California Voters Weigh Making High-Income Tax Permanent

Proposition 3 would make permanent higher income tax rates for California’s top 2% of earners. Voters approved the rates in 2012 and extended them in 2016; without another extension, they are scheduled to end in 2031. The tax applies to single filers earning more than $371,000 and couples filing jointly earning more than $743,000, with thresholds adjusted for inflation. The rate is 12.3% for those earners.

The tax generates an estimated $5 billion to $15 billion annually. As much as 15% of school revenue comes from it, and schools would face the loss of that funding starting in 2031 if the measure fails. Revenue enters the state’s school funding formula: 89% of the resulting allocation goes to K-12 schools and 11% to community colleges. Any surplus goes to a rainy day fund.

Supporters say the money has helped pay for school meals, smaller classes and children’s health care, including Medi-Cal. The California Teachers Association has spent nearly $60 million promoting the measure and sent members to canvass more than 200,000 homes. Union president David Goldberg described it as vital to schools and teachers’ jobs. The California State PTA, California Federation of Teachers, California’s Democratic Party and its gubernatorial candidate, Xavier Becerra, also support it.

Opponents say the tax was meant as temporary support during the Great Recession and argue that making it permanent breaks that commitment. They say the state should restrain spending and warn that wealthy taxpayers could move to lower-tax states. They also question the need for continued revenue amid declining enrollment and increased school spending. The California Taxpayers Association, Howard Jarvis Taxpayers Association and state Republican Party oppose Proposition 3.

California school enrollment has fallen for about a decade, while schools face higher insurance costs and repairs to aging buildings. Administrators say recent increases in state funding have not matched rising expenses.

Keep School Funding Stable by Making the Wealthy Tax Permanent

California schools could lose billions of dollars a year beginning in 2031 if voters reject Proposition 3. The measure would keep higher tax rates on the state’s top 2% of earners in place, maintaining revenue that has supported schools and other services for more than a decade.

The tax raises an estimated $5 billion to $15 billion annually and has supplied as much as 15% of school revenue. Its proceeds enter California’s school funding formula, with 89% of the allocation going to K-12 schools and 11% to community colleges. Any extra revenue is directed to a rainy day fund.

Supporters point to school meals, smaller class sizes and children’s health care, including Medi-Cal, as programs the tax has helped fund. The California Teachers Association has invested nearly $60 million in a campaign for the measure and mobilized members to canvass more than 200,000 homes. Union president David Goldberg called it vital to protecting schools and teachers’ jobs. Other supporters include California’s Democratic Party, California State PTA, California Federation of Teachers and Xavier Becerra, the party’s candidate for governor.

Opponents want the tax to expire, arguing it was supposed to be temporary and that California should reduce spending instead. But schools are contending with falling enrollment, rising insurance bills and costly repairs to aging buildings; administrators say recent state funding increases have not kept pace with expenses. Proposition 3 would preserve a major source of support as those pressures continue.

California’s Temporary Tax Should Not Become Permanent

Proposition 3 asks California voters to turn a temporary tax increase into a permanent one. Higher rates for the state’s top 2% of earners were approved in 2012 and extended in 2016, with expiration set for 2031. Opponents say taxpayers accepted a time-limited increase and state leaders should not keep extending it.

The tax applies to single filers earning more than $371,000 and couples earning more than $743,000, at a rate of 12.3%. It brings in an estimated $5 billion to $15 billion each year, with as much as 15% of school revenue coming from the proceeds. Opponents argue that continued demands on wealthy residents could drive some to lower-tax states and weaken California’s revenue base.

They also question whether the tax remains necessary, pointing to declining school enrollment and increased government spending on schools in recent years. The California Taxpayers Association, Howard Jarvis Taxpayers Association and state Republican Party oppose the measure. They argue that making the increase permanent reverses the original promise and that Sacramento should spend responsibly rather than ask taxpayers to shoulder it indefinitely.

Supporters say the money has financed school meals, smaller classes and children’s health care, and warn that schools could lose billions annually after 2031 if the tax ends. The revenue also supports community colleges and a state rainy day fund. Proposition 3’s supporters, including the California Teachers Association, say maintaining the funding is vital to schools and teachers. The choice is whether to preserve those funds through a lasting tax increase or let the promised expiration stand.