California’s election featured a big showdown over taxes. Wealth tax defeat was the biggest

California adopted the initiative system — allowing proposed laws to bypass the Legislature and be placed on the ballot via petition — in 1911, but until the 1970s it was scantily used.

Since 1971, no year has passed without at least a few and sometimes dozens of measures being filed, records from the Secretary of State’s office show. The most was in 2005, when 109 ballot proposals were cleared for signature gathering.

Since 1911, a total of 2,194 measures have gained permission to circulate petitions: 410 qualified for the ballot and, not counting this year’s crop, just 141 survived to become law.

Despite the less than 30% rate of success, the initiative process has evolved into a powerful tool for changing governmental policy. Sometimes even the threat to qualify an initiative can force the Legislature to act.

Proposition 13, the iconic 1978 measure to limit property taxes and make enactment of other taxes more difficult, stands as the ultimate example of that power. However, this year’s ballot offered a measure, Proposition 40, that would rival Prop. 13 in impact.

The votes in Tuesday’s election are still being counted, but Prop. 40, which would impose a 5% tax on the wealth of California’s billionaires, was consistently running behind by roughly 5 percentage points as votes were being tallied Wednesday.

Pre-election polls had indicated Prop. 40, which enjoyed popularity earlier in the year, had dropped into negative territory.

In a sense, its apparent failure should not be surprising.

It was placed on the ballot by the Service Employees International Union-United Healthcare Workers West to improve financial support for medical services that faced cuts in both federal and state funds.

The union said the one-time tax could raise as much as $100 billion, but its campaign for the measure was relatively weak, while the billionaires targeted by Prop. 40 pumped several hundred million dollars into a massive media campaign against it.

Prop. 40 also suffered from deep divisions within the Democratic Party and within the labor union community, the latter because most of the revenues would have gone to healthcare, rather than being shared with other services, such as education.

Dave Regan, the pugnacious leader of SEIU-UHW, vowed to try again if the Legislature “fails to deliver a real solution” to healthcare support. 

“That’s not a hypothetical. That’s our plan,” Regan said.

Tuesday’s election was a double-barreled loss for Regan. By a huge margin, voters also rejected his Proposition 44, which would have required clinics serving low-income patients to spend 90% of their annual revenue on patient care.

Moreover, voters appear to have approved Proposition 42, a measure placed on the ballot by Prop. 40’s wealthy opponents to counter the wealth tax. It places a prohibition of taxing personal wealth into the state constitution.

By prohibiting some taxes, Prop. 42 is, in effect, a win for the state’s tax limitation advocates — the same groups that backed Prop. 13 about 48 years ago and have jousted with unions and other pro-tax forces ever since.

Prop. 42 partially offsets voters’ rejection of Proposition 43, which would have made passage of local government taxes more difficult, and their approval of Proposition 3, which makes a temporary hike in income taxes on high-earning Californians, first approved in 2012, permanent.

Putting all of these issues together, Tuesday’s election was another in a long string of ballot measure confrontations between pro- and anti-tax advocates — with rejection of Prop. 40, the biggest of the bunch, giving the anti-tax faction a win on points.

Had Prop. 40 passed, it would have, like Prop. 13 in 1978, fueled a national taxation battle. Taxing personal wealth has become a holy grail goal for the Democratic Party’s uber-progressive wing.