What California's November Tax Measures Could Change | Susan Shelley
Susan Shelley from the Howard Jarvis Taxpayers Association discusses California's November ballot tax measures, opposing Propositions 2, 3, and 40 (which would extend income taxes, make temporary taxes permanent, and implement a wealth tax respectively), while supporting Propositions 41, 42, and 43 to increase tax accountability and restore voting thresholds.
Summary
The interview covers multiple California tax initiatives on the November ballot. Proposition 2 would modify reserve fund rules to allow easier budget borrowing, which Shelley argues circumvents spending limits and leads to future tax increases rather than genuine fiscal management. Proposition 3 seeks to make permanent a 2012 "temporary" income tax increase on high earners (currently 13.3% top rate), which Shelley opposes because it creates uncompetitive conditions and encourages wealthy individuals and businesses to relocate to states like Texas and Florida with zero income tax, ultimately reducing state revenue. She notes that the top 1% of California taxpayers pay approximately 45% of personal income taxes. Proposition 40 proposes a 5% wealth tax on billionaires' unrealized gains, which Shelley argues is economically destructive, unconstitutional (violating a 0.4% constitutional cap), and could expand to non-billionaires once infrastructure is established. She explains that unrealized gains are paper profits that may never be realized and could require people to sell assets or leave the state. In opposition, Proposition 42 would ban wealth taxes on retirement accounts and other assets, while Proposition 41 would require pre-election audits of special tax programs. Proposition 43, which Shelley's organization supports, would restore the two-thirds voter approval requirement for local special tax initiatives, closing a loophole created by a 2017 California Supreme Court decision that allowed citizen-initiated taxes to bypass the constitutional threshold. She illustrates how this loophole has enabled billions in additional annual taxes, with local sales taxes now reaching 11.25% in some areas. Shelley also addresses Proposition 44, noting it comes from SEIU (the same group behind the wealth tax) and would increase costs through new regulations. The conversation concludes with historical context about Proposition 13 (1978), which Shelley credits with preventing property tax crises by tying assessments to purchase price with a 2% annual cap, and she argues California's overall tax burden is already among the highest in the nation.
About this episode
California counties begin mailing November ballots by October 5. This year's ballot carries 14 statewide propositions, and several of them deal with taxes. Some proposals revisit earlier decisions, such as whether an income tax increase first approved as temporary in 2012 should become permanent. Others are new, including a proposed one-time tax on the state's billionaires. Susan Shelley, Vice President of Communications at the Howard Jarvis Taxpayers Association, offers a taxpayer advocate's assessment of the measures and what they could change for people in California. The outcome of one measure could determine whether another becomes law. Timestamps: 00:00 California’s November Tax Measures 01:43 Proposition 2 and the Rainy Day Fund 04:35 Proposition 3 and Income Taxes 07:16 Proposition 40 and the Billionaire Tax 11:11 Understanding Unrealized Gains 14:09 Proposition 42 14:55 Proposition 41 16:34 Proposition 43 and Local Taxes 21:01 Sales Taxes and Everyday Purchases 23:07 Temporary Taxes and Extensions 24:34 Funding Local Public Services 25:29 Proposition 44 and Community Clinics 26:37 Proposition 13 and Property Taxes 30:38 Comparing California’s Taxes With Other States 📩 Email Us YOUR Story: [email protected] 👉 Read California News: https://californiainsider.com/ Views expressed in this video are the opinions of the host and guests and do not necessarily reflect the views of California Insider. -------------------- 🇺🇸🇺🇸🇺🇸 Watch our Documentary "Leaving California" at https://leavingcamovie.com/ 🟡 Sign up for our newsletter: https://californiainsider.com/email-signup-page 💟 Support us: https://donorbox.org/california-insider-2024-donation • Facebook - https://www.facebook.com/CAInsiderShow/ • X (Twitter) - https://twitter.com/CA_Insider • Instagram - https://www.instagram.com/california.insider/ -------------------- #California #CaliforniaNews #CaliforniaInsider #CaliforniaPolitics #TaxesExplained
Key Insights
- Shelley argues that budget borrowing allows the state to issue promissory notes to postpone budget shortfalls to future years, forcing legislators to either cut services or raise taxes, creating a recurring cycle of deficits
- The top 1% of California taxpayers pay approximately 45% of personal income taxes, making their migration to zero-income-tax states like Texas and Florida directly impact the general fund budget
- Proposition 40's wealth tax is structured to allow the legislature to modify the threshold and rules after passage with a 2/3 vote, potentially expanding beyond billionaires despite initial claims of limited scope
- Unrealized gains taxation means taxing paper profits that may never materialize; if a stock increases to $1,000 but is never sold, the owner has no cash to pay taxes on the $999 gain
- A 2017 California Supreme Court decision in Cannabis Coalition v. City of Upland created a loophole allowing citizen-initiated special taxes to bypass the constitutional two-thirds voter requirement, resulting in billions in additional annual taxes
- Proposition 13 tied property tax assessments to purchase price with a 2% annual inflation cap, providing tax certainty and preventing people from losing homes due to market value increases during inflationary periods
- California's income tax begins at approximately $20,000 annual income, and at $70,000 (barely above median income of $65,000), residents pay 9.3% tax rates that would be reserved for millionaires in other states
- Local governments redirect funding from general funds to special taxes on politically popular services like police and schools, freeing general fund money for other uses while increasing overall tax burden through misleading tax measures
Topics
Transcript
[0:02] A number of tax initiatives will be put on the ballot in California in November . Some of them continue taxes for wealthy Californians. Other measures effectively propose a wealth tax for individuals with net assets over a billion. At the same time, there are measures that work in the opposite direction. They will abolish the wealth tax. Today we're talking to Susan Shelley from the Howard Jarvis Taxpayers Association. She will tell us about the taxpayers' perspective on these initiatives. The fact is that they are [0:33] spending more and more money, and this affects taxes. And then the next year or two comes, and you have to return that money to the budget. So now they have…
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