Sergey Brin’s $102 million helped sink California’s billionaire tax and may block the next one

Résumé détaillé

Proposition 42, bankrolled largely by Sergey Brin, bars new state taxes on stocks, business stakes and other assets. Critics say it could reach capital gains.

California voters rejected a one-time tax on the state’s billionaires last week. A second measure, funded largely by those same billionaires, now looks set to make the next attempt much harder.

Proposition 42 was leading with 51.6% of the vote as of Nov. 10, with about 83% of ballots counted, according to Associated Press estimates published by KQED. The constitutional amendment bars new state taxes on personal property, including business interests, intellectual property and financial assets, and blocks most taxes from being applied retroactively.

Its sponsor, Building a Better California, is a political committee largely funded by Google co-founder Sergey Brin, who gave it $102 million. The committee put more than $300 million into defeating Proposition 40, the 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 goes well beyond the one-time tax it was built to stop. It walls off a pool of wealth that California lawmakers had never taxed but were free to, just as federal cuts open a hole in the state’s health budget.

Many of the billionaires who backed Proposition 42 warned that a billionaire tax would drive the state’s wealthiest business leaders away. The New York Times reported that venture capitalist Peter Thiel and Google co-founder Larry Page were considering leaving, and Fortune reported in January that Page and Brin were cutting ties with California. Gov. Gavin Newsom also warned that 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.

Billionaires account for a small slice of the state’s tax base. The academics who helped write Proposition 40 estimated that California’s billionaires pay about $3 billion a year in state income tax, roughly 2.5% of income tax revenue and…

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