Proposition 55: Tax Extension to Fund Education and Healthcare (Proposition 30)

 This November there will be more on the ballot than just choosing our next president. Another issue is an important California measure to raise additional revenue through 2030. You, as a California voter, will have the opportunity to vote for or against an initiative to extend for 12 years the temporary personal income tax increases enacted in 2012 on high income earners. Unlike the initial proposition, which also temporarily raised the state’s portion of sales tax, the proposed extension focuses only on income tax.
The tax increases imposed in 2012 range from 10.3 percent for those with a taxable income between $250,000 and $300,000, to 13.3 percent on taxable income over $1,000,000. This tax increase will expire in 2019 should California residents vote “no.”
Proposition 30 raised about $6 billion per year since it was approved in 2012. According to the Legislative Analyst’s Office, and independent body, the extension of this initiative will generate $4 billion to $9 billion annually from 2019 through 2030, depending on the economy and stock market.
About half of the funds raised will be allocated for education with approximately 90 percent of the revenue for schools being used for K-12 schools. The remainder of the money earmarked for education will be directed to community colleges. The bill prohibits using generated revenue for administrative costs. However, local school boards will be granted the right to decide how these funds will be spent at open meetings subject to annual audits.
Up to $2 billion per year would go to healthcare programs, and flow to California’s Medi-Cal program in support of low-income earners. The remainder will be used for budget reserves and debt payments.  According to the nonpartisan Pubic Policy Institute of California, close to two-thirds of the likely voters surveyed lean toward supporting this initiative.  If you have questions how the passage of this bill will affect you financial status and what actions you can take, you are welcome to contact our office.
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