Initiative Update:
Teachers’ Union Amends Income Tax Initiative to Address ‘Fatal Flaw’ Cited by Governor

The California Teachers Association and other proponents of an initiative to extend higher personal income tax rates on high-income earners amended their measure January 11 to remove what Governor Jerry Brown last week characterized as a “fatal flaw.”

The earlier version of the tax extension (Initiative 15-0115) would have sidestepped the state’s rainy day fund by earmarking all of the revenue for education and healthcare spending. “That, in my judgment, is a fatal flaw,” Governor Brown told reporters, stressing his support for a strong rainy day fund to help the state government weather the next recession.

The new version would send some of the revenue to the rainy day fund.

Gale Kaufman, a longtime campaign consultant for the California Teachers Association, said the proponents made the change after hearing the remarks made by the governor.

Asked about the amendment, Governor Brown said January 14: “It certainly removes the fatal flaw, and I think that’s a very positive development.” The Sacramento Bee reported that when the governor was asked by reporters if he will support the measure, he said, “I think I’ve said enough for this morning.”

In recent months, the governor has repeatedly stated that the Proposition 30 taxes were intended to be temporary.

If the measure qualifies for the ballot and is approved by voters in November, it will extend the temporary personal income tax rates approved by voters in 2012 with passage of Proposition 30. The higher top income tax rates are scheduled to expire in 2018, but the initiative would extend them through tax year 2030.

The initiative would not change the rates. However, under existing law, the Franchise Tax Board adjusts income brackets each year to account for inflation.

Proponents of the initiative chose not to also seek an extension of the temporary sales and use tax increase included in Proposition 30. Polls indicated that voters oppose extending the sales and use tax, which is scheduled to expire at the end of this year.

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