Brin's $102 Million Sank California's Billionaire Tax — and Walled Off the Next One

Sergey Brin put $102 million into a California ballot committee, and the return came in two parts: the state's billionaire tax died, and a constitutional amendment now blocks most future attempts to tax wealth. Proposition 42 was leading with 51.6% of the vote as of Nov. 10, with roughly 83% of ballots counted, according to Associated Press estimates published by KQED. The amendment bars new state taxes on personal property — business interests, intellectual property, financial assets — and blocks most taxes from applying retroactively.

The sponsor, Building a Better California, poured more than $300 million into defeating Proposition 40, the one-time billionaire tax, and passing Propositions 41 and 42, according to the California Fair Political Practices Commission. Proposition 41 failed. With Proposition 40 defeated, Proposition 42 stands on its own, and its reach extends well past the tax it was built to stop.

What did the billionaires do — and say?

Many backers of Proposition 42 warned a billionaire tax would drive the state's wealthiest out. The New York Times reported that venture capitalist Peter Thiel and Google co-founder Larry Page were considering leaving; Fortune reported in January that Page and Brin were cutting ties with California. Gov. Gavin Newsom warned a wealth tax would push the state's richest residents out. Brin, who now lists a Nevada address, has compared the billionaire tax to the Soviet-era socialism he fled as a child.

The numbers behind those warnings are modest. Academics who helped write Proposition 40 estimated California's billionaires pay about $3 billion a year in state income tax — roughly 2.5% of income tax revenue and about 1% of total state revenue. Economists at the Hoover Institution put the figure at $3.3 billion to $5.8 billion. The top 2% of earners, by contrast, pay about half of all state income taxes, according to the nonpartisan Legislative Analyst's Office. The LAO estimated billionaire departures triggered by Proposition 40 would cost the state less than $1 billion a year.

Reporting by the New York Times and CalMatters showed Propositions 41 and 42 were designed to nullify Proposition 40: had the billionaire tax passed, it would have been voided if either rival measure won more votes. Proposition 40 lost statewide even though San Francisco and Los Angeles counties backed it, Fortune reported. Santa Clara County, the heart of Silicon Valley, voted it down.

What does Prop 42 put off-limits?

Backers outside the billionaire class pitched the measure as protection for ordinary savers. Proposition 42 "permanently protects pensions, 401(k)s, IRAs and other personal savings from new taxes, whether proposed by the Legislature or at the ballot box," said Brian R. Marvel, president of the Peace Officers Research Association of California, which donated $150,000 to the Yes on 42 campaign.

Critics call that framing misleading. Proposition 40 reached retirement savings only through billionaires' Roth IRAs and similar accounts worth more than $10 million. "Don't be fooled—Prop. 42 is not really about protecting your retirement savings from new taxes," Suzanne Jimenez, chief of staff at SEIU-United Healthcare Workers West, which sponsored Proposition 40, wrote in the official voter guide. "It's a redundant, expensive trick to allow approximately 200 billionaires to keep avoiding paying their own taxes while YOU get stuck with the bill."

California already taxes few assets beyond real estate — capped by Proposition 13 — plus boats, planes, business equipment and vehicles through the vehicle license fee. Until now, nothing in the state constitution stopped lawmakers from taxing other kinds of wealth. The state taxes investment gains only when an asset is sold, and under the "stepped-up basis" rule, heirs owe nothing on gains built up during the original owner's lifetime. The California Budget & Policy Center estimates that break costs the state about $5 billion a year. Proposition 42 largely puts that untapped wealth out of reach.

Will the capital-gains fight land in court?

Three law professors who helped draft Proposition 40 — Brian Galle of UC Berkeley, David Gamage of the University of Missouri and Darien Shanske of UC Davis — argue Proposition 42 could reach Proposition 3, which voters approved last week to make permanent a tax increase on the top 2% of earners, largely for education, that was set to expire in 2031.

Because the measure bars taxes on the "ownership or control" of personal property without defining the phrase, they warned its protections could stretch to all income-producing personal property. A court, they wrote, could find that taxing capital gains under Proposition 3 is a "tax on the ownership or control of 'financial assets.'"

Nathan Click, a spokesperson for the Yes on 42 campaign, told the San Francisco Examiner the claim is "total BS." Prop 42, he said, "was carefully crafted to only prohibit new taxes on retirements, savings and personal property, and to prohibit retroactive taxes. That means that existing funding for schools, public safety, roads, healthcare, etc. is untouched by this measure." Kayla Kitson, a senior policy analyst at the California Budget & Policy Center, said the capital gains question "could end up in courts and would depend on how broadly courts interpret the language of the measure." She declined to predict how a court might rule.

How much room does Sacramento lose?

Proposition 42 also bars retroactive state taxes except during a declared emergency. Backdating a tax to the start of the tax year is common practice, the Budget Center notes, both to prevent dodging and to raise money fast. Kitson pointed to the 2024-25 budget talks, when Newsom proposed limiting business tax credits starting in 2025; negotiators moved the start date back to the 2024 tax year, which "raised revenue more quickly to prevent deeper budget cuts," Kitson said. The emergency exception likely wouldn't have covered that move, she said, because it "involved putting together a balanced budget rather than addressing an unplanned revenue shortfall after the budget was enacted."

The squeeze is real. H.R. 1, the federal tax-and-spending law passed in July 2025, is expected to cut about $30 billion a year from Medi-Cal, according to the California Health Care Foundation. Medi-Cal covers more than half of the state's children, 2.2 million seniors and people with disabilities, and 1 in 5 working Californians. Rural hospitals face higher closure risk; Proposition 40 was meant to fill some of those gaps.

Supporters of the billionaire tax have vowed to keep pushing, and Nobel laureate economists who backed it have predicted the idea will spread to other states. In California, though, any new wealth tax would first need voters to undo Proposition 42. Brin, meanwhile, keeps working out of Google's Mountain View headquarters, Business Insider reported. The tax he spent $102 million to defeat is gone — and the measure he funded makes the next one much harder to pass.