SACRAMENTO, CA — A new publication released today by the California Budget & Policy Center (Budget Center) examines how California’s voter-approved top income tax rates have helped fund schools, health care, and other essential state services over the past decade and what’s at stake as Proposition 3, which will be on the November ballot, asks voters whether to make those rates permanent. Without voter approval, the current rates will expire after 2030, reducing state revenues by billions of dollars annually and limiting investments in critical public services that benefit all Californians.
Since California voters first approved the higher tax rates on the state’s top earners in 2012, they have generated approximately $120 billion in state revenue to support schools, community colleges, health care, economic security programs, and state budget reserves. In recent years, the rates have generated roughly $10 billion annually and apply only to the state’s highest-income taxpayers — approximately the top 2% of California tax filers.
“For more than a decade, California voter-approved top tax rates have helped fund the public investments that all Californians rely on every day,” said Erik Saucedo, senior policy analyst at the California Budget & Policy Center. “As state leaders face ongoing budget challenges and significant federal funding cuts, maintaining this critical revenue source would help protect funding for education, health care, and other essential services that strengthen communities across California.”
The publication explains that Proposition 3 would not raise taxes or create new tax rates. Instead, it would permanently extend the tax rates voters first approved in 2012 and renewed in 2016. The analysis finds that current rates apply only to approximately the top 2% of California tax filers — individuals with incomes above roughly $371,000 and married couples filing jointly with incomes above approximately $743,000 in tax year 2025. If the measure does not pass, California could lose between $5 billion and $15 billion annually in revenue, making it more difficult to sustain essential services and respond to growing fiscal pressures.
As the state confronts projected budget deficits, rising costs, and deep federal funding reductions, the Budget Center encourages voters to understand the role these revenues have played in supporting California’s budget and the potential consequences of allowing them to expire.
To view the full publication and additional policy recommendations, visit www.calbudgetcenter.org/resources/.
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About the California Budget & Policy Center:
The California Budget & Policy Center (Budget Center) is a nonpartisan research and analysis nonprofit advancing public policies that expand opportunities and promote well-being for all Californians.
