Are you ready for a multi-billion-dollar tax hike?
Imagine how another year of a multi-billion-dollar tax increase would impact your small business. Now, imagine it will last not only another year, but 12 more years. Can you feel your belt tightening already?
If Proposition 55 passes on November 8, you won’t have to use your imagination; it will be reality. A ballot measure that would extend Gov. Jerry Brown’s so-called temporary personal income tax through 2030, Proposition 55 would increase state revenues by anywhere from $5 billion to $11 billion annually.
Meanwhile, it would suck revenues away from small business owners.
Since many small business owners file taxes as individuals, the tax hike would directly impact their ability to grow their businesses and expand jobs.
“That’s where it affects the business owner,” says Paul Cramer, of NFIB member company Star Milling, an animal feed mill in Perris, who is also the NFIB/CA Leadership Council Chair. “That’s the majority of NFIB’s membership. So, what the people up in Sacramento don’t understand is that for the business owner earning $250,000, that tax is far more dangerous than for the CEO earning a salary of $1,000,000. That’s because that $250,000 is income for the business, not personal income. It’s more punitive than a tax on the million-dollar CEO.”
The governor and other advocates promised the taxes hikes in 2012 would be temporary. Now, Prop. 55 seeks to break that promise, with no accountability or transparency about where the funds will go.
Here, a look at the ballot question you will read on Election Day.
Tax Extension to Fund Education and Healthcare. Initiative Constitutional Amendment. Extends by twelve years the temporary personal income tax increases enacted in 2012 on earnings over $250,000 (for single filers; over $500,000 for joint filers; over $340,000 for heads of household). Allocates these tax revenues 89% to K-12 schools and 11% to California Community Colleges. Allocates up to $2 billion per year in certain years for healthcare programs. Bars use of education revenues for administrative costs, but provides local school governing boards discretion to decide, in open meetings and subject to annual audit, how revenues are to be spent. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local government: Increased state revenues annually from 2019 through 2030—likely in the $5 billion to $11 billion range initially—with amounts varying based on stock market and economic trends. Increased revenues would be allocated under constitutional formulas to schools and community colleges, budget reserves and debt payments, and health programs, with remaining funds available for these or other state purposes. (15-0115.)
