California's proposed billionaire tax splits Big Labor as construction trades break with progressive allies

A powerful California labor union is publicly opposing a proposed billionaire tax backed by one of the state's most aggressive progressive unions, a rift that exposes a fault line running through the Democratic coalition on taxes, jobs, and economic reality.

Chris Hannan, president of the State Building and Construction Trades Council, told Politico that the proposed one-time 5% levy on Californians with fortunes exceeding $1 billion would chase wealth, investment, and jobs out of the state. His opposition puts the building trades on the opposite side of SEIU-United Healthcare Workers West, which is championing the measure under the banner of the "Healthcare Executive Compensation Act."

The split matters because labor unity is the engine of progressive ballot campaigns in California. When the trades break ranks, the coalition cracks, and the cracks tell you something about who actually bears the cost of ideological tax policy.

Hannan's warning: jobs will leave with the billionaires

Hannan was firm in his words. As the New York Post reported, the construction trades leader framed his opposition in bread-and-butter terms his members understand.

"It's not because we feel that anyone shouldn't have to pay their fair share, but doing a retroactive tax, we believe, would drive people out of the state and drive investment out of the state."

That word, "retroactive", is the key. The measure's January 1 cutoff date means it would apply to wealth already accumulated in California, not just future earnings. For anyone with a billion-dollar fortune, the math is simple: leave before the tax hits, or write a check for fifty million dollars or more.

Hannan went further, spelling out the downstream consequence his members fear most.

"What we believe would happen is these individuals would leave California and would take these investments to other states, losing the jobs for our members, losing tax revenue that goes into the general fund."

That is not a theoretical concern. It is already happening.

Billionaires are already heading for the exits

At least six billionaires reportedly cut ties with California before the start of this year to avoid the potential tax. Among them: Google co-founder Larry Page and PayPal co-founder Peter Thiel, two of the most recognizable names in Silicon Valley.

Tax adviser David Lesperance, who specializes in relocating ultra-wealthy clients out of high-tax jurisdictions, told Bloomberg he personally helped four billionaires end their California residency before the proposal's January 1 cutoff date. Four clients. One adviser. The exodus is not speculative; it is underway.

California's progressive establishment likes to treat billionaires as a fixed revenue source, a piggy bank that never moves. The evidence says otherwise. When you announce a retroactive wealth tax, the wealth walks. And it takes jobs, investment, and general-fund tax revenue with it, exactly as Hannan warned.

The pattern is familiar across Democratic-led state and local governments that pursue ambitious progressive spending plans without accounting for the flight of capital and talent those plans provoke.

The architect and the governor

The driving force behind the billionaire tax is Dave Regan, who has led SEIU-United Healthcare Workers West since 2011. Backers of the measure argue it is needed because of federal funding cuts to Medi-Cal and other health care programs, framing the tax as a lifeline for the state's safety net.

Gov. Gavin Newsom is not buying it. He has repeatedly said he opposes the billionaires' tax and warned that state-imposed wealth taxes can be difficult to enforce and vulnerable to legal challenges. His comments to the New York Times were blunt.

"This will be defeated, there's no question in my mind. I'll do what I have to do to protect the state."

Strong words. But Newsom's office did not immediately respond to a request for comment on what steps he has actually taken to follow through on that pledge. The gap between a governor's rhetoric and his actions is worth watching, especially when the measure's backers are among the most politically powerful labor organizations in the state.

Newsom reportedly expressed frustration with Regan's tactics last year. That frustration has not yet translated into a visible campaign to stop the measure from reaching voters.

Polling shows a state divided

A recent survey by the Public Policy Institute of California found that 54% of likely voters agree with the tax. Democrats were far more supportive, with 76% in favor. Republicans were overwhelmingly opposed at 82%. Independents split narrowly, with 53% backing the proposal.

But those topline numbers mask a geographic divide. In the Central Valley, where agriculture, construction, and blue-collar industry drive the economy, 56% of likely voters said they would vote "no." Support was stronger in urban areas like Los Angeles, where the direct consequences of capital flight are easier to ignore from a downtown office.

That Central Valley opposition is significant. These are not hedge-fund Republicans. They are working families who understand that when major employers and investors leave, the pain lands on people who build things, grow things, and fix things, not on the politicians who wrote the tax.

The broader pattern of Democratic economic proposals that sound populist but deserve harder scrutiny is playing out again in Sacramento. The promise is always the same: tax the rich, fund the programs, and nobody else gets hurt. The math rarely cooperates.

A coalition under strain

What makes this fight unusual is that the opposition is coming from inside the labor movement. The State Building and Construction Trades Council is not a conservative think tank. It represents the men and women who pour concrete, wire buildings, and lay pipe across California. When their president says a tax will cost his members jobs, that is not an ideological talking point. It is an economic forecast from someone whose people depend on private investment for their livelihoods.

SEIU-UHW, by contrast, represents healthcare workers, a sector funded heavily by government programs like Medi-Cal. The incentive structure could not be more different. SEIU's members benefit when government spending increases. The building trades' members benefit when private capital flows into construction projects. A tax that drives private capital out of the state helps one union's agenda and guts the other's.

That tension is the real story here. It is not just progressives versus conservatives. It is a fight within the Democratic coalition over whose jobs matter more, and who gets sacrificed on the altar of ideological purity.

The Democratic Party is experiencing similar internal fractures elsewhere. In Maine, Democratic political instability has reshaped the governor's race as internal rivalries and collapsing campaigns expose a party struggling to hold its own coalition together.

The enforcement problem nobody wants to discuss

Even Newsom, who is no supply-sider, has acknowledged that state-imposed wealth taxes face serious enforcement and legal hurdles. Taxing unrealized gains on billionaires' assets is not like withholding income from a paycheck. It requires valuing illiquid holdings, private companies, trusts, and complex financial instruments. Legal challenges are virtually guaranteed.

And the retroactive element compounds the problem. Applying a new tax to wealth that existed before the law took effect raises constitutional questions that California courts will have to sort out, assuming the measure passes. The prospect of years of litigation, uncertain revenue, and continued capital flight is not a plan. It is a gamble, funded by the livelihoods of workers who cannot afford to bet wrong.

Across the country, institutional shakeups are revealing who actually keeps government functioning and who was simply collecting a paycheck. California may be about to learn a similar lesson about who actually funds the state's economy, and what happens when those people decide they have had enough.

What comes next

The billionaire tax still has to survive a ballot campaign, and the opposition is now bipartisan in a meaningful sense: the governor opposes it, the building trades oppose it, Republicans oppose it overwhelmingly, and the Central Valley is firmly against it. The measure's backers have union muscle, urban Democratic voters, and a populist message. Whether that is enough depends on whether California voters listen to the people who build the state's economy or the people who want to redistribute it.

Hannan's break with the progressive labor establishment is the clearest signal yet that the tax-the-rich playbook has real limits, limits that show up not in think-tank white papers but in the paychecks of ironworkers and electricians. When the construction trades tell you a tax will kill their jobs, it is worth asking why the politicians pushing it are so sure they know better.

California has spent years proving that you can drive out taxpayers faster than you can replace their revenue. The billionaire tax is a bet that this time will be different. It won't be.