logo

TaxProf Blog

Ad: BlueJ Better Tax Answers. -Accomplish hours of research in seconds -Instantly draft high-quality communications -Verify answers using a library of trusted tax content. Learn more

California’s Proposition 40 Rejected

Jon Endean
,

While the final count is likely still weeks away, the AP has officially called California’s Proposition 40 in favor of “No,” meaning that it is likely to go down. (Of the competing ballot initiatives, Proposition 41 (which prohibits taxes where the revenues are not included in state spending limits) appears to have been rejected as well, and Proposition 42 (which prohibits retrospective taxes and new taxes on personal property) remains uncalled.)

In light of the (rather voluminous) TaxProf Blog coverage on Prop. 40, here are several retrospectives and postmortems on the failure of the ballot measure. From Andrew Duehren in the New York Times, Failure of Billionaire Tax Strikes Blow to Progressive Agenda:

Of all the progressive arguments in favor of a wealth tax, the most clear-cut was supposed to be the popularity of such a policy. Even people who may not vote for Democrats would support such a tax, the thinking went, out of frustration with the opulence and power of the ultrarich.

And then voters in California rejected what would have been the nation’s first tax on wealth. Proposition 40 called for a one-time, 5 percent tax on the assets of California’s roughly 250 billionaires. It failed with roughly 53 percent of voters opposed as of the tally on Monday evening, when The Associated Press called the race.

The outcome is a stark setback for a progressive political project aimed at fundamentally changing taxation in the United States. Even in an election cycle when Democrats surged to huge victories across the country, a policy idea at the heart of the progressive agenda could not muster a bare majority in one of the country’s most liberal states.

From Martin Sandbu in the Financial Times, How to Think About Wealth Taxation:

The US elections produced a historic Republican rout (read our news and analysis here). Voters were clearly exercised about oligarchic domination and corruption (illustrated by Patrick Jenkins’ Monday interview with one of Washington’s corruption fighters) and the cost of living. Whether the new political constellation will make any of those things better, or whether it means a long-term realignment and the demise of Maga-ism, remains to be seen.

While digesting the overall results, let me draw your attention to one particularly interesting contest. California’s Proposition 40 was a referendum on a one-off wealth tax on billionaires. At the time of writing, the count is incomplete but the initiative looks to have failed. Regardless of the outcome, however, the calls for more taxes on wealth are likely to continue, especially with the success of socialist candidates. Before rushing to conclusions for or against specific wealth tax proposals, however, we should ask more basic questions about how — and how much — to tax capital. That is today’s topic.

Related TaxProf Blog coverage:

About the Author

Jon Endean Avatar
Jon Endean
Jon Endean is an Assistant Professor of Law at Brooklyn Law School, where he teaches courses in taxation. His scholarship examines foundational principles of tax law and what they can reveal about the relationship between taxation and other areas of law. Before entering academia, Jon practiced tax law at Covington & Burling in New York City, and he is a graduate of Rice University and Yale Law School.
Ad: BlueJ Better Tax Answers. Blue J's generative AI tax research solution is transforming how tax experts work. Learn more.
Information and rates on advertising on TaxProf Blog