STUMP » Articles » Taxing Tuesday: Tax-Related Ballot Questions » 23 October 2018, 15:33

For today’s post, let’s leave Trump behind, and focus on tax-related items on state and local ballots.

I’m taking a bit of a break for a while – in short, I’m exhausted and in pain. The reason I’m posting this is most of this was written last week already.

BALLOTPEDIA ON TAX ISSUES

Ballotpedia has a nice guide of tax issues on state ballots, but that’s an entire history.

Let’s see what they have for 2018. There are 37 items on this page… but that includes proposed ballot measures (especially in California) that never made the ballot, or which is not on the November ballot (was earlier in the year). And not all of these are that interesting.

So let’s go down the list in state ABC order, focusing on ones specifically on the November ballot (and excising some ones that even I find boring):

• Arizona Proposition 126, Prohibit New or Increased Taxes on Services Initiative (2018) – hmmm, a NO NEW TAXES measure. I will keep an eye on this as well.
• California Proposition 2, Use Millionaire’s Tax Revenue for Homelessness Prevention Housing Bonds Measure (2018) – sigh, it’s California. I’ll look at this one.
• California Proposition 5, Property Tax Transfer Initiative (2018) – I have a related item below
• California Proposition 6, Voter Approval for Future Gas and Vehicle Taxes and 2017 Tax Repeal Initiative (2018) – there is an odd mix of pro-tax and anti-tax initiatives for California this year
• Colorado Amendment 73, Establish Income Tax Brackets and Raise Taxes for Education Initiative (2018) – to allow for a progressive state income tax instead of a flat tax. This is one to watch.
• Florida Amendment 5, Two-Thirds Vote of Legislature to Increase Taxes or Fees Amendment (2018) – hmm, make it harder to increase taxes.
• Louisiana Amendment 6, Phase-In of Tax Increases from Property Reappraisal Amendment (2018) – relates to property tax and phasing in effect of large re-appraisals (over 50% increase) over 4 years
• Maine Question 1, Payroll and Non-Wage Income Taxes for Home Care Program Initiative (2018) – a payroll tax of 3.8% (up to the Social Security wage limit) to fund Universal Home Care — given the aging of Maine, I don’t think this is a good idea.
• Missouri Proposition D, Gas Tax Increase, Olympic Prize Tax Exemption, and Traffic Reduction Fund Measure (2018) – this was an initiative from the legislature… why can’t they just vote for it themselves? The main thrust is increasing the gas tax 10 cents up to a total of 27 cents by 2022. It’s currently 17 cents.
• Montana I-185, Extend Medicaid Expansion and Increase Tobacco Taxes Initiative (2018) – increases tobacco taxes by a lot — for example, tax on a pack of cigarettes would increase from $1.70 to $3.70.
• Montana LR-128, Property Tax for State University System Measure (2018) – again, an initiative from the legislature… is there a reason these guys can’t increase taxes on their own? Looking at the history at the link, evidently this started in 1948, and the state population re-approves it every 10 years. The lowest approval vote was 51.5% in 1958, the highest was 67.2% in 1978.
• Nevada Question 2, Sales Tax Exemption for Feminine Hygiene Products Measure (2018) – Looking at the history, some medical items are already exempt from sales tax, but it looks like stuff like aspirin or bandaids are still taxed. Just wait, they’ll ask for a tax exemption for Midol next. What I don’t understand is why this has to be an amendment to the state constitution. This is odd.
• Nevada Question 4, Medical Equipment Sales Tax Exemption Amendment (2018) – heck, why couldn’t this have been combined with the previous one? Just more medical equipment, like CPAP devices. I am so happy it’s difficult to amend the U.S. Constitution. This is really going to be part of the Nevada state constitution?
• North Carolina Income Tax Cap Amendment (2018) – another legislatively referred constitutional amendment. I’m really getting iffy about what they’re putting in state constitutions. It’s lovely to think “We’ll cap the state income tax rate at 7% instead of the current 10%”, but this really should be in legislation, not the constitution.
• Oregon Measure 103, Ban Tax on Groceries Initiative (2018) – this is more keeping groceries tax-free (no state sales tax) and remove local taxes on groceries. As noted in the Ballotpedia entry, Washington state (below) has a similar ballot initiative, and California was going to have one, but something was passed by the legislature and the initiative was withdrawn.
• South Dakota Initiated Measure 25, Tobacco Tax Increase Initiative (2018) – big increase in tobacco taxes
• Utah Constitutional Amendment B, Tax Exemption for Property Leased by a Government Entity (2018) – this can be a problem for towns with a lot of government property. I understand the state doesn’t want to tax itself (that’s silly), but a town may miss out on property taxes if the state leases space in that town.
• Virginia Question 1, Property Tax Exemption for Flood Abatement Amendment (2018) – “partial local property tax exemption for real estate subject to recurrent flooding that undertook improvements to prevent flooding or long-term damage from flooding” — okay, provide an incentive for flood abatement. That’s a good idea. Of course, some places may not be fixable re: flooding, and it would be better if people left.
• Washington Initiative 1631, Carbon Emissions Fee Measure (2018) – oh yay, a carbon tax. I’ll keep an eye on this one.
• Washington Initiative 1634, Prohibit Local Taxes on Groceries Measure (2018) – as with Oregon… I think these are measures to prevent soda taxes.

