California Democrats endorse one-time 5% tax on billionaires

Newsom, Becerra among Democrats opposing endorsed levy

The California Democratic Party’s executive board endorsed the state’s proposed billionaire tax on Sunday, clearing the 60% threshold needed to overcome objections and win the party’s backing, according to a party spokeswoman. The vote came at a weekend meeting of the roughly 380-member board in San Diego, three months before Californians decide the measure in November.

If the initiative takes effect, it would impose a one-time 5% levy on the state’s roughly 200 billionaires. The tax would apply to people who resided in California as of Jan. 1 of this year and who have a net worth of $1 billion or more at the end of this year; for purposes of the tax, a person’s net worth excludes certain assets, such as real estate they own directly.

The proposal was initiated by Service Employees International Union United Healthcare Workers West, a large healthcare union, which sought to raise $100 billion aimed mostly at offsetting healthcare funding cuts by the Trump administration. “This endorsement puts to rest the idea that California Democrats are not united by the billionaire tax—they are,” said Dave Regan, the union’s president.

The endorsement offers the proposal a public-relations boost that was far from assured, because the tax has divided the party establishment. Democratic Gov. Gavin Newsom and Democratic gubernatorial candidate Xavier Becerra have publicly opposed the levy, with Newsom arguing it could push the state’s largest taxpayers to flee. Other opponents include the California Teachers Association and the California Professional Firefighters.

After the initiative qualified for the ballot in June, Newsom and his allies fought to persuade the union to withdraw it. The union at one point offered to withdraw the proposal in exchange for Newsom backing a smaller wealth tax.

Progressive leaders including Sen. Bernie Sanders (I., Vt.) and U.S. Rep. Ro Khanna (D., Calif.) have backed the proposal, saying the health funding is needed and that the wealthiest Californians should be paying more. Independent polling has shown a strong majority of Democratic voters in California and a narrower majority of the broader electorate support the tax.

Both sides mounted lobbying campaigns targeting executive board members ahead of the vote at a waterside Sheraton hotel near the airport. The union hosted a hospitality suite with food and drinks and set up a booth where members handed out T-shirts, hats and other swag touting the billionaire tax.

According to a person familiar with the matter, opponents of the tax paid around $7,000 to cover hotel rooms, registration fees and travel expenses for several voting board members and their proxies. The payments were made by the “No on Prop 40” campaign via Hilltop Public Solutions, a political consulting firm hired by opponents of the tax. The No on Prop 40 campaign is backed by the California Medical Association and California Primary Care Association Advocates.

“The No on 40 campaign provided limited travel assistance for a handful of volunteers and supporters who requested help offsetting costs—a common practice for candidate and ballot campaigns,” said Marco Meneghin, a principal at Hilltop, in a statement. Following Sunday’s vote, a spokesman for the No on Prop 40 campaign called the proposed billionaire tax “bad for our budget, bad for our economy and bad for our future.”