How Can YOU Stop California’s Wealth Tax? (Propositions 41 & 42)

This November, California voters will decide whether to impose a special tax on the wealthiest among us. But the wealth tax isn't the only major fiscal measure on this year's ballot, or the only opportunity voters have to weigh in on how our state raises and spends money.

Alongside the wealth tax are two companion measures that represent a very different vision for California's tax system. Propositions 41 and 42 have been dubbed "poison pills" because they are designed to limit, or potentially prevent, the wealth tax from taking effect, even if voters approve it.

So, what exactly do these propositions do? Why were they placed on the ballot? And if you oppose a wealth tax, should you vote for them as well?

Poison Pills?

So, why are there three propositions on the ballot that all seem to deal with the wealth tax? The answer is because the wealth tax put forward in Proposition 40 is so drastic that opponents want to do everything they can to stop it.

This means if Proposition 40 passes, these two measures essentially block it from taking effect, thus limiting what the wealth tax actually looks like in practice. The good news for those of us who oppose the wealth tax (ahem, I definitely do!) these propositions give us really practical ways to vote in favor of limiting the wealth tax, even if we can’t stop voters from approving it.

The Details of Proposition 41

So, let’s take them one at a time to understand what they would do: starting with Proposition 41. This is called the “Improving Transparency, Effectiveness, and Efficiency in California Government Act of 2026” … which is a super long name, but about sums up what it seeks to do! This proposition would impose a few new rules for any special tax, like a wealth tax, being put in front of voters.

The first new rule Proposition 41 would add would be a new transparency requirement for special taxes. Before we get into the requirement itself, it's helpful to understand what a special tax is. In California, a special tax is one where the money raised is legally earmarked for a specific purpose.[1] In other words, the revenue can't simply be deposited into the state's general fund and spent however lawmakers choose. It has to be used for the specific programs or services promised to voters. That's different from a general tax, where the revenue goes into the state's general fund and can be allocated each year based on the Legislature's priorities.

With that distinction in mind, here's what Proposition 41 would require: once supporters of a special tax initiative have collected 25% of the signatures needed to qualify it for the ballot, the State Auditor would be required to conduct an audit of the programs the measure proposes to fund.[2] The purpose of that audit is to evaluate the proposed spending and provide voters with more information before the initiative ultimately appears on the ballot. It would also require the State Auditor to include recommendations for how to reduce the program’s costs by 10%. That’s the first rule.

The second new rule Proposition 41 adds is to require ongoing oversight after a special tax has been approved. Rather than ending the review process once the measure passes, the proposition would require the State Auditor to conduct audits of any programs that continue to receive funding from a special tax.[3] Specifically, every four years, the State Auditor would review those programs to evaluate whether taxpayer dollars are being used for the purposes voters were promised when the tax was approved. The idea is to provide ongoing accountability, ensuring that funds dedicated to a specific purpose continue to be spent on that purpose over time.

The third and final rule Proposition 41 enacts is a little more technical, but it's an important one. California's Constitution places a limit on how much tax revenue the state can spend each year. That spending cap applies to money collected through both general taxes and special taxes. However, under current law, certain types of spending (such as some infrastructure projects) can be excluded from that limit.

Proposition 41 would change how that rule applies to new special taxes. If it passes, the state may no longer be able to exempt spending from newly created special taxes when calculating the constitutional spending limit. In practical terms, that means revenue from a new special tax, like the proposed wealth tax, would be more likely to count toward the state's overall spending cap, limiting how much additional spending the state could undertake.[4]

So, to summarize, Proposition 41 makes three key changes. First, it requires the State Auditor to review the programs a proposed special tax would fund before the measure qualifies for the ballot. Second, it requires ongoing audits every four years of programs that continue to receive funding from enacted special taxes. And third, it generally requires revenue from new special taxes to count toward California's constitutional spending limit, rather than allowing that spending to be excluded.

The Heart of Proposition 41

Those are the details of the proposition, but what is the intention of it? What is the heart behind it? What would it really do?

