--- title: "California’s Prop. 3 asks voters to make a temporary 2012 tax permanent, forever" description: "The income tax on earnings above $371,000 has been renewed once and raises $5 billion to $15 billion a year; supporters want to stop asking" author: "Nate Ledger" published: 2026-10-21T12:00:00Z modified: 2026-10-21T16:25:01Z url: https://rews.cc/a/california-s-prop-3-asks-voters-to-make-a-temporary-2012-tax-4933c1 language: en tags: ["politics", "economy", "education", "taxes", "labor", "us"] publisher: "Rews (https://rews.cc)" --- # California’s Prop. 3 asks voters to make a temporary 2012 tax permanent, forever *The income tax on earnings above $371,000 has been renewed once and raises $5 billion to $15 billion a year; supporters want to stop asking* By Nate Ledger · October 21, 2026 · https://rews.cc/a/california-s-prop-3-asks-voters-to-make-a-temporary-2012-tax-4933c1 ## In brief - Prop. 3 would permanently extend an income tax on Californians earning over $371,000 (couples over $743,000) - The tax began as a temporary recession-era measure in 2012 and was renewed by voters in 2016; it now expires in 2031 - It raises between $5 billion and $15 billion a year, varying with the stock market and top earners’ incomes - The California Teachers Association, the state’s largest teachers union, is a primary backer of the measure Here is a small recurring ritual of California governance. Every so often, the state puts a measure on the ballot asking voters to approve an income tax on high earners to pay for schools and health care. Voters approve it. The tax is described as temporary, with an expiration date, and when the expiration date approaches, the state puts another measure on the ballot asking voters to renew it. Voters renew it. Eventually someone notices that a tax that has been in place for most of two decades, and that voters have endorsed twice, is not really ‘temporary’ in any meaningful sense, and proposes to resolve the semantic awkwardness by just making it permanent. That is Proposition 3 on this November’s ballot. As [Carolyn Jones explains at CalMatters](https://calmatters.org/politics/elections/2026/10/prop-3-california/), it would permanently extend an income tax that applies to individuals earning more than $371,000 a year, or couples earning more than $743,000, with the money going to schools, health care and other state services. The tax first appeared in 2012 as a temporary response to the Great Recession’s wreckage of school budgets — voters then approved marginal rate increases of 1 to 3 percentage points on incomes above roughly $263,000 for single filers, a threshold that has been adjusted upward since — and voters extended it in 2016. Now it is set to expire in 2031, and its supporters would like to not have to keep doing this. ![A cream hourglass on a teal background holds orange balls falling toward a schoolhouse with a bell tower in its lower chamber.](https://rews.cc/img/c290c4f11bbaac674d06b219f06bff04beed9ca2.webp) A few things are worth noticing about the economics here. The first is the volatility. The tax generates between $5 billion and $15 billion a year, a range so wide it is less a revenue stream than a weather system. The reason is mechanical: the tax falls on the state’s top earners, and top earners’ incomes are disproportionately made of capital gains and bonuses and equity compensation, which fluctuate with the stock market, interest rates and the other forces that decide whether a given year is a good one to be rich in California. In boom years the tax showers Sacramento with money; in bust years the revenue drops at exactly the moment demand for state services rises. This is a known structural feature of California’s finances — the [Legislative Analyst’s Office notes](https://lao.ca.gov/BallotAnalysis/Initiative/2025-016) that the top 2 percent of taxpayers pay these higher rates — and extending the tax permanently extends the volatility permanently too. Nobody said permanence had to be boring. The second thing is the politics, which are genuinely a bit odd. Ordinarily, making a tax permanent is the hard version of asking for a tax. But this particular tax has a long track record of winning at the ballot box, which is not mysterious: it applies to a small slice of the electorate, and it funds schools, which the rest of the electorate tends to like. ‘It’s only a tax on the wealthiest Californians, but it’s vital for our schools,’ is how David Goldberg, president of the California Teachers Association — the state’s largest teachers union and a primary backer of the measure — puts it, adding: ‘I can’t overstate how important this is.’ ![An open book balances on a triangular fulcrum, with a gold money bag on the raised left side and six seated students on the lower right.](https://rews.cc/img/56079754ddd640465a17ce2119a062388e9c5a89.webp) There is an incentive structure buried in that quote that is worth stating plainly. Imagine you design a tax to be maximally durable at the ballot box. You would want it paid by the fewest possible voters and enjoyed by the most. A tax on individual income above $371,000 that funds schools is close to the platonic ideal of that design: the people paying it are a small minority, the people receiving the benefit are everyone with kids in public school, and the people deciding are all of the above. Opponents of such measures tend to argue about out-migration — rich Californians decamping for Austin or Miami — and about the wisdom of building a budget on the state’s most cyclical incomes. Those arguments have now lost twice, in 2012 and 2016, though both times the tax on offer was temporary ones. Permanent is a newer ask. The honest framing, though, is that the ‘temporary’ label was always a bit of a courtesy. California’s school funding did not stop needing the money in 2016, and it will not stop in 2031. What Prop. 3 really asks voters is whether the fourth decade of this arrangement should look different from the first three, or whether everyone can stop pretending the expiration date means anything and save the trouble of another campaign.