Along with the high profile national and state candidate races, voters in several states determined the fate of some tax initiatives. The decisions were mixed. The Tax Foundation has a good overview of the results.
On income taxes, the Tax Foundations says voters “split the difference.”
Illinois voters rejected a high graduated rate income tax while Arizonans embraced a large income tax rate increase for high earners, among the many attention-grabbing results from Tuesday’s elections—most of which, admittedly, weren’t about taxes. Coloradans, meanwhile, ratified an income tax cut in a year that many expected voters to instead be weighing in on a substantial income tax increase—and that was before the pandemic.
Overall, TF analysts write that voters remain unenthusiastic about income tax hikes.
Voters, it turns out, still dislike income tax increases, and usually vote for the lower-tax position when the matter is before them on the ballot…
Between 2010 and today, when voters have weighed in on income taxes they have chosen the lower-tax option 14 out of 23 times, including 10 out of 17 votes directly on tax rates and levies. Of the seven times voters favored higher rates, four had language tying the increased revenue to education, health care, or transportation expenditures. Most of the failed measures lacked such provisions. Tying income tax increases to education, as was the case in Arizona Proposition 208, may have served to make income tax hikes more attractive to voters, even if doing so increases education funding’s reliance on a more volatile revenue source.
Details on the tax policy changes here.
We’ll detour from the TF analysis for a second to report San Francisco voters continue to follow their own peculiar path.
San Francisco voters approved a new tax that will target businesses with the most disproportionately paid CEOs.
Measure L required a simple majority to pass and was approved by 65.18% of voters Tuesday night, making San Francisco the first U.S. city to move to tax both private and public businesses based on how “overpaid” their top executives are.
The measure, introduced by Supervisor Matt Haney and backed by the board, is expected to generate between $60 million and $140 million a year in general funds starting in 2022, according to an estimate by the city.
Business leaders appear to have been resigned to the outcome.
“It was the right time and the right city, with a very big turnout,” said Jim Wunderman, President and CEO of the Bay Area Council. The council and other business groups, including the California Chamber of Commerce, opposed the measure but did not fund the opposition campaign. The measure was among four tax proposals approved by San Francisco voters on election day.
We won’t speculate about what that means for other progressive West Coast cities.
Back to the Tax Foundation on property measures on the ballot.
In Tuesday’s election, voters in two states—California and Colorado—were tasked with deciding whether to amend their states’ constitution to change how the property tax burden is distributed. In many ways, the ballot measures were mirror images of each other, but the outcomes were similar.
California Proposition 15 sought to shift more of the property tax burden onto commercial property taxpayers by excluding most commercial properties from the protections of Proposition 13, while Colorado Amendment B sought to prevent residential taxpayers from receiving additional disproportionate property tax relief under the “Gallagher Amendment” moving forward.
With 85 percent of precincts reporting, Colorado Amendment B has been adopted by a 58-42 percent margin. And with 99 percent of precincts at least partially reporting (and an estimated 72 percent of the total vote count in), California Proposition 15 appears to have been defeated by a 48-52 percent margin, though it may take some time for an official call.
Washington’s constitutional requirement of property tax uniformity is one of the major strengths of the state’s tax structure.