The entire premise of Proposition 41 is greater accountability and transparency in government spending. If you've followed my work for any length of time, you know this is something I've advocated for over and over again – especially considering the fraud scandals we've seen in recent years and the pattern of wasteful government spending that continues year after year.

California isn't a state that lacks revenue. We have the nation's largest population, one of the world's largest economies, and some of the highest taxes in the country. Yet despite all of that, our state continues to face budget deficits, while the high cost of living remains one of the biggest concerns for California families. Why? Because government has a spending problem. No matter how much revenue is collected, if spending continues to grow just as quickly (or even faster), the money will never be enough. Every new program creates new financial obligations, and when those obligations outpace revenue, the pressure to raise taxes only grows.

That's why I believe two things must happen. First, government must spend more responsibly. We need to eliminate waste, fraud, abuse, and programs that simply aren't serving Californians well. But second, taxpayers deserve far greater transparency into how their money is being used. Accountability isn't possible if the public has no meaningful way to evaluate whether government is delivering on its promises.

This is where Proposition 41 comes in. At its core, this proposition says that if the government is going to ask you to pay more in taxes, it also has a responsibility to show you where that money is going. Before asking voters to approve a new special tax, there should be an independent review of the programs it would fund. After that tax is enacted, there should be ongoing oversight to ensure those dollars are being used as promised. And there should be meaningful limits on how much additional spending government can take on. If government wants more of your money, taxpayers deserve transparency, accountability, and confidence that every dollar is being spent wisely.

How does this relate to the wealth tax? If Proposition 40 passes, it would create a brand-new special tax expected to generate billions of dollars in revenue. Proposition 41 doesn't stop that tax from being collected. Instead, it says that if Californians are going to entrust the state with that much additional money, there should be greater transparency and accountability surrounding how those funds are used.

In other words, Proposition 41 answers the question of what safeguards should exist if voters decide to approve one – and to say it is necessary is the understatement of the century.

The Details of Proposition 42

But Proposition 41 is not the only proposition on our ballots positioned against the potential wealth tax. Proposition 42 takes it much further and would neutralize the wealth tax altogether.

The proposition itself states that it would "prohibit new state personal property taxes and certain retroactive state taxes."[5] So what does that actually mean?

First, we need to understand the difference between personal property taxes and the types of taxes Californians are more familiar with. California already taxes certain forms of personal property. For example, the vehicle license fee you pay to the DMV each year is based on the value of your vehicle.

What California has not historically taxed, however, is the ownership of personal financial assets – things like stocks, investment accounts, or ownership interests in businesses. 

Right now, California taxes the income those assets generate. For example, if you sell a stock and make a profit, you may owe taxes on that gain. That is a tax on the income produced by the investment. But simply owning that stock does not create a yearly tax obligation.

Proposition 42 would preserve that distinction by prohibiting the state from creating a new tax on the ownership of financial assets themselves. In other words, it would prevent California from taxing someone simply because they own a certain monetary value of stocks, investments, or business assets. The proposition would also address retroactive taxation by limiting the state's ability to impose a new tax based on events or ownership that occurred in the past, rather than applying the tax prospectively going forward.

This is where Proposition 42 directly intersects with Proposition 40. A wealth tax is different from the taxes Californians are used to paying because it does not tax income generated from an asset, it taxes the asset itself. It is a tax on net worth, meaning the value of what someone owns. So, supporters of Proposition 42 argue that if California adopts a permanent prohibition on taxing asset ownership, it would prevent the type of wealth tax proposed in Proposition 40 from being implemented – not just this year, but as a future model for taxation in the state.

The Heart of Proposition 42

But let’s think outside of the wealth tax for a moment. Is the permanent ban proposed by Prop. 42 a good idea?

But let's think outside of the wealth tax for a moment. Is the permanent ban proposed by Proposition 42 a good idea? To answer that, we have to ask a bigger question: should government be able to tax the things people own simply because they own them?

