Proposition 3: California Renew State Income Tax Increase for Education Funding Initiative

Prop 3 is a proposal to make permanent an existing tax on high-income earners to help fund K-12 and community college education. The loss of this funding would be incredibly detrimental to the future of access to education. DSA San Diego is excited to support these campaigns and continue building socialism in the region!

Higher taxes on high incomes raise more money for the state, but some of the people paying them leave, and some invest or work less. The question is how much of each.

Luckily, we already know the effects of this tax: 535 top-bracket taxpayers left the state (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3461513) after this tax was enacted, against a backdrop of 66,936 total individuals, or about 0.8%. These top-bracket taxpayers make up roughly 2% of all taxpayers, but they account for about half of all state income taxes (https://lao.ca.gov/BallotAnalysis/Initiative/2025-016).

We think voters should make these tax rates permanent and vote yes.

Note: We object to the title of this proposition, which implies funding specifically for "Children's Education and Health Care." That's false, and Attorney General Bonta should have intervened to require an honest title.

Source (https://growsf.org/voter-guide/san-francisco-voter-guide-november-2026-election#prop-3)

Prop 3 would extend an existing tax on high-earning Californians (individuals making $361K or more annually, and couples making more than $721K). Set to expire in 2030, this tax generates billions of dollars each year for the state’s General Fund and pays for public services including schools, health care, and prisons (yeahhhh, we don’t love that part). So, Prop 3 is basically just asking if we can stick with this modestly higher tax rate for the top 2% to fund, well, everything. 

CA voters have already voted to approve this twice in 2012 and 2016. And this time, the tax would become permanent! This is cash we’re already counting on, so if it doesn’t pass, we’re screwed [gritted teeth emoji]. Vote Hell Yes! On Proposition 3!

Source (https://www.theleaguesf.org/#Prop3)

Sacramento, CA — CFT – A Union of Educators and
Classified Professionals announced today that its members voted
to support Proposition 3, The California Children’s
Education and Health Care Protection Act of 2026, on the November
ballot.

Proposition 3 makes California’s existing higher income tax rates
on the wealthiest Californians permanent to provide ongoing
funding for public schools, community colleges, and health care
programs. Prop 3 is essential to provide over 15 billion dollars
annually for our schools and students.

CFT released the following statement from President Jeff
Freitas:

“The choice here is a simple one, we either give the wealthiest
Californians a tax break or we keep funding public schools and
other needed services with the $15 billion that this measure
brings to the state budget. This measure has never been more
necessary; we’re up against a President who is actively defunding
our public schools and trying to dismantle our education system.
California must continue to support  our students and fight
for this funding which translates to smaller class sizes, free
school lunches, and mental health resources.

“When our public schools and community colleges are funded with
the critical annual revenue that this tax on the wealthiest two
percent provides, it frees up general fund resources for other
vital programs that families rely on, including health care and
necessary social services.

“Thank you to the members of CFT for their hard work in placing
this measure on November’s ballot. Now let’s get to work to pass
it!”

Source (https://www.cft.org/news-release/cft-announces-support-proposition-3-november-ballot)

SPUR's Recommendation

Prop. 3 would make permanent an existing high-earner tax that funds K–12/community college education, children’s healthcare, and debt paydown. This tax has generated more than $119 billion for education and healthcare, with no evidence that it has driven high earners out of state. It’s highly progressive, hitting only top earners while sustaining programs such as universal school meals that disproportionately benefit low-income students, and it would help backfill Medi-Cal funding just as federal cuts threaten healthcare access for millions of low-income Californians. The trade-offs are modest: permanence would limit future tax flexibility, and reliance on capital-gains-linked income would keep revenue volatile. But given the tax's proven track record and the increasingly dramatic funding gaps the tax would help fill in the wake of H.R. 1, SPUR supports making it permanent.

