
His argument is that California can tax income only while taxpayers remain connected to California, and that a state-only wealth tax could push some of its largest taxpayers to establish residency elsewhere.
The nonpartisan Legislative Analyst's Office gives that concern some factual support.
It estimates Proposition 40 would probably raise tens of billions of dollars over several years.
But it also says behavioral responses by billionaires - including leaving California - could reduce ongoing state income-tax revenue by less than $1 billion per year.
That is an important distinction from the campaign's headline estimate.
Supporters say the tax could generate roughly $100 billion.
The Legislative Analyst's Office does not promise that amount.
Its official fiscal estimate is broader and more cautious: tens of billions in temporary revenue, with the exact amount highly uncertain.
Proposition 40 would apply to billionaires who were California residents on Jan. 1, 2026.
The tax would equal 5 percent of covered net worth and would be due in 2027.
Taxpayers could spread payments across five years, although doing so would cost more.
Directly held real estate, pensions and retirement accounts are generally excluded.
Ninety percent of the proceeds would be reserved for health care services.
The remainder would go to education, food assistance and administration of the tax.
The measure was built as a response to major federal reductions in Medicaid and food-assistance spending enacted under President Donald Trump.
SEIU United Healthcare Workers West, the union leading the campaign, argues California needs a temporary emergency source of revenue to prevent severe cuts to Medi-Cal and related services.
That is the strongest argument for the tax.
The federal funding losses are real, and California's health system will have to absorb them somehow.
A one-time tax on a few hundred ultra-wealthy residents could raise a very large amount of money without increasing taxes on ordinary households.
The strongest argument against it is also straightforward.
California's tax system already depends heavily on high-income taxpayers, whose capital gains and investment income make state revenues volatile.
If a wealth tax encourages even a relatively small number of major taxpayers to move permanently, California could trade a short-term windfall for a smaller recurring income-tax base.
That is why the conflict is not simply rich people versus everyone else.
Some of Proposition 40's most important opponents are Democratic-aligned organizations and labor groups that normally support higher public spending.
The California Teachers Association opposes the measure.
Planned Parenthood Affiliates of California opposes it.
The State Building and Construction Trades Council has opposed it.
California Professional Firefighters and several medical organizations are also against it.
SEIU California, the statewide organization representing roughly 750,000 workers, chose not to take a position even though SEIU-UHW is driving the campaign.
That internal labor division makes the fight more complicated than a standard union-versus-billionaire campaign.
At the same time, the measure has substantial institutional support.
The California Democratic Party endorsed it.
The California Labor Federation endorsed it days later.
AFSCME California and Teamsters California support it, as do Sen. Bernie Sanders and Rep. Ro Khanna.
The result is an unusually clean political fault line.
Newsom and Becerra are arguing that a California-only wealth tax is economically dangerous.
A large part of the Democratic activist and labor base is arguing that the greater danger is allowing federal health cuts to hit low-income Californians while enormous private fortunes remain largely untouched.
That disagreement is now official party business, not merely a committee squabble.
The party endorsement also matters because the original draft of this story treated the vote as unfinished.
It is finished.
The state party chose Proposition 40 over the position of its governor and its own gubernatorial nominee.
Newsom has other political problems competing for attention, but they should not be merged into the billionaire-tax fight without evidence.
Ruby Rippey, the former San Francisco aide who had an affair with Newsom in 2005, published a detailed first-person account in Vanity Fair on July 28.
Newsom had already publicly admitted the affair in 2007 and apologized for it.
Rippey's new essay adds her version of events and disputes some of the way Newsom has recently described the episode.
That is a renewed personal controversy.
It is not evidence about whether Proposition 40 is sound tax policy.
The same caution applies to federal scrutiny involving Newsom and First Partner Jennifer Siebel Newsom.
Newsom said in June that federal agents were questioning friends and former employees and that his wife was being investigated.
Reporting has indicated inquiries involving Siebel Newsom's taxes, nonprofit-related matters and subjects connected to Newsom's former chief of staff.
The Newsoms have also faced scrutiny over charitable contributions solicited at the governor's request, commonly known as behested payments.
Those payments are legal when properly disclosed, although Newsom has previously faced reporting penalties and criticism over their use.
But the public record does not establish that Proposition 40, the party endorsement, the affair and every federal inquiry are parts of one connected scandal.
They are separate political pressures occurring at the same time.
The billionaire-tax campaign itself is already becoming one of the most expensive ballot fights in the country.
Google co-founder Sergey Brin has poured $102 million into Building a Better California, according to California campaign-finance data reported this week.
His latest contribution was $20 million.
That spending is not all a direct television campaign against Proposition 40.
Building a Better California is supporting other ballot measures designed to make the billionaire tax harder to implement or potentially block it altogether.
The most important are Propositions 41 and 42.
Proposition 41 would require pre-election audits of programs funded by new voter-created special taxes and recurring audits of programs funded by new special taxes.
It would also affect whether spending from new special-tax revenue can be excluded from California's constitutional spending limit.
That technical provision matters more than the word 'audit' in the title.
