# Prop 42: Bans new state taxes on owning personal property (stocks, accounts, etc.) and certain retroactive taxes

URL: https://www.californiapeople.org/props/prop-42

- number: 42
- title: Bans new state taxes on owning personal property (stocks, accounts, etc.) and certain retroactive taxes
- type: Initiative constitutional amendment
- sponsor: Opponents of Prop 40 (Building a Better California coalition)

**Our read: Toss-up: a permanent call.** Bans state wealth taxes in the Constitution for good. Backed by $128M, mostly from billionaires, plus Newsom and building trades.

## Key findings
- **$128.0M for Yes, one of the biggest Yes campaigns on the ballot** (more than Prop 3's $74.8M or Prop 38's $71.3M), through one committee backed by Building a Better California (Brin $102M across its measures). [^1][^2]
- Its Yes committee is named "Protect Retirement & Life Savings" [^1], but **Prop 40 already generally excludes pensions and retirement accounts** [^3]. The people who benefit most from a permanent wealth-tax ban are those whose wealth sits in unrealized gains.
- It's **permanent**: it would take another statewide vote to ever allow a wealth tax in California. Wealth taxes have mostly disappeared abroad (12 OECD countries in 1990, 4 in 2017, and 3 in 2025 per the Tax Foundation). [^4]
- Unlike most billionaire-backed measures, it has backing from **Gov. Newsom** plus police and fire unions [^5] and the State Building Trades [^6].

## Track record
| Question | Today in California |
|---|---|
| Does the state tax owning stocks or accounts? | No. It taxes only the income from them. [^7] |
| Existing personal-property taxes | Vehicle license fee and business-equipment property tax. **Not repealed** by Prop 42, which applies only to new taxes. [^7] |
| Retroactive taxes | Prop 42 limits when they're allowed (LAO's example of a retroactive tax: "a tax on money someone earned two years ago"). [^7] |
| Wealth taxes abroad | 12 OECD countries in 1990 → 4 in 2017 → 3 in 2025 (Spain, Norway, Switzerland, per the Tax Foundation), raising 0.6–4.3% of their tax revenue. [^4] |

## What it does
- Bans new state taxes on simply owning personal property (anything but real estate). [^7]
- Limits retroactive taxes. [^7]
- Voids conflicting taxes enacted after Jan 1, 2026, which includes Prop 40 if Prop 42 gets more votes. [^6]
- Fiscal effect: could reduce future tax revenues; when and by how much is unclear. [^7]

## Money and conflicts
- **Yes $128.0M. No $22.7M** ($21.2M from SEIU-UHW's Prop 40 committee), through Oct 22, 2026. [^1]
- Supporters: Building a Better California, Sergey Brin, Reform California, Peace Officers Research Association, California Professional Firefighters, State Building Trades [^6], Gov. Newsom [^5].
- The public-safety and construction unions are a notable crossover, since their members aren't the ones being taxed. I didn't find a public explanation of their reasons.

## Does it solve a lasting problem?
- It settles a policy question permanently in the Constitution instead of leaving it to future voters. Whether that's good depends on whether you want a wealth tax off the table for good. Its near-term purpose is to defeat Prop 40.

## If you vote yes: accountability
**Bottom line:** Prop 42 is a ban, so there's no new money to follow. What to watch is how courts read "personal property" and "retroactive," and whether the ban spills over onto taxes it wasn't aimed at. [^7]

### Who's accountable
- **The courts** will define the edges of the ban. Expect lawsuits over any new state tax enacted after Jan 1, 2026. [^6]
- **The Legislature and the Franchise Tax Board** would have to fit future tax laws within it.

### What to watch
- Any state tax bill that's challenged or dropped because of Prop 42.
- Lost revenue: the LAO says the effect on future revenue is unclear in size and timing, so watch for budget estimates. [^7]

### Public records to request (CPRA)
Anyone can file a California Public Records Act request (the state's version of FOIA), with no reason required. Agencies must respond within 10 days, or 24 in unusual cases. [^8] The Legislature isn't covered by the Public Records Act. Its records fall under a separate law, the Legislative Open Records Act.

## Both sides
- **For:** no taxes on unrealized gains or merely owning savings; no retroactive taxes. SD Union-Tribune, OC Register. [^6]
- **Against:** written to protect billionaires, framed around retirees who aren't at risk. SEIU-UHW, CA Democratic Party, Sacramento Bee, SF Chronicle. [^6]

## Official voter guide (condensed) with annotations
- Official title: Prohibits New State Personal Property Taxes and Certain Retroactive State Taxes. Initiative Constitutional Amendment.
- Summary: Bars new state taxes on owning personal property and taxes that apply retroactively. Voids conflicting taxes enacted after January 1, 2026.
- Fiscal impact: "Possibility that tax revenues will not go up as much in the future."
- A YES vote means: The state could not establish new taxes on the ownership of financial assets or other personal property.
- A NO vote means: The state could still create new taxes on owning financial assets or other personal property.
- Argument for: The constitution lets lawmakers tax retirement and savings that were already taxed when earned. This protects those savings by banning new and retroactive personal property taxes.
- Argument against: A "billionaire-funded trick" meant to undo the California Billionaire Tax that would cost Californians health care.
- Supporters: CA Professional Firefighters, State Building & Construction Trades Council, AMVETS Department of CA
- Opponents: Sen. Bernie Sanders, SEIU-United Healthcare Workers West

Annotations (what the booklet leaves out):
- (pro) The retirement framing is notable because Prop 40 already excludes pensions and retirement accounts. The people a wealth-tax ban protects most are those whose wealth is in unrealized gains, chiefly the very wealthy. [^3]
- (summary) Prop 40 taxes net worth as of Jan 1, 2026, so if 42 gets more yes votes, Prop 40 is voided. [^5]
- (general) Yes side raised $128.0M from one committee. It's a permanent constitutional ban: allowing any future wealth tax would take another statewide vote. [^1]

## Sources
[^1]: SoS, contribution totals (through Oct 22, 2026). https://www.sos.ca.gov/campaign-lobbying/helpful-resources/measure-contributions/2026-ballot-measure-contribution-totals/proposition-42-prohibits-new-state-personal-property-taxes-and-certain-retroactive-state-taxes-initiative-constitutional-amendme
[^2]: Ballotpedia News (Oct 26, 2026). https://news.ballotpedia.org/2026/10/26/with-798-9-million-in-contributions-and-counting-2026-is-the-most-expensive-ballot-measure-election-cycle-in-california/
[^3]: LAO Prop 40 (retirement exclusion). https://lao.ca.gov/ballot/2026/prop40-110326.pdf
[^4]: Euronews on wealth taxes (Sept 29, 2025). https://www.euronews.com/business/2025/09/29/wealth-taxes-in-europe-who-collects-them-and-how-much-do-they-raise
[^5]: CalMatters, Newsom positions (Oct 9, 2026). https://calmatters.org/politics/2026/10/newsom-tax-propositions-november-election/
[^6]: CalMatters guide. https://calmatters.org/california-voter-guide-2026/proposition-42-property-taxes/
[^7]: LAO. https://lao.ca.gov/ballot/2026/prop42-110326.pdf
[^8]: First Amendment Coalition, CPRA deadlines. https://firstamendmentcoalition.org/resources/explainers/explainer-cpra-delays