Voters in several states on election day will decide on ballot initiatives that could cumulatively raise billions of dollars in new taxes. The Tax Foundation has compiled all of its analysis on the key initiatives to watch on November 8th. Some of the highlights are listed below.
Colorado: Amendment 69 would impose a 10 percent payroll and income tax (termed the “premium tax”), on top of the state’s existing 4.63 percent single-rate individual income tax, to fund a new public option health care system (ColoradoCare). The proposal would give Colorado the highest top income tax rate in the country and its business tax climate would suffer. The measure is also poorly structured and would give a newly-established board the power to raise taxes independently of the legislative and executive branches.
California: Proposition 55 would extend California’s temporary income tax increases on high income earners passed in 2012 under Proposition 30 (our coverage back in 2012). If passed, California would retain a top individual income tax rate of 13.3 percent, currently the highest rate in the country.
Maine: Question 2 would increase Maine’s top individual income tax rate from 7.15 percent to 10.15 percent for incomes above $200,000, giving the state the highest top income tax rate in the Northeastern United States, and the second top income tax rate in the country, behind only California.
Louisiana: Amendment 3 would repeal Louisiana’s obscure corporate tax deduction for federal taxes paid, and concurrent legislation would lower the corporate tax rate from 8 percent to 6.5 percent, bringing the state more in line with other states in the region.
Olympia, Wash.: Initiative 1 would impose a 1.5 percent local income tax to establish a college grant program within the city. However, the ballot language is opaque and local income taxes are prohibited by state law in Washington. If enacted, the tax would be subject to legal challenge.
Boulder, Colo., and three California cities—Oakland, San Francisco and Albany—will vote on ballot initiatives that would impose hefty local excise taxes on soda and other sugar-sweetened beverages. In a recent op-ed for U.S. News & World Report, the Tax Foundation’s Scott Drenkard and Morgan Scarboro explain how these proposals are regressive, complicate the tax code, and are unlikely to improve health outcomes.
Oregon: Measure 97, which would impose a 2.5 percent gross receipts tax on businesses, is a regressive tax proposal that would increase consumer prices and negatively impact job creation. While the proposed 2.5 percent tax rate seems small, because it is levied on total receipts instead of total profits, it is many of orders of magnitude greater voters might think. For context, Ohio’s Commercial Activity Tax is levied at a rate of 0.26 percent, raising around 10 percent of state revenue. Oregon’s tax is projected to bring in $6 billion dollars over the budget biennium, swelling government revenues by 25 percent.
Five states—Arizona, California, Maine, Massachusetts, and Nevada—will vote on whether to legalize and tax purchases of marijuana. In Oregon, the city of Portland and three different counties, as well as San Diego, Calif., will decide whether to impose local excise taxes on marijuana sales.
Missouri: Amendment 4—dubbed the “Taxpayer Protection Amendment”—would prohibit adding any “service or transaction” to the state or local sales tax base if it was not taxed as of January 1, 2015. This prohibition on sales tax base-broadening, being pushed by the Missouri Association of Realtors, could stifle the state’s ability to properly reform its tax code.