There is a fundamental difference between taxing economic activity and taxing accumulated assets. When someone earns income, sells an investment, or operates a business, there is a measurable transaction taking place. A tax on that activity is based on something being produced, earned, or exchanged.

A tax on ownership is different. It creates an ongoing obligation simply because someone possesses something of value. The government is no longer taxing what someone does with their resources, it is taxing the resources themselves. And this matters because oftentimes, you could have much higher net worth than liquid cash! Meaning, you personally could own a bunch of stocks but not see a single dollar from those stocks before selling them. Does it make sense to you that you should have to pay a tax bill on an asset you have not sold, income you have not received, or cash you may not have available?

Let’s not forget that, at their core, taxes exist to fund the essential functions of government. They provide the resources needed for things like public safety, infrastructure, courts, national defense, and other services that individuals cannot efficiently provide on their own. But taxes are not meant to be an unlimited source of revenue. The purpose of taxation is not simply to collect as much money as possible, it is to responsibly fund the necessary functions of government while recognizing that every dollar collected comes from a person, a family, or a business.

At the heart of Proposition 42 is the idea that there must be a boundary between public taxation and private ownership. Government should tax only what people earn and what economic activity they engage in, not continually claim a share of what people have already accumulated and saved.

How To Vote on These Propositions!

So, how should you plan to vote on Propositions 41 and 42? I believe these are propositions we can wholeheartedly vote yes on; let me give you three reasons why.

First, they address real issues that lead to decline here in our state: a lack of transparency, a lack of accountability, and a government spending system that continues asking taxpayers for more money without first demonstrating that they will use the resources we give them effectively.

Proposition 41 says that if the government creates a new special tax, taxpayers deserve to know exactly where that money is going and whether those programs are actually delivering results – that is objectively a good thing! Regardless of what side you fall on for the wealth tax, or what side of the political aisle you are on, all governments should provide this to the people they represent. And then Proposition 42 goes even further by making it so that California cannot create a system where the government can tax the ownership of wealth itself.

Unlike so many laws and propositions put forth, these would have tangible, measurable impacts on our state, for the better. They get at the underlying root causes of decline, and mandate solutions that will help.

Second, they directly counteract one of the worst propositions on the ballot – Proposition 40. The wealth tax, if passed, will have disastrous consequences for our state. It is not a light thing to toy with. If passed, it will change the relationship between the state and private property by creating a tax based on what someone owns rather than what they earn or sell. 

The economic consequences are too significant to ignore, and California should be cautious before creating a new form of taxation that will certainly discourage investment, entrepreneurship, and long-term economic growth. So, how do we do that? We support better policy choices, like these ones, which recognize that even if the wealth tax is passed by voters, these laws, if passed as well, could counterbalance its worst effects. 

Lastly, they are a tangible way to make your voice heard on these issues. In California, it can often feel like major policy decisions happen far away from everyday citizens. But the ballot initiative process gives voters the ability to directly weigh in on the direction of our state. We don’t have to just advocate against Proposition 40, but we can advocate for Propositions 41 and 42! We have the opportunity this election cycle to advocate for greater transparency, accountability, and stewardship of taxpayer dollars – we should recognize the weight of that privilege and use it wisely.

So as you head to the ballot box this November, make sure you understand what is at stake – and plan to vote YES on Propositions 41 and 42.

References:

[1] Legislative Analyst’s Office. “A Look at Voter-Approval Requirements for Local Taxes,” March 20, 2014. https://lao.ca.gov/reports/2014/finance/local-taxes/voter-approval-032014.aspx.

[2] Legislative Analyst’s Office, “Proposition 41 [Ballot],” 2026, https://lao.ca.gov/BallotAnalysis/Proposition?number=41&year=2026.

[3] Ibid.

[4] Ibid.

[5] Legislative Analyst’s Office, “Proposition 42 [Ballot],” November 3, 2026, https://lao.ca.gov/BallotAnalysis/Proposition?number=42&year=2026.