California voters approve retroactive increase in personal income tax rates, impact on withholding remains unaddressed

On November 6, 2012, California voters approved Proposition 30, The Schools and Local Public Safety Protection Act of 2012, which imposes a seven year tax increase on earnings of taxpayers with income over $250,000 starting in 2012. As a result of Proposition 30 (which also includes a sales tax increase), California expects increased tax revenues through 2018/2019, averaging about $6 billion annually. The additional revenues will be available for funding the State's budget, and the previous 2012/2013 planned spending reductions, primarily to education programs, will no longer occur.