California Democratic Gov. Gavin Newsom is having a brutal couple of weeks.
Last week, Newsom was forced to respond after a woman came forward and spoke publicly about a prior extramarital affair she had with Newsom nearly two decades ago.
Newsom and his wife are also facing increased scrutiny over his extensive use of “behested payments” as federal investigations into the governor and First Partner Jennifer Siebel Newsom continue to draw attention.
Now, Newsom is scrambling after Democrats just bucked a directive he gave them.
California voters narrowly support Proposition 40, a one-time billionaire wealth tax, but two competing measures could ultimately nullify it.
A new Public Policy Institute of California survey found 52% of likely voters supporting Proposition 40 and 46% opposing it.
Another 2% remained undecided, leaving the proposal with less than a comfortable cushion less than two months before California’s November election.
Proposition 40 would impose a one-time tax of up to 5% on taxpayers holding more than $1 billion in assets.
Supporters say roughly 200 California billionaires would face the levy based on qualifying wealth and residency.
The measure covers businesses, securities, art, collectibles, and intellectual property, while it excludes real estate and certain retirement accounts.
The measure directs 90% of resulting revenue toward healthcare and 10% toward food assistance or education-related programs.
California’s Legislative Analyst estimates the tax could generate tens of billions of dollars spread across several years.
Supporters promote estimates approaching $100 billion, arguing the proceeds would offset federal reductions affecting healthcare and food-assistance programs.
Supporters include SEIU United Healthcare Workers West and Senator Bernie Sanders, while several statewide Democratic leaders oppose the proposal.
Opponents listed in official materials include the California Taxpayers Association, the California Primary Care Association, and the California School Boards Association.
Governor Gavin Newsom and Democratic gubernatorial nominee Xavier Becerra oppose Proposition 40, despite the state Democratic Party endorsing it.
Republican gubernatorial nominee Steve Hilton also opposes the tax, creating unusual cross-party opposition among prominent statewide political figures.
The biggest complication comes from Propositions 41 and 42, separate countermeasures that could prevent Proposition 40 from taking effect.
PPIC found 51% supporting Proposition 41 and 54% supporting Proposition 42, both percentages comparable to Proposition 40’s support.
California rules allow competing measures to conflict when both pass, with the measure receiving more affirmative votes controlling inconsistent provisions.
Proposition 41 requires audits of programs funded by new special taxes and restricts exclusions from California’s constitutional spending limit.
It also declares conflicting measures void when Proposition 41 receives more affirmative votes than another measure appearing simultaneously.
Proposition 42 prohibits new state taxes on personal property, including financial assets, intellectual property and business interests.
It also bars certain retroactive state taxes enacted or taking effect after January 1, 2026.
Like Proposition 41, Proposition 42 contains language nullifying conflicting ballot measures when it receives more affirmative votes.
Those provisions create the unusual possibility voters could approve Proposition 40 while simultaneously preventing the billionaire tax from operating.
Google co-founder Sergey Brin has spent more than $100 million across initiatives that include efforts aimed at defeating Proposition 40.
Other wealthy technology figures have also financed committees opposing Proposition 40 or supporting measures capable of nullifying the tax.
Critics argue taxing wealth rather than income could encourage billionaires to move residences, businesses or investments outside California.
The Legislative Analyst says billionaire departures could reduce ongoing state income-tax collections by less than $1 billion annually.
That estimate remains uncertain because officials cannot know beforehand how many taxpayers would change residency or investment behavior.
Supporters dispute predictions of widespread flight and argue the tax would preserve healthcare resources amid federal funding reductions.
Proposition 40 exempts its revenues from certain school-funding, reserve and spending-limit requirements, creating direct conflicts with Proposition 41.
Seven in ten Democrats support Proposition 40, while three in four Republicans and a slim independent majority oppose it.
Administrators would also face difficult valuation questions involving privately held companies, artwork, intellectual property and other assets without public prices.
California voters decide all three measures November 3, making the final result depend on both passage and competing vote totals.
This article may contain commentary which reflects the author's opinion.
