Our View: Vote YES on Proposition 3: Make existing tax permanent; protect schools

Proposition 3, a citizen’s initiative, does not create a new tax. It makes permanent a high-wealth income tax rate that has been in effect since 2012.

The rate affects only the state’s most wealthy. It was first passed by voters by a 53.9% to 46.7% margin in 2012. With the rate due to expire, Californians in 2016 gave even greater support to extending the tax until 2020, with a 63.37% to 36.77% vote.

This election, voters should pass Proposition 3, the California Renew State Income Tax Increase for Education Funding initiative, to make permanent a much-needed education funding source. It will protect California’s schools and our children’s future.

With California’s economy struggling to recover from the Great Recession, schools and students faced the likelihood of closures, teacher layoffs and program cuts in 2012. Proposition 30 was placed on the ballot to create temporary a high-income tax rate that affected only 2% of California’s population. The money from the tax hike was placed in a separate state account for K-12 and community colleges.

As the Proposition 30 income tax rates were approaching expiration, California’s economy in 2016 had recovered from the recession, but fears persisted that another boom-and-bust cycle was just around the corner. To continue to protect schools, voters passed Proposition 55, which extended the higher tax rates until 2030.

California’s current tax rates range from 1% to 9.3%, depending on the taxpayer’s annual earnings. The additional three tax rates affecting only the wealthy are:

• 10.3% — for those earning $371,000 to $446,000 (single filer) and $743,000 to $892,000 (joint).

• 11.3% — for those earning $446,000 to $743,000 (single filer) and $892,000 to $1.5 million (joint).

• 12.3% — for those earning above $743,000 (single filer) and above $1.5 million (joint).

Proposition 3 does not propose increasing those rates. Rather, it proposes to make the rates permanent. If the current rates are allowed to expire, the state’s top earners would get a tax cut. Their income tax rates would go down to 9.3%.

“People have shown us time and time again that they know that investing in our students, our communities and educators is one of the best investments we can make as a state,” said David Goldberg, president of the California Teachers Association, one of several organizations supporting Proposition 3. “Frankly, they also are blown away by income inequality we have in the state. … If we do not pass this, it actually is a tax cut for the wealthiest Californians.”

The state Legislative Analyst office estimates the three-tiered tax rate on the wealthy generates annually about $10 billion for schools. If the rates expire, because of minimal funding requirements California voters earlier placed in the constitution, lost education money would be made up from the state general at the expense of other vital state services.

That is why Proposition 3, which makes the rates permanent, is supported by organizations that include the American Federation of State, County and Municipal Employees; California Professional Firefighters; and the Service Employees International Union, as well as numerous educational associations.

The California Medical Association, which supports Proposition 3, warns keeping the tax rates is critical to sustaining California’s healthcare system, which includes the community hospitals all Californians rely on.

But Proposition 3 opponents, which include the anti-tax groups California Taxpayers Association, Howard Jarvis Taxpayers Association and Reform California, see it differently. The three-tier income tax on the wealthy was supposed to be temporary, so let it expire.

“California has the highest income tax rates in the nation, and every year the state has a bigger budget and a higher cost of living to show for it,” states the Howard Jarvis Taxpayers Association in its Voters Guide. “These ‘temporary’ income tax rate hikes should not be a backdoor method for permanent increases.”

Supporting Proposition 3, the League of Women Voters of California makes a good argument: “California should not give its highest-income residents a multi-billion-dollar tax cut, while schools, healthcare and other essential services face serious financial pressure. Proposition 3 simply asks the top 2% to keep paying the same rates they already pay.”

The Californian agrees. Vote YES on Proposition 3.