CA Proposition 3: Makes Progressive Income Tax Rates Permanent

SACRAMENTO, CA — Buried by the debate over Proposition 40 — California's "Billionaire Tax" — is another tax measure for Golden State voters to consider this November: Proposition 3.

Currently, state income tax rates adjust upward for high wage-earners under a measure approved by California voters in 2012 (Proposition 30) and extended in 2016 (Proposition 55). The progressive tax brackets, which require the wealthiest residents to pay more, are set to expire in 2031. Proposition 3 would make them permanent.

Today, for example, joint filers in California earning up to $22,000 annually pay a 1% personal income tax rate, compared to 12.3% for joint filers earning over $1.5 million per year. The brackets would become permanent if Prop. 3 passes.

According to the Legislative Analyst's Office, passing Prop. 3 would preserve $5 billion to $15 billion in annual state income tax revenue.

California state income tax is the largest source of revenue for the state's General Fund, supplying nearly half of total state revenue. It pays for public education, health and human services programs, corrections and prisons, higher education, and the general operations of state government and local community assistance.

Proposition 3 maintains broad support among California leaders. Despite the tax implications for high earners, Building a Better California endorsed Prop. 3, stating revenues are needed "to protect funding for our schools and healthcare by maintaining the state’s progressive income tax rates, which the wealthiest 2% have paid for 15 years."

But the measure's opponents argue that Prop. 3 could spur wealthy Californians to flee for lower-tax states, taking jobs and revenue with them. While California did experience a small exodus of wealthy residents following the 2012 passage of Prop. 30, the 2016 passage of Prop. 55 didn't have the same effect.

Despite predictions of mass millionaire flight after the 2016 extension, California's share of million-dollar tax filers actually expanded from roughly 14.9% in 2010 to over 16% in subsequent years.

Election & Voter Resources

For official information regarding ballot measures, voter registration, and polling logistics, consult the following resources:

• California Secretary of State Official Voter Information Guide: Provides complete initiative texts, fiscal analyses, and official arguments.
• California Secretary of State General Election Portal: Offers key dates, registration tools, and official ballot tracking.