The American Revolution was fought, in part, over the question of taxation without representation. The Founders understood that the power to tax wasn't just another government function, it was a serious power over the lives and livelihoods of the people.
We have forgotten that in California. Every election we see numerous propositions placed on the ballot that will increase our taxes – and majority of the time, we pass them! It is looking no different with this election.
Today, we're looking at two California propositions that bring questions of taxation and government spending to the forefront: Propositions 2 and 43. My hope is that you will walk away informed and empowered to make a different choice this election.
Proposition 2: More Money, More Problems
Proposition 2 would allow California to build a much bigger savings account for the future, require the state to put more money into savings during certain years when tax revenues are especially high, and continue paying down some government debts. Under current law, the state is required to deposit 0.75% of General Fund tax revenues in the state’s main rainy-day fund until it reaches 10% of General Fund taxes – Proposition 2 would raise that to require deposits until reaching 20% of General Fund taxes.[1]
Now, this sounds like a good premise, right? It sounds responsible! Proponents are arguing that it allows our government to save more money for future years when it might be needed – and that sounds like wise fiscal planning.
But remember what we have talked about for so many weeks: revenue is not the problem in California, spending is. California does not struggle to bring in tax revenue; California struggles to spend that money wisely, to know which programs to prioritize, and to prevent itself from growing bigger and bigger, thus requiring more and more revenue. So, if we allow our government to put away more money year after year, presumably for the future, what are we really doing? We are allowing our government to take more of our money so that it can continue to fund its bad habits in the future, rather than having to face the realities of its overspending head on. California only needs to expand its reserves because it keeps expanding its spending commitments without addressing the underlying costs, but a larger reserve doesn't actually solve that problem.
But there is more to this proposition, because not only does it just squirrel away to money to keep up its lavish lifestyle in future years, but it does also so in a way that functionally destroys the Gann limit.
What is the Gann limit, you may ask? The Gann limit is a constitutional spending limit in place for our state. It was created by voters in 1979 to restrict how much tax revenue the California government can spend each year.[2] When California hits or exceeds the Gann limit, half of the spending that exceeded the limit must go back to taxpayers.[3] So, in theory, the Gann limit is supposed to serve as a check on government spending. If the state collects more tax revenue than it's constitutionally allowed to appropriate, it can't simply keep all that excess and spend it however it wants. Some of that money must go back to you as the taxpayer.
In practice though, this spending limit has been weakened over years of legislative changes. The most notable changes came in 1990 through the passage of Proposition 111. First, it gave the government more room to increase spending. The limit was originally tied to inflation, but Prop 111 changed the formula to use growth in per-capita personal income. So, when people's incomes grew faster than inflation, the government could increase its spending limit by more, too.
Second, it made it harder to trigger taxpayer refunds. Instead of looking at whether the state exceeded the limit in a single year, the state looked at a two-year period. That means if the state went over the limit one year but came in under it the next, the two years could offset each other, potentially avoiding a refund. And third, it exempted more spending from the calculation. For example, certain spending funded by gasoline taxes was excluded. So even when the government spent that money, it didn't count toward the Gann limit in the same way as other appropriations.
Put those three changes together, and you can see how the limit became less restrictive. The state could have a higher spending limit, more time to offset a year of excess spending, and more spending that didn't count toward the limit at all. The Gann limit was still there, but it became harder to hit.[4]
Proposition 2 would further weaken the Gann limit. How? It’s a little complex but hang with me. As described, Proposition 2 would raise the cap on California’s rainy-day fund from 10% of General Fund tax revenues to 20%. But it would also change how deposits into that fund count toward the state’s spending limit.
Under current law, putting money into the rainy-day fund counts toward the Gann limit. The idea is that the state is setting that money aside to spend in the future, so the deposit counts toward the limit today.
Let’s use a simplified example. Imagine the state has a spending limit of $100,000, but it collects $200,000 in tax revenue. If its spending subject to the limit exceeds the allowable amount, the state can’t simply keep spending without consequences. Under the Gann limit’s rules, excess funds may have to be returned to taxpayers and directed to schools.
Proposition 2 would change the calculation. Deposits into the rainy-day fund generally would no longer count toward the spending limit when the state puts the money away. Instead, the money would count when the state withdraws it. So, imagine the state reaches its $100,000 spending limit and puts some of its remaining revenue into the rainy-day fund. That deposit would no longer push the state over the limit in the way it does under current law. That means the state could save more of its surplus without triggering the same spending-limit consequences at that point.
That’s the main the concern: money that might otherwise contribute to a taxpayer refund could instead be set aside for the government to spend in a future year.