The Legislative Analyst's Office says that if Proposition 41 receives more yes votes than Proposition 40, courts could find the measures conflict and stop Proposition 40 from taking effect even if a majority separately approves it.
Proposition 42 attacks the wealth tax more directly.
It would prohibit new state taxes on certain forms of personal property and restrict certain retroactive state taxes.
Those provisions overlap with core features of Proposition 40.
The same vote-count problem applies.
If Proposition 42 passes and receives more yes votes than Proposition 40, courts could conclude that the conflicting provisions prevent the billionaire tax from becoming law.
So California voters are not facing a simple yes-or-no billionaire-tax election.
They are facing three interacting propositions that could all receive majority support while still producing litigation over which one controls.
That is a major weakness in the original framing that described the audit proposal as merely 'complicating' implementation.
Propositions 41 and 42 could do substantially more than complicate it.
They could help nullify Proposition 40 if they pass with more yes votes.
Brin's financial exposure helps explain why the campaign has become so aggressive.
With a fortune recently estimated in the hundreds of billions of dollars, a 5 percent tax could create a liability in the neighborhood of $13 billion if the measure applied to his full covered net worth.
The exact amount would depend on valuation rules, residency determinations, exclusions and litigation.
That is why precise estimates such as $13.3 billion should be treated as rough arithmetic rather than a settled tax bill.
Brin is not the only technology billionaire who has taken steps to reduce California ties.
Larry Page moved a number of business entities out of California before the Jan. 1 residency date.
Travis Kalanick has said he moved to Texas.
Peter Thiel and other technology investors have also shifted residences or business operations outside California.
Mark Zuckerberg and Priscilla Chan purchased a $170 million property on Indian Creek Island near Miami this year.
But buying a Florida home does not by itself establish that Zuckerberg legally abandoned California residency because of Proposition 40.
He continues to own substantial property in California.
That distinction is important throughout the 'billionaire exodus' debate.
Moving companies, buying homes and publicly announcing a new residence are evidence of economic behavior.
California tax residency is a legal determination based on a broader set of facts and connections.
The proposed tax itself tries to close the escape route by applying to people who were residents as of Jan. 1.
That retroactive feature is likely to produce litigation from people who argue they had already left or that California cannot constitutionally tax them in the way the measure proposes.
The fight therefore has three layers.
The first is ideological: should billionaires be required to surrender 5 percent of accumulated wealth to protect public services?
The second is economic: will that raise more money than California eventually loses if wealthy taxpayers leave?
The third is legal and procedural: even if voters approve Proposition 40, will competing measures or constitutional challenges prevent it from taking effect?
Newsom is betting that the second problem overwhelms the first.
The Democratic Party's activists are betting that the first problem is urgent enough to justify the risk.
Becerra has chosen Newsom's side on the tax despite running with the official endorsement of the same state party that now supports Proposition 40.
That makes the split especially useful as a test of what California Democratic voters actually want from the next generation of leadership.
The party's endorsement does not bind Becerra.
It does make it harder for him to describe opposition to the measure as the consensus Democratic position.
Likewise, the endorsement does not guarantee Proposition 40 will pass.
California Democratic Party ballot recommendations have sometimes diverged sharply from the final electorate.
Voters can support Democratic candidates while rejecting Democratic Party recommendations on individual propositions.
The campaign will also have to confront the difference between its $100 billion political message and the state's more cautious fiscal analysis.
The Legislative Analyst's Office says the tax would probably raise tens of billions, not that $100 billion is assured.
It also warns of possible ongoing revenue losses if billionaires respond by reducing California taxable income or leaving the state.
Supporters can reasonably argue that even tens of billions would be an extraordinary amount of money for health care.
Opponents can reasonably argue that a temporary tax should not be judged only by the first checks the state receives.
The longer-term effect on the tax base matters too.
That is the real policy argument beneath the rhetoric about 'soaking the rich' or 'protecting billionaires.'
California's fiscal structure makes both sides unusually sensitive to the behavior of wealthy residents.
A small share of high earners already generates a very large share of personal income-tax revenue.
When markets rise, California can experience enormous revenue gains.
When markets fall or wealthy taxpayers relocate, the state can experience equally dramatic shortfalls.
Proposition 40 would deliberately intensify that concentration for a limited period by asking the wealthiest residents for an enormous one-time payment.
Its supporters see that concentration as the point.
Its opponents see it as the danger.
The party vote settles one question.
California Democrats officially support the billionaire tax.
It settles another.
Newsom and Becerra are now openly on the opposite side of their own state party on one of the most consequential measures on the November ballot.
What remains unsettled is much larger.
No one yet knows whether the tax will raise something close to the $100 billion supporters project, whether wealthy residents will successfully escape California taxation, or whether Propositions 41 and 42 will legally neutralize the measure even if voters approve it.
That is why the strongest version of the story is not that Newsom is simply losing control of California Democrats.
It is that California is becoming the national test case for a question Democrats are likely to fight over well beyond 2026: how aggressively can government tax accumulated wealth before the people who own it change their behavior, their residence or the law itself?
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Newsom has chosen the cautionary side of that argument.
His own party has now chosen the other one.
