Temporary should mean temporary. But for the government, temporary often means forever.
That’s what’s happening with Proposition 3 on the Nov. 3 ballot, titled: “Provides Permanent Funding for Schools and Healthcare by Extending Existing Tax on High Incomes,” which, as the name suggests, seeks to lock in the state’s high income tax rates forever.
The story goes back to 2012, with Proposition 30, which imposed both a statewide sales tax increase through 2016 and an increase to top income tax rates through 2018.
Leading the push for Prop. 30 was Gov. Jerry Brown, who vowed it was only a temporary measure to help the state ride out tough budget times in the years after the Great Recession and ensure the state’s schools were reliably funded. In fact, Prop. 30 was titled, “Temporary Taxes to Fund Education.” Taken together with other voter-approved income taxes, this pushed top income tax rates to 13.3%, the highest in the nation according to the Tax Foundation, with Hawaii the runner-up at 11%.
It wasn’t long before the state’s public employee unions pounced to extend the “temporarily” increased top income tax rates over the objections of even Gov. Brown. In 2016, voters approved the extension with Proposition 55, with the taxes set to run through 2030 and expiring in 2031. As this editorial board warned at the time in opposing Prop. 55, “California will not be able to tax its way to prosperity, and imposing more taxes, particularly on those most capable of making investments here (and most capable of leaving or shifting their investments to more business-friendly states) will only reduce job opportunities and suppress economic growth.”
The argument in favor of Prop. 3 seen by voters argues that allowing Prop. 55 to expire “would give millionaires and billionaires a massive tax cut at the expense of our classrooms, clinics and communities.” But that assumes the wealthy producers will stay here, instead of getting an instant tax cut by moving to Texas or elsewhere, especially when considered in an environment in which wealth taxes are seriously being talked about.
Indeed, research published by the American Economic Association in 2024 by Joshua Rauh and Ryan J. Shyu found that the Prop. 30 tax hikes prompted many high-income earners to either leave California or lower their taxable income. Such “responses eroded 45.2 percent of state windfall tax revenues within the first year and 60.9 percent within 2 years, driven largely by the intensive margin,” Rauh and Shyu reported.
Beyond the perils of maintaining such a high tax environment, the reality is that high taxes have primarily served to paper over the fundamental budget problems of the state and the education system. As Rauh recently noted, “In California, over the 9 most recent years of data, contributions to pensions for K-12 nearly doubled as a share of educational budgets, and consumed 44% of the increase in school budgets. Prop 30/55 looks more like a tax to fund pensions than a tax to fund education.”
That’s the cold, hard reality behind any public proclamation that higher taxes are needed to help students.
Also, to reiterate, the existing Prop. 55 tax rates run through 2030, expiring in 2031. That gives Californians plenty of time, including election cycles in 2028 and 2030, to decide whether the state truly needs another extension of our sky-high income tax rates. There’s no urgent need for an extension in 2026, let alone to make the “temporary” tax hikes permanent.
Robbing future voters of their decision-making because the California Teachers Association wants to secure a revenue stream years ahead of time is unjustified.
Vote no on Prop. 3.