California voters sent a confusing message about taxes this election season, approving some measures while soundly rejecting others that asked them to dig deeper into their pockets — or someone else’s.
At the ballot box, Californians rejected a historic attempt to tax billionaires’ assets, turned down a related transparency measure, and shot down a proposal that would have made it harder for local governments to raise taxes. At the same time, they approved a ban on wealth taxes and retroactive levies, and voted to permanently extend a tax on high earners that funds public schools.
Add to that a handful of high-profile local tax measures that passed, including funding boosts for Bay Area transit systems and a new sales tax increase to support firefighting efforts in the city of Los Angeles, and the picture that emerges is one of a state willing to tax — but selectively, and often only when voters feel confident the money won’t touch their own wallets.
“Voters are willing to open up their wallet if they believe it’s for a good cause … and that it’s actually going to that place,” said Brandon Castillo, a veteran ballot measure strategist who has worked on California campaigns for years.
Mark Baldassare, survey director for the nonpartisan Public Policy Institute of California, said the pattern reflects something deeper about how Californians think about taxation during tough economic times.
“We are a very progressive state where voters, particularly today when affordability weighs on them, have a tendency to say somebody else will be paying taxes, not me,” Baldassare said.
That instinct, however, didn’t carry Proposition 40 — the closely watched measure that would have imposed the nation’s first wealth tax on billionaires — across the finish line. The proposal drew fierce opposition from an unlikely coalition that included business groups, deep-pocketed tech executives, and even prominent Democrats.
**A stinging defeat for progressives**
The billionaire tax’s failure marked one of the night’s most surprising results, especially given that California delivered a broader “blue wave” in down-ballot races. Political observers say the outcome underscores a familiar pattern in state politics.
“California voters are sometimes more conservative on ballot propositions than they are on voting for candidates,” said Christian Grose, a political science and public policy professor at USC.
That tendency has shown up repeatedly in recent election cycles, with voters embracing tougher criminal justice policies, rejecting a minimum wage hike, and making it harder to pass local bonds. Voters have also upheld the death penalty even though the state hasn’t carried out an execution since 2006 — a contrast made sharper this month when Gov. Gavin Newsom commuted all death row sentences to life without parole.
Republican consultant Rob Stutzman said ballot measures tend to draw more centrist responses than candidate elections because they force voters to weigh a single, often technical policy question rather than balance broader political loyalties.
“They just have the policy question, and voters sort it out for themselves,” Stutzman said.
That dynamic helped carry Proposition 42 to victory. Backed heavily by wealthy interests hoping to head off Prop. 40, the measure bars future wealth taxes and retroactive levies on personal property and financial assets. The Associated Press confirmed its passage Friday with 51.3% of the vote.
Supporters, including some labor groups, argued the measure would shield pensions and retirement accounts from being targeted by future tax proposals, even though billionaire tax backers insisted their measure never intended to touch ordinary retirement savings.
Analysts say voter confusion, paired with a staggering $378 million spent by opponents — much of it from Silicon Valley billionaires — sealed Prop. 40’s fate. Propositions 41 and 42 had been strategically placed on the ballot specifically to undercut Prop. 40 if it passed, creating a tangle of competing tax questions for voters to untangle.
The wealth tax also failed to unify Democrats. While the California Democratic Party and the California Labor Federation backed it, Newsom, Planned Parenthood, medical clinics and the state’s largest teachers union all came out against it. Public support slipped six percentage points in the final two months of the campaign, turning what had been a narrow lead into a decisive loss.
“The campaign against the billionaire tax was a success,” Grose said.
**Other tax measures found more success**
Despite Prop. 40’s collapse, few analysts believe its failure reflects a broader rejection of progressive taxation in California. Instead, many point to the measure’s design as its downfall.
Thad Kousser, a political science professor at UC San Diego, said the measure concentrated nearly all its revenue on healthcare spending while leaving other state programs vulnerable if wealthy residents fled California to avoid the tax. He called it “an unforced error.”
“It made it a David and Goliath fight, but it didn’t need to be,” Kousser said. “You don’t pass a landmark progressive tax increase that is sort of a change to how America has historically done anything by dividing up the progressive coalition.”
Meanwhile, the anti-tax sentiment behind Prop. 42’s win didn’t extend to Prop. 43, which voters rejected. That measure would have required local governments to secure a two-thirds vote before raising taxes for specific services — a threshold Kousser said many voters viewed as a recipe for “minority rule,” allowing a small fraction of voters to block funding for essential community services.
“Voters don’t like to put in place these rules that seem to be tilted in one direction,” he said.
Voters showed more appetite for Prop. 3, which passed with nearly 59% support and makes permanent a higher state income tax rate on earnings above $360,000 — money dedicated to K-12 education. That tax bracket has technically existed since 2012 as a temporary budget measure; Prop. 3 locks it in for good.
David Goldberg, president of the California Teachers Association, called the vote a “resounding message of support for taxing the wealthy.”
So why did voters embrace an income tax increase on high earners while rejecting a wealth tax on billionaires? Kousser pointed to a key difference: Prop. 3 faced no organized Democratic opposition and simply extended an existing policy, while Prop. 40 opponents successfully convinced many voters that the measure could eventually threaten ordinary Californians’ savings.
**Tax measures likely to keep appearing on ballots**
Dustin Corcoran, chief executive of the California Medical Association, which opposed the billionaire tax, said its defeat shouldn’t be read as voters endorsing the state’s wealth gap or current tax structure. He said his organization is already exploring future ballot measures to secure funding for healthcare and other core services.
Even supporters of Prop. 40 aren’t backing down. Dave Regan, president of SEIU-United Healthcare Workers West, which led the campaign for the billionaire tax, said his organization plans to return with a new version of the measure in 2028.
Regan pushed back on the idea that Democrats were split on the issue, citing polling that showed 60% to 70% of Democratic voters supported the tax, with opposition concentrated mainly among party leaders like Newsom and Governor-elect Xavier Becerra.
“At the very highest levels of state officials there’s actually, you know, a different point of view, but that’s out of step with where regular people are at,” Regan said.
Still, fiscal watchdogs and the state’s nonpartisan budget analyst caution that tax increases alone won’t solve California’s persistent budget troubles. The state has posted deficits for four straight years even as overall spending has climbed. This year’s state budget totals $351.7 billion — a 64% jump from the $214.8 billion budget Newsom signed during his first year in office.
“California’s budget is structurally overextended despite booming and near-record revenues,” the Legislative Analyst’s Office wrote in a recent assessment, warning of diminished reserves, mounting debt and projected annual deficits between $8 billion and $10 billion in coming years.
Original source: CalMatters
