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The Democratic Party Endorsed the Wealth Tax. Its Doctors, Teachers, Nurses, and Firefighters Didn't.

2026-08-04 · 00:00 UTC ·Garry Tan ·5 min read

Brief

Proposition 40 is a one-time 5% wealth tax aimed at roughly 200 ultra-wealthy Californians to raise money for healthcare and schools, placed on the November 3, 2026 ballot after SEIU–UHW spent $31 million to collect about 1.6 million signatures. The measure created an unusual coalition against it: physicians, community clinics, children’s hospitals, the California Teachers Association (≈300,000 members), construction trades, housing advocates, and police unions argue the tax makes California’s revenue base more volatile rather than stabilizing it. The Legislative Analyst’s Office warns the measure could reduce ongoing income-tax receipts by hundreds of millions annually if targeted residents relocate. Critics also cite design flaws—taxing property held through LLCs/partnerships while exempting directly held property—that could impede housing finance and cost jobs. The narrow party endorsement exposed a fault line between activists and frontline service providers.

Why it matters

California Democratic Party executive board narrowly endorsed Proposition 40 — a one-time 5% wealth tax targeting roughly 200 of the state's richest residents — in early August 2026 after failing to reach a 60% threshold on the first vote and passing only when two delegates switched sides.

Key details

  • SEIU–United Healthcare Workers West spent $31 million to gather about 1.6 million signatures to place Prop 40 on the November 3, 2026 ballot.
  • Major intended beneficiaries oppose the measure: California Medical Association, California Primary Care Association, California Teachers Association (≈300,000 members; 800-delegate State Council), California Children’s Hospital Association, Planned Parenthood Affiliates of California, and the Peace Officers Research Association (≈90,000 officers) warn it would increase revenue volatility and threaten funding for Medi-Cal, schools, clinics, and public safety.
  • The nonpartisan Legislative Analyst’s Office found Prop 40 could produce an ongoing decline in state income-tax revenue—potentially hundreds of millions annually—if affected wealthy residents leave; critics also say the tax’s treatment of property held via LLCs/partnerships could harm housing production and jobs.
Source evidence

The Democratic Party Endorsed the Wealth Tax. Its Doctors, Teachers, Nurses, and Firefighters Didn’t.

California Democrats backed Prop 40 by two votes. The real story is the coalition of workers who voted no, and they are the ones the tax claims to save.

TL;DR

California Democrats endorsed Prop 40’s wealth tax by just two votes, but the doctors, teachers, clinics, and construction unions the measure is supposed to help all voted no, warning it makes the state’s budget more volatile, not less. The party made its statement, and now voters decide whether a one-time tax on a few hundred people is worth the risk to the funding schools and healthcare already depend on.

On Sunday in San Diego, the California Democratic Party’s executive board endorsed Proposition 40, a one-time 5% tax on the wealth of roughly 200 of the state’s richest residents. The money is meant to fund healthcare and schools. The union that wrote it, SEIU-United Healthcare Workers West, spent $31 million gathering 1.6 million signatures to put it on the November ballot.

Read the headlines and you would think the party spoke with one voice. It did not. The endorsement failed to clear the 60% threshold on the first vote. It passed only after two delegates switched sides on a second round.

The Supposed Beneficiaries Are Opposing It

There is the paradox at the center of Prop 40: it is sold as a rescue for healthcare and schools, but the healthcare workers and schools say it is the opposite. The doctors, nurses, teachers, and clinics the measure was written to help have read the fine print and decided to vote no.

Start with the doctors. The California Medical Association, which represents the state’s physicians, voted to oppose. Its warning is blunt: because the measure leans California’s budget even harder on a volatile revenue base, it “may result in less funding for our general fund and therefore less funding for health care.” A tax written to fund healthcare, opposed by the doctors, because they think it will mean less healthcare.

The clinics agree. The California Primary Care Association, which represents community health centers, opposes it. Its president, Francisco Silva, said it plainly: the very folks the measure is supposed to help are not supporting it. The doctors, the clinics, and the school boards did not just object. They seeded a joint campaign against it.

Then there is Planned Parenthood Affiliates of California, which almost never breaks with its usual allies. CEO Jodi Hicks was careful to say the group is “not taking a position because we agree with any of the billionaires.” It opposes because a one-time tax cannot cover long-term needs, and because it could jeopardize a steadier funding measure it prefers.

The California Children’s Hospital Association and community providers round out the healthcare opposition. On a healthcare tax, the healthcare workers are voting no.

The Teachers

The California Teachers Association, the largest teachers union in the state with more than 300,000 members, voted to oppose through its 800-delegate State Council. CTA is emphatic that it supports taxing the wealthy. It just does not believe this is the way. The union would rather extend the existing income taxes on high earners that already fund California’s classrooms, a measure also on the November ballot. Stack a flashy one-time wealth tax on top, teachers worry, and you put the reliable money at risk.

“I can remember very few times when our party has been this divided over an issue,” CTA’s Teri Holoman told delegates on Sunday.

The California School Boards Association joined a statement with the medical groups warning the tax “directly threatens vital funding for education and schools, healthcare and clinics, public safety, and infrastructure projects by making California’s revenue even more volatile.”

Builders, Housing Advocates, and Police

This coalition is wider than most people realize. The State Building and Construction Trades Council of California, the carpenters and electricians and laborers who build the state, were among the first major unions to break ranks. President Chris Hannan said a retroactive tax would drive people and investment out of California, costing his members jobs. The United Brotherhood of Carpenters said the same: the measure would drive employers, jobs, and capital out of the state.

The pro-housing side lined up the same way. California YIMBY formally opposed, pointing to a technical flaw: the tax exempts directly held property but taxes property held through the LLCs and partnerships that actually finance housing. In their words, the design rewards “the only ownership structure that doesn’t contribute to housing production, while penalizing every structure that does.”

Even law enforcement is in the coalition. The Peace Officers Research Association of California, representing roughly 90,000 peace officers, is on record against it. And Governor Gavin Newsom, along with the Democrat running to replace him, Xavier Becerra, opposes it too, warning it would “defund teachers, schools, clinics, and public safety.”

We laid out the full roster of who is opposed and why in a primer on the coalition against Prop 40.

A Universal Argument

Strip away the politics and every one of these groups is making the same technical case. California’s budget already swings hard on the capital gains of its wealthiest residents. A one-time tax on a few hundred people who can relocate — and some already have — does not stabilize that base. It strains it further.

The state’s own referee agrees. The nonpartisan Legislative Analyst’s Office found the measure would likely produce an ongoing decrease in state income-tax revenue, hundreds of millions of dollars a year, as some of the roughly 200 affected residents leave. The revenue Prop 40 promises for healthcare could walk out the door with the people it targets, and take a chunk of the existing budget with it.

For institutions that live on predictable public funding, a source that spikes once and then leaves a hole is not a rescue. It is a risk. That is the case the doctors, teachers, nurses, and firefighters are all making.

That is the fault line worth watching, and it runs through the Democratic Party everywhere right now. On one side, the people who deliver the services: teach, heal, respond, build. They ask the hard questions. Does the money actually show up? Does it stay? On the other side, the activists who want the party to make a statement, whatever the cost.

On Sunday the activists won by two votes. The doctors and the teachers and the firefighters lost by two votes. On Tuesday, 1,300 unions gather at the California Federation of Labor Unions to take their own vote. Watch whether the working-class “no” vote becomes a working-class movement.

The party made its statement. Voters decide on November 3. The question California’s families are left with is the one the doctors and teachers were already asking. After the statement, does anyone actually get the healthcare, and do the schools still get paid?

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