Tax Fairness Prevails at the State Ballot Box

Last night Americans in states from coast to coast cast their ballots on a wide range of tax and budget issues.  On the whole, they should feel proud of their choices.

Generally, just as voters nationally favored a presidential candidate who supports higher taxes on the best-off Americans and made tax fairness a centerpiece of his candidacy, when given the opportunity at the state level to raise taxes on, or reject tax cuts for, the wealthy, voters overwhelmingly were on the side of fairness. In California Governor Jerry Brown’s revenue raising plan, which increases income taxes on the richest Californians and raises the sales tax by a quarter cent, passed handily. Californians also voted to repeal a special billion-dollar tax break for multi-state corporations. In Oregon, voters shot down a measure that would have repealed the state’s estate tax and allowed family members to transfer property tax-free. Oregonians also voted to eliminate the state’s “corporate kicker” refund program. Instead of providing a tax rebate to corporate income taxpayers when total corporate tax revenues exceed expectations, now that excess revenue will be used to support K-12 education.

The vote on the Oregon “kicker” refund was part of a broader rejection of measures designed to strangle future revenue growth in the states.  Voters in Florida rejected both a “TABOR” style state tax limitation and a cap on local property tax increases. Michigan voters decisively rejected a measure that would have required a two-thirds vote of each legislative chamber to eliminate any tax break or raise any tax rate.  And New Hampshire voters opted not to ratify a constitutional amendment that would have handcuffed future lawmakers by banning them from ever enacting a tax on earned income (which the state does not currently levy).

Unfortunately, some lower-profile efforts to curb state revenue growth met with success.  Oklahoma slightly tightened an existing cap on its property tax, and Arizona created a new property tax cap. Washington voters also approved a statutory change requiring a supermajority vote of the legislature to raise taxes, though since the requirement is not enshrined in the state’s constitution it’s possible for lawmakers to work around it as they have similar limitations in the past.

Proposals to increase taxes that fall most heavily on middle- and low-income Americans, like the sales tax and cigarette tax, generally didn’t fare as well as the more progressive tax plan put before California voters. In Arizona and South Dakota, measures that would have increased the sales tax rate were rejected handily, and Missouri voters rejected a measure that would have hiked the cigarette tax. Arkansas voters, however, gave their approval to a half cent sales tax increase that state lawmakers had already passed.

Below is a complete listing of the results for the state tax ballot initiatives we’ve been following:

Arizona Proposition 204 FAILED
Proposition 204 would have made permanent a temporary 1 percent sales tax increase that voters approved in 2010, and that is scheduled to expire in mid-2013.

Arizona Proposition 117 PASSED
Proposition 117 limits property taxes by preventing the taxable assessed value of properties from rising by more than 5 percent per year.

Arkansas Issue #1  PASSED
Issue #1 amends the Arkansas constitution to allow for a temporary increase in the state’s sales tax to pay for large-scale transportation needs like highways, bridges, and county roads.

California Proposition 30 PASSED and Proposition 38 FAILED
Governor Jerry Brown’s revenue raising measure, Proposition 30, won handily while the rival revenue raising proposal was defeated.  Proposition 30 will raise significant revenue to stave off cuts to education through a tax hike on wealthy Californians and sales tax increase.

California Proposition 39  PASSED
California voters supported Proposition 39 which repeals a billion dollar tax break for multi-national corporations.

Florida Amendment 3 FAILED
Amendment 3 would have created a Colorado-style TABOR (or “Taxpayer Bill of Rights”) limit on state revenue growth, based on a formula tied to population and cost-of-living growth.

Florida Amendment 4 FAILED
Amendment 4 would have cut property taxes for businesses, non-residents, and Floridians with multiple homes by capping growth in the taxable value of their properties at no more than 5 percent per year.

Michigan Proposal 5 FAILED
Proposal 5 would have amended the state constitution to require a two-thirds vote in both the House and Senate to raise revenue either by increasing tax rates or eliminating special tax breaks.

Missouri Proposition B FAILED
Proposition B would have increased the state’s cigarette tax by 73 cents to 90 cents a pack.

New Hampshire Question 1 FAILED
Voters rejected Question 1 which would have enshrined a permanent ban on taxing earned income into the Granite State’s constitution.  New Hampshire is already one of nine states without a broad-based personal income tax.

Oklahoma State Question 758 PASSED
State Question 758 tightens the state’s property tax cap by limiting increases in home’s taxable assessed value to 3 percent per year, rather than the previous limit of 5 percent.

Oklahoma State Question 766 PASSED
State Question 766 creates a new exemption for certain corporations’ intangible property, such as mineral interests, trademarks, and software.

Oregon Measure 84 FAILED
Voters rejected Measure 84 which would have eliminated the state’s inheritance and estate tax and allowed for tax-free property transfers between family members.

Oregon Measure 85 PASSED
Voters approved Measure 85 choosing to eliminate Oregon’s “corporate kicker” refund program which provides a rebate to corporate income taxpayers when total state corporate income tax revenue collections exceed the forecast by two or more percent. Now, the excess revenue above collections will go to the state’s General Fund to support K-12 education.

Oregon Measure 79 PASSED
Measure 79 constitutionally bans the state from levying real estate transfer taxes and fees even though such taxes are currently nonexistent in Oregon.

South Dakota Initiated Measure #15 FAILED
Initiated Measure #15 would have raised the state’s sales tax by one cent, from 4 to 5 percent. The additional revenue raised would have been split between two funding priorities: Medicaid and K-12 public schools.

Washington Initiative 1185  PASSED
Initiative 1185 requires a supermajority of the legislature or a vote of the people to raise revenue.