Take on the Props – Proposition 55 Tax Maintenance

141834-fullIn 2012, Prop 30 was on the California state ballot. This proposition was sold as a 1% to 3% increase on the marginal tax rate on the personal income earned above $263,000. This includes small business owners who pay personal income tax instead of the state business tax. The proposition also included a 1/4% state sales tax increase. Of the revenue earned from these sources, 50% went to K-12 education, community colleges and state colleges. The rest was mostly spent on the state’s Medi-Cal and health and human services with a smaller percentage set aside for a rainy-day fund and debt payments.

Prop 55 extends this tax increase from 2018 to 2030.

A few important notes to consider:

1. Income and sales taxes will not increase with a YES on this proposition. A YES vote keeps everything the same.
2. The increase from Prop 30 was a marginal tax increase. This means for people making over $263,000 a year, only money made above that threshold was taxed at a higher rate.
3. The original Prop 30 was sold as a temporary tax increase. Here’s a direct quote from the text in Prop 30 in 2012: “The new taxes in this measure are temporary. Under the California Constitution the 1/4-cent sales tax increase expires in four years, and the income tax increases for the wealthiest taxpayers end in seven years.”
4. One could argue that 2012 was a desperate time for our schools. I remember it well. And the anti-tax crowd could certainly argue that times are good now, so why should we extend a tax program that was sold as a stop-gap in the first place.

A YES vote extends Prop 30 from 2018 until 2030. A NO vote allows Prop 30 to expire in 2018 and removes the income and sales tax increases from Prop 30.

You can read more details from the state’s Legislative Analysts Office, here: www.lao.ca.gov/BallotAnalysis/Proposition?number=55&year=2016

Dan O’Brien

Ting Internet is in Culver City!

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