A growing disagreement between two prominent California Democrats is putting Gov. Gavin Newsom under renewed scrutiny as debate intensifies over a proposed billionaire wealth tax and the influence of wealthy political donors.
Rep. Ro Khanna (D-Calif.) has taken aim at Gov. Gavin Newsom for refusing to endorse Proposition 40, a ballot initiative that would levy a one-time 5% tax on the wealth of California’s billionaires. Khanna contends the governor’s stance reflects a broader reluctance among Democratic leaders to challenge influential wealthy donors.
The dispute highlights a larger debate within the Democratic Party over tax policy, economic inequality, and how aggressively lawmakers should pursue new taxes on the nation’s wealthiest residents.
Khanna Says Democratic Leaders Fear Wealthy Donors
Speaking with POLITICO, Khanna claimed many Democratic elected officials privately support higher taxes on billionaires but hesitate to say so publicly because they fear political and financial consequences.
“They saw what happened to me,” Khanna said, referring to his own experience after backing the proposal. “They’re afraid to offend these billionaires.”
Khanna alleged that venture capitalist Ron Conway, a longtime Democratic donor and influential figure in Silicon Valley politics, personally urged him to distance himself from Proposition 40 after Khanna posted on social media in December mocking reports that some wealthy Californians were considering leaving the state.
According to Khanna, Conway warned that supporting the measure could damage his political future.
Khanna told POLITICO that Ron Conway warned him his support for the proposal could effectively end his political career, adding that Conway believed influential billionaires would never forgive him for backing the measure.
Khanna said Conway also encouraged him to apologize for supporting the proposal, but the congressman said he refused.
“He said, ‘These people are ruthless,'” Khanna recalled.
Proposition 40 Continues to Gain Support
Despite resistance from some Democratic leaders, Proposition 40 has attracted increasing support from influential organizations across California.
The California Democratic Party voted to endorse the proposal over the weekend, while the California Federation of Labor Unions followed with its own endorsement, becoming the state’s largest labor organization to back the measure.
Supporters argue the proposal would generate additional revenue for public services by requiring California’s wealthiest residents to contribute more through a one-time tax on billionaire wealth.
Critics, however, have raised concerns that such a tax could encourage wealthy residents and businesses to relocate, potentially reducing investment and long-term tax revenue.
The debate reflects broader national discussions over how states should balance economic growth with efforts to address income inequality.
Newsom Takes a Different Approach
Although Newsom has consistently supported progressive policies during his time as governor, he has not endorsed Proposition 40.
Instead, Newsom has argued that a national wealth tax would likely be more effective than individual state-level efforts, suggesting that a federal approach could avoid potential disadvantages for states acting alone.
Khanna strongly disagrees with that position.
Questioning Newsom’s stance, Khanna said he could not understand why the governor appeared to side with wealthy billionaires instead of those focused on expanding health care access for Californians.
The disagreement has become one of the clearest public policy differences between two Democrats who are frequently mentioned in conversations about the party’s future leadership.
Progressive Democrats Remain Divided
Khanna said he has spent months working to expand support for Proposition 40 by organizing discussions with labor leaders, California’s congressional delegation, and members of the Congressional Progressive Caucus.
While Sen. Bernie Sanders has endorsed the proposal, several nationally recognized progressive lawmakers have not yet taken a public position.
Khanna also commented on the absence of Rep. Alexandria Ocasio-Cortez from the campaign supporting Proposition 40.
“She gets so many requests,” Khanna said. “I’m not sure this is on her radar. Obviously, she’d be a great ally.”
The differing responses illustrate that even among progressive Democrats, there is no unified position on the California initiative.
What the Debate Could Mean for 2028
Political observers have long viewed both Newsom and Khanna as potential contenders for higher national office, making their disagreement especially noteworthy.
Although Newsom has not officially announced plans for a presidential campaign, he is widely considered a possible Democratic candidate in 2028.
Khanna also confirmed that he expects to decide around Thanksgiving whether he will enter the presidential race.
If both men ultimately compete for the Democratic nomination, their contrasting views on wealth taxes and economic policy could become a significant point of debate during the campaign.
A Larger Conversation Inside the Democratic Party
The dispute over Proposition 40 extends beyond a single ballot measure. It reflects broader questions facing the Democratic Party as it seeks to define its economic message in the years ahead.
Some Democrats argue that higher taxes on billionaires are necessary to address growing wealth inequality and help fund public programs. Others believe national solutions would be more effective or worry that aggressive state-level tax policies could have unintended economic consequences.
As California voters prepare to weigh the proposal and potential presidential contenders continue positioning themselves for the future, the debate between Khanna and Newsom offers a glimpse into the policy disagreements shaping the Democratic Party’s next chapter.
Whether Proposition 40 ultimately succeeds or fails, the controversy has already exposed divisions among prominent Democrats over taxation, campaign donors, and the direction of the party heading into the 2028 election cycle.