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Direct public involvement in shaping the United States’ tax policy has a long history. There was the Boston Tea Party tax protest as the country was being formed. More than 200 years later, citizen lawmaking was still going strong with California’s watershed Proposition 13 — a tax ballot initiative to reduce property taxes by more than 50 percent.
Now, every election cycle, tax issues appear on ballots across the country for voters to determine whether levies will be enacted, ended or even permanently banned.
It will happen again on Nov. 4, with 20 statewide tax-related issues to be decided by voters in 11 states.
20 tax-related questions to be on ballots in 11 states on Nov. 4
Amendment A would cap the state income tax rate at 6 percent. Referendum 1 would provide a property tax exemption for some University System of Georgia buildings.
Tax for Education Referendum would add a new 3 percent tax on income greater than $1 million.
Five tax questions, including measures to provide tax breaks for disabled veteran homeowners and other permanently disabled residential property owners.
Question 1 would repeal the automatic increase based on inflation of the state’s gasoline tax.
Question 3 would create a 2 percent margin tax on certain businesses, with proceeds going to the state’s school districts. Question 2 would remove the mineral mining tax cap.
Two tax measures, including the prohibition of taxes on mortgages or real property transfers. The second would protect water, wildlife and parks with a portion of the state’s oil extraction tax revenue.
Questions 770 and 771 would provide homeowner-related tax relief to disabled veterans and surviving spouses of military personnel, respectively.
Amendment 3 would prohibit any state or local taxation of payroll or earned personal income.
The property tax exemption for certain veterans and surviving spouses of soldiers killed in action would provide residential real estate tax relief to some military widows and widowers.
Advisory Vote No. 8 would eliminate agricultural tax preferences for various aspects of the marijuana industry. Advisory Vote No. 9 could impose the state leasehold excise tax on certain interests in tribal property.
Amendment 1 would create property tax exemptions for certain nonprofit youth organizations.
“Western states tend to have more direct democracy laws,” says Brittany Clingen, ballot measures project director for Ballotpedia. The online tracking of national voter initiatives is a project of the nonprofit Lucy Burns Institute.
However, the move for direct voter say in the laws that govern them is found nationwide as people become more frustrated with government, Clingen says. Since taxes often are a key component of such frustration, it’s no surprise that many ballot questions are tax-related.
23 statewide tax ballot initiatives in 2014
Three tax measures were decided in the August primaries.
In August, Alaska voters opted to keep tax breaks in place for oil companies. That’s not a surprise, since the Last Frontier’s economy relies heavily on the collection of that natural resource. What was somewhat of a surprise was that the measure narrowly passed.
Michigan voters decided to do away with the state’s tax on business property such as equipment, machinery and computers. Supporters said the tax break was needed to keep the state’s business climate competitive.
Missouri voters, however, rejected a temporary sales tax increase that would have funded state transportation projects.
Some of the remaining tax-related initiatives will change or repeal existing laws. Others are advisory only, giving lawmakers suggestions for future tax legislation. And in a few cases, the tax component is only a small part of a larger question.
But both business and individual tax issues are important to the taxpayers who will be going to the polls.
Income tax issues
Among the initiatives that tax watchers are keeping a close eye on are the income tax questions in Georgia, Illinois and Tennessee.
Georgia voters will decide whether to cap the state income tax at the current 6 percent rate. Amendment A would prohibit any increase, a move supporters say is needed to make the Peach State more competitive with other Southern states. Opponents say individual income tax rates generally don’t prompt population moves and that the ballot question is merely a political gimmick.
Illinois voters will get their say about raising taxes on their wealthier neighbors. The Illinois Millionaire Tax Increase for Education question asks voters whether they support increasing the state income tax by 3 percent on incomes greater than $1 million. The added money would go to school districts based on enrollment size. The vote, however, is advisory only. Any actual increase, if favored by most Prairie State voters, would have to come from the state legislature. Of course, since it is advisory only, lawmakers could decide not to increase taxes even if most voters said it was OK.
Then there’s Tennessee (the Volunteer State), one of nine states that does not have an income tax on wage and salary income. Amendment 3 would keep it that way forever. If approved by Volunteer State voters, the state legislature would be prohibited from “levying, authorizing or permitting any state or local tax upon payroll or earned personal income.” The change would not affect the state’s current tax on certain dividend and interest income.
Stopping automatic gas tax hikes
In 2013, Massachusetts lawmakers hiked the state’s gasoline tax from 21 cents to 24 cents. The Transportation Finance Act also provides for that tax to increase annually based on the inflation rate.
Voters could put an end to those automatic tax hikes by approving Question 1 next month.
Opponents of the automatic gas tax hike say it’s unfair. No other Massachusetts tax is tied to the rate of inflation. They also are concerned that lawmakers could use this tax as the basis for tying other taxes to the Consumer Price Index.
Those who want to keep the annual gas tax hikes in place argue that it’s the best way to ensure the state has sufficient money to pay for road and infrastructure maintenance.
New Nevada business tax
If Nevada voters approve Question 3 in November, some of the state’s businesses would face a 2 percent margin tax beginning Jan. 1, 2015. Small businesses are exempt from the new tax. It would apply only to firms with revenues of more than $1 million.
The new tax money would be dedicated to public school costs. Supporters of the tax say businesses benefit from a better educated public. The added revenue, they argue, could help reduce class sizes, provide teachers and students with more tools and technology, fund early childhood education programs and enhance the Silver State’s ability to recruit and keep quality educators.
Opponents of the tax say it would destroy one of the state’s best tools for attracting new businesses: a low tax rate. An analysis prepared for the Coalition to Defeat the Margin Tax found that the proposal would take Nevada from below the national average in several business tax categories to among the top five states in the country.
Local soda taxes, too
Voters in two Northern California cities will decide whether they should pay a tax on sugary beverages, such as sodas, sweetened tea, and energy and sports drinks.
The Berkeley proposal would assess a 1-cent-per-ounce tax on sugar-sweetened beverages. The money would go to the city’s general fund.
San Francisco’s measure calls for a 2-cents-per-ounce tax. The new revenue would go to specific programs, such as health education and programs promoting healthy lifestyles.
Attempts to implement similar beverage taxes by other states and cities across the country have generally failed. Could that record change in one or both of these California cities known for their liberal politics and public activism? If so, the outcome could spark renewed enthusiasm for so-called soda taxes elsewhere.
“Supporters of contentious issues will try to test at local levels first,” says Clingen. That strategy has been used before to advance policy dealing with genetically modified organisms, fracking and marijuana.
“It’s less expensive,” says Clingen. “If it’s successful, they work to expand statewide.”