Proposition 40, the California Billionaire Tax Act, is continuing to exacerbate the fissures within the Democratic Party between mainstream politicians such as Governor Gavin Newsom and the rising tide of Democratic socialists such as New York City Mayor Zohran Mamdani.
The California Democratic Party has officially endorsed the one-time 5% tax on the worldwide net worth of individuals exceeding $1 billion. Newsom and prominent Democratic-aligned public sector unions have opposed it, and have offered instead to increase healthcare funding by a healthy $7 billion.
Newsom has argued that a direct tax aimed at the uber rich, which will undoubtedly face a constitutional challenge, and cause even greater population flight from the Golden State. California has already witnessed the likes of Elon Musk, Larry Ellison, and Google co-founders Larry Page and Sergey Brin relocating to more tax-friendly domiciles.
It is clear that Newsom, a clever politician, is opposed to Proposition 40, in part, because he wants to secure his image as a “moderate” since, by all accounts, he will run for president in 2028. Distancing himself from Democratic Socialists like Mamdani, who favors wealth taxes and all sorts of redistribution schemes, is crucial if Newsom is to win the Democratic nomination and later, the independent vote in the general election.
Questions have also been raised about whether the law will succeed financially. A Hoover Institution study authored by Benjamin Jaros, Joshua D. Rauh, Gregory Kearney, John Doran and Matheus Cosso, estimates that the act will “only” generate $40 billion in revenues, less than half of the $100 billion promoters of it have promised. *
Others opposed to the measure have pointed out that, besides the catastrophic loss of human capital and financial assets, a wealth tax will disincentivize potential entrepreneurs and businessmen from moving to the state. In a recent New York Post opinion piece, “California Democrats Go Full Socialist in Endorsing Billionaire Tax,” Jon Hartley writes:
For generations, the state attracted entrepreneurs, investors,
engineers and innovators from around the world. Silicon Valley
became the global center of technological innovation because
talented people believed California was the best place to build
ambitious companies. **
Another unforeseen consequence of a wealth tax is that it will, if enacted, hit those below the “billion-dollar-threshold” – millionaires. Originally, the federal income tax, passed in 1913, only affected the very rich. Like the wealth tax, the income tax was a “soak-the-rich” scheme which now includes almost all Americans.
Of course, what is not being discussed is the fundamental problem facing California and the federal government: out-of-control spending. Increasing or broadening the tax base will only give politicians more money to squander.
While advocates of wealth taxes have mostly come from the political left, there has been speculation that a left/right populist coalition could be formed to combat the burgeoning wealth disparity we are seeing in the nation. While on the surface such a political fusion, if it ever did crystallize, seems attractive, it would most likely be a disaster for right-wing populists.
Right-wing populists hold that rampant corporatism and the constant interference of the government in the economic lives of everyday Americans are the root causes of America’s growing wealth disparity. They believe the political-financial class “cheats,” using its cozy relationship with the state to profit. That is the essence of crony capitalism.
The Tea Party, Ron Paul’s presidential runs and even Donald Trump’s campaigns were filled with populist expressions. While Trump eventually canned Musk and shelved most of the Department of Government Efficiency’s recommendations for cutting government spending, Musk did end up playing a prominent role in his 2024 presidential race.
Paul has for many decades spoken out about the way the Federal Reserve is used to prop up Wall Street to the detriment of Main Street.
The various right-wing populist movements were sabotaged not so much by the left, but by the conservative establishment which saw them as threats to their legitimacy and power. Hence, they absorbed and co-opted them. The institutional obstacles that the Democrats and Republicans have erected to ensure their parties dominate smaller movements make it unlikely that any significant change to the status quo can take place.
California’s Proposition 40 and the electoral success of Democratic-Socialist candidates are the frustrated expressions of increasing number of voters who see their standard of living deteriorate while the ranks of multi-billionaires grows.
Unfortunately, voting for wealth taxes and supporting Democratic-Socialist candidates will only compound their plight.
**Jon Hartley, “California Democrats Go Full Socialist in Endorsing Billionaire Tax,” New York Post, 3 August 2026, California Dems go full socialist, backing billionaire tax
Antonius Aquinas@antoniusaquinas
Antonius Aquinas 