SACRAMENTO, Calif. — Proposition 42 is a proposed constitutional amendment that would do two big things: block new state taxes on personal property, including financial assets, and limit certain retroactive state taxes.

It would apply to new taxes enacted or taking effect on or after Jan. 1, 2026 — a provision aimed squarely at the Prop. 40 billionaire wealth tax.

What would Prop. 42 do?

Prop. 42 is one of two propositions (alongside Prop. 41) that are heavily funded by Google co-founder Sergey Brin and a coalition of other wealthy tech entrepreneurs and investors. Both would effectively counteract the Prop. 40 billionaire wealth tax—a one-time, 5% wealth tax on California residents with more than $1 billion in assets.

But that’s just one piece of the proposed amendment. The measure would prohibit new state taxes on the ownership of personal property, a category that includes business interests, intellectual property and financial assets, like money held in retirement and investment accounts. California does not currently tax people for owning stocks or investment accounts, but Prop. 42 would effectively prevent future wealth taxes.

The measure also limits retroactive taxes, like a tax on money someone earned several years ago. That provision that would nullify the billionaire wealth tax, which would apply to any California resident as of Jan. 1, 2026. It would cancel out the wealth tax only if both pass in November, and if Prop. 42 wins more votes.

The nonpartisan Legislative Analyst Office’s analysis says Prop. 42 could make it harder for the state to raise taxes in the future, creating a possibility that revenues won’t grow as much. Exactly when that would matter — and by how much — remains unclear.

What supporters say

Supporters of Prop. 42 include prominent critics of the billionaire wealth tax like the State Building & Construction Trades Council of California, the California Professional Firefighters and the California Chamber of Commerce.

They pitch Prop. 42 as a shield for retirement savings and personal savings like 401(k)s and pensions and as a fairness measure against what they call “double taxation.” Their argument: Californians already pay income tax when they earn money, and the constitution currently leaves room for the Legislature to tax the value of personal property, too.

They also argue the retroactivity limits would prevent the state from passing new taxes that reach back to money earned in prior years.

What opponents say

SEIU-United Healthworkers West, which is backing the proposed Prop. 40 billionaire tax, characterizes Prop. 42 as a billionaire-funded measure designed to undercut their proposal. They note that the group funding Prop. 42, Building a Better California, is heavily funded by Brin and other billionaires who might be subject to the tax — though Brin reportedly moved to Nevada last year to avoid it.

The SEIU-UHW says Prop. 42 isn’t actually about protecting retirement accounts. The real goal, they say, is making the proposed billionaire tax impossible to enforce. They argue that would have consequences for working people, because the billionaire tax’s revenue would go toward funding looming healthcare cuts passed by Congressional Republicans and signed by President Donald Trump.

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