The idea seemed simple at first: a one-time tax on California’s billionaires to counter looming cuts to Medicaid.

Instead, the proposed wealth tax has exposed deep divisions among Democrats and created strange bedfellows on both sides working to defeat or pass the proposal.

Drama surrounding the measure includes a fight among labor unions worried their own priorities will suffer, tech elites putting down hundreds of millions to defeat it and allegations of extortion and harassment by the tax’s architect.

The messy fight has gripped California for the past year and shows how enacting a long-heralded concept on the left—taxing billionaires’ stratospheric wealth—is far from easy, even in one of the nation’s bluest states. It has been one of the costliest ballot fights in California’s history.

Voters will decide on Nov. 3 whether to approve the nation’s first-ever wealth tax targeting billionaires. The latest independent polls show slightly more voters support than oppose the tax, with large numbers undecided. Democratic voters show much stronger support—despite opposition by many of their leaders.

The tax is “already a hot mess, no matter what happens,” said Katie Porter, a progressive former congresswoman from Orange County who opposes it.

Advertisements against the billionaire tax itself, left, and in favor of a measure that would block future wealth taxes.

A healthcare-worker union, the Service Employees International Union-United Healthcare Workers, began workshopping the tax last year after Trump signed the One Big Beautiful Bill Act, which will cut federal healthcare spending by more than $1 trillion nationally over a decade, mostly from Medicaid. The program for low-income Americans covers more than one-third of Californians and consequently is a major source of funding for the healthcare system.

Dave Regan, the healthcare-worker union’s president, said that among several options polled by the union, the most popular was the simplest: a wealth tax on billionaires, with revenues earmarked for healthcare.

The one-time, 5% tax would apply to the net assets of California residents worth $1 billion or more at the end of 2026. Rather than income or real estate, it would be levied on assets such as publicly traded stocks, bonds, private business interests, intellectual property and art. A person taxed on $10 billion in assets would owe $500 million.

The tax would apply to people who were California residents on Jan. 1, 2026, making it tougher for billionaires to skirt it by moving elsewhere. If the initiative passes, that retroactivity and other aspects of the law are expected to be tested in court.

Proponents estimate the tax will raise around $100 billion from between 200 and 300 California billionaires and argue it is necessary to prevent hospitals from closing, millions of residents from losing health coverage and insurance costs from spiking.

It was a call to arms for tech elites and billionaires. Spearheaded by Google co-founder Sergey Brin, they have funded two countermeasures on the ballot that could invalidate the tax, including one that would prohibit California from taxing wealth altogether.

The three initiatives together have spent more than $300 million in campaign contributions, roughly 90% of it aimed at defeating the wealth tax.

Democratic Gov. Gavin Newsom, who is discussing running for president in 2028, is against the tax.

Californians have faced a barrage of ads overwhelmingly criticizing the proposed tax. They include television spots depicting doctors in white coats saying it would force cuts to hospitals and clinics, government bureaucrats inside a Trojan piggy bank and ordinary people warning that politicians could expand the tax to everyone.

One ad on Facebook sponsored by a business group reads: “Today, it is forcing billionaires to itemize everything they own. Tomorrow it could be YOU.”Reordered allies The initiative set off a reordering of traditional political allies. A main concern: It might push wealthy people to leave the state, which over time could cause a painful hit to the state’s tax receipts. Gov. Gavin Newsom is against the measure, saying it could undermine California’s competitiveness.

Newsom has argued for a national wealth tax instead—the state’s top Democrat is finishing his final term in California and is discussing running for president in 2028. The Democratic candidate on the ballot to replace him as governor, Xavier Becerra, also opposes the measure.

But the state’s Democratic Party endorsed it—in a high-stakes weekend vote in August. Some progressives are in favor, including Rep. Ro Khanna, a Democrat representing Silicon Valley, as well as Sen. Bernie Sanders, the Vermont independent, who has held rallies in Los Angeles and San Francisco backing the tax plan.

