Economics

Tax The Rich Ballot Measures Fail In Midterm Elections

Voters said “No” to tax increases in ballot initiatives across the country in the midterm elections. There were initiatives to raise taxes on high earners. Those failed. And there were initiatives to cap, limit or restrict taxes. Most of those passed.

First, the appetite for taxing high earners appears to be waning, perhaps in light of President Donald Trump’s antitax rhetoric. Maine and Colorado rejected ballot measures that would have made their state income tax regimes more progressive, despite the stated reasons for the tax hikes: to help K-12 students and the elderly.

In Maine, Question 1 would have enacted a new 3.8% payroll tax and a non-wage income tax hike, meant to fund a new home health care program for the elderly by bringing in $300 million in annual revenue. Employers and employees would have split the new 3.8% tax on income over $128,400 (the Social Security benefits base). Small business owners and those with pass-through income would have been responsible for the full 3.8% tax. In addition, taxpayers would face a new 3.8% tax on non-wage income, such as dividends and interest, above $128,400. The taxpayers who would have been hit already pay Maine’s current top state income tax rate of 7.15% (imposed on single taxpayers with taxable income of $50,750 or more and joint filers with taxable income of $101,550 or more). The National Taxpayers Union opined against the tax in this editorial. There were 63% No votes to 37% Yes votes, with 73% reporting.

In Colorado, voters rejected Amendment 73, to establish new income tax brackets and raise taxes to fund education programs, including special education and gifted programs. The measure would have replaced Colorado’s flat income tax of 4.63% with a progressive income tax, targeting taxpayers with taxable income of over $150,000 with tax hikes. The new system would have had five tax brackets with graduated rates. The 4.63% rate would have applied to the first $150,000 of income, going up to 8.25% for income above $500,000. The measure would have brought in an additional $0.6 billion revenue in FY 2018-2019 and $1.4 billion in FY 2019-2020, according to a Colorado Legislative Council’s fiscal impact statement.

Separately, a handful of states had ballot measures to rein in taxes.

Arizona voters approved Proposition 126, which prohibits state and local governments from enacting new taxes or increasing tax rates on services. Florida voters approved Amendment 5 which requires a two thirds vote of each chamber of the state legislature to enact new taxes or fees or increase existing ones. They also approved Amendment 2 which makes permanent the cap of 10% on annual non-homestead parcel assessment increases set to expire. North Carolina voters approved an amendment to lowers the maximum allowable state income tax rate from 10% to 7% (the top rate is currently 5.5%). And Washington voters approved Initiative 1634, which prohibits local governments from enacting taxes on groceries.

Oregon and California were the two states to defeat initiatives to reign in taxes. Oregon voters defeated Measure 103 which would have banned taxes on groceries, as well as Measure 104, which would have required a three fifths vote of each chamber of the state legislature to increase revenue. California voters defeated Proposition 6, which would have required voter approval for the state legislature to impose, increase or extend fuel taxes or vehicle fees in the future.

This article originally appeared on Forbes

Leave a Reply

Your email address will not be published. Required fields are marked *