What Prop. 3 Would Do

Proposition 3 would amend the California Constitution to permanently extend the state’s marginal income tax rates on the top 2% of earners, which have been in place since 2012 under Proposition 55 and are set to expire in 2030. In 2025, the top 2% income bracket started at $371,001 a year for individuals and $743,001 a year for couples filing jointly. The tax applies to salaries, wages, interest, and profits from stocks, property, and other investments.

Revenue would primarily support K–12 schools and community colleges under 1988’s Proposition 98. About 40% — $2 billion to $6 billion annually — would go to education, while remaining funds could support children’s healthcare, the Budget Stabilization Account (rainy day fund), and other General Fund uses. Because the revenue counts toward the state’s required education funding, it frees up General Fund dollars for other programs.

If the tax rates set in 2012 expire, the state would lose between $5 billion and $15 billion annually. In the short term, the state would need other General Fund revenues to meet education funding requirements; over time, the Proposition 98-mandated spending minimum could decline depending on the formula in use, economic conditions, and legislative decisions.

The Backstory

California’s personal income tax structure is the most progressive in the country (meaning the tax rate is higher the more income one earns). Voters approved Prop. 30 in 2012 to temporarily raise rates on high earners, then extended it through Prop. 55 in 2016 (expiring in 2030). Before Prop. 30, the top rate was 9.3%.

The tax structure for the top 2% of earners in California under different scenarios depends on whether Prop. 3 passes.

Single Filer Income Tax Rates Under Prop. 3

• Taxable Income (brackets adjusted annually for inflation): $371,001–$446,000; Marginal Tax Rate (now through 2030): 10.3%; If Prop. 3 Passes: 10.3%; If Prop. 3 Is Rejected: 9.3%
• Taxable Income (brackets adjusted annually for inflation): $446,001–$743,000; Marginal Tax Rate (now through 2030): 11.3%; If Prop. 3 Passes: 11.3%; If Prop. 3 Is Rejected: 9.3%
• Taxable Income (brackets adjusted annually for inflation): Above $743,000; Marginal Tax Rate (now through 2030): 12.3%; If Prop. 3 Passes: 12.3%; If Prop. 3 Is Rejected: 9.3%

Joint/Other Filer Income Tax Rates Under Prop. 3

• Taxable Income (brackets adjusted annually for inflation): $743,001–$892,000; Marginal Tax Rate (now through 2030): 10.3%; If Prop. 3 Passes: 10.3%; If Prop. 3 Is Rejected: 9.3%
• Taxable Income (brackets adjusted annually for inflation): $892,001–$1.5 million; Marginal Tax Rate (now through 2030): 11.3%; If Prop. 3 Passes: 11.3%; If Prop. 3 Is Rejected: 9.3%
• Taxable Income (brackets adjusted annually for inflation): Above $1.5 million; Marginal Tax Rate (now through 2030): 12.3%; If Prop. 3 Passes: 12.3%; If Prop. 3 Is Rejected: 9.3%

Source: Legislative Analyst’s Office, A.G. File No. 2025-016 (https://lao.ca.gov/BallotAnalysis/Initiative/2025-016)

Prop. 98 requires California to provide a minimum level of funding for K–12 schools and community colleges each year, based on state revenues, economic growth, and student enrollment. Local property taxes also contribute to the Prop. 98 minimum. Together, these requirements typically direct about 40% of General Fund revenues to education.

Of the education funding, 89% goes to K–12 schools and 11% to community colleges. None of the funding can be used for administrative costs. After meeting education requirements, revenues go to debt service and the rainy day fund; 50% of remaining funds, capped at $2 billion annually, may support Medi-Cal children’s and family health services.

Medi-Cal provides free or low-cost health care to nearly 15 million Californians. This funding is especially important after federal bill H.R. 1 made major cuts to health care and food assistance. Federal Medicaid cuts could cost Medi-Cal tens of billions of dollars annually and cause up to 2 million Californians to lose coverage.

