Newsom backs Prop 42 to cancel California's 5% billionaire tax and ban wealth taxes
File photo: Office of the Governor of California (Public domain), via Wikimedia Commons
California Governor Gavin Newsom on Oct 9, 2026, backed Prop 42, which would cancel a one-time 5% billionaire tax and bar future wealth taxes.
What Happened
California Governor Gavin Newsom on Friday, October 9, 2026, endorsed Proposition 42, a measure on the state's November ballot that would cancel out a separate proposal to tax billionaires and would also bar new taxes on personal property in future. The billionaire tax, Proposition 40, would charge a one-time 5% tax on the net worth of California residents worth more than $1 billion, and spend most of the money on Medi-Cal, the state's health programme for low-income residents. Proposition 42 is funded by Google co-founder Sergey Brin. Newsom, who already opposed the billionaire tax, said in a statement released by the measure's backers that Californians deserve protection for their retirement savings.
Key Facts
- Newsom endorsed Proposition 42 on October 9, 2026, ahead of California's November ballot.
- Proposition 40 would levy a one-time 5% tax on the net worth of about 200 residents whose wealth exceeded $1 billion at the start of 2026.
- Ninety per cent of Proposition 40's revenue would go to Medi-Cal, the state's health care for low-income people.
- Backers, led by the health workers' union SEIU-United Healthcare Workers West, say it would raise about $100 billion over five years; sceptics put the figure nearer $40 billion.
- Proposition 42 would block retroactive taxes like Proposition 40's and bar new taxes on personal property, including pensions and 401(k) savings before they are drawn.
- Brin has put about $102 million into Building a Better California, the group behind Propositions 41 and 42; Newsom has not taken a position on Proposition 41.
- A UC Berkeley-POLITICO poll last month showed Proposition 40 at 45% support, 43% opposed and 12% undecided.
Why It Matters
California's choice on a wealth tax will be watched well beyond the state, because a tax on net worth, rather than on income, is rare. Supporters argue it is a fair way to fund health care for low-income residents when wealth is concentrated at the very top. Opponents argue it would push wealthy people and their companies out of the state, and that the long-run loss of income tax would outweigh a one-off gain. The official ballot argument against the tax claims it would cost California about $25 billion in lost revenue for schools, health care and public safety.
The size of the possible windfall is itself disputed. The union backing the tax projects about $100 billion over five years, sceptics estimate closer to $40 billion, and the state's nonpartisan Legislative Analyst's Office expects it to raise tens of billions of dollars over several years. The wide range reflects how hard it is to value private holdings and to predict how many billionaires would move before paying.
Newsom's move matters politically because it puts a leading Democrat at odds with parts of his own party and with labour unions. Supporters of the tax accused him of siding with billionaires, and a union leader said he would rather see families lose health coverage than ask a few hundred billionaires to pay more. Newsom has said he will keep opposing Proposition 40 while arguing that the fight against concentrated wealth belongs at the national level.
| Measure | What it would do |
|---|---|
| Proposition 40 | One-time 5% tax on net worth above $1 billion; 90% to Medi-Cal |
| Proposition 41 | Brin-backed; would subject Proposition 40 revenue to spending limits and audits |
| Proposition 42 | Brin-backed; blocks retroactive wealth taxes and bans new personal property taxes |
| Newsom's position | Opposes 40, backs 42, no stance yet on 41 |
Impact
Short-term: The endorsement gives the anti-tax side a prominent Democratic voice in the final weeks before the November vote, in a race that polls show is close.
Long-term: If Proposition 42 prevails, its ban on new personal property taxes would make it much harder for California to try such a tax again; if Proposition 40 wins, it could become a test case for wealth taxes in other US states and countries.
Who is affected: About 200 California billionaires, Medi-Cal patients and health workers, state budget planners, retirement savers, and investors and policymakers worldwide who follow wealth-tax debates.
Key Takeaway
By backing Proposition 42 on October 9, 2026, Gavin Newsom has put his weight behind a measure that would wipe out California's proposed billionaire tax and bar future wealth taxes, in a vote that polls show is close.
Questions and Answers
What is California's billionaire tax?
Proposition 40 on the November 2026 ballot would charge a one-time 5% tax on the net worth of California residents worth more than $1 billion at the start of 2026, with 90% of the money going to Medi-Cal health coverage.
What did Gavin Newsom do?
On October 9, 2026, Newsom endorsed Proposition 42, a rival measure funded by Sergey Brin that would cancel the billionaire tax and ban new taxes on personal property, including retirement savings.
How much money would the billionaire tax raise?
Estimates vary widely. Its union backers say about $100 billion over five years, sceptics say nearer $40 billion, and the state's Legislative Analyst's Office expects tens of billions of dollars over several years.
Is the billionaire tax likely to pass?
It is too close to call. A UC Berkeley-POLITICO poll last month found 45% in favour, 43% against and 12% undecided, before Newsom's endorsement of the rival measure.
Disclaimer: Prepared by the Peepals newsroom from publicly available sources with AI assistance. Information is accurate to the best of our knowledge at the time of publication and may change. Images may be representative. Not professional advice. Report an error via our contact page.
Sourced and fact-checked by the Peepals Global Editorial Team
Reported, fact-checked and published by the Peepals Global Editorial Team.
