With every release of economic data, the case for a wealth tax becomes ever more obvious. While The Washington Post documents how the median wage struggles to keep up with price hikes, The Wall Street Journal reports that corporate profits are at record highs, with one corporate analyst noting, “These profit margins are incredible.”
In 1970, the wealthiest 1 percent of Americans commanded roughly one-fifth of the nation’s wealth; today, they command one-third. If we are to get serious about funding universal health care and child care, free public colleges and trade schools, taxing the investment holdings of the wealthiest Americans is the only way these goals can plausibly be met.
California’s Proposition 40 on the November ballot would begin such efforts. The initiative would levy a one-time 5 percent tax on the wealth of the state’s roughly 200 billionaires, calculated chiefly by the value of their stock holdings as of December 31 of this year. Not surprisingly, an opposition campaign is being funded by some of the state’s wealthiest billionaires, headed by Google’s Sergey Brin. Also not surprisingly, Proposition 40 has been polling well, though the hundreds of millions of dollars that Brin and company will spend against it have yet to hit the state’s airwaves and social media with tsunami force.
Eighty percent of California Democrats and 70 percent of California union members currently support the tax, according to a poll sponsored by the measure’s author, an SEIU local of hospital and other health care workers. Such polls may have a pro-author bias, but its finding on the measure’s overall level of support—57 percent—isn’t that different from the finding in a May survey by the gold standard of California polls, that of the Public Policy Institute of California (PPIC), which had the level of overall support at 54 percent.
And yet a rift has opened between leading California Democrats and the rank and file. Both Gov. Gavin Newsom and governor-to-be Xavier Becerra have opposed Prop 40, plainly unwilling to offend the (rapidly shrinking) number of Silicon Valley gazillionaires who occasionally back Democratic candidates. (Lest he offend likely voters in 2028’s Democratic presidential primaries, Newsom has said he does support a national wealth tax, just not a state one.) And even as the state AFL-CIO recently voted in convention to back Prop 40 by more than a two-thirds supermajority, the state’s two largest unions were not among them. The California Teachers Association (CTA), which claims more than 300,000 members, has come out against the proposal, while the California State Council of the SEIU, which claims more than 700,000 members, has voted to go neutral, even though the measure’s author and chief sponsor is one of its locals, SEIU’s 120,000-member United Healthcare Workers West (UHWW).
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At issue with these unions isn’t how the tax would be funded, but where the funds will go. As drafted by UHWW President Dave Regan, virtually all the revenues from the tax would go to keeping open hospitals that will have to cut back services or shut down entirely due to health care cuts in Donald Trump’s One Big Beautiful Bill. The initiative would thereby save the jobs of UHWW members.
No other state services or functions also endangered by Trump’s bill will get substantial support. The measure would not fund the state’s K-12 schools at anywhere near the level that’s become standard since voters enacted Proposition 98 in 1988, which mandated that primary education receive 40 percent of the state’s general fund each year. If passed, Prop 40’s revenues would not be part of the general fund, but CTA fears the precedent it sets for revenue distribution, and also fears that the opposition campaign might also doom a different ballot measure that extends the longevity of the highest bracket of the state’s income tax, which does substantially contribute to funding schools.
As for the majority of SEIU’s California locals’ (which claim more than half a million of SEIU’s 700,000-plus California members) refusal to back the measure, the UHWW-specific distribution of funds also shortchanges some of their own members who are at risk from Trump’s cutbacks, including many thousands of home care workers. As well, there are long-standing animosities between Regan and his fellow SEIU leaders, not to mention other state labor leaders who nonetheless support Prop 40.
Regan has a long history of floating ballot measures that would benefit his members or potential members, such as those working in dialysis facilities, and offering to pull those measures from the ballot if the affected industries (like dialysis providers) agree to go union or make contractual concessions to his members. (When such deals haven’t been reached, state voters have been confronted, in three different elections, with ballot measures imposing regulations on dialysis facilities that virtually no one understood.) In the case of Prop 40, the Los Angeles Times has reported on allegations that Regan asked Newsom to help the UHWW unionize two hospitals as a condition for his withdrawing the proposition, allegations that Regan denies.
In other words, it’s not really the idea of a wealth tax that has led these unions to oppose (in the case of CTA) or refrain from supporting (in the case of SEIU) Prop 40. Each has what I’d term parochial reasons to oppose what I believe must be the labor-left’s emerging strategy to stop the epochal upward redistribution of Americans’ income and wealth, which has moved the nation toward oligarchic rule. My hunch is that their own members won’t find that parochial reasons outweigh the general good of instituting a wealth tax. Indeed, the UHWW’s polling showed that 63 percent of teachers and an identical 63 percent of health care workers support Prop 40, despite the CTA’s opposition and the SEIU’s reticence.
CTA and SEIU are generally the largest funders of Democratic campaigns and progressive organizations in California, which may pose a problem this fall for some of the state’s leading progressive groups. California’s foremost voter mobilization organization in working-class Black and Latino communities is California Calls, whose grassroots canvasses have long been responsible for the election victories of a host of the state’s most progressive officeholders and the victory of the measure instituting the millionaire’s tax bracket that saved the state budget in 2012. Tomorrow, the organization’s board is scheduled to decide whether to canvass in favor of Prop 40, a decision complicated by the fact that it is one of the organizations that receives a sizable share of its funding from CTA, which would not look kindly on the group’s getting out the vote for a wealth tax. Many of the state’s staunchest left activists, by contrast, have told the group that failing to back the measure would betray its raison d’être, while acknowledging that backing it could come at considerable organizational cost.
A royal mess, by any standard. Nonetheless, American democracy ultimately rests on a foundation of widespread economic and political egalitarianism, for which wealth taxes are a necessity and will only become more so. If not now, when?
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