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With so much to follow in the midterm elections, it is easy to lose sight of a bumper crop of tax-related ballot measures. But a look at the results of Tuesday’s initiatives shows one change from recent years: most tax-increasing measures failed. In the ten years before 2018, voters approved half of tax-increasing state ballot measures, but this week they only approved a handful. .
Two factors may have made a difference: voter fatigue and corporate influence. Voters typically know relatively little about the ballot measures they are presented with, and unlike in most candidate races, they can’t rely on a partisan cue to help them decipher their ballot options. In a highly partisan midterm election, amidst an especially toxic national rhetoric, and with local news coverage in sharp decline, it was likely especially difficult for voters to thoroughly consider all the measures on the ballot. Moreover, in a number of key states, multiple tax and revenue measures were on the ballot simultaneously, a surefire recipe for confusion. When in doubt, voters tend to vote “no,” and that may have mattered this year.
In addition, corporate interests actively participated in ballot measure contests this year, both to thwart taxes that would cut into their profits and to support new tax carve-outs and limitations. While not successful across the board, big money investments appear to have paid off in many prominent ballot measure fights.
Here are the key results:
Bad news for progressive tax increases for big programs. Colorado failed to pass a progressive income tax increase that would have raised about $1.6 billion for public pre-K to 12 schools. In addition, Maine rejected a measure to raise taxes on high earners to fund home care for the elderly and disabled. Colorado and Maine are both purple states, so these fights were going to be uphill. Colorado is famous for its anti-tax past.
On the other hand, the choices before the voters were not as clear as they could have been. Coloradans had a whopping thirteen statewide ballot measures to consider, including two other revenue measures; voters rejected a sales tax increase intended to pay for transportation and a transportation measure without a tax attached. Moreover, it may have been difficult to motivate Maine voters on tax policy. After voters approved Question 2 in 2016, raising income taxes on top earners to fund public education, the Governor and the legislature repealed their decision as part of subsequent budget legislation.
Largely bad news for carbon and fuel taxes. For the second time, voters in Washington State failed to pass a carbon tax, following an enormous influx of corporate spending. Missouri voters refused to raise gas taxes, rejecting a ballot measure that, somewhat bizarrely, also included a tax exemption for Olympic prizes. Utah citizens also voted down a gas tax, though their decision is nonbinding.
The exception was California, where voters rejected an effort to repeal a recent gas tax increase. The new California transportation taxes-- 12 cents a gallon on motor fuels and higher vehicle registration fees-- will go forward as planned. They are projected to raise $5 billion a year.
Taxes on marijuana were more popular than taxes on cigarettes. Michigan and Missouri legalized marijuana and taxed its use. North Dakota considered and rejected a proposal to legalize marijuana that did not include a tax. An interesting question: Are voters more likely to approve legalization of marijuana with an accompanying tax? Some voters who do not much care for legalizing pot might be swayed by a relatively easy source of funding for schools, health care, or other popular priorities.
Unlike in the case of marijuana, new taxes on tobacco were not successful. Montana’s cigarette tax to support Medicaid expansion appears to be losing, unlike other Medicaid expansions on the ballot without dedicated funding. The difference may well be the financial clout of the tobacco industry, which spent more than $17 million opposing Montana’s I-185, making the ballot measure contest the most expensive in Montana history. South Dakota’s cigarette tax for technical school funding also failed after millions in spending from Big Tobacco.
Corporations seeking special tax carve-outs were big winners. Alongside the defeat of the Washington carbon tax and the cigarette taxes in Montana and South Dakota, corporations flexed their muscle in several additional races. Led by the state realtors association, Arizona passed a ban on taxing services, despite widespread and bipartisan opposition to the measure. There appeared to be a split decision on soda taxes: Oregon rejected and Washington appears to be approving bans on such levies. Both measures were misleadingly promoted as barring taxes on “groceries,” which neither Oregon nor Washington have. The misdirection was likely more effective in Washington, which already has a sales tax while Oregon does not. Yet again, what works in Oregon does not necessarily work in Washington.
Mixed results on tax limitations. Florida passed Amendment 5, requiring a two-thirds supermajority to raise state taxes or fees. And North Carolina put in place a constitutional amendment that sets an income tax cap of 7 percent, which is higher than the current flat income tax rate of 5.5%. Oregon, on the other hand, rejected a measure to require a three-fifths supermajority for revenue increases.
Overall, in a year when many voters and activists were focused elsewhere, corporations demonstrated a remarkable capacity to influence a number of ballot measure contests, and some major tax increases failed to obtain the level of voter support that had prevailed in past elections.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.
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