Rep. Ro Khanna, a Democrat, in August with Dave Regan, the union leader who is the architect of the proposed tax. (Jason Henry/Bloomberg News) Many of the super-rich worried the measure would be a sure win. “Who wouldn’t want to tax the billionaires?” said tech investor David Friedberg on the popular Silicon Valley podcast “All In.”

Silicon Valley titans strategized in a Signal chat about whether to flee or fight, and some family offices scrambled to hire political consultants. State tax officials doggedly check phone logs, country-club memberships and other records to verify if wealthy taxpayers who claim to have moved are telling the truth.

Brin bought a house on the Nevada side of Lake Tahoe. PayPal co-founder Peter Thiel’s company opened a Miami office. White House tech adviser David Sacks said he had moved to Austin—though his 2025 Christmas card included an artist’s rendering of a San Francisco cable car and the name of his Billionaire’s Row estate.

Mark Zuckerberg considered leaving the state, but Meta’s board negotiated terms on a share split to help cover the potential tax bill and keep him in California, according to a regulatory filing last week.

But cryptocurrency billionaire Chris Larsen told the crowd at a political event in Mountain View in March, attended by The Wall Street Journal, that leaving California was surrender, not bravery. “What happened to that saying, ‘These colors don’t run?’”Larsen said. He also said tech elites had been “checked out” and “way too weak” in California politics. Fight among unions Things got testy between Newsom and unions—which have widely backed him over his nearly eight years in office.

The governor said at a New York Times event in early December that the ballot measure was “not something to be panicked about” given that “the vast majority of labor…and almost everybody I know” opposed it.

Lorena Gonzalez, the president of the California Federation of Labor Unions, an umbrella group that later endorsed the billionaire tax, called Newsom’s chief of staff. “With all due respect to Gavin, he doesn’t speak for unions,” she said she told him.

Regan, the healthcare-worker union’s president, said Newsom called him to the governor’s Sacramento office before Christmas and agreed with him that the federal Medicaid cuts could cost California up to $25 billion a year. “I don’t have a solution, Dave,” Regan said Newsom told him.

But he said Newsom asked him to withdraw the measure and said the two men haven’t met since. The healthcare-worker union later proposed a 2% tax instead, but Newsom rejected that, too.

“Gavin wants to raise money for his presidential campaign,” Regan said, implying he wanted to maintain the support of wealthy donors. Lorena Gonzalez, the president of the California Federation of Labor Unions, has endorsed the tax. A representative for Newsom didn’t respond to requests for comment.

In June, Newsom told a small gathering before a Y Combinator event that he was mapping out Democratic-aligned groups to oppose the wealth tax, isolate the healthcare-worker union and pressure it to drop the measure, according to people who heard his comments.

The two well-financed ballot initiatives taking aim at the wealth tax raised costs for the union’s measure—signature collectors for petitions in California are paid per signature, and the billionaires’ side was paying high rates, pressuring the union to match. That drained the union’s campaign cash. But it collected the 875,000 signatures needed to land on November’s ballot. Some of the most significant rifts in the run-up to the vote have been among unions themselves.

Teachers’ unions complained the tax would send 90% of revenue to a special healthcare account, rather than to general state funds. Several major unions were also concerned the billionaire tax could compromise a separate ballot measure to make permanent an income tax on high earners to fund education that has been backed by the California Teachers Association.

But Julie Van Winkle, a senior officer of United Teachers Los Angeles, led her union to break with its parent, the CTA, to vote in support of the measure last month. She also brought along the California Federation of Teachers, a smaller statewide teacher’s union, to back it. “I don’t want my students to not have healthcare,” Van Winkle said. “I felt like it was my responsibility.”

Planned Parenthood Affiliates of California said the tax isn’t a long-term funding solution. Dustin Corcoran, the chief executive of the California Medical Association, which represents 50,000 physicians, said some healthcare groups are brainstorming longer-term fixes to the Medicaid funding problem, including as a ballot measure in 2028.

The billionaire tax is “one of the worst-drafted ballot measures that I think I’ve ever read,” Corcoran said, criticizing its one-time nature and the few guardrails around how the money is spent.

