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Proposition 3: Permanently extend a higher income tax on the state’s richest taxpayers
This measure would lock in an income tax rate that's currently set to expire after 2030.
Currently, the state’s richest earners pay a temporary higher income tax rate, which was last approved by voters in 2016. It’s due to expire in 2031. Proposition 3 proposes making that higher tax permanent. The state says these rates are paid by just the top 2% of California’s taxpayers and would continue to bring in billions each year.
Official title on the ballot: Proposition 3: Provides permanent funding for schools and health care by extending existing tax on high revenue incomes.
Makes permanent existing voter-approved tax rates for individuals earning over $371,000 (adjusted annually for inflation). Allocates tax revenues to public education. Fiscal Impact: Maintains $5 billion to $15 billion of annual state income tax revenue by making a temporary tax increase on high-income earners permanent instead of letting it expire in 2031.
What your vote means
A "Yes" vote means: An income tax increase on high-income earners would become permanent instead of expiring in 2031.
A "No" vote means: The higher tax rate would expire in 2031.
Understanding Proposition 3
Most of the state’s money comes from income tax. It helps pay for spending that comes out of the general fund, which covers public services like education, healthcare and prisons.
The state says it plans to spend about $250 billion from the fund this year. Currently the higher income tax brings in between $5 billion and $15 billion per year, according to the Legislative Analyst’s Office.
Who will pay?
Single individuals who make more than $371,000, and joint filers who make more than $743,000 a year.
Currently the rate is between 10.3% and 12.3%, depending on income. If Proposition 3 fails, that rate is scheduled to drop to 9.3% in 2031.
Why now?
The higher income tax rates are set to end in 2031. Prop. 3 would get rid of that expiration date.
Voters temporarily approved the higher rates twice before, in 2012 and 2016.
Here’s what supporters say
What it takes to win
A majority is needed to pass.
Further reading
Supporters argue that losing the annual tax revenue would be devastating for public schools, students and educators. “The choice is simple: Continued resources for our K–12 schools and community colleges or a tax cut for the wealthiest Californians,” the California Teachers Association said.
Notable supporters: California Teachers Association, California Democratic Party, California State PTA, California School Employees Association
Opponents argue that California already has the highest personal income taxes in the country, and extending them could sustain higher costs for small businesses and their customers. “Prop. 3 would make the tax hikes permanent — during a year in which high taxes and the unaffordable cost of living are the biggest problems for the majority of Californians,” Robert Gutierrez, president of the California Taxpayers Association wrote in a commentary for CalMatters.
Notable opponents: Reform California, California Taxpayers Association
Commentary in CalMatters: Proposition 3 sustains California schools. Losing the high-income tax would be devastating
Commentary in CalMatters: This high-income tax was pitched as ‘temporary.’ California voters can ensure it stays that way