The reality is that the current limit, and the rule that contributions to the rainy-day fund are part of that limit, are in place for a reason. The Gann limit was created to keep government spending from growing beyond a certain level, and when tax revenues exceed that limit, the state can't simply keep all of that money and spend it however it wants. There are rules for how the excess is handled.
Just because the government collects more money doesn't automatically mean it should get to keep more money. When revenue surges, the Gann limit creates a check on the state's ability to expand spending indefinitely. It forces lawmakers to consider whether that extra money should go toward additional government spending, or whether some of it should go back to the people who paid it in the first place. This matters because government programs and spending commitments can be difficult to scale back once they've been established. A temporary surge in tax revenue can make it easy to expand programs, but when that revenue disappears, taxpayers are often left with the bill – or lawmakers have to make painful cuts. A spending limit encourages fiscal restraint and makes sure a windfall doesn't automatically become a permanent expansion of government.
When we loosen the rules that limit government spending, we’re not just changing how much money the state can save, but how much accountability taxpayers can expect in return. The Orange County Register Editorial Board says it best as they describe, “In sum, Prop. 2 operates under the pretense that Sacramento really just wants to become more responsible. What it actually does is further bloat the accounts of the state, enables ongoing budget games and makes it harder for taxpayers to get some of their money back.”[5] Bottom line: you shouldn’t be comfortable with the California government hoarding away your tax dollars to keep funding its overspending problems.
Proposition 43: Protecting Taxpayers
Now, on the opposite end of the spectrum, we have Proposition 43. While Proposition 2 wants to make it easier for your government to keep and spend even more of your tax money, Proposition 43 seeks to make it harder to increase taxes in the first place.
This proposition is simple to understand. Under current law, special taxes that are proposed by voters are approved by a majority vote. Proposition 43 would make it so that any special taxes proposed by voters would require a two-thirds vote to pass.[6] That’s it, that’s all it does – simple, yet incredibly important for us to get right. So, is this a good requirement, and if so, why?
Yes, but let me explain.
First of all, this is rooted in historical precedent and in our state’s very constitution. In 1996, California voters passed Proposition 218, which established the two-thirds threshold needed to implement special taxes. So, decades ago, voters agreed that special taxes require a higher level of approval before being implemented. However, in 2017, the California Supreme Court ruled that this law only applied to tax measures proposed by local officials, not by voters. The result has been that since, several high-profile local special tax measures have passed with a simple majority because they were proposed by voters and not by lawmakers. This goes against our state’s original constitution, which required a supermajority vote to borrow money – which resulted in taxation.[7]
The truth is that we have become numb to our government taxing us more and more. In California especially, we are so used to high taxes that additional tax measures don’t phase us anymore. This is tragic. Jon Coupal, President of the Howard Jarvis Taxpayers Association, hit the nail on the head when he said, “The power to tax is (the) government’s most draconian power. The people of the state of California have made it a policy that when you are going to exercise that power, it should require a higher degree of consensus.”[8]
He is absolutely right! We should not make it easy for our government to take more and more from us – especially given how much revenue they already bring in and misuse!
In 2022, Los Angeles voters approved a tax on high-value property sales with 58% support.[9] In 2024, Sonoma County voters approved a half-cent sales tax to fund wildfire response and other emergency services with 62% support. Under Proposition 43’s proposed two-thirds threshold, neither measure would have passed with those vote totals.[10] Should we approve such measures by such narrow support? I would argue we should not! As it stands right now, a narrow majority can impose a new financial obligation on everyone who is subject to that tax, including people who voted against it. A higher threshold would instead require a broader consensus before that obligation is created. It would also require local governments to make their case more convincingly, prioritize existing revenue, and demonstrate that a tax increase has substantial public backing.
Restoring the Weight of Taxation
I want to wrap up these two propositions by talking about something bigger than either of them. Both measures raise a fundamental question that we, as Americans, need to spend more time thinking about: What does it actually mean when the government takes our money?
In modern society, we have become so accustomed to paying taxes that we've complete lost the weight that should come with it. We pay our taxes every year, we see new tax measures on our ballots, we hear that the government needs more money for this program, or that service, or some new initiative, and often, the conversation starts and ends with whether the cause sounds worthy. But in that, we are missing the fundamental question of should the government automatically be entitled to more of our money simply because it says it needs it?
