Skip to main content

Proposition 55 – Extension of Proposition 30 Tax Increases

Printer-friendly version

Official Title:

Tax Extension to Fund Education and Healthcare. Initiative Constitutional Amendment.

Overview:

In 2012, California voters approved Proposition 30, which temporarily raised two types of California taxes.  First, Proposition 30 increased the state sales tax by one-quarter cent.  This tax increase expires in 2016.  Second, Proposition 30 increased the marginal income tax rates by roughly 1 percent on the tax filers with the highest incomes ($250,000 for single filers and $500,000 for joint filers).  These income tax increases are in effect from 2012 through 2018.  In the current fiscal year, the Proposition 30 income tax increases are anticipated to raise between $6 billion and $8 billion in additional revenue.

Proposition 55 would extend the Proposition 30 income tax increases, meaning they would not expire at the end of 2018.  Proposition 55 would extend those income tax increases through 2030.

Proposition 55 would not extend the Proposition 30 state sales tax increase.

 Fiscal Impact:

According to the Legislative Analyst Office (LAO), Proposition 55 would result in increased state revenues annually from 2019 through 2030—likely in the $5 billion to $11 billion range initially—with amounts varying based on stock market and economic trends.   Under the proposition, increase revenues would be allocated under constitutional formulas to schools and community colleges, budget reserves and debt payments, and health programs, with remaining funds available for these or other state purposes.

CCC Position: - No position

Support:

Supporters of Proposition 55 include the California State PTA, the Children’s Defense Fund – California, and Tom Torlakson, the California State Superintendent of Public Instruction.

Supporters of the proposition argue that it does not raise taxes, that it affects only the wealthiest Californians by maintaining their current income tax rate, and that it lowers the sales tax.  Moreover, supporters state that this measure has strict transparency and accountability requirements to ensure that education funds get to the classroom.  Lastly, Proposition 55 prevents up to $4 billion in cuts to schools and continues to restore funding cut during the recession so that additional teachers can be hired, arts and music programs can be restored, community college can be made more affordable, and health care access for children can be expanded.    

Opposition:

Opponents of Proposition 55 include the Howard Jarvis Taxpayers Association and the National Federation of Independent Business – California. 

Opponents of this measure assert that in 2012, voters approved the Proposition 30 tax increases because they were promised that the increases would be temporary and end in 2017.  Now, however, special interests want to break that promise and extend these tax hikes 12 more years.  Opponents state that California’s economy has recovered from the recession, and the state currently has a budget surplus so that education, health care, and state government can be funded without new or higher taxes.  

Reflections on Church Teaching:

"The tax system should be continually evaluated in terms of its impact on the poor. This evaluation should be guided by three principles. First, the tax system should raise adequate revenues to pay for the public needs of society, especially to meet the basic needs of the poor. Secondly, the tax system should be structured according to the principle of progressivity, so that those with relatively greater financial resources pay a higher rate of taxation. The inclusion of such a principle in tax policies is an important means of reducing the severe inequalities of income and wealth in the nation. Action should be taken to reduce or offset the fact that most sales taxes and payroll taxes place a disproportionate burden on those with lower incomes. Thirdly, families below the official poverty line should not be required to pay income taxes. Such families are, by definition, without sufficient resources to purchase the basic necessities of life. They should not be forced to bear the additional burden of paying income taxes." Economic Justice for All: Pastoral Letter on Catholic Social Teaching and the U.S. Economy , United States Conference of Catholic Bishops (1986).

"It is the duty of citizens to contribute along with the civil authorities to the good of society in a spirit of truth, justice, solidarity, and freedom.  The love and service of one's country follow from the duty of gratitude and belong to the order of charity. Submission to legitimate authorities and service of the common good require citizens to fulfill their roles in the life of the political community.  Submission to authority and co-responsibility for the common good make it morally obligatory to pay taxes, to exercise the right to vote, and to defend one's country."  Catechism of the Catholic Church, nos. 2239-2240.

"In a system of taxation based on justice and equity it is fundamental that the burdens be proportioned to the capacity of the people contributing."  Mater et Magistra, Encyclical of Pope John XXIII on Christianity and Social Progress, May 15, 1961 (132). 

Visit http://www.cacatholic.org/education for more information on Education issues in California.

Read the California Bishops’ statement In Search of the Common Good - http://www.cacatholic.org/news/california-bishops-statements/search-common-good - which examines the moral and ethical questions important in a State Budget