Newsom backs Prop. 42, which would cancel the billionaire tax and bar future taxes on personal wealth

Gov. Gavin Newsom on Friday endorsed Proposition 42, a measure that would cancel the proposed billionaire tax on the Nov. 3 ballot and go further by blocking any new state tax on personal property, CalMatters reported.

Proposition 40, the billionaire tax, would levy a one-time 5% tax on the assets of billionaires who were California residents as of Jan. 1 of this year. It was put on the ballot by a single health care union, and nine of every 10 dollars it collects would fund Medi-Cal, which covers low-income Californians.

Prop. 42 would outlaw a tax that reaches back in time, as Prop. 40 does. It would also ban new taxes on personal property of all kinds, including pensions and 401(k) accounts before retirees begin drawing on them, investments and other financial assets, business holdings and art collections, according to CalMatters. Google co-founder Sergey Brin funded the effort to place it on the ballot.

The two sides

Supporters, who include police and firefighter unions, argue that middle-class retirement and pension savings should never be taxed as assets ahead of being taxed again as income. "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 the campaign released.

CalMatters noted that nobody has proposed taxing those accounts, that earlier asset-tax bills never made it out of the Legislature, and that many retirement accounts are exempt from the billionaire tax.

Backers of the billionaire tax said the endorsement put Newsom on the side of his wealthy donors. Debru Carthan, a vice president of SEIU-United Healthcare Workers West, said in a statement that Newsom would "rather millions of children and families lose their healthcare" than ask a few hundred billionaires to pay more.

The California Democratic Party has endorsed Prop. 40, and polling cited by CalMatters shows it narrowly ahead among likely voters. Newsom has opposed state-level wealth taxes throughout his two terms, saying wealthy residents could leave and take their income tax payments with them.

This summer he called instead for a federal levy on the rich, with a minimum rate for anyone whose net worth tops $100 million.

His spokesperson said Newsom has not taken a position on Prop. 41, a second Brin-backed measure that would undercut Prop. 40 by subjecting its revenue to state spending limits and audits.

His other ballot picks

Newsom endorsed most of the 14 statewide propositions. He opposes three:

• Prop. 39, a voter identification requirement backed by Republicans
• Prop. 43, which would make most local taxes harder to pass
• Prop. 44, sponsored by a health care union, which would require safety-net clinics to put a set share of their revenue into patient care

He has yet to weigh in on Prop. 45, which business groups put forward to set deadlines for environmental review of new development.

Sources

calmatters.org