California voters ban new taxes on personal assets

51 percent of California voters supported Proposition 42, a statewide measure that prohibits new taxes on personal assets. The Associated Press declared the measure passed on Friday with about 96 percent of votes counted.

The final tally showed just over 51 percent in favor and nearly 49 percent opposed. Proposition 42 led by a narrow margin from the start of the vote count on Nov. 3.

The law bans any new tax on personal property. This includes 401(k) accounts, business interests, digital assets, intellectual property, and personal belongings. Real estate is not covered by the ban. The measure also stops retroactive taxes unless the state declares an emergency.

Proposition 42 was placed on the ballot by Building a Better California. This group is funded by Google co-founder Sergey Brin, venture capitalists, and other tech executives. They also opposed Proposition 40, a one-time tax on billionaire assets that appeared on the same Nov. 3 ballot.

Voters rejected Proposition 40 but passed Proposition 42. If Proposition 40 had won, Proposition 42 would have nullified that wealth tax if it received more votes. By passing both decisions, voters closed off a potential source of state revenue.

Susan Shelley, vice president of communications at the Howard Jarvis Assoc., said the result shows voters are concerned about retirement savings becoming a target for future taxation. Her organization opposed the tax. The California Small Business Assn., the California Senior Alliance, and the California Professional Firefighters also backed the measure.

Supporters of Proposition 42 wrote that taxes and the cost of living are already too high in California. They argued for protection against taxes on personal property and retirement savings. Backers of the rejected Proposition 40 said they may return with a proposed wealth tax for the 2028 ballot. Any future attempt to target personal assets would require asking voters to nullify Proposition 42.