California Billionaire Tax Splits Unions as Local Chapters Back Prop. 40
California’s proposed billionaire wealth tax is exposing growing divisions within the state’s labor movement, as local unions increasingly break with their statewide leaders to support the controversial ballot measure.
Teachers’ unions in San Francisco and Los Angeles have endorsed Proposition 40, despite opposition from the California Teachers Association (CTA), one of the state’s most influential labor organizations. Several local construction-trade unions have also backed the proposal, putting them at odds with the State Building & Construction Trades Council.
The dispute comes as California voters prepare to decide the measure on November 3. Supporters say the tax could help offset federal healthcare funding cuts, while opponents warn that taxing billionaires’ wealth could encourage wealthy residents to leave the state and weaken public finances.
With polling showing a closely contested race, support from local union members could become an important factor in the final days of the campaign.
Local Unions Challenge Statewide Leadership
Proposition 40 has divided organized labor since it emerged as a major issue in California’s election campaign. Several influential statewide unions oppose the proposal, while other labor organizations have endorsed it as a way to help protect healthcare funding.
The disagreement has become more visible as local union chapters make their own decisions.
United Teachers Los Angeles, which represents approximately 35,000 teachers and staff, has endorsed the measure despite the CTA’s opposition. The United Educators of San Francisco, representing around 6,500 teachers and staff, has also backed Proposition 40.
Alex Schmaus, a political organizer for the San Francisco union, described the statewide teachers’ association’s position as a mistake. He said his local’s leadership had voted unanimously to endorse the tax.
Supporters argue that the measure responds to concerns about wealth inequality and the potential consequences of federal healthcare spending reductions. They also say local union members should be able to make decisions based on the needs of their communities, even when those decisions conflict with statewide leadership.
Lorena Gonzalez, head of the California Labor Federation, which supports Proposition 40, said the recent endorsements reflected the importance of grassroots participation in the labor movement.
The disagreement highlights a broader question facing organized labor: whether statewide leadership should determine a common political position or whether local chapters should be free to support policies they believe best serve their members.
Why California’s Billionaire Tax Is Controversial
Proposition 40 would impose a one-time 5% tax on the assets of eligible California billionaires under the measure’s proposed rules.
Its principal sponsor, SEIU-United Healthcare Workers West, estimates that the tax could generate approximately $100 billion over five years. The union argues that the money would help address the financial pressure created by federal healthcare cuts, including potential reductions affecting Medi-Cal, California’s health insurance program for eligible low-income residents.
Supporters say the proposal would require some of the wealthiest residents to contribute toward maintaining essential services at a time when hospitals, clinics and healthcare providers face uncertainty over future funding.
The measure is not without critics, however. Opponents include Gov. Gavin Newsom, the California Teachers Association and the statewide Building Trades organization, along with business groups and other prominent interests.
Their main argument is that a one-time wealth tax could encourage billionaires to relocate, potentially reducing California’s future income-tax revenue and weakening its ability to fund public services.
They also question whether the proposal would provide a sustainable source of funding for healthcare and education over the long term.
These competing positions reflect a central uncertainty surrounding the measure: whether the revenue collected from the proposed tax would outweigh any longer-term fiscal effects associated with changes in residency, investment or economic activity.
Revenue Estimates Become a Point of Debate
The financial projections have become a major part of the campaign.
SEIU-UHW estimates that Proposition 40 could raise about $100 billion over five years. A separate study by economists associated with Stanford University’s Hoover Institution estimated that the measure might collect approximately $30 billion while potentially costing California around $39 billion in income-tax revenue over time because of billionaire departures.
Those estimates rely on different assumptions about how much wealth would be subject to the tax, how affected residents might respond and how much income-tax revenue the state could lose.
The figures should therefore be treated as competing projections rather than established outcomes. The amount ultimately collected, if the measure passes, would depend on implementation, taxpayer circumstances and behavioral responses.
For supporters, the possibility of generating substantial revenue for healthcare makes the proposal worth pursuing. For opponents, uncertainty over its long-term fiscal consequences is a reason to reject it.
The debate has also raised questions about the distribution of the proceeds. Critics argue that relatively little of the money would go to schools, while healthcare funding would receive the largest share.
That concern is particularly significant for teachers’ unions, which have their own priorities on the November ballot.
Why the Teachers’ Unions Are Split
The CTA’s opposition to Proposition 40 reflects concerns about the measure’s long-term funding model and its potential impact on California’s public finances.
The association has argued that the proposal would not provide the stable, lasting funding that schools and communities need. Its leaders have also expressed concern that voters could become confused by multiple tax-related measures appearing on the same ballot.
The CTA is separately supporting Proposition 3, which would permanently extend California’s existing tax on top-income earners, a source of funding for schools and other public services.
Local unions backing Proposition 40 see the two proposals differently. They argue that voters can support an existing income-tax measure while also backing a one-time tax intended to help address an immediate healthcare funding challenge.
Schmaus said teachers in San Francisco expect voters concerned about growing wealth inequality to support both measures.
The split illustrates how unions with broadly similar constituencies can reach different conclusions about tax policy, funding priorities and the best way to protect public services.
