California voters will decide whether to keep the state’s highest income tax rates in place indefinitely.
Proposition 3 would extend the income tax rates originally approved by voters in 2012, then extended in 2016. Those rates are set to expire in 2031 if the measure fails.
Dubbed the California Children’s Education and Health Care Protection Act, the measure would continue the top marginal income tax rates of up to 12% for single filers who earn over $360,000 per year, joint filers earning at least $721,000 and heads of households who earn more than $490,000, if passed by voters. Those thresholds would be adjusted for inflation.
Tax revenues would be deposited into the Education Protection Account, which provides local education institutions with general-purpose state funding; 89% of what is generated would be allocated to K-12 schools, while the remainder would go to community colleges. Proposition 3 would allow school boards to decide how those revenues are spent, but it prohibits funds from being used on administrative costs.
The California Teachers Association and the California Federation of Teachers, both in support of the measure, said passing Proposition 3 would prevent billions of dollars in cuts to schools.
The income tax revenue going toward local school districts and community colleges would free up state funding “for a Rainy Day Fund to prevent cuts to healthcare for children and their families; services for seniors, working families, and small businesses; wildfire prevention; and other critical needs even when revenues decline,” the petition said.
The state’s Legislative Analyst’s Office estimated that extending the tax rates would maintain $5 to $15 billion in annual income tax revenues collected.