California voters on Tuesday made permanent a tax on the state’s highest earners, locking in rates that were scheduled to expire after 2030. Proposition 3 passed with 58.7% in favor (4.4 million votes) to 41.3% opposed (3.1 million votes), according to Associated Press figures released early Wednesday.
The measure is a constitutional amendment. It does not create a new tax; it permanently fixes the higher income tax rates California has charged top earners since 2012, rates that range from 10.3% to 12.3%. Those rates apply only to individual income above roughly $371,000, a threshold that adjusts each year for inflation. Earners below that line see no change.
Combined with a separate 1% surcharge on income over $1 million that funds mental health services, California’s top earners will now pay a 13.3% state income tax rate indefinitely — already the highest in the nation.
This is the third time voters have been asked to approve this tax. It began in 2012 as Proposition 30, pitched by then-Gov. Jerry Brown as a temporary fix to help schools recover from the Great Recession. Voters extended it in 2016 through Proposition 55. Prop 3 removes the expiration date entirely.
The state’s nonpartisan Legislative Analyst’s Office estimates the tax will bring in between $5 billion and $15 billion a year. Of the education funding generated, 89% goes to K-12 schools and 11% to community colleges, with excess revenue in some years routed to health care. In strong revenue years, the tax accounts for about 15% of the state’s K-12 budget.
Who pushed it, who fought it
The California Teachers Association put the measure on the ballot and spent about $30 million backing the campaign. It was joined by the California State PTA, the California School Nurses Organization, the California School Employees Association, the California Medical Association and the California Democratic Party. Supporters argued that letting the tax expire would force layoffs and program cuts, especially with federal funding also being reduced. The CTA cast the vote as a choice between continued school funding and what it called “a tax cut for the wealthiest Californians.”
Opposition came from the California Taxpayers Association, the Family Business Association of California and the California Hispanic Chambers of Commerce. They argued the tax was originally sold to voters as temporary, noted that Californians already pay some of the highest income, sales and gas taxes in the country, and called on the state to “fix spending first” rather than lock in permanent new revenue.
A Public Policy Institute of California survey of likely voters taken Oct. 16-22 found 58% support and 41% opposition — essentially unchanged from its September poll. Democrats, independents, younger voters and renters backed it by wide margins; Republicans and older voters were opposed.
Prop 3 shared the ballot with Proposition 40, a one-time 5% wealth tax targeting California’s roughly 200 billionaires. That measure lost majority support in PPIC’s final pre-election poll after tech industry leaders spent hundreds of millions of dollars campaigning against it.
The Prop 3 fight also spilled into the race for state superintendent of public instruction, where CTA-backed candidate Richard Barrera supported the measure.
