California voters will decide in November whether to make permanent the state's top marginal tax rates on higher incomes, following the California Secretary of State's announcement that the initiative qualified for the ballot. The current top marginal tax rates are scheduled to expire in 2031.
This initiative represents the third ballot measure concerning this income tax since 2012. The tax was initially enacted in 2012 after 63% of voters approved Proposition 30. It was renewed in 2016 when Proposition 55 received approval from 55% of voters. Initially, the 2012 tax rate applied to incomes above $250,000 for single filers and $500,000 for joint filers, with Proposition 55 extending this rate for those original brackets until 2031.
The current proposal would continue higher marginal income tax rates on income exceeding $361,000 for single filers and $721,000 for joint filers. Unlike Propositions 30 and 55, which did not include mechanisms to adjust the bracket threshold for inflation, the proposed initiative increases the bracket threshold and links it to inflation. Revenue generated from the increased marginal tax would be allocated, with 89% directed to K-12 schools and 11% to state community colleges, deposited into the Education Protection Account. This method of revenue division and the Education Protection Account were established in 2012 with the approval of the tax.
Californians for Protecting Public Education, Health Care and Budget Stability is leading the campaign in support of the initiative, having reported over $10.25 million in contributions. The campaign has received endorsements from the California Teachers Association, AFSCME California, California Federation of Teachers, California Professional Firefighters, California School Employees Association, and SEIU California. "It's clear from the widespread support that the Prop. 55 extension received in the signature gathering process that our communities are committed to fighting for fully funded public schools. California is the 4th largest economy in the world, with egregious wealth disparity. We either vote to extend Prop. 55 now, or our state's wealthiest get a tax break in 2030 while 1-in-6 educators lose their jobs," California Teachers Association President David Goldberg said.
Pacific Research Institute senior fellow Wayne Winegarden said, "Extending these income tax rates, it's hitting that same pressure points and it's causing the same incentives to leave. And if you look at the latest IRS migration data, you can see it. People with greater means are leaving the state." The campaign submitted 1,648,745 signatures for the initiative, exceeding the required 874,641 signatures needed for an initiated constitutional amendment. The Secretary of State estimated that approximately 1,195,175 of the submitted signatures, or 72.49%, were valid.