3

Why Thrive LA supports 3

Proposition 3 would amend the California Constitution to make permanent the higher income tax rates on individuals earning above roughly $361,000 (single filers) and $721,000 (joint filers). These rates, currently 10.3%, 11.3%, and 12.3% on the top three brackets, were first approved by voters in 2012 under Proposition 30 and extended in 2016 under Proposition 55. Without Proposition 3, the rates expire in 2031 and revert to 9.3%. Revenue is directed 89% to K-12 schools and 11% to community colleges, with surplus funds flowing to children's health care through Medi-Cal. Let us be direct: under normal circumstances, Thrive LA opposes making any tax permanent. Taxes reduce economic activity. California already has the highest top marginal income tax rate in the nation (13.3% with the Mental Health Services surcharge), and IRS migration data confirms that high earners are leaving the state. Making these rates permanent removes a scheduled reduction and further entrenches California's competitive disadvantage against states like Texas, Florida, and Nevada that impose no income tax at all. The revenue is also wildly volatile, swinging between $5 billion and $15 billion annually based on stock market performance, which builds structural instability into a state budget that already runs chronic deficits despite spending roughly $250 billion a year. So why support it? Because the alternative is worse. California's legislature has spent the last decade building recurring obligations, including teacher salaries, school construction commitments, and health care expansions, on top of this revenue. If these rates sunset in 2031 without any replacement, the result is not fiscal discipline. It is a budget crisis that Sacramento will use to justify new, broader taxes that hit middle-income earners, small businesses, and housing providers. A wealth tax proposal, a commercial property tax split roll, or an expanded payroll tax are all waiting in the wings. Proposition 3 is the least bad option: it maintains rates that have been in effect for over a decade on a narrow slice of earners, rather than opening the door to taxes that would hit a far wider base. This is a strategic endorsement, not an enthusiastic one. The measure keeps the tax burden concentrated on the top 2% of earners rather than allowing Sacramento to spread it downward. It preserves funding for schools that communities depend on without creating a new tax category. And it avoids the fiscal cliff that would give the legislature a pretext for far more destructive revenue measures. Vote yes on Proposition 3 to hold the line.