California's Billionaire Tax Trails and Its Top Rate Wins; Arizona Caps Grocery Taxes; Colorado Rejects a Right to Natural Gas

The bottom line today

California’s billionaire tax is losing. Two days after the vote, Proposition 40 trailed with more than 56% of voters opposed, and Proposition 42, the constitutional ban on new taxes on business interests and other assets, led with 54% [3, 4]. Neither had been decided [4]. The cost lands elsewhere: Proposition 3 was listed as approved with about 59%, which makes California’s top income tax rates permanent, and Proposition 45’s CEQA deadlines were trailing [4]. Arizona capped city grocery taxes, its mileage tax ban is still too close to call, and Colorado rejected a constitutional right to natural gas [8, 10, 12]. For employers, the day is a split: a threat averted and a scheduled tax cut cancelled.

CA California Propositions 40 and 42: the wealth tax trails, the asset tax ban leads

What they do. Proposition 40 would impose a one-time 5% tax on the net worth of California residents worth more than $1 billion, with private companies valued by formula [1]. Proposition 42 bars new state taxes on personal property, including business interests, intellectual property and financial assets, and certain retroactive taxes [1]. If both pass and Proposition 42 gets more votes, the Legislative Analyst says courts could find the two conflict [1].

Where they stand. On election night, Proposition 40 trailed with 56% opposed and 54% of votes counted, according to Associated Press figures reported by CalMatters, and Proposition 42 led with 55% [2]. By November 5, Proposition 42 stood at 54% with nearly 60% of anticipated votes counted [3]. CalMatters’ November 5 tally listed both as leading, not decided, with Proposition 41, the other counter-measure, trailing at about 53% opposed [4]. SEIU-United Healthcare Workers West, the sponsor of the wealth tax, appeared to concede shortly before polls closed and said it would return in 2028 if the Legislature does not produce a health care funding fix, CalMatters reported [2].

Pratt’s read. As this release laid out before the vote, the danger in Proposition 40 was its valuation formula: book value plus 7.5 times average book profits, presumed by voting control (October 29 release). If the count holds, no founder of a profitable private California company has to raise cash to pay a tax on paper equity. Proposition 42 is the larger win because it is durable. CalMatters notes that the Legislative Analyst expects it to make future tax increases harder and possibly reduce revenue, and that voters could undo it with another measure [3]. The union’s 2028 promise is the open question. A ban written into the constitution is the strongest answer an investor can get.

CA California Proposition 3: the top rate stays

What it does. Proposition 3 makes permanent the 2012 rates of 10.3%, 11.3% and 12.3% on income above about $371,000 for single filers and $742,000 for joint filers, which are otherwise set to fall to 9.3% after 2030 [1]. The Legislative Analyst puts the revenue at $5 billion to $15 billion a year [1].

Where it stands. CalMatters listed it as approved with about 59% on November 5 [4]. The result is not certified.

Pratt’s read. Supporters argued it does not raise anyone’s taxes, and for most wage earners that holds [1]. Owners of pass-through firms report business profit on their personal returns, and they lose the cut they had been promised for 2031. The 12.3% bracket now has no end date. A related measure went the other way: Proposition 43, which would require two-thirds voter approval for citizen-proposed local special taxes and was backed by the California Taxpayers Association, the Family Business Association of California and the California Hispanic Chambers of Commerce, was trailing with more than 54% no [1, 4].

CA California Proposition 45: CEQA deadlines trail

What it does. Proposition 45, sponsored by the California Chamber of Commerce, would give housing, water, clean energy, broadband, transportation and other listed projects an optional track with fixed review deadlines [1, 5]. The San Francisco Standard summarized the clock: environmental impact reports within 365 business days, comment periods capped at 45 days, lawsuits filed within 30 days and resolved, appeals included, within 270 days [5].

Where it stands. It was losing on election night and trailing with more than 54% no in the November 5 tally, not yet called [4, 5].

Pratt’s read. The campaign turned on data centers, which are not on the measure’s list. “CalChamber and the data center developers they represent couldn’t stop strong data center safeguards in the Legislature, so they’re spending big to override them at the ballot box,” a No on 45 spokesperson, Woody Little, said [5]. The yes campaign pointed to a Legislative Counsel opinion that data centers are not broadband [5]. If the count holds, builders are back where they started: CEQA without a clock, and any deadline reform goes back to the Legislature.

AZ Arizona Proposition 316: the grocery tax cap passes

What it does. HCR 2021 caps city taxes on food for home consumption at 2%, requires voter approval for any new or higher rate, bars cities at 2% or more from raising theirs, and blocks increases in the 24 months before June 30, 2027 [6].

Where it stands. The Associated Press called it for yes at 11:33 p.m. election night, with 59% support, KJZZ reported [8]. By Wednesday it had more than 61% [9].

Pratt’s read. Grocers get a stable rate and customers get a ceiling, which is the credit this release gave the measure before the vote. Critics have a fair point about where cities go next. Cathy Sigmon of Civic Engagement Beyond Voting warned of “erosion of popular services” and said that cities “will have little choice but to raise taxes elsewhere” [9]. Retailers and restaurants should watch city councils for exactly that. Cities do keep the grocery tax revenue they collect now, AZFamily notes [9].

AZ Arizona Proposition 141: the mileage tax ban is too close to call

What it does. SCR 1004 would amend the Arizona Constitution to bar the state and every local government from taxing vehicle miles traveled, or from monitoring or limiting miles driven without the driver’s consent, while exempting interstate agreements on commercial vehicle fuel taxes and registration fees [7].

Where it stands. At 7:46 p.m. on election night it had 50.8% yes [10]. It needs a simple majority, and the reporting this release draws on shows no call as of November 5 [10].

Pratt’s read. For fleets, delivery firms and farm operations, a yes means certainty that miles will not become a new tax base, while the interstate trucking systems stay as they are [7]. KJZZ notes the case on the other side: gas tax revenue that maintains roads is falling as drivers switch to electric vehicles [10]. That problem stays either way.

CO Colorado Amendment 82: no constitutional right to natural gas

What it does. Amendment 82 would have added to the constitution that “consumers have the right to purchase natural gas for cooking or heating in homes or businesses throughout the state” [12].

Where it stands. The Associated Press projected Wednesday that it failed, with about 46% yes against the 55% a citizen-initiated amendment needs [12]. Secretary of State numbers on Wednesday showed 53.87% no and 46.13% yes [11].

Pratt’s read. This release flagged in September that the measure was two sentences long and might limit state and local gas rules (September 29 release). Much of the gas industry declined to endorse it, fearing a new round of regulatory fights, Colorado Politics reported [11]. Restaurants, manufacturers and landlords that rely on gas heat keep the status quo, including the 2030 emission cuts state gas utilities must make and the local electrification rules for new buildings that KUNC describes [12]. Supporters, led by Advance Colorado, argued gas is reliable and affordable and used by more than 70% of Colorado homes [11]. Opponents, including the Sierra Club, said voters wanted “local decision making and accountability” [12]. The cost question for gas users now moves to the utility commission and city halls.

On the calendar

Counting continues in all three states, and none of these results is certified [4, 10, 12]. Arizona’s grocery tax rules key to June 30, 2027 [6]. California’s top rates had been scheduled to drop after 2030 [1].