California voters dealt a significant setback to wealth-tax supporters, rejecting a proposed levy on billionaires while approving new safeguards against taxes on personal assets.
Proposition 42 passed with just over 51% of the vote, while nearly 49% opposed it, according to the Associated Press. The AP called the measure in favor with about 96% of ballots counted.
The outcome marked a double defeat for supporters of Proposition 40, a proposed one-time tax on billionaires’ assets that voters rejected.
Prop. 42 bars the state from imposing new taxes on personal property, including 401(k) accounts, business interests, digital assets, intellectual property and personal belongings. Real estate is not covered by the measure.
It also prohibits retroactive taxation, except in the event of a state-declared emergency.
Building a Better California supported the measure. The group was funded by Google co-founder Sergey Brin, venture capitalists and other technology executives who opposed the proposed billionaire tax.
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Prop. 42 was crafted as a so-called “poison pill” intended to defeat Prop. 40 if both measures passed. Under the arrangement, Prop. 42 would have nullified the wealth tax if it received more votes. Voters ultimately rejected the levy and approved the asset-tax protections.
Susan Shelley, vice president of communications for the Howard Jarvis Association, which opposed the tax, said the results reflected voters’ concerns about the government targeting 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.
Supporters of a wealth tax could return with another proposal for the 2028 ballot.
Any effort to tax personal assets would first require voters to overturn Prop. 42.
