Competing Initiative Filed to Extend Temporary Taxes on High-Income Earners

A week after the California Teachers Association filed an initiative to extend temporary income taxes on high-income earners, the California Hospital Association and the Service Employees International Union together filed a competing initiative seeking to keep these taxes permanently in place.

The key difference between the CTA’s initiative and the new initiative (15-0070) filed September 21, is that CHA/SEIU would make permanent the temporary tax increase and redirect the funds previously dedicated to schools to instead also fund state-run health care programs.

Beginning with the 2019 tax year, the CHA/SEIU initiative would bring California’s marginal top income tax rate to 15.3 percent. Click here for a table of the proposed marginal tax rates imposed by the initiative.

If Proposition 30 were allowed to sunset at the end of the 2018 tax year, the rate for all affected taxpayers would drop to 9.3 percent (with an additional 1 percent surcharge for taxpayers with a taxable income greater than $1 million). The initiative would add the new, higher rates to the constitution and allow the Franchise Tax Board to adjust the rates annually for inflation.

In 2012, Governor Jerry Brown placed a temporary income tax and sales tax increase on the ballot, and the initiative – Proposition 30 – was approved by voters. While both the CTA initiative and CHA/SEIU initiative propose to extend/increase personal income taxes, neither seeks to extend the temporary sales tax increase, which is set to expire in 2016.  

October 7, 2015

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