Editor’s Note; This is the first in a series of articles exploring the various statewide ballot measures that will go before voters for approval Nov. 8. In this article, we will present Prop 55 and Prop 56, both will increase taxes for California residents.
The California Extension of the Proposition 30 Income Tax Increase Initiative, also known as Proposition 55, is on the Nov. 8, ballot in California as an initiated constitutional amendment. A “yes” vote supports extending the personal income tax increases on incomes over $250,000 approved in 2012 for 12 years in order to fund education and health care. A “no” vote opposes extending the personal income tax increases on incomes over $250,000 approved in 2012 for 12 years, allowing the tax increase to expire in 2019.
According to text found on ballotpedia.com, about 89 percent of revenues from the tax increase would go toward K-12 schools and 11 percent to state community colleges. An additional $2 billion would be allocated in certain years to Medi-Cal and other health programs.
Ballotpedia reports that Prop 30, approved in 2012, was an income tax that also had a sales tax component that Prop 55 would not extend. Without extension through approval of Prop 55 or another like it, the income tax approved under Prop 30 was designed to be phased out starting in 2018. Prop 30 raised about $6 billion per year since it was approved in 2012.
Prop 55 would continue the tax rates instituted by Prop 30 through 2030. The tax increase impacts the 1.5 percent of Californians with a single income filing of at least $263,000 or a joint income filing of at least $526,000.
In California, the income tax bracket applies to a filers portion of income within that bracket. The Official Voter Information Guide provides an example: “The amount of increased taxes paid by high-income taxpayers would depend upon their taxable income. For example, if this measure passes, a single person with taxable income of $300,000 would pay an extra 1 percent on their income between $263,000 and $300,000. This works out to a tax increase of $370 for this person.”
To date, supporters include the likes of Lt. Governor Gavin Newsom, State Superintendent Tom Torlakson, and the California Democratic Party. Supporters say that Prop 55 would not raise taxes for anyone, would lower the sales tax, only affect the wealthiest Californians and provides strict accountability and transparency standards ensuring that money goes to local schools while preventing budget cuts and continue to restore funding lost during the recession.
Opponents include Senator John Moorlach, the California Republican Party and the California Chamber of Commerce. Opponents say that Prop 55 would extend a measure that was supposed to be temporary, amounting to a broken promise made by politicians, extend taxes during a time when higher taxes are not necessary, hurt small businesses and favor special interests and politicians.
The California Proposition 56, Tobacco Tax Increase (#15-0081A1) will be on the Nov. 8, ballot in California as a combined initiated constitutional amendment and state statute. A “yes” vote favors increasing the cigarette tax by $2 per pack, with equivalent increases on other tobacco products and electronic cigarettes. A “no vote opposes increasing the cigarette tax by $2 per pack, with equivalent increases on other tobacco products and electronic cigarettes.
According to ballotpedia.com, initiatives to increase taxes on tobacco products are also on the ballot in Colorado as Amendment 73, Missouri as Proposition A and Amendment 3, and North Dakota as Measure 4 in 2016.
Ballotpedia reports that California currently has a tobacco excise tax of $0.87 per pack of cigarettes. The mean or average state tobacco tax is $1.65. Fourteen states have lower tobacco taxes than California, while 35 states and D.C. have higher taxes. The federal government levies a $1.01 tobacco tax in 2016.
Revenue from the current state tax on tobacco goes to the General Fund, tobacco prevention, health care services for low-income persons, environmental protection, breast cancer screenings and research, and early childhood development programs. Prop 56 would increase the tobacco tax by $2 bringing the total up to $2.87 per pack of cigarettes. The tax would also be levied on other tobacco products and e-cigarettes, too.
Revenue from the additional $2.00 tax would be allocated to physician training, prevention and treatment of dental diseases, Medi-Cal, tobacco-use prevention, research into cancer, heart and lung diseases, and other tobacco-related diseases, and school programs focusing on tobacco-use prevention and reduction. Proposition 56 does not change how the 87 cent tobacco tax is allocated.
Supporters include Secretary of State Alex Padilla, the California Democratic Party and California League of Conservation Voters. Supporters say Prop 56 would reduce tobacco-related health care costs and would help pay for those costs, prevent youth smoking and would also address tobacco marketing aimed at youth as a target customer. In addition, the proposition includes transparency and accountability safeguards for use of the tax revenue generated.
Opposition to Prop 56 include the California Republican Party, the California Taxpayers Association and the Inland Empire Taxpayers Association. Opponents say the proposition would fund insurance companies and special interests more than it would fund treatments for smoking related illnesses and youth smoking prevention, would not allocate funds for improving schools and would waste money on overhead and bureaucracy.