Jeanne Kuang

(CalMatters) Not only has Gov. Gavin Newsom vocally opposed the proposed California billionaire tax, but he also wants to prevent the state from ever passing a wealth tax in the future.

On Friday he endorsed Proposition 42, a ballot measure that would cancel out Proposition 40, the proposed billionaire tax. Prop. 42 would prohibit retroactive taxes like the one-time 5% tax on assets that would apply to any billionaire who lived in California on Jan. 1, 2026 if Prop. 40 passes.

But Prop. 42, funded and placed on the ballot by billionaire and Google co-founder Sergey Brin to defeat the billionaire tax, also would go further, by banning any new taxes on personal property.

That includes pensions and 401K accounts before retirees start drawing retirement income from them. It also includes other investments, financial assets, business holdings, art collections and all other forms of personal wealth that would be affected by the billionaire tax or any future wealth tax.

Newsom’s decision to support Prop. 42 runs counter to his own Democratic Party and some labor unions. It also aligns him with some of the wealthy tech donors with whom he’s maintained longstanding relationships dating back to his days as mayor of San Francisco.

Proponents primarily argue that middle-class workers’ retirements and pension accounts should never be taxed as assets before the gains are later taxed a second time as income, even though there is no such proposal. Lawmakers have in the past proposed asset taxes but those bills went nowhere in the Legislature and any tax would require a two-thirds majority to pass. The proposed billionaire tax also exempts many kinds of retirement accounts.

“We all agree that Californians deserve to have their retirement and life savings protected from new state taxes so those savings are there when they need them,” Newsom said in a statement released by the proponents, who also include police and fire unions.

Proponents of the tax criticized his Prop. 42 endorsement as “in lock step with his billionaire backers.”

“By voting yes on Prop 42, he’s showing California his true colors,” said Debru Carthan, vice president of Service Employees International Union-United Healthcare Workers West in a statement. “He’d rather millions of children and families lose their healthcare than ask a couple hundred billionaires to finally pay their fair share.”