Voters Approve State Tax Increases, and Legislative Transparency Measure

California voters approved major statewide tax increases on November 8, including an extension of the personal income tax top rates through 2030, but also sided with CalTax in approving Proposition 54 to bring transparency to California’s legislative process.

Proposition 54 requires legislation to be in print for at least three days before final votes, and require all legislative hearings to be recorded, streamed, and archived online.

“Last-minute legislation, rushed through the Legislature without adequate vetting, has been a growing problem in California,” CalTax President Teresa Casazza said. “Voters put an end to this by overwhelmingly approving Proposition 54, and the improved legislative transparency will result in better laws, with more taxpayer input.”

Voters also approved CalTax-supported Proposition 51, authorizing the state to sell up to $9 billion in bonds to finance school construction. CalTax noted that the use of statewide bonds is preferable to local school bonds, as the latter must be repaid through higher property taxes.

The largest tax hike on the ballot, Proposition 55, increases personal income taxes by approximately $90 billion by extending the income tax provisions of Proposition 30, an initiative approved in 2012 as a budget stabilization measure with two temporary taxes: a personal income tax increase that would expire in 2018, and a sales tax increase that would expire at the end of 2016. The initiative does not extend Proposition 30’s sales tax increase.

Proposition 55 maintains three tax brackets of 10.3 percent, 11.3 percent and 12.3 percent for single filers with a taxable income of more than $263,222, and head-of-household filers with taxable income more than $357,981. (The state also imposes a 1 percent tax on income over $1 million, putting the state’s top income tax rate at 13.3 percent – the highest in the nation.)

Voters also approved Proposition 56 to increase tobacco taxes by $2 per package of 20 cigarettes, with an equivalent tax on other tobacco products, for a total tax increase estimated at $1.6 billion per year initially, declining over time. The initiative also taxes “vaping” products.

Tax revenue also will be generated by Proposition 64, which legalizes marijuana for recreational use in California. In addition to state taxes, marijuana will be subject to many local taxes, thanks to the approval of several local measures.

Here are the preliminary results reported by the Secretary of State’s Office, with the percentage of votes in favor of each:

Proposition 51: Statewide Bond to Fund School Facilities (CalTax supported) – Pass, 54 percent.

Proposition 52: 2/3 Vote on Hospital Tax, Secures Federal Matching Funds – Pass, 69.6 percent.

Proposition 53: Public Vote on State Revenue Bonds (CalTax had a neutral position) – Fail, 48.6 percent.

Proposition 54: Legislative Transparency (CalTax supported) – Pass, 64.3 percent.

Proposition 55: Personal Income Tax Increase (CalTax opposed) – Pass, 62.1 percent.

Proposition 56: Tobacco Tax Increase (CalTax opposed) – Pass, 62.9 percent.

Proposition 57: Reduces and Adjusts Prison Sentences – Pass, 63.6 percent.

Proposition 58: Repeal of “English Only” Education – Pass, 72.4 percent.

Proposition 59: Polls Voters on Campaign Finance Laws (CalTax opposed) – Pass, 52.3 percent.

Proposition 60: Restrictions on Producers of Adult Films – Fail, 46.1 percent.

Proposition 61: Mandated Cap on Drug Prices (CalTax opposed) – Fail, 46.3 percent.

Proposition 62: Abolishes the Death Penalty – Fail, 46.1 percent.

Proposition 63: Restrictions on Purchasing and Owning Firearms – Pass, 62.6 percent.

Proposition 64: Legalization of Marijuana – Pass, 56 percent.

Proposition 65: Seizure of Retailers’ Bag Sales Revenue – Fail, 44.7 percent.

Proposition 66: Restructures Death Penalty Procedures – Pass, 50.9 percent.

Proposition 67: Referendum of Statewide Bag Regulations – 52 percent voted to allow the statewide bag regulations to take effect.

November 9, 2016

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