Construction Unions Also Break Ranks
The disagreement extends beyond education.
Several local affiliates of the State Building & Construction Trades Council have endorsed Proposition 40 despite the statewide organization’s opposition.
Among them are the San Diego Building Trades Council, which represents more than 35,000 construction workers, and Sheet Metal Workers’ Local 104, representing approximately 10,000 members across the Bay Area and Northern California.
Vince Sugrue, the legislative director for Sheet Metal Workers’ Local 104, said support among the local’s membership was overwhelming. He pointed to the potential consequences of healthcare funding cuts as a major reason for the union’s position.
The statewide Building Trades leadership sees the issue differently.
Chris Hannan, president of the California Building Trades, has argued that the proposed tax could ultimately undermine the revenue used to finance infrastructure and school construction. Those projects provide employment for construction workers throughout the state.
Hannan also rejected the idea that the local endorsements represented a broader revolt among union members. He said the majority of members continued to oppose Proposition 40, describing differences between local chapters as a normal feature of a large labor organization.
The disagreement demonstrates how unions can share an interest in protecting workers while disagreeing about the economic consequences of a particular tax policy.
More Labor Organizations Join the Campaign
Despite opposition from some prominent statewide groups, Proposition 40 has attracted additional support from across California’s labor movement.
The California Labor Federation has endorsed the proposal, as have the California Federation of Teachers, the National Union of Healthcare Workers and the California Nurses Association.
The California Federation of Teachers is a separate organization from the CTA. Its decision to support Proposition 40 marked a change from its earlier neutral position.
Other unions have also backed the measure, arguing that healthcare funding is too important to leave unaddressed.
The growing list of endorsements has strengthened supporters’ argument that opposition from some statewide leaders does not necessarily reflect the views of every local union or its members.
However, endorsements alone do not establish how individual union members will vote. The divisions also show that labor organizations are weighing competing concerns, including healthcare access, school funding, employment and the long-term financial health of California.
Voters Face a Close Decision Before Election Day
Public opinion remains divided as the November 3 election approaches.
A Citrin Center for Public Opinion Research poll conducted in partnership with POLITICO found that 46% of likely voters supported Proposition 40, while 43% opposed it. The remaining respondents were undecided.
The narrow margin suggests that the outcome remains uncertain. Other polling has also shown relatively close support for and opposition to the measure.
Campaign spending is another important factor. Opponents of the billionaire tax have raised substantially more money than supporters, financing advertising and outreach efforts intended to persuade voters that the proposal could damage the state’s economy and public finances.
Supporters, meanwhile, are emphasizing the potential impact of federal healthcare funding reductions and the need to find additional resources for affected communities.
Local union endorsements could help the campaign reach voters through established networks of workers, educators and community organizations. But their influence will depend on whether members and the wider electorate agree with the arguments being made.
What the Dispute Means for California Labor
The Proposition 40 debate reveals that California’s labor movement is not united on how to respond to the state’s healthcare funding challenges.
For some unions, the immediate priority is finding additional money to protect healthcare access. Others are concerned that a wealth tax could undermine the long-term tax base that finances public services, construction projects and jobs.
The divisions also raise questions about how political decisions are made within large labor organizations. Local chapters may have direct experience with the needs of their communities, while statewide leaders must consider broader economic and political consequences.
Neither side has a monopoly on the concerns being raised. The central dispute is whether Proposition 40 offers a workable response to California’s funding challenges or creates financial risks that could outweigh its benefits.
As Election Day approaches, the measure’s fate will depend on voters rather than union endorsements alone. But the public disagreements among labor organizations have made one thing clear: even within a state known for its strong labor movement, the question of how to tax billionaire wealth has produced a significant divide.
Frequently Asked Questions
What is California Proposition 40?
Proposition 40 is a proposed ballot measure that would impose a one-time 5% tax on eligible California billionaires’ assets. Its primary stated purpose is to help fund healthcare and other designated services.
Why do some California unions support Proposition 40?
Supporters argue that the tax could generate substantial revenue to help offset federal healthcare funding reductions and protect access to services for low-income residents.
Why do other unions oppose the billionaire tax?
Opponents warn that wealthy residents could leave California, potentially reducing future income-tax revenue. Some also question whether the proposal would provide sustainable funding for public services.
Which teachers’ unions have endorsed Proposition 40?
United Teachers Los Angeles and the United Educators of San Francisco have endorsed the measure despite opposition from the statewide California Teachers Association.
How much money could Proposition 40 raise?
SEIU-United Healthcare Workers West estimates that it could generate around $100 billion over five years. Other estimates are lower, reflecting different assumptions about collections and possible economic effects.
When will California voters decide on Proposition 40?
California voters are scheduled to decide the measure on November 3, 2026.
Does support from local unions mean most union members back the tax?
Not necessarily. Local endorsements show that some chapters support the measure, but they do not establish how every member or the broader labor movement will vote.
Follow developments in California politics, labor relations, healthcare funding and tax policy as voters prepare to decide one of the state’s most closely watched ballot measures.
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