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Summary of article:
California voters passed Proposition 3, which essentially made the temporary high income tax permanent and continued raising taxes on high earners with annual incomes over $371,000 to support education, health care, and the state’s fiscal reserves.
CBS TV station reports,California High income groups will “permanently raise taxes”! According to Associated Press forecasts, voters have passed Proposition 3 in the midterm elections on the 3rd, meaning California’s current high income tax rate on the top 2% of taxpayers will be replaced by a permanent expiration in 2031 to fund education and health care.
California voters first passed Proposition 30 in 2012, which raised taxes on the wealthy; In 2016, they passed Proposition 55, which extended the tax increase period for 15 years. With the passage of Proposition 3, permanent tax increases on the rich became a foregone conclusion.
Supporters stated in the Official California Voter Guide that for more than 10 years, these taxes have been used to fund vital programs that California families and communities depend on, and Proposition 3 will allow these programs to benefit the next generation. This revenue will also help the state government increase its “Rainy Day Fund”, which is a reserve fund in case the state government faces financial shortfalls and unexpected economic conditions in the future.
According to election guidelines, this higher tax rate applies to single taxpayers with an annual income of up to 371,000 yuan and couples with an annual income of up to 743,000 yuan. The relevant income limits are adjusted annually based on inflation. It is estimated that the state government could increase tax revenues by 5 billion to 15 billion yuan annually.
Opponents argue that the tax increases approved by voters more than 10 years ago were temporary in nature and that state leaders should cut spending rather than permanently raise taxes. Opponents said in the official voter guide that California taxpayers have fulfilled their promise to pay a higher temporary income tax for 16 consecutive years. Politicians should also fulfill their promises and stop insisting on high taxation. He further criticized, “If Sacramento state officials could use public funds responsibly, there would no longer be a need to ask taxpayers to make a ‘temporary tax’ permanent.”
Summary FAQ
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The most significant change is that the higher income tax rate imposed on the top 2% of income-earning taxpayers will no longer expire in 2031, but will be implemented permanently, equivalent to making the original temporary tax increase permanent.
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According to election guidelines, this higher tax rate will apply to taxpayers with annual income of more than $371,000 for single taxpayers and $743,000 for couples filing jointly, and the threshold will be adjusted annually with inflation.
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Proponents believe the tax could continue vital programs such as education and health care, and increase the Rainy Day Fund; Opponents argue that the state government should cut spending first and criticize it as unfair to make the originally promised temporary tax permanent.
