Newsom endorses Prop. 42, which would block California's billionaire tax if both measures pass and it gets more yes votes than Prop. 40

Both measures can pass, and Prop. 42 is written for that case. As SFGATE describes the rule, if both pass and Prop. 42 earns more yes votes than Prop. 40, the billionaire tax does not go into effect ^[5].

Polls have consistently found voters leaning toward Prop. 42 ^[11], and polling also shows a majority of Democratic voters supporting Prop. 40 ^[13]. Newsom's approval among Democratic voters was high as of late September, SFGATE noted, and it said his endorsement could give Prop. 42 a generous boost ^[12]. We'd expect the voters who decide the margin to be the ones who vote yes on both.

Prop. 42 would block new taxes on stocks and other financial property and ban retroactive ones such as the billionaire tax, and it would not apply to real estate ^[3]. The levy it can override is a one-time 5% tax on the state's 200-plus billionaires ^[6]. SFGATE did not report the size of the taxable base. Billionaire donors such as Google co-founder Sergey Brin are bankrolling Prop. 42 ^[2]. Brin was among the tech executives who announced plans in January to move residences or businesses out of state ^[16].

Newsom opposed Prop. 40 in January, saying a wealth tax would drive the wealthiest residents out ^[14]. A 2025 study by the Institute for Policy Studies, a progressive group, found that wealth taxes in Massachusetts and Washington led to more high-income individuals and higher net worth, not a drop ^[15].

In a statement provided by the Prop. 42 campaign, Newsom said: "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" ^[7]. That repeats a claim made by opponents of Prop. 40, who say the tax could grow to cover everyday people's assets ^[18]. CalMatters found that unlikely: Prop. 40 would be written into the state constitution, so future changes would likely need another ballot measure ^[17]. Prop. 42, as described, is defined by asset type, so it covers stocks and financial property whoever holds them ^[3].

Rep. Ro Khanna, a Prop. 40 supporter, offered another explanation at a rally last week. "The governor, it's no secret, wants to run for president. He doesn't want to offend billionaires who could fund his campaigns," Khanna said ^[10].

The outcomes split three ways. In one, Prop. 40 fails and Prop. 42 passes alone, and Brian Marvel of the Peace Officers Research Association of California wrote to SFGATE: "Whatever happens with Prop 40, Prop 42 gives Californians the long-term protection they deserve" ^[8]. In another, both pass with Prop. 42 ahead and the levy never takes effect ^[5]. In the third, both pass with Prop. 40 ahead.

Our view that the margin is what planners should track would be wrong if Prop. 40 fails on its own votes, since the comparison then never comes into play. The state Democratic Party endorsed Prop. 40 in August against Newsom's position ^[9], and both the San Francisco and statewide parties urge a no vote on Prop. 42 ^[4].