Bucking the California Democratic Party and siding with Mayor Daniel Lurie and Gov. Gavin Newsom, the San Francisco Democratic Party voted Wednesday not to endorse Proposition 40, the proposed one-time wealth tax on the state's billionaires. The group unanimously supported a resolution backing a national wealth tax.
The group opposed endorsing Prop 40 by a margin of 17-4 with one member voting "no endorsement."
Newsom has also supported the idea of a national tax, but there is no existing legislation and any such plan would likely be doomed in the Senate, where it would be unlikely to secure a filibuster-proof majority.
Proposition 40 would impose a one-time, 5% wealth tax on anyone worth more than $1 billion. It would apply retroactively to people living in California on Jan. 1, 2026. The tax would be paid in 2027, or billionaires could opt to spread the payments out over five years but would have to pay more for that option. It is intended to backfill cuts to the state budget by the federal government's House Resolution 1, which could lead to 2 million Californians losing their Medi-Cal state health benefits.
The vote comes as the anti-Prop 40 campaign released its first wave of ads opposing the measure. The ads highlight that Newsom, and both candidates for governor - Democrat Xavier Becerra and Republican Steve Hilton - oppose it, as does Planned Parenthood and the California Teachers Association.
But the California Democratic Party and the Democrat-friendly California Labor Federation have both endorsed it, demonstrating how divided Democrats are over the proposal and how moderate forces have taken over the San Francisco Democratic Party in recent years. Speaker Emerita Nancy Pelosi, a member of the local Democratic chapter, voted "no endorsement" on Prop 40 and her representative at the meeting was absent for the national wealth tax vote. State Sen. Scott Wiener, also a member who is running to succeed Pelosi in Congress, abstained on the Prop 40 vote and supported the national wealth tax resolution. Wiener's opponent, Supervisor Connie Chan, was absent for both votes, as Chan had a fundraiser co-hosted by Pelosi scheduled at the same time at the Julius Castle restaurant.
Longtime San Francisco labor leader Mike Casey blasted the group prior to the vote. "The San Francisco Democratic Party today hardly resembles the party that I've known and valued over the years. … Wake up! Look around the country. Now is not the time to be sucking up to billionaires," he said.
Before the vote, Kim Tavaglione, executive director of the San Francisco Labor Council, encouraged the panel "to stand with labor, because we're very disappointed in the Dems of late, and we're ready to move on."
Billionaire Google co-founder Sergey Brin has contributed $82 million to a political action committee opposing the California measure. The committee, Building a Better California, has raised $118 million from prominent billionaires to fight the tax.
Party member Peter Gallotta worried that opposing the tax would be "politically damaging for all of us and for what it means to be a San Francisco Democrat. We should not hand billionaires and Fox News a talking point against this measure.The richest people in California do not need the San Francisco Democratic Party to be their shield."
Before the meeting, San Francisco Democratic Party committee member Eric Kingsbury said Prop 40 "is not a workable policy to do locally or on a state level, and it really has the potential to harm our economy."
Kingsbury said the San Francisco Democrats took a different position on Prop 40 from the state Democratic Party because "it is something that very likely will disproportionately impact San Francisco. It very likely will lead to people choosing to not create businesses that they think are going to be very successful in California, just so they are not subject to a future tax. Because if you go to the well once (for a new wealth tax measure), there's no guarantee you won't go to the well again."
While there have been a handful of high-profile billionaire departures since the wealth tax was first discussed, "research on the impacts of state-level income taxes on interstate migration has generally found very minor effects on the numbers of high-income people in a state relative to the state's total population of high-income people," according to a new study from the California Budget and Policy Center. "While taxes may be one factor in where people decide to live, they are one of many, and they may not outweigh other factors such as professional and family considerations, public amenities, weather, and lifestyle preferences."
The nonpartisan Legislative Analyst Office analysis of Prop 40 said: "Billionaires may respond to a new wealth tax in ways that reduce their income tax payments. For example, some billionaires may decide to leave California. The income taxes they currently pay to the state also would go away."
Newsom has said he opposes the measure because he fears it would lead to billionaires leaving the state. The loss of their tax revenue could be "hundreds of millions of dollars or more per year," according to the Legislative Analyst Office. Supporting such a tax would also mean alienating deep-pocketed Silicon Valley donors he has known for decades as he contemplates a 2028 presidential run.
Kingsbury, who was the author of the resolution supporting a national wealth tax, said the intent "more to make sure we are on the record supporting something that makes sense" in terms of public policy. He said he hoped that the idea would become part of a national conversation, as the resolution only calls for "the California Democratic Party and the Democratic National Committee to adopt a national wealth tax as party policy and to push for such a policy to advance in Congress."
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This article originally published at Bucking state party, S.F. Dems vote to oppose California billionaire tax.