Back in July, we told you California was preparing to try something no state has tried before.

Proposition 40 would impose a one-time 5% tax on certain assets held by Californians worth more than $1 billion.

At the time, the battle lines looked fairly simple: A health care workers union, for instance, wanted the tax. Billionaires didn’t.

Gov. Gavin Newsom opposed doing it at the state level and argued that taxing extreme wealth should instead be handled by the federal government.

Two months later, things have gotten considerably messier.

Some of California’s most powerful labor unions are now fighting each other over Proposition 40.

SEIU-United Healthcare Workers West is spearheading the initiative, arguing California needs the money to offset federal health care cuts. The California Labor Federation and California Democratic Party have endorsed the measure.

But the opposition now includes the California Teachers Association, California Professional Firefighters and the State Building and Construction Trades Council of California — groups that frequently find themselves on the same political side as organized labor.

So much for a tidy billionaires-versus-workers storyline.

Sonoma State political scientist David McCuan told ABC7 the dispute demonstrates something more fundamental about California politics.

“Labor is a huge, powerful block in Sacramento,” he said. “And it’s not really blue or red. It’s just powerful.”

And that power is now pulling in opposite directions.

Your Rundown for Friday, September 11, 2026...

Bigger Than Billionaires

Proposition 40 applies to billionaires who were California residents on Jan. 1, 2026.

The tax would equal 5% of their net worth and come due in 2027, although taxpayers could spread payments over five years at additional cost. Real estate, pensions and retirement accounts are generally excluded.

As Jim Rickards explained when we first covered the proposal: “That means after you pay income tax and invest the remainder, they want to tax the assets themselves, not just the income.”

And Californians appear increasingly divided over whether that’s a good idea.

Source:The New York Times, California Wealth Tax Initiative polling tracker. Graphic created with assistance from ChatGPT.

A Berkeley IGS poll conducted Aug. 3–9 found 48% of likely voters supporting Proposition 40 and 41% opposed.

That’s still a seven-point advantage.

But compare it with Berkeley’s March poll, when Yes led 52% to 33%; the Yes margin has narrowed from 19 points to seven.

Meanwhile, an opposition-sponsored FM3 poll conducted Aug. 23–27 put No ahead 47% to 44%, underscoring just how unsettled the race remains.

The most interesting part of Proposition 40 may ultimately be what happens after California votes.

Supporters frame the measure as an emergency response to health care funding cuts. Opponents argue a state wealth tax could encourage wealthy residents to leave, reducing the income-tax revenue California already collects from them.

The state’s nonpartisan Legislative Analyst says that response could reduce ongoing income-tax collections by less than $1 billion annually, though the precise effect is uncertain.

That leaves California voters with a broader question than whether billionaires should pay more.

It’s whether a state should begin taxing accumulated wealth itself.

Jim put the stakes more vividly when we first examined this fight: “Investors need to know what’s coming,” he said, “before the DSA knocks on your door.”

Whatever happens on Nov. 3, Proposition 40 is already testing an idea with implications well beyond California: where the line between taxing income and taxing wealth should be drawn.

Market Rundown for Friday, September 11, 2026

S&P 500 futures are up 0.55% to 7,640.

Oil is down 2.85% to $99.50 for a barrel of WTI.

Gold’s down 0.85% to $4,369.10 per ounce.

And Bitcoin has pulled back 0.25% to $76,915.