We need to go all the way back to our very founding to get this. The American Revolution was, in part, a fight over the authority to tax the people without their consent. The Declaration of Independence listed among the grievances against the British Crown that it had imposed taxes on the colonists without their consent. And that Declaration laid out a foundational principle of American government: that governments derive their just powers from the consent of the governed.[11]
Now, obviously, the Founders did not believe that all taxation was illegitimate. The Constitution explicitly grants the federal government the power to tax to pay its debts and provide for the common defense and general welfare. But the founding generation also understood that the power to tax had to be accountable to the people. James Madison described the power of the people's representatives over public funds as a powerful constitutional check on government.[12]
We have lost that check today. We do not exercise that check on government! We forget that tax revenue isn't some endless pool of money that belongs to the government. It comes from people who work, build businesses, raise families, buy homes, and make decisions about how to use the money they earn. Every dollar the government collects is a dollar that a person or a business no longer has available to spend, save, invest, or give elsewhere. Which means that we must demand enough accountability before agreeing to give government more of it.
Does the government demonstrate that it is using the money it already collects responsibly? Are existing programs accomplishing what they were created to accomplish? Have lawmakers considered whether current revenue could be prioritized differently before asking taxpayers for more? When the state collects more than it can spend under its constitutional limit, should the default assumption be that it should find a way to keep that money, or should taxpayers have a meaningful claim to it as theirs?
Those are the questions I want us to be asking. But we already know the answers! The answers are no – clearly no. The California government has not used our money responsibly, existing programs are deeply ineffective and riddled with unmitigated fraud, lawmakers never stop to ask if they should STOP taking our money, and now there is a proposition to further entrench the assumption that the government should get to keep as much of our money as it wants.
Ultimately, our money belongs to us before it is collected in taxes. Government's authority to collect and spend it comes with a responsibility to justify how that power is used. The more accustomed we become to handing over our money without asking those questions, the easier it becomes to treat taxation as a given rather than a serious decision that deserves serious scrutiny.
But that is something we absolutely need to recover – not the idea that government can never do anything worthwhile, but the expectation that it must continually justify what it asks of the people it serves. California has not. Which means, this election, you must vote NO on proposition 2, and YES on proposition 43.
References:
[1] Legislative Analyst’s Office, “Proposition 2 [Ballot],” November 3, 2026, https://lao.ca.gov/BallotAnalysis/Proposition?number=2&year=2026.
[2] California Department of Education. “Gann Limit - Accounting,” September 18, 2024. https://www.cde.ca.gov/fg/ac/gl/.
[3] Kitson, Kayla, Scott Graves, and Jonathan Kaplan. “How the Gann Limit Threatens Ongoing Investments for Californians.” California Budget & Policy Center, December 2022. https://calbudgetcenter.org/resources/qa-why-hitting-gann-limit-threatens-ongoing-investments-in-californians/.
[4] Michael New, “The Gann Limit Turns 25,” Cato Institute, October 28, 2004, https://www.cato.org/commentary/gann-limit-turns-25.
[5] The Editorial Board. “Endorsement: No on Prop. 2. California Needs Fiscal Discipline, Not Accounting Tricks.” Orange County Register, October 7, 2026. https://www.ocregister.com/2026/10/07/endorsement-no-on-prop-2-california-needs-fiscal-discipline-not-accounting-tricks/.
[6] Legislative Analyst’s Office, “Proposition 43 [Ballot],” November 3, 2026, https://lao.ca.gov/BallotAnalysis/Proposition?number=43&year=2026.
[7] Yu, Yue Stella. “Prop. 43 Would Make Special Taxes Harder to Pass. That’s the Point, Say Anti-tax Advocates.” CalMatters, October 9, 2026. https://calmatters.org/politics/2026/10/california-prop-43-election-2026/.
[8] Ibid.
[9] Holthouse Carlin & Van Trigt LLP. “Los Angeles Voters Approve ‘Mansion Tax’ Ballot Measure,” December 19, 2022. https://www.hcvt.com/alertarticle-mansion-tax-los-angeles.
[10] Bay City News Service. “Prop. 43 Would Make Special Taxes Harder to Pass. Thats the Point, Say Anti-Tax Advocates.” SF Gate, October 10, 2026. https://www.sfgate.com/news/bayarea/article/calmatters-prop-43-would-make-special-taxes-22472084.php.
[11] National Constitution Center – constitutioncenter.org. “The Declaration’s Grievances Against the King | Constitution Center,” n.d. https://constitutioncenter.org/essays/the-declarations-grievances-against-the-king.
[12] “Origins | US House of Representatives: History, Art & Archives,” n.d. https://history.house.gov/Institution/Origins-Development/Power-of-the-Purse/Origins/.