Phew.

So, here’s a question: in some of these cases, the initiative came from non-legislators who had to petition to get it on the ballot and yadda yadda.

In some other of these cases, it’s part of the process of amending the state consititution and I will come back to that in a bit.

But in some of these cases, it’s the legislature putting something out there, so they don’t have to vote for it themselves or something. WTF?

Separately, most of the state amendments I’m reading don’t need to be in the state constitution, as far as I can tell. For example, why can’t the Nevada legislature just pass a law saying that tampons are not to be taxed? Why cannot state law handle this?

The two competing forces: anti-tax moves (e.g., anti-grocery tax, make it difficult for legislatures to increase taxes, cap on various taxes) and pro-tax moves (increase tobacco taxes, gas taxes, make state income tax progressive) — and in some states, there’s both anti-tax and pro-tax initiatives. Should be interesting to see how that shakes out.

CALIFORNIA 2020: TAX OR DON’T TAX…MAKE UP YOUR MIND

Measure to Weaken Property Tax Limits Qualifies for California’s 2020 Ballot

Coming to an election near you in 2020: the future of Proposition 13, California’s landmark law limiting property taxes.

Secretary of State Alex Padilla announced Monday that an initiative to scale back the protections for commercial and industrial properties is eligible for the November 2020 ballot. The proponents, led by a coalition of civil rights groups and community organizations, could still decide before then not to move forward with the measure.

Okay, sorry, this one will be in 2020, not this year, but this could be big. Not that it will make a huge difference in the presidential election that year, but let’s see what’s coming.

Approved by voters in 1978, Proposition 13 set state property taxes at 1 percent of the purchase price and capped annual increases at 2 percent or the rate of inflation, whichever is lower.

Californians who hang onto their property for a long time can, as a result, end up paying far less in taxes than what new buyers would pay. Critics complain the state is losing out on billions of dollars per year in revenue from commercial and industrial property, and it has long been a dream of unions and other liberal advocacy groups to overturn at least parts of the law.

The new initiative would tax commercial and industrial properties at market value while leaving in place the Proposition 13 protections for homeowners, a concept known as “split roll.” Small businesses, agricultural land and up to a half million dollars worth of tangible property, such as equipment, would be exempted from the change.

The money raised by the tax increase — estimated by the state at between $6 billion and $10 billion — would go to local governments and schools.

I know the kind of problem with this — in my own case, we had a blanket re-evaluation of property values in our town, which benefited me to the tune of about $3000/year. You see, I made the great decision to buy a hefty house at the top of the market.

The very next year, property values had dropped something on the order of 20%. Of course, my downpayment had been about 25%, so I have never been underwater on my house.

But I had been paying elevated property taxes compared to my neighbors… especially the short sales of 2010.

TAX STORIES

• Governing: For College Towns, Having a World-Famous University Is a Mixed Blessing — what happens in New Haven when so much real estate is tied up by a non-profit university.
• A Second State Could Ban Service Taxes – that state is Arizona
• Tax Returns Tell Tricky Tales Of How Super Wealthy Candidates Avoid Paying Some Taxes – it’s not all that tricky, really. They are rich men who get money from their investments. They don’t work for wages.
• Governing: The Week in Public Finance: Most States’ Tax Systems Worsen Income Inequality – interestingly, NY is relatively “fair” by their metric….but then California is the “fairest”. Hmm.
• Forbes:$1.6 Billion Lottery Winner Will Face Huge Taxes, Possible Lawsuits
• WaPo: White House officials discuss symbolic tax vote as Trump touts imminent cut for middle class
• Fortune: Mega Millions $1.6 Billion Jackpot Also Comes With a Mega Millions Tax Bill
• East Bay Times: Gas tax: What you need to know about Prop 6

That’s all. See you whenever!