The fully funded Proposition 3 campaign describes it as a much-needed tool to fund public schools.
“Proposition 3 preserves critical funding for local schools, preventing class size increases and teacher layoffs,” an ad for the video on YouTube says. “Every dollar goes to local schools, not Sacramento politicians.”
In fact, the ballot initiative is another tax measure for higher-income Californians that helps pay for all state services supported by general fund dollars, including health care, courts and schools. In other words, schools are a sales vehicle for selling a tax measure to voters, with far greater impact than schools.
The measure has strong support from California’s largest teachers union and is separate from Proposition 40, the billionaire tax measure. No one is staunchly opposed to Proposition 3—including the billionaires who would rather see it pass than Prop. 40.
Proposition 3 would permanently impose higher tax rates on the top 2 percent of taxpayers in the state that would otherwise expire at the end of 2030. If these rates were allowed to expire, the state’s general fund would absorb massive annual losses estimated at $5 billion to $15 billion in today’s dollars.
About 40 percent of the money raised by this tax goes to pay for the transition from community college to transitional kindergarten. About 60% goes to other areas—health care, family support services, higher education, the prison system, the court system, etc. This explains why a broad coalition of labor unions supports the “Yes” movement, even though the most important issue is schools.
The largest spender supporting Proposition 3 is the California Teachers Association. As of Monday, the group had spent about $60 million on advocacy and using its vast membership to canvass on the ground. Teachers unions have embraced Proposition 3 as a more strategic alternative to Proposition 40. A mid-September poll found likely voters divided on Proposition 40.
Although public opinion polls are also more limited, support for Proposition 3 remains strong.
Both Proposition 40 and Proposition 3 will benefit schools. But teachers unions are uneasy about the structure of Proposition 40. Union leaders also worry that two measures to tax the wealthy could confuse voters and turn them against both measures — especially since billionaires are campaigning in large numbers against Proposition 40.
“When you spend hundreds of millions of dollars fighting the idea of raising revenue, I think it really affects the zeitgeist among the general electorate,” said CTA President David Goldberg. “There’s always a concern that voters will be overwhelmed and confused, that voters might say, ‘I’ve had enough,’ and vote against everything.”
Proposition 40 would impose a one-time 5% tax on many assets of California billionaires who lived in the state as of January 1. The proposal is expected to raise tens of billions of dollars — mostly for health care. In some ways, Proposition 40 is a direct response to the phased, albeit temporary, cuts to health and social services in President Trump’s “Big Beautiful Act” passed in July 2025.
Goldberg said Prop. 3 is better for educators than Prop. 40 because a greater share of Prop. 3 goes to education and its benefits are here to stay.
“Proposition 3 funding has become an important part of our education funding in California,” Goldberg said. “Making it permanent is critical. We are a labor-intensive job, so perhaps one in six educators may see layoff notices by the end of this decade. The impact will be felt even earlier as districts begin to prepare and preserve reserves.”
Other donors who gave $1 million or more to Yes on 3 include: the National Education Assn.; the California School Employees Association; the CFT, an independent California teachers union; and the California chapter of the Service Employees International Union and SEIU Local 2015, which represents home care providers and nursing home workers, according to a CalMatters database.
The yes votes totaled more than $81 million, and the no votes totaled about $5,500.
strange bedfellows
In an odd partnership, Building Better California, the billionaire-funded group that funds the fight against the billionaire tax, has backed Proposition 3.
Proposition 3 would maintain the income tax rates billionaires already pay and seems likely to pass, while Proposition 40 would reduce billionaires’ net worth by billions of dollars in total. Their explanation is, “We believe strong, responsible investments will strengthen our state, protect our schools, solve the housing crisis, and improve other essential public services.”
CTA isn’t the only one who chooses “yes” on the 3rd and “no” on the 40th. Other members of the camp include the California Medical Association, the California Professional Firefighters Organization, the United Domestic Workers of America, Gov. Gavin Newsom and gubernatorial front-runner Xavier Becerra.
The main No on 40 committee is led by doctors, teachers, firefighters and unions, but nearly 100% of its funding comes from Building a Better California, an organization that receives its funding overwhelmingly from tech billionaires.
According to data analysis by Capital & Main, as of the end of October, Google co-founder Sergey Brin alone had donated $102 million to stop the billionaire tax; Goldberg said the CTA had not provided any information.
Important and powerful people have no problem with taxing the rich twice. Supporters of both proposals include the California Democratic Party; the California Federation of Labor; the California chapter of the American Federation of State, County and Municipal Employees; and the California Nurses Association.
Education groups that agreed with the two groups included the CFT, a smaller but still main rival union to the CTA, and the local teachers union in Los Angeles.
“California’s schools, hospitals and clinics need money. Billionaires don’t,” said Julie Van Winkle, vice president of United Teachers Los Angeles.
The California Republican Party, the Libertarian Party and the Howard Jarvis Taxpayers Association have taken no positions on either proposal.
Opponents of Proposition 3 point out that the original campaign pitch for higher tax rates, back in 2012, was that the rates would only last until 2018 “to address the budget deficit,” according to the No on Proposition 3 website. “These ‘temporary’ taxes were later extended, and now politicians want to make them permanent. California voters deserve real results, not broken promises.”
Richard Barrera, a liberal Democrat and school board member whom the CTA is endorsing for state superintendent of public instruction, also supports both proposals. His opponent, conservative Republican Sonja Shaw, a school board member, opposed both measures.
Support funding for Proposition 40 totals $33.4 million, while opposition funding totals $130 million.
What does Proposal 3 do?
The higher tax rate was scheduled to last until 2018. The ensuing sales tax increase also lasted four years. A major selling point is that the higher tax rate is temporary.
Sales tax was allowed to be eliminated. But voters who approved Proposition 55 in November 2016 extended the higher rate until 2030.
In 2011, the state tax bracket topped out at 9.3%. Starting from 2012, the temporary taxes are divided into 10.3%, 11.3% and 12.3%. If Proposition 3 fails, California’s top state tax rate would revert to 9.3% in 2031, although an unrelated additional 1% surcharge would be imposed on taxable income over $1 million for mental health services.
Over the years, who is in the higher bracket in terms of income is adjusted upward for inflation.
The 10.3% rate affects individual filers with taxable income between $371,479 and $445,771. The range for married couples filing jointly is $742,958 to $891,542.
The top rate of 12.3% applies to single filers with taxable income in excess of $742,953 and joint filers in excess of $1,485,906.