Released on November 16, 2025
New “Overpaid CEO Tax Ordinance” in Los Angeles would evade two-thirds vote requirement
The Los Angeles City Clerk announced last week that the “Overpaid CEO Tax Ordinance,” a citizens’ initiative that would impose an additional tax of one to ten times an employer’s regular city business tax based on pay differences, has been cleared to circulate for signatures.
The measure is a special tax, meaning the revenue is dedicated to specified purposes. Under the California constitution, special taxes require a two-thirds vote of the electorate to pass. However, a loophole carved by the California Supreme Court with ambiguous language in a 2017 decision (California Cannabis Coalition v. City of Upland) has led to appellate decisions holding that the constitution effectively does not apply to tax increases proposed by a citizens’ initiative.
“The court-created ‘Upland’ loophole continues to grow,” said Jon Coupal, president of the Howard Jarvis Taxpayers Association. “Special interests can now write their own tax increase, direct the money to themselves, collect signatures to place it on the ballot and then not have to meet the constitutional requirement for a two-thirds vote of the people. Fifty percent plus one vote is enough, according to the courts.”
If placed on the ballot by a vote of the City Council, the identical measure would need a two-thirds vote of the electorate to pass.
The Howard Jarvis Taxpayers Association is seeking to close the “Upland loophole” with an initiative that makes clear all special taxes need a two-thirds vote to pass. The Local Taxpayer Protection Act to Save Proposition 13 also bans real estate transfer taxes higher than 0.11% and sunsets current transfer taxes above that level. New transfer taxes were banned by Proposition 13 in 1978, but court decisions in the 1990s allowed charter cities, which have more autonomy, to enact them for general purposes.
“We are restoring the full protections of Proposition 13 with HJTA’s new initiative,” Coupal said. “We do not believe it’s the proper role of the California courts to invent ways to make it easier to raise taxes.”
The Local Taxpayer Protection Act to Save Proposition 13 needs about 875,000 valid signatures of registered California voters by mid-February to qualify for the November 2026 ballot. The official initiative petition is available at SaveProp13.com.
For More Information:
Jon Coupal, President, HJTA; 916-444-9950, jon@hjta.org
Susan Shelley, VP, Communications; 213-384-9656; susan@hjta.org
About the Howard Jarvis Taxpayers Association
The Howard Jarvis Taxpayers Association is a member-supported nonprofit organization that fights for the interests of taxpayers and to secure the constitutional taxpayer protections voters have adopted through the initiative process, beginning with Proposition 13 in 1978. The Howard Jarvis Taxpayers Foundation, a 501(c)(3), funds the organization’s legal and educational work. More information at hjta.org.