Several newspapers have joined the California Chamber of Commerce in recommending a “no” vote on a ballot initiative that would extend Proposition 30 income tax hikes until 2031.
Proposition 55 extends by 12 years the temporary personal income tax increases enacted in 2012 on earnings over $250,000, with revenues allocated to K–12 schools, community colleges, and, in certain years, health care.
CalChamber Reasons for Position
CalChamber did not oppose the original Proposition 30 tax increase in 2012 because the measure was supposed to be temporary and the state was in the midst of a dire financial situation. An extension of Proposition 30 would make the tax virtually permanent, even when the state’s budget is balanced.
The state currently has in excess of $3 billion in reserves and has a balanced budget that pays down debt and saves even more for future economic downturns. In June, the Legislative Analyst’s Office anticipated an $8.5 billion reserve for the 2016-17 state budget.
Also, revenue from the personal income tax is highly volatile and any anticipated revenue from Proposition 55 might be significantly reduced when California is faced with future recessions.
Passing an extension now is premature, because Proposition 30 taxes do not expire until the end of 2018.
Following are excerpts from the newspaper editorials opposing Proposition 55:
East Bay Times: Tax extension breaks Gov. Brown’s promise “In 2012, when voters approved increasing income taxes on the wealthy and the state sales tax, they were promised the levies would end by 2018. Proposition 55 on the November ballot breaks that promise. It would extend the income tax portion, not just for another six years but for 12. Voters should reject it.” July 28, 2016
Los Angeles Daily News: No on Prop. 55; temporary taxes should stay that way “While Silicon Valley has experienced strong growth since the recession, the same cannot be said for most of the rest of the state. California will not be able to tax its way to prosperity, and imposing more taxes, particularly on those most capable of making investments here (and most capable of leaving or shifting their investments to more business-friendly states) will only reduce job opportunities and suppress economic growth.” October 10, 2016
Los Angeles Times: Don’t tie California’s fate to Wall Street volatility. Vote no on Proposition 55 “A tax structure that depends too heavily on a small group of people, however wealthy they may be, also presents an insidious social and political problem. When a majority of people provide a substantial portion of the state’s revenue, there is a broader demand for accountability and a greater incentive to vote. But when only a few provide most of the revenue, the majority loses not only its incentive to demand results, but its leverage to do so. The tax system that Proposition 55 locks in place until 2030 is fiscally, politically and socially unsound, and voters should reject it and demand that the Legislature produce something better.” October 1, 2016
San Diego Union-Tribune: Prop. 55: The three big reasons to vote no “Perhaps the strongest reason to oppose Proposition 55 is that it amounts to accepting a Sacramento status quo that deserves demolition, not acceptance. Consider that the biggest beneficiary of the tax hikes by far is the California public schools system, which under Proposition 98 gets the most of state revenue. The evidence is endless in Sacramento that the interests of the veteran teachers in the California Teachers Association and the California Federation of Teachers are valued far more than the interests of students — especially minority students in the poorest communities.” September 26, 2016
San Francisco Chronicle: No on state Prop. 55 “The state cannot continue to just keep putting patches on a tax structure destined to periods of undue destitution… Prop. 55 represents another big patch for a precarious tax structure, and one big excuse for elected officials to continue avoiding a comprehensive tax reform that actually could allow sustainable investments in our schools and other priorities. Voters should reject it.” September 9, 2016
Santa Rosa Press-Democrat: No on Prop 55: Don’t break this promise “But here’s the problem. First, it’s disingenuous. The governor sold Proposition 30 as a temporary tax package in order to get fiscal moderates to go along with the idea. Now Brown is sitting on the sidelines as special interests push to extend the tax without the sales tax component and without his support or opposition.” October 13, 2016
Ventura County Star: Prop. 55 is bad tax policy, bad government “Prop. 30 was sold to all of us as a temporary tax. Now it is not. Gov. Brown, the leading advocate for that measure, is neutral on Prop. 55, which was created by an ad hoc group of unions and advocacy groups for education and health care. It clearly reneges on the promise made to voters only four years ago. The state now has a surplus and has built up its ‘rainy day fund’ for emergencies.” October 14, 2016
More Information
For more information on Proposition 55, visit www.hjta.org.
To view all CalChamber positions on the General Election ballot measures, visit www.calchamber.com/ballot.
