California Proposition 7, Inflation-Adjusted Indexing of Income Tax Brackets (June 1982)

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California Proposition 7 was on the June 8, 1982 statewide primary ballot in California as an initiated state statute, where it was approved.

Proposition 7 amended California's income tax law (Cal. Rev. & Tax. Code section 17041) to require permanent full "indexing" of the income tax brackets starting with the 1982 income year.

Election results

Proposition 7
ResultVotesPercentage
Approveda Yes 3,191,178 63.5%
No1,835,05436.5%

Ballot summary

Proposition 7's official ballot summary said:

"Graduated state personal income tax brackets are adjusted annually by applying an "inflation adjustment factor" determined by use of the percent that the California Consumer Price Index has changed. This is referred to as "indexing." Under existing statutes, the full percentage change in the Index is being used for 1980 and 1981 taxable years. Beginning in 1982 and for later taxable years the Index percentage changes which exceed 3 percent will be used. This measure changes existing statutes by providing for the continued use during 1982 and taxable years thereafter of the full percentage Index changes. Summary of Legislative Analyst's estimate of net state and local government fiscal impact: Reduce state personal income tax revenues by about $230 million in 1982-83, by about $445 million in 1983-84, and by increasing amounts thereafter. Under existing law reductions in state revenue would result in corresponding reductions in amount of fiscal relief provided by state to local governments and schools."

Fiscal impact

The fiscal estimate provided by the California Legislative Analyst's Office said:

"Impact on State Revenues. The adoption of this initiative would reduce state personal income tax revenues by about $230 million in fiscal year 1982-83 (July 1, 1982-June 30, 1983), by about $445 million in fiscal year 1983-84 (July 1, 1983-June 30, 1984), and by increasing amounts thereafter.
Reduction in State Aid to Local Governments. Under existing law (Chapter 282, Statutes of 1979), the reduction in State General Fund revenues caused by this measure would result in a corresponding reduction in the amount of fiscal relief provided by the state to local governments and schools, beginning in fiscal year 1982-83.

Lawsuits

  • Rossi v. Brown. 9 Cal. 4th 688 (1995)
  • Wilson v. Superior Ct. of Los Angeles County. 134 Cal. App. 3d 173 (1982)

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