Since January 1, 2012, the top-earner income tax has generated more than $119 billion for education and healthcare, helping more than double school funding and support transitional kindergarten, expanded learning, free school meals, COVID-19 recovery, and teacher recruitment. Before the passage of Prop. 30, California ranked 50th among states in per-student education spending. Now it ranks 16th (or 31st when accounting for the state’s cost of living). However, because 80% of school spending goes to staff salaries and benefits, the state still has 22 students per teacher, compared with 15.4 nationally.

Recently, the tax has generated about $9 billion to $10 billion annually, although revenues fluctuate with the economy and stock market. The LAO estimates annual revenues could range from $5 billion to $15 billion.

Notably, high earners have not fled the state because of this tax; California has had the second-lowest out-migration rate among $200,000-plus households of any state over the past decade. The state has lost less-educated and lower-income adults faster than higher-income and college-educated adults because of affordability and cost-of-living concerns.

Californians for Protecting Public Education, Health Care and Budget Stability led the effort to put Proposition 3 on the ballot, with funding from the California Teachers Association and California Federation of Teachers. Some proponents oppose Prop. 40, the Billionaire Tax, out of concern that it could undermine support for Prop. 3.

A citizen-initiated measure, Prop. 3 needs a simple majority (50% plus one vote) to pass.

Equity Impacts

Allowing the state’s marginal income tax rates on the top 2% of earners to expire would require major cuts to education spending on the next generation of Californians, which would disproportionately impact low-income children and students of color. This income tax revenue enabled California to become the first state offering free breakfast and lunch to all TK–12 students, plus free after-school programs prioritizing low-income neighborhoods.

California’s educational funding formula, the Local Control Funding Formula, directs the most resources to students who face the greatest educational hurdles, including grants for English learners, foster youth, homeless students, and low-income families in high-poverty districts.

Prop. 3 would backfill federal cuts and sustain up to $2 billion in annual funding for Medi-Cal, most of which goes to low-income people and people of color. Without state budget and policy intervention, the cuts from H.R. 1 are expected to completely destabilize California’s healthcare and hospital system, exacerbate food insecurity, and cause children to miss routine screenings and vaccines.

The measure is highly progressive; it does not increase taxes on couples earning less than $743,001 or individuals earning less than $341,001, in today’s dollars.

Pros

• Prop. 3 would help backfill ongoing funding needs for children’s healthcare and Medi-Cal, which is facing severe federal funding cuts.
• The measure would tax only California’s highest earners.
• It would not increase the current income tax rate, which was set in 2012.
• Any leftover capital-gains-driven revenue would lower state debt and help build the rainy day fund, which supports the state’s financial health and mitigates the volatility of this funding source.
• There is no evidence that the tax has contributed to any significant tax flight from the state.
• Because the tax is permanent, it would facilitate greater predictability in state revenues.

Cons

• The state’s reliance on taxing the highest income earners would increase state budget volatility.
• The measure is restrictive: it would require meeting the Prop. 98 education minimum before allowing flexibility in funding allocation.

Source (https://www.spur.org/voter-guide/2026-11/ca-prop-3-high-earner-income-tax-extension)

No on Prop 3: Income Tax Increase

DECEPTION ALERT: Biased title plays up funding for schools and health care without accountability for how the money is spent.

Makes permanent California’s highest-in-the-nation income tax rates at a time when California is losing employers, jobs and taxpayers to other states and seeing lower tax revenues as a result. Worse, Prop 3 does nothing to reform wasteful spending in the programs it purports to fund, so taxpayers will not see better services.  This tax was sold as “temporary” in 2012, extended in 2016 and now politicians want to make it permanent before it even expires.

Source (https://www.reformcalifornia.org/voter-guides/san-diego)

NO on Prop. 3

Remember the “temporary” income tax rate hike “for the schools” that was passed in 2012 and “temporarily” renewed in 2016? This measure renews it again and this time makes it permanent. California has the highest income tax rates in the nation, and every year the state has a bigger budget and a higher cost of living to show for it. These “temporary” income tax rate hikes should not be a backdoor method for permanent tax increases.

Vote NO on 3.