While the San Diego Building Trades Council endorsed the tax, the statewide construction union has sided with the billionaires against it, fretting that the tax could drive high-earners from the state, reducing tax income and, in turn, scaling back major projects that employ them. Ironworkers and pipe fitters protested against the proposed tax.

Union ironworkers and pipe fitters in jeans and work boots gathered in early October, in 100-degree heat, to rally against the tax with signs that read “Protect Our Jobs.”

Roland Gutierrez of the Sprinkler Fitters Local 709 said he was concerned that if lawmakers expanded the tax beyond billionaires, ordinary workers could see taxes on their assets, including retirement savings.

“We’re a big family—we don’t always see eye to eye with each other,” Gutierrez said of the split between the trade unions and the healthcare-worker union. “It happens.”Lawsuits, complaints Regan tried to bring on board the California Primary Care Association, which represents hundreds of health clinics, according to a federal lawsuit filed last month.

Regan offered through an intermediary to drop a separate ballot proposal that would dictate how health clinics spend their budgets—if the association would drop its opposition to the wealth tax and use its campaign funds to help Regan’s union, according to the lawsuit, which the association and several health clinics filed against Regan and his union.

“It’s a shakedown,” said association CEO Francisco Silva in an interview. The association had raised about $30 million by that time to oppose the tax and has maintained its opposition.

A spokesman for the healthcare-worker union called the primary-care association’s allegations “categorically false.”

Regan and his union have also wrangled with its own statewide coordinating organization, SEIU California. The body is made up of 17 unions that represent more than one million workers, including the 120,000 in Regan’s healthcare-worker union.

Last year, SEIU California’s executive committee had agreed to work with other unions to pass the income-tax measure backed by the teachers union to fund education. It voted twice, in August and October 2025, against pursuing new revenue through a ballot measure in 2026, people familiar with the situation said.

But Regan didn’t drop the issue. His later efforts to persuade colleagues to support the wealth tax led to complaints he harassed and threatened to extort them, triggering two investigations by outside law firms. Both reports, completed this summer, were reviewed by the Journal. Regan has led the fight for the ballot measure. (Jason Henry/Bloomberg News) In one report, SEIU California’s then-president, David Huerta, said Regan had raised the specter of a U.S. Department of Labor investigation into alleged governance issues if the executive committee didn’t back the tax. Regan told investigators the comment wasn’t a threat. Investigators wrote that they had substantiated Huerta’s allegation.

Courtni Pugh, a former SEIU California executive director, told investigators that in a 2009 argument, Regan kicked in her office door, backed her against a bookcase and yelled in her face, according to the reports. A colleague cited in one report recalled hearing arguing and Pugh sobbing.

Regan said at a press conference the allegation was false. He also said it began circulating after some union leaders attended a 2025 Christmas party at the governor’s mansion. (He said he wasn’t invited to the party “and I’m glad I wasn’t.”) He indicated the claim was meant to be a distraction from the wealth-tax debate.

Regan said politicians and labor leaders who oppose the tax are playing “an inside game of trading favors” with the governor and wealthy donors.

Pugh is now a political consultant working to defeat the wealth tax. She said in a statement that Regan’s response was offensive to the people he had threatened, and she participated in the investigation “in hopes that no one else would have to endure this kind of treatment from him.”

A rally in support of the tax earlier this month in Los Angeles. (Mike Blake/Reuters) The second report investigated a complaint from Jess Bartholow, who leads SEIU California’s lobbying team. She described to investigators an altercation with Regan in March about how she did her job that ended with him yelling “F— you.”

Regan said Bartholow had approached him and they had a brief, “honest and frank exchange.”

Regan has been barred from SEIU California’s offices since the Bartholow complaint, one of the people familiar with the matter said. Regan can participate in SEIU California meetings by Zoom, the person said.

Regan and other leaders of his union filed their own complaint about SEIU California to the international level of the SEIU union, complaining of character assassination. Regan’s union said the accusations against him were gathered and disseminated by an SEIU California lawyer who had a conflict with Regan dating back more than a decade about finances and governance.

In July, SEIU California’s executive committee voted 11-4 to take a neutral stance on the wealth tax.