Prop. 42 explained: Ban on new state taxes on savings and other personal property

SAN JOSE - Proposition 42 is a citizen initiative that would amend the state Constitution to ban new state taxes on owning personal property.  Personal property means anything a person owns other than land and buildings, such as stocks, savings or business shares.

What it would do

According to the Legislative Analyst's Office (LAO), the state could not create new taxes based on the value of personal property or financial assets.  The measure would also limit retroactive taxes, which reach back to past years, and would cancel conflicting taxes passed after Jan. 1, 2026.  Opponents say that would include Prop. 40.

Who would be affected

People with large savings, investments or business holdings, including those who would owe the Prop. 40 tax, would be protected from new taxes on that wealth.  Programs that might be funded by such taxes would lose that option.

What it would cost

The LAO says state revenue may not grow as much in the future as it otherwise could, because the state would lose an option for raising taxes.

Supporters and why

Supporters include the California Professional Firefighters, the State Building and Construction Trades Council and AMVETS, Department of California.  They say retirement savings are already taxed once as income.

"YES ON PROP. 42:  PROTECT YOUR RETIREMENT AND LIFE SAVINGS FROM STATE TAXES" - Argument in favor

Opponents and why

Opponents include Sen. Bernie Sanders and SEIU-United Healthcare Workers West.

"This is a billionaire-funded initiative designed specifically to undo the California Billionaire Tax, Prop. 40." - Argument against

Where the parties stand

The California Republican Party supports Prop. 42; the California Democratic Party opposes it.  In the IGS poll, 84% of Republicans and 19% of Democrats said yes.  PPIC found most Republicans and independents yes and most Democrats no.

The money

The Yes side's largest listed contributions come from Building a Better California, including $18 million, two $16 million checks, two $15 million checks, $13 million, $10 million, $9 million, $8.3 million and $8 million.  SEIU-UHW committees fund the No side.

Polling

In a Public Policy Institute of California (PPIC) survey of 1,086 likely voters taken Oct. 16-22 (margin of error plus or minus 3.8 points), 51% said yes and 47% no, down from 54% yes in September.  In a Berkeley Institute of Governmental Studies (IGS) Poll of likely voters taken Oct. 19-25 and released Oct. 29, 43% said yes, 45% no and 12% were undecided.

What your vote means

A yes vote means the state could not create new taxes on owning personal property.  A no vote means it could.

Source:  Secretary of State, Voter Information Guide, Prop. 42; Legislative Analyst analysis, Prop. 42; Official arguments and rebuttals, Prop. 42; Secretary of State Quick Guide to Props, Prop. 42; California Democratic Party endorsements; California Republican Party endorsements; PPIC Statewide Survey, October 2026; Berkeley IGS Poll Release #2026-22