California’s richest are doing great.

Over the last four decades, while the bottom four-fifths of households have seen their real incomes decline, the top 1% has seen theirs grow two and half times. This upper stratum now earns in a week what the middle fifth of Californians makes in a year.

Proposition 3 asks the Californians truly living the California dream to keep paying their fair share. No more. No less.

Vote for Proposition 3.

In 2012, voters approved Proposition 30 to temporarily increase marginal rates on the top 2% of earners; and in 2016, they approved Proposition 55 to extend these same rates until 2030.

Now on the Nov. 3 ballot, Proposition 3 would keep these existing rates in place permanently after 2030.

The measure only applies to individuals whose incomes exceed $371,000 or joint filers whose incomes exceed $743,000. (The median full-time worker in California earns $65,000. The median family’s income is $100,000.)

If Proposition 3 fails, the state’s General Fund would lose between $5 billion and $15 billion per year, according to the Legislative Analyst’s Office projections. Around 40% of those lost revenues would have gone to California’s public schools and colleges; the remainder would fund other state services, including healthcare, and the state’s rainy day reserve fund.

However, should it fail, the richest Californians would get a large windfall, the vast majority of which would flow to the top 1%.

Extremely disingenuous

The campaign against Proposition 3, sponsored by the California Taxpayers Association, ranges from merely misleading to downright scurrilous.

The main tactic used by the California Taxpayers Association, whose board of directors includes heads of the world’s biggest businesses, is to hide behind small businesses. Proposition 3, they argue, will hurt small business owners because “many” operate as sole proprietorships, partnerships and S Corps, and they report their business earnings on personal income taxes.

That might sound convincing until you look at Census and Franchise Tax Board data.

It turns out, the average revenue for the state’s nonemployer businesses — be they C corps, S corps, individual proprietorships, etc. — is less than $65,000. In other words, the vast majority of the state’s smallest businesses don’t make anywhere near enough to have to pay these higher rates. Invoking them, as opponents do, is absurd.

But what about prices. Will Proposition 3 raise prices and thus inflate inflation?

Opponents claim that small businesses will just pass the costs of this tax onto consumers. That might sound logical until you realize that Proposition 3 won’t raise taxes. It preserves existing ones.

Why would businesses suddenly raise prices because voters decided to maintain tax rates in place for the last 13 years?

They wouldn’t.

Perhaps the most dishonest attack on this progressive tax is that it will push the state’s wealthy out of the state and discourage investment.

Evidence from the last decade completely throws cold water on those fears of capital flight.

Millionaire factory

California’s share of the country’s millionaires and billionaires increased during the last decade, as UC Berkeley’s Econometrics Lab found.

And Franchise Tax Board data show the same: The number of tax filers subject to the top tax rates more than doubled between 2013, when these higher rates went into effect, and 2024.

No serious economic analyst could look at the last decade and a half and call it an era of disinvestment or economic malaise in California. After all, this exact period saw California lead the planet in global investment, innovation and wealth creation. Our big companies — Apple, Alphabet, Meta, Netflix and Nvidia  — became the biggest. And our early-stage startups, led by high-skilled talent, attracted historic levels of capital and then became globally dominant business behemoths, like Uber and Airbnb.

And that investment hasn’t stopped, just because the top 2% has been paying two or three percentage points more on their income taxes.

California’s startups attracted $366 billion from venture capitalists in the first six months of this year. Not only is that double its previous record but it’s three times the amount invested in the other 49 states combined. The total volume of capital invested in this one sector of the state in just half a year exceeds the annual economies of 25 states.

The fearmongering about these progressive taxes defies logic.

New urgency

Over the last year, the reason for keeping these rates in place has become even more urgent.

As a result of a vindictive Republican Congress and president, California will lose billions in federal funds. H.R. 1, or the One Big Beautiful Bill Act, is shifting the costs of maintaining our safety net back onto this state. California’s counties, which maintain the safety net, expect to lose as much as $9.5 billion per year.

Already, local governments, including Santa Clara County, are resorting to regressive sales taxes to prop up services once sustained with progressive federal taxes. Bay Area hospitals are seeing the number of uninsured in their emergency rooms double, as this news organization has documented.

Rejecting Proposition 3 would compound that problem, depriving the state of billions while handing a giant windfall to the Californians who need it least.

Proposition 40 was a different beast. We opposed it. It was retroactive. It taxed wealth. It was new, and it does risk creating capital flight.

But Proposition 3 has none of those defects.

Vote yes.

Editor’s note: To read our other endorsements of the most competitive races and significant measures on Bay Area voters’ ballots, please visit mercurynews.com/endorsements.