- Associated Press - Tuesday, November 8, 2016

LOS ANGELES (AP) - California voters decided Tuesday to continue taxing the rich at a higher rate to raise billions of dollars for public schools and health care.

The easy approval of Proposition 55 extends until 2030 taxes that voters first approved in 2012 in response to deep education cuts during the Great Recession.

Those increases were set to expire two years from now. Instead, voters decided 62 percent to 38 percent to keep them.

Supporters included teacher and hospital unions that spent millions of dollars during the campaign. Organized opposition amounted to one die-hard skeptic on a shoestring budget.

The proposition extends what were supposed to be short-term tax increases on residents who annually earn more than $263,000 for single filers and $526,000 for families. At that level, taxes bump up 1 percent - millionaires pay an extra 3 percent.

The windfall will generate between $4 billion and $9 billion annually, according to the independent state Legislative Analyst’s Office.

Backers argued that public schools are only now recovering from devastating cuts that political leaders made as tax revenues shrank with the U.S. economy starting in 2008. Even so, to make Proposition 55 more palatable to voters, the proposition’s authors opted not to renew sales tax increases that voters passed four years ago.

“55 is not the fix, it is a stopgap. It brings stability to schools that, if we didn’t have it, we’d return to the freefall,” said Eric Heins, president of California Teachers Association union and an elementary school music teacher in the San Francisco Bay Area.

Though schools are the main beneficiaries, the authors of Proposition 55 also carved out a new funding stream in flush tax years for Medi-Cal, the state’s health insurance for low-income residents.

Opponents of Proposition 55 countered that the state must stop targeting its richest residents, suggesting that millionaires will move away if they have to pay more.

Only about 1.5 percent of taxpayers pay the higher rates. Those highest earners account for about half of the state’s revenue from income taxes. Because so few Californians will pay more - but millions will benefit from increased education funding - the proposition’s passage was not a surprise to its main opponent.

“How much higher can these rates go and still have a livable economy for people?” said David Kersten, who led a symbolic fight against the initiative that lacked any financial backing.

Even supporters acknowledged that patchwork tax policy - in this case targeting the wealthy - is no way to stabilize state finances, which are robust during good times but crash during downturns due to a reliance on income and capital gains taxes.

Still, because there has been little political stomach in Sacramento for revamping the tax code, voters were again asked to make state fiscal policy.

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Contact Justin Pritchard at https://twitter.com/lalanewsman.


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