California voters have locked new wealth taxes out of the state constitution, and a single $102 million check from Google co-founder Sergey Brin did much of the work. Proposition 42 led with 51.6% of the vote as of Nov. 10, with roughly 83% of ballots counted, according to Associated Press estimates published by KQED.

The amendment bars new state taxes on personal property — business interests, intellectual property, financial assets — and blocks most retroactive taxation. Its sponsor, the committee Building a Better California, drew the bulk of its money from Brin, who contributed $102 million. The committee poured more than $300 million into defeating the billionaire tax, Proposition 40, and passing Propositions 41 and 42, according to the California Fair Political Practices Commission. Proposition 41 failed.

With Proposition 40 dead, Proposition 42 now stands on its own, and its reach extends far beyond the one-time levy it was built to stop.

Who spent what, and why?

Many billionaires who backed the measure warned it would drive the state's wealthiest residents away. The New York Times reported that venture capitalist Peter Thiel and Google co-founder Larry Page were considering leaving; Fortune reported in January that Page and Brin were cutting ties with California. Governor Gavin Newsom also warned a wealth tax would push the richest residents out.

Brin, who now lists a Nevada address, has compared the billionaire tax to the Soviet-era socialism he fled as a child. He has kept working out of Google's Mountain View headquarters, Business Insider reported.

The numbers behind the fight:

• Billionaires pay about $3 billion a year in state income tax — roughly 2.5% of income tax revenue and about 1% of total state revenue, per the academics who wrote Proposition 40. The Hoover Institution puts the figure at $3.3 billion to $5.8 billion.
• The top 2% of earners pay about half of all state income taxes, according to the Legislative Analyst's Office.
• The LAO estimated billionaire departures under Proposition 40 would cost California less than $1 billion a year.

Reporting by the New York Times and CalMatters showed Propositions 41 and 42 were designed to nullify Proposition 40: had the billionaire tax passed, it would have been voided if either rival measure won more votes. Proposition 40 lost statewide even though San Francisco and Los Angeles counties backed it; Santa Clara County, the heart of Silicon Valley, voted it down.

What does Proposition 42 put off-limits?

Backers outside the billionaire class pitched the measure as protection for ordinary savers. Proposition 42 "permanently protects pensions, 401(k)s, IRAs and other personal savings from new taxes, whether proposed by the Legislature or at the ballot box," said Brian R. Marvel, president of the Peace Officers Research Association of California, which donated $150,000 to the Yes on 42 campaign.

Critics call that argument misleading. Proposition 40 reached retirement savings only through billionaires' Roth IRAs and similar accounts worth more than $10 million. "Don't be fooled — Prop. 42 is not really about protecting your retirement savings from new taxes," Suzanne Jimenez, chief of staff at SEIU-United Healthcare Workers West, which sponsored Proposition 40, wrote in the official voter guide. "It's a redundant, expensive trick to allow approximately 200 billionaires to keep avoiding paying their own taxes while YOU get stuck with the bill."

California already taxes few assets beyond real estate, boats, planes, business equipment and vehicles. Until now, nothing in the state constitution stopped lawmakers from taxing other kinds of wealth. The state taxes investment gains only at sale, and under the "stepped-up basis" rule heirs owe nothing on gains accrued during the original owner's lifetime — a break the California Budget & Policy Center estimates costs the state about $5 billion a year. Proposition 42 largely puts that untapped wealth out of reach.

Could the fight move to court?

Three law professors who helped draft Proposition 40 — Brian Galle of UC Berkeley, David Gamage of the University of Missouri and Darien Shanske of UC Davis — argue it could reach Proposition 3, which voters approved last week to make permanent a tax increase on the top 2% of earners, largely for education. Because Proposition 42 bars taxes on the "ownership or control" of personal property without defining the phrase, they warned it "could impact the ability of the state to tax capital gains income, whether as part of Proposition 3 or otherwise."

Nathan Click, a spokesperson for the Yes on 42 campaign, called the claim "total BS" in an interview with the San Francisco Examiner. "Prop 42 was carefully crafted to only prohibit new taxes on retirements, savings and personal property, and to prohibit retroactive taxes," he said. "That means that existing funding for schools, public safety, roads, healthcare, etc. is untouched by this measure."

Kayla Kitson, a senior policy analyst at the Budget Center, said the capital gains question "could end up in courts and would depend on how broadly courts interpret the language of the measure." She declined to predict a ruling.

What changes for the budget?

Proposition 42 also bans retroactive taxes except during a declared emergency — and the exception is narrow. Kitson pointed to the 2024-25 budget talks, when Newsom and the Legislature moved a limit on business tax credits back to the 2024 tax year, which "raised revenue more quickly to prevent deeper budget cuts." The emergency exception likely would not have covered that move, she said, because it "involved putting together a balanced budget rather than addressing an unplanned revenue shortfall after the budget was enacted."

The state faces exactly that squeeze. H.R. 1, the federal law passed in July 2025, is expected to cut about $30 billion a year from Medi-Cal, according to the California Health Care Foundation. Medi-Cal covers more than half of the state's children, 2.2 million seniors and people with disabilities, and 1 in 5 working Californians. The cuts raise closure risks for rural hospitals; Proposition 40 was designed to fill some of those gaps.

Supporters of the billionaire tax have vowed to keep pushing, and Nobel laureate economists who backed it have predicted the idea will spread to other states. In California, though, any new wealth tax must first persuade voters to undo Proposition 42.