California Governor Gavin Newsom has thrown his support behind a ballot initiative designed to neutralize a proposed tax on the state's wealthiest residents. The governor endorsed Proposition 42 on Friday, a measure that would bar retroactive taxes imposed under Proposition 40, commonly referred to as the Billionaire Tax Act, for any billionaire who was a California resident as of January 1, 2026, according to CalMatters.
Proposition 42, largely funded by Google co-founder Sergey Brin, is seen as a direct counter to the billionaire tax. It would also prohibit new taxes on personal property, including pensions, 401(k) accounts, and other investments, before retirees begin drawing income from them.
In a statement released by the measure's proponents and obtained by CalMatters, Newsom emphasized the need to protect residents' savings: “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.”
The Billionaire Tax Act, Proposition 40, would impose a one-time 5 percent tax on the state's billionaires, with 90 percent of the revenue earmarked for healthcare programs and the remaining 10 percent for food assistance or education-related initiatives.
Newsom has consistently opposed Proposition 40, writing on Substack in June that it is not the right approach for California's budget priorities. He argued that the fight against concentrated wealth should be waged at the federal level, not through state-level measures. “I will continue to oppose the November measure because I believe California's budget belongs to all Californians, not to any one stakeholder, no matter how worthy the cause,” he wrote. “And I will keep making the case, here and everywhere I can, that the fight against concentrated wealth is a national fight that we have to win soon.”
Proposition 40 qualified for the November ballot in June after surpassing the required 962,106 valid signatures. The initiative has created divisions among California Democrats, with some fearing it could drive billionaires out of the state, particularly from Silicon Valley. Brin has warned that the tax would undermine California businesses and force business leaders to relocate.
However, the measure has drawn support from the Service Employees International Union United Healthcare Workers West (SEIU-UHW), one of its most prominent backers, as well as progressive lawmakers such as Rep. Ro Khanna (D-Calif.) and Sen. Bernie Sanders (I-Vt.), who rallied for the measure in Los Angeles earlier this year.
Recent polling from the University of California, Berkeley Citrin Center for Public Opinion Research and POLITICO shows Proposition 40 holding a narrow lead, with 45 percent of registered voters in favor, 43 percent opposed, and 12 percent undecided.
Newsom's endorsement of Proposition 42 adds another layer to the complex political battle over taxation and wealth in California. It also comes amid his broader political maneuvers that have drawn national attention. As the November election approaches, the fate of both measures will be closely watched by political observers and financial markets alike.