Source (https://www.hjta.org/2026votingguide#Ballot-Measure-Recommendations)

Prop 3 - Constitutional Amendment for Permanently Higher Taxes

Endorsement: NO on Proposition 3

This is what we call puppies and kittens governance: California spends obscene amounts of our taxpayer dollars on things we don’t want (including $40 million to non-existent healthcare providers and hundreds of millions in other fraud), wags its finger that we must fund “insert heartstring-tugging need here,” and then lectures that we’re the "bad guy" if we don’t give them what they demand. It's an extreme misuse of funds. The only way to stop the cycle of "abuse" is to pull the money and force them to deliver what WE want and need, instead of the perks they want to give themselves and their friends on OUR dime (e.g., full-time security details for former elected officials!).

Vote NO on Proposition 3

Source (https://www.connectedsf.com/2026-voter-guide#prop-3)

**DECEPTION ALERT: Biased title plays up funding for schools and health care without accountability for how the money is spent. Makes permanent California’s highest-in-the-nation income tax rates at a time when California is losing employers, jobs and taxpayers to other states and seeing lower tax revenues as a result. Worse, Prop 3 does nothing to reform wasteful spending in the programs it purports to fund, so taxpayers will not see better services. This tax was sold as “temporary” in 2012, extended in 2016 and now politicians want to make it permanent before it even expires.

Temporary should mean temporary. But for the government, temporary often means forever.

That’s what’s happening with Proposition 3 on the Nov. 3 ballot, titled: “Provides Permanent Funding for Schools and Healthcare by Extending Existing Tax on High Incomes,” which, as the name suggests, seeks to lock in the state’s high income tax rates forever. 

The story goes back to 2012, with Proposition 30, which imposed both a statewide sales tax increase through 2016 and an increase to top income tax rates through 2018. 

Leading the push for Prop. 30 was Gov. Jerry Brown, who vowed it was only a temporary measure to help the state ride out tough budget times in the years after the Great Recession and ensure the state’s schools were reliably funded. In fact, Prop. 30 was titled, “Temporary Taxes to Fund Education.” Taken together with other voter-approved income taxes, this pushed top income tax rates to 13.3%, the highest in the nation according to the Tax Foundation, with Hawaii the runner-up at 11%. 

It wasn’t long before the state’s public employee unions pounced to extend the “temporarily” increased top income tax rates over the objections of even Gov. Brown. In 2016, voters approved the extension with Proposition 55, with the taxes set to run through 2030 and expiring in 2031. As this editorial board warned at the time in opposing Prop. 55, “California will not be able to tax its way to prosperity, and imposing more taxes, particularly on those most capable of making investments here (and most capable of leaving or shifting their investments to more business-friendly states) will only reduce job opportunities and suppress economic growth.”

The argument in favor of Prop. 3 seen by voters argues that allowing Prop. 55 to expire “would give millionaires and billionaires a massive tax cut at the expense of our classrooms, clinics and communities.” But that assumes the wealthy producers will stay here, instead of getting an instant tax cut by moving to Texas or elsewhere, especially when considered in an environment in which wealth taxes are seriously being talked about. 

Indeed, research published by the American Economic Association in 2024 by Joshua Rauh and Ryan J. Shyu found that the Prop. 30 tax hikes prompted many high-income earners to either leave California or lower their taxable income. Such “responses eroded 45.2 percent of state windfall tax revenues within the first year and 60.9 percent within 2 years, driven largely by the intensive margin,” Rauh and Shyu reported.

Beyond the perils of maintaining such a high tax environment, the reality is that high taxes have primarily served to paper over the fundamental budget problems of the state and the education system. As Rauh recently noted, “In California, over the 9 most recent years of data, contributions to pensions for K-12 nearly doubled as a share of educational budgets, and consumed 44% of the increase in school budgets. Prop 30/55 looks more like a tax to fund pensions than a tax to fund education.”

That’s the cold, hard reality behind any public proclamation that higher taxes are needed to help students.   

