California voters approved Proposition 42, a statewide measure that prohibits new taxes on a wide range of personal property.
With votes still being counted across the state, the Associated Press said Friday that the ballot measure had passed. The measure received just over 51 percent in favor and nearly 49 percent against, with about 96 percent of the votes counted.
Proposition 42 has been narrowly in the lead since vote counting began on November 3.
The proposal prohibits any new taxes on personal property, such as 401(k) accounts, business interests, digital assets, intellectual property and personal effects. Real estate is not included. It also prohibits retroactive taxes except in cases of state-declared emergency.
“Public safety officers spend their careers keeping California communities safe, and they plan for retirement knowing exactly what they’ve earned. On Election Day, voters made sure those savings won’t become the next target for new taxes,” said Brian Marvel, president of Peace Officers Research Assn. from California. “Prop. 42 gives our members, and every Californian, the security of knowing their retirement will be there when they need it.”
Proposition 42 was put on the ballot as a “poison pill” to overturn Proposition 40, a one-time tax on billionaires’ assets that was also on the Nov. 3 ballot. Voters rejected Proposition 40, but passed Proposition 42, closing a potential source of money for the state.
If Proposition 40 had passed, Proposition 42 would have canceled the wealth tax if it had received more votes.
The state generally taxes income, but not unrealized capital gains on assets.
Its passage means “voters are concerned that the retirement savings they have could be a tax target in the future,” said Susan Shelley, vice president of communications for the Howard Jarvis Assn., which opposed the tax.
Proposition 42 was put to a vote by Building a Better California, a group funded by Google co-founder Sergey Brin, venture capitalists and other tech executives. The group opposed Proposition 40.
The California Small Business Assn., the California Senior Alliance and the California Professional Firefighters organization also supported Proposition 42.
“Taxes and the cost of living are already too high in California – we need protection from taxes on our personal assets and retirement savings,” supporters of the measure wrote.
Proponents of Proposition 40 have said they could come back with a wealth tax proposal for the 2028 ballot. Any attempt to target personal property would require asking voters to strike down Proposition 42.
Staff writer Seema Mehta contributed to this report.
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