In 2012, California raised income taxes on the top 2% of earners — today, that applies to individuals who make $361,000 or more per year, or $721,000 per year for joint filers. Most of that money goes to public education.
The hike was only supposed to be temporary, to help schools survive the Great Recession. But it’s been extended, and now plays an important role in the education budget. The Legislative Analyst’s Office estimates that the law brings in between $5 and $15 billion a year. Prop 3 would make the higher tax rate permanent.
If the measure fails, the rule would expire in 2031, effectively creating a tax cut for the state’s top earners.
“It will come at the expense of services for students and educators and communities across California,” said David Goldberg, president of the California Teachers Association. He’s among a huge group of educators who support Prop 3, including the San Francisco’s teachers union, the CA School Employees Association, and SEIU California, the union representing school service workers like clerks and custodians.
Those against the proposal worry it will drive the wealthy out of California.
“Instead of paying a little bit more in taxes with the higher Prop 3 or Prop 40 tax rates, they take 100% of their tax increment to another state,” Assemblymember Carl DeMaio explained on his podcast. “That state gets the revenue. We get zero.”
But Goldberg said that exodus is unlikely, because unlike Prop 40, Prop 3 isn’t a new tax. “They would've already left, right? If that was the case. But they haven't.”
Census data show that California does have one of the highest rates of emigration in the country. But research from the Public Policy Institute of California shows that high-income people are actually less likely to leave than low- or middle-income folks. The number one reason they say they’re leaving: unaffordable housing.
Assemblymember DeMaio’s office did not return KALW’s requests for comment.
