California's progressive tax crusaders spent months chasing the fortunes of billionaires, and voters have now handed them a rebuke that could linger for years.
Proposition 42, a constitutional amendment barring new taxes on personal assets, passed with just over 51% of the vote to nearly 49% opposed, according to the Associated Press. The AP declared the measure approved on Friday with roughly 96% of ballots counted.
The result delivered a double defeat to supporters of Proposition 40, a proposed one-time 5% tax on the assets of billionaires. Voters had already rejected that levy, which failed by roughly 52% to 48%.
Prop. 42 prohibits new taxes on personal property, including 401(k) accounts, business interests, digital assets, intellectual property and personal belongings. Real estate is excluded from the protections.
The measure also bars retroactive taxation except during a state-declared emergency. That provision alone closes off one of the more aggressive tools wealth-tax advocates had hoped to use.
Prop. 42 was backed by Building a Better California, a group funded by Google co-founder Sergey Brin, venture capitalists and other tech executives who opposed the billionaire tax. The committee also sponsored a second competing measure, Proposition 41, which voters rejected.
Both measures were designed as so-called "poison pills" to kill Prop. 40 if all of them passed. Under that arrangement, Prop. 42 would have nullified the wealth tax had it received more votes.
In the end, voters made the arrangement unnecessary by rejecting the levy outright and approving the protections anyway. Supporters framed the outcome as a victory for ordinary savers rather than the ultra-wealthy.
Susan Shelley, vice president of communications at the Howard Jarvis Taxpayers Association, which opposed the wealth tax, said the vote reflected fears about government reaching into personal savings. "Voters are concerned that the retirement savings that they have might have been a target for taxation in the future," Shelley told The Los Angeles Times.
The defeat of Prop. 40 came despite a Democratic wave elsewhere on the ballot. The measure drew opposition from an unusual coalition that included Gov. Gavin Newsom, even as the California Democratic Party and the state's labor federation backed it.
Not every tax measure failed, however. Voters approved making permanent an existing tax on high-income earners, a reminder that the state's appetite for taxing top earners has not disappeared.
Wealth-tax advocates have signaled they may return with another proposal for the 2028 ballot. Leaders of SEIU-United Healthcare Workers West, the union behind Prop. 40, have said they will pursue a new levy if state lawmakers do not act first.
Any such attempt now faces a far steeper climb. Because Prop. 42 is part of the state constitution, a future tax on personal assets would first require voters to overturn it, according to The New York Post.
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