Also, to reiterate, the existing Prop. 55 tax rates run through 2030, expiring in 2031. That gives Californians plenty of time, including election cycles in 2028 and 2030, to decide whether the state truly needs another extension of our sky-high income tax rates. There’s no urgent need for an extension in 2026, let alone to make the “temporary” tax hikes permanent.

Robbing future voters of their decision-making because the California Teachers Association wants to secure a revenue stream years ahead of time is unjustified.

Vote no on Prop. 3.

Source (https://www.dailynews.com/2026/09/02/endorsement-no-on-proposition-3-temporary-taxes-should-be-temporary/)

There are 2 “TAX INCREASE” PROPS on ballot (Props 3 & 40), on both a “NO” is recommended. Biased title plays up funding for schools and health care without accountability for how the money is spent.

CA has the HIGHEST-in-the-nation INCOME TAX rates. PROP 3 would make a “temporary” tax increase (not even due to sunset til 2031), PERMANENT. This is at a time when CA is already losing EMPLOYERS, losing JOBS, & losing PEOPLE/TAXPAYERS, to other states. And, with them goes the CA revenue they generate. If more leave CA, esp high-income individuals, it will only exacerbates the cost-of-living crisis for Californians.

**DECEPTION ALERT: Biased title plays up funding for schools and health care without accountability for how the money is spent.

Makes permanent California’s highest-in-the-nation income tax rates at a time when California is losing employers, jobs and taxpayers to other states and seeing lower tax revenues as a result. Worse, Prop 3 does nothing to reform wasteful spending in the programs it purports to fund, so taxpayers will not see better services. This tax was sold as “temporary” in 2012, extended in 2016 and now politicians want to make it permanent before it even expires.

**DECEPTION ALERT: Biased title plays up funding for schools and health care without accountability for how the money is spent.

Makes permanent California’s highest-in-the-nation income tax rates at a time when California is losing employers, jobs and taxpayers to other states and seeing lower tax revenues as a result. Worse, Prop 3 does nothing to reform wasteful spending in the programs it purports to fund, so taxpayers will not see better services. This tax was sold as “temporary” in 2012, extended in 2016 and now politicians want to make it permanent before it even expires.

**DECEPTION ALERT: Biased title plays up funding for schools and health care without accountability for how the money is spent.

Makes permanent California’s highest-in-the-nation income tax rates at a time when California is losing employers, jobs and taxpayers to other states and seeing lower tax revenues as a result. Worse, Prop 3 does nothing to reform wasteful spending in the programs it purports to fund, so taxpayers will not see better services. This tax was sold as “temporary” in 2012, extended in 2016 and now politicians want to make it permanent before it even expires.

**DECEPTION ALERT: Biased title plays up funding for schools and health care without accountability for how the money is spent. Makes permanent California’s highest-in-the-nation income tax rates at a time when California is losing employers, jobs and taxpayers to other states and seeing lower tax revenues as a result. Worse, Prop 3 does nothing to reform wasteful spending in the programs it purports to fund, so taxpayers will not see better services. This tax was sold as “temporary” in 2012, extended in 2016 and now politicians want to make it permanent before it even expires.

**DECEPTION ALERT: Biased title plays up funding for schools and health care without accountability for how the money is spent.

Makes permanent California’s highest-in-the-nation income tax rates at a time when California is losing employers, jobs and taxpayers to other states and seeing lower tax revenues as a result. Worse, Prop 3 does nothing to reform wasteful spending in the programs it purports to fund, so taxpayers will not see better services. This tax was sold as “temporary” in 2012, extended in 2016 and now politicians want to make it permanent before it even expires.

**DECEPTION ALERT: Biased title plays up funding for schools and health care without accountability for how the money is spent.

Makes permanent California’s highest-in-the-nation income tax rates at a time when California is losing employers, jobs and taxpayers to other states and seeing lower tax revenues as a result. Worse, Prop 3 does nothing to reform wasteful spending in the programs it purports to fund, so taxpayers will not see better services. This tax was sold as “temporary” in 2012, extended in 2016 and now politicians want to make it permanent before it even expires.