Document Type
Article
Publication Date
9-2026
Abstract
This memorandum discusses the possible collateral damage that Propositions 41 and 42 (on the ballot in California on November 3, 2026) might cause. The two propositions were concocted very quickly by billionaires in order to trick voters that will vote for Proposition 40 (the billionaire tax) also to vote for these propositions that are designed to undermine the billionaire tax.
The basic trick is that these propositions have plausible seeming veneers but hide a poison pill that aims to frustrate the functioning of the billionaire tax. The veneers are “plausible seeming” because they address problems that are not problems. For example, Prop 42 protects retirement assets when there is no threat to them – certainly not from Prop 40 (which exempts them).
But this memo focuses on an issue other than their deceptiveness and general disrespect for the democratic process. Because these propositions were drafted so quickly and poorly as poison pills for one tax measure, they could, if passed, impact many other vital policy initiatives. Some possible negative impacts include.
· The audit requirements of Proposition 41 could hamstring Proposition 3 (the teacher-sponsored measure to fund education with taxes on million-dollar earners) or invalidate it outright.
· The audit requirements of Proposition 41 could similarly hamstring many other revenue raising measures, such as (for example) a tax on large employers who have many employees on Medi-Cal.
· The limitations on taxing personal property in Proposition 42 could impact the ability of the state to tax capital gains income, whether as part of Proposition 3 or otherwise.
· The limitation on taxing personal property in Proposition 42 could frustrate any future attempt to reform California’s Vehicle License Fee, a backbone tool for financing a wide array of local services.
Recommended Citation
David Gamage et al.,
Analysis of the Impacts of Propositions 41 and 42 on California Public Finance
(2026).
Available at: https://scholarship.law.missouri.edu/facpubs/1384