California voters have dealt a major blow to wealth-tax advocates, rejecting a proposed levy on billionaires while approving protections against new taxes on personal assets. Proposition 42 passed with just over 51% of the vote, compared to nearly 49% opposed, according to the Associated Press, which declared victory for the measure with roughly 96% of ballots counted.
The result delivered a double defeat to supporters of Proposition 40, a proposed one-time tax on billionaires’ assets that voters rejected.
Prop. 42 prohibits new taxes on personal property, including 401(k) accounts, business interests, digital assets, intellectual property and personal belongings. Real estate is excluded.
It also bars retroactive taxation except during a state-declared emergency. The measure was backed by Building a Better California, a group funded by Google co-founder Sergey Brin, venture capitalists and other tech executives opposed to the billionaire tax.
Prop. 42 was designed as a so-called “poison pill” to kill Prop. 40 if both measures passed. Under the arrangement, Prop. 42 would nullify the wealth tax if it received more votes. Voters ultimately rejected the levy and approved the protections. Susan Shelley, vice president of communications at the Howard Jarvis Association, which opposed the tax, said the result reflected 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.
Wealth-tax advocates may return with another proposal for the 2028 ballot. Any attempt to tax personal assets would first require voters to overturn Prop. 42.
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