California Democrats moved a step closer Saturday to officially backing a controversial billionaire wealth tax — despite opposition from Gavin Newsom and Xavier Becerra. 

The California Democratic Party’s resolutions committee voted to recommend support for Proposition 40, a November ballot measure that would impose a one-time 5% tax on roughly 200 California billionaires.

Supporters argue the measure would generate an estimated $100 billion to help offset federal healthcare funding cuts, but critics warn it could drive wealthy residents and investment out of the state.

The committee’s vote does not make the endorsement official.

The proposal must still be approved by at least 60% of delegates during Sunday’s general session, although delegates could instead vote to take no position, with a simple majority or remove the recommendation for a separate floor debate.

The recommendation nevertheless puts the party’s grassroots activists at odds with some of California’s highest-profile Democrats.

Newsom has repeatedly opposed the state wealth tax, arguing California would be put at a competitive disadvantage if it acted alone because billionaires could simply move to lower-tax states.

Instead, the outgoing governor of California has advocated for a federal wealth tax, saying a nationwide approach would prevent the wealthy from relocating to avoid paying. 

Becerra has also broken with supporters of Proposition 40.

On Friday, the Democratic nominee for governor reaffirmed that he opposes the billionaire tax while announcing his positions on several November ballot measures.

Instead, Becerra endorsed Proposition 3, which would permanently extend an existing income tax surcharge on high earners to fund education, while declining to support Proposition 40. 

The committee vote highlights an increasingly visible divide within California’s Democratic Party between progressive activists pushing for more aggressive taxes on the wealthy and establishment Democrats who fear the economic consequences.

Proposition 40 has been championed by SEIU United Healthcare Workers West President Dave Regan and has drawn endorsements from Sen. Bernie Sanders, Rep. Ro Khanna, AFSCME California and Teamsters California.

Supporters argue the one-time tax is needed to protect healthcare programs after what they describe as roughly $100 billion in federal healthcare cuts under the Trump administration. 

But the measure has also split organized labor.

Several influential groups, including the California Police Chiefs Association, United Domestic Workers and the California State Council of Laborers oppose the proposal, while the SEIU California executive board recently voted to remain neutral. The California Federation of Labor Unions is expected to decide its position later this week. 

The battle over Proposition 40 has become one of the state’s most contentious ballot fights, pitting progressive Democrats against many of the party’s traditional leaders ahead of the November election.

Whether the California Democratic Party ultimately endorses the measure will be decided when delegates vote during Sunday’s general session.

The California 2026 Billionaire Tax Act will officially appear on the statewide general election ballot on November 3, 2026.

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