Dave Regan vows conditional 2028 California wealth-tax ballot measure

Opponents outraised Proposition 40 supporters more than 10-to-1

Union president Dave Regan said the Service Employees International Union-United Healthcare Workers West would put a billionaire tax back on the ballot in 2028 if lawmakers in Sacramento did not come up with a solution to the healthcare cuts by then. “That is our plan,” Regan said. “We will build on the coalition that brought us here, we welcome more stakeholders to the process, and we’ll put forward a proposal informed by everything that we’ve learned in this campaign.”

California voters rejected Proposition 40, a ballot initiative that would have created the nation’s first modern tax on wealth. The Associated Press called the race Monday as the initiative trailed after last week’s election. The Wall Street Journal characterized the outcome as “a significant blow to supporters,” who had hoped the measure would create a template for taxing wealth far beyond California. The outlet also said the rejection left the state’s next governor, Democrat Xavier Becerra, with “a major budget problem.”

The Service Employees International Union-United Healthcare Workers West, a healthcare-workers’ union, proposed Proposition 40, which sought to impose a one-time 5% tax on the net assets of California residents worth more than $1 billion at the end of this year. The proposal had no modern precedent in the U.S., where most individual taxes are assessed on income rather than assets. Advocates for taxing wealth said the existing system allowed superrich Americans to pay relatively little to the government. The union estimated the tax would raise $100 billion over five years to offset looming Medicaid cuts that President Trump signed into law last year.

The union spent more than $30 million trying to pass Proposition 40. Opponents of the tax, including Google co-founder Sergey Brin and other technology executives and billionaires, poured hundreds of millions of dollars into campaigns to defeat the measure and outraised Proposition 40 supporters by more than 10-to-1. The Wall Street Journal wrote that “success was never a sure thing, even in deep-blue California.”

Some opposition funding went toward two other ballot measures intended to undermine the billionaire tax. One aimed at adding new spending rules and audit requirements, while the other was intended to ban wealth taxes.

The campaign opposing Proposition 40 called the measure a “reckless experiment conducted on our state’s economy with little regard for the harms it would cause.” The campaign said California was facing “enormous pressure” because of the looming healthcare cuts and wanted to work with Becerra and others on “more thoughtful” solutions.

The Wall Street Journal described the failed billionaire tax as underscoring a key divide over Democrats’ economic message, at a time of “infighting among Democrats over the party’s future.” The outlet said Democrats had flipped the U.S. House of Representatives and U.S. Senate by emphasizing cost-of-living concerns, including high fuel and grocery prices, while progressives and moderates differed over how those issues should be addressed. The outlet wrote that the proposal “roiled California’s political and labor circles for the past year.”

The state Democratic Party endorsed the wealth tax in August, but party leaders including departing Gov. Gavin Newsom and his elected successor, Becerra, opposed it. Newsom warned the tax could undermine California’s economic competitiveness and marshaled a coalition of Democratic-aligned groups to oppose it. Among them were Planned Parenthood Affiliates of California, groups representing health clinics and doctors, the state’s largest teachers union, and unions representing firefighters and construction workers.

The Wall Street Journal reported that polls earlier in the year consistently showed the tax plan had modest support, with stronger backing from Democrats. The outlet said public opinion soured as billionaires and their allies ran advertising on television and cellphones, in social-media feeds and in mailboxes, portraying the tax as a threat to ordinary Californians’ retirement savings.

With Proposition 40 rejected, California’s next governor, Democrat Xavier Becerra, and state lawmakers still face the looming Medicaid cuts and their effect on the state budget. The proposed tax revenue will not be available to offset those cuts.