California Props 41 and 42: How They Aim to Cancel Billionaire Tax

Proposition 40, dubbed California’s billionaire tax, has sparked intense debate. Two competing measures have also qualified for the ballot in an effort to challenge it.

Proposition 41 would require audits of newly created tax programs, while Proposition 42 would bar new state taxes on personal property and prohibit certain retroactive state taxes.

Either measure—or both—could ultimately invalidate the billionaire tax if approved. Supporters, however, insist their objectives extend beyond blocking Proposition 40.

“Every voter in California should vote yes on Prop. 41. It will bring new accountability and transparency to every tax dollar we send to the state,” said Tracy Hernandez, a member of the Yes on Prop. 41 campaign. She said the measure would require the state auditor to examine how money is allocated, spent and whether it is being used effectively or wasted.

“We want to establish a foundation that ensures lawmakers cannot turn to the retirement savings and hard-earned money of working people whenever they consider raising taxes,” said Brian Marvel, who is supporting Proposition 42.

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Under the ballot rules, the measure receiving the most votes takes effect. That means even if Proposition 40 passes, California would not adopt a wealth tax if Proposition 41 or Proposition 42 wins more votes. The campaigns backing Propositions 41 and 42 have received major financial support from Google co-founder Sergey Brin, who has contributed more than $138 million.

“Propositions 41 and 42 are deeply misleading measures placed on the November ballot by a small group of billionaires seeking to undermine and eliminate the billionaire tax,” said Clarissa Woo Hermosillo of the ACLU of Southern California. She argued that California already has strong safeguards requiring audits of new state special taxes, making Proposition 41 unnecessary, and warned that the measures could block new taxes intended to fund health care, housing and community care programs.

Gov. Gavin Newsom, who opposes Proposition 40, has publicly endorsed Proposition 42. His position puts him at odds with members of his own party and some labor unions. Critics of Proposition 42 have condemned the endorsement, arguing that it demonstrates Newsom is aligned with his billionaire donors.