When voters cast their ballots across the country on November 6, they???ll also have the chance to decide on a gamut of state-level ballot initiatives. Given most states??? fiscal woes, many of these measures will be tax hike propositions, but there will be other noteworthy issues as well. Human Events will examine some of the more substantial tax-related initiatives. We???ll come back in the following weeks to highlight other measures.
Out of all ballot initiatives this fall, California???s menu of propositions is most wide-ranging. Three out of the state???s 11 propositions are tax hikes: Proposition 39 would increase taxes on multistate businesses in California. Propositions 30 and 38 would each raise sales and income taxes, their proponents say temporarily, to fund schools.
Prop 39 would level the playing field between in-state and out-of-state businesses in California, but it wouldn???t necessarily be any fairer.
The current law levies lower taxes on multistate businesses that operate in California with property and payroll outside the state. Rather than consider giving the in-state businesses a break, the proposition???s main supporter, Silicon Valley billionaire Thomas Steyer, would have taxes raised on the out-of-state companies that have customers in California.
A total of $550 million per year of the high tax???s revenue would fund projects that create energy efficiency and clean energy jobs in California, according to the initiative???s language.
As for the other two California tax hike propositions, there is a duel raging???both purport to fund schools but appear, upon closer inspection, to be little more than political jockeying between Gov. Jerry Brown, backer of Prop. 30, and education advocate and former federal prosecutor Molly Munger, who supports a rival initiative, Prop. 38.
Prop. 30 originated with Gov. Brown and would change the California Constitution to raise sales and income taxes and put the revenue toward K-12 schools and community colleges. Prop. 38 would direct an estimated no-strings-attached $10 billion to classrooms next year, as well as alter the school finance plan. Prop. 38 would create a fund specifically for classrooms that the state legislature would not be able to touch. The unions, including the California Teachers Association, have gotten behind Brown???s Prop. 30, which would not create a separate, no-strings fund for classrooms.
Lisa Snell, education policy expert at the Reason Foundation, finds this puzzling. Because the biggest expense in a classroom is the teacher, the lion???s share of Prop. 38???s revenue would go to teachers, something unions ostensibly would prefer. The apparent real motivator, she says, is ???political dealings that take precedent over what would be best for their members and the kids. If they were really for the kids and the teachers, you???d think they would back the proposition that???s, on its face, more advantageous for the kids and the teachers,??? she said.
The state legislature passed Brown???s 2012-13 budget, which he wrote as if a November affirmative vote was a done deal on Prop. 30???s revenue increases and were available for the state budget. That has enabled him and his union backers to campaign for his proposition with the message that if voters don???t pass it, K-12 and higher education will lose $6 billion.
The Florida legislature unanimously passed two initiatives for tax breaks for service members and their spouses in March. Amendment 2 would ease property taxes on combat-disabled veterans over the age of 65 by discounting the ad valorem tax on homestead property. Amendment 9 would do the same for the spouses of fallen military service members who died while on active duty.
The amendment also includes the same homestead tax exemption for the spouses of firefighters and police officers who died performing the duties of their employment.
More exemptions for homesteaders: Amendment 5 would give all first-time homesteaders an exemption at the rate of 50 percent of the national median home price.
New Hampshire residents will vote on a constitutional amendment that would ban the levying of any new personal income taxes in the state.
The proposed measure, Constitutional Amendment Concurrent Resolution 13 (CACR 13), would add this clause to the constitution: ???No new tax shall be levied, directly or indirectly, upon a person???s income, from whatever source it is derived.???
New Hampshire already doesn???t have a personal income tax at the state level, but proponents of the ballot measure believe the amendment would be an important safeguard against any changes. In January, the state House Majority Leader D.J. Bettencourt touted the proposed amendment as a ???strong and unmistakable message to our citizens and to our business community that we are going to hold firm the New Hampshire advantage of no personal income tax.??? Detractors worry that the language is too vague and may put excess limits on the state government???s sources of revenue.
The Michigan Alliance for Prosperity (MAP) is sponsoring a ballot initiative that would require either a two-thirds majority vote in the legislature or a statewide vote before raising any state taxes. MAP raised $1.89 billion in 2012 to campaign for the initiative.
Michigan Gov. Rick Snyder has come out against it. On his website, he calls it ???a bad idea for our state.??? He claims that the two-thirds vote would be necessary not just for tax increases, but for tax reform of any sort. ???If the two-thirds amendment would have been in place a few years ago, … [w]e couldn???t have taken the steps we did to improve Michigan???s business climate to bring more and better jobs to our state.???
In the Bureau of Labor and Statistics Jobs Report for August, Michigan had an unemployment rate of 9.4 percent, lower than the 10.4 percent Michigan held before Snyder signed an eight-bill tax reform package last May. Michael LaFaive, director of fiscal policy at the Mackinac Center, a libertarian think tank, thinks that???s a moot point. If the proposed amendment had been in place last year, ???a tax reform such as the one Gov. Snyder put through would have still been plausible,??? he told Human Events.
Indeed, the language of the proposed amendment does not require a special vote for all tax reform, just increases. The two-thirds vote might have nixed the tax hike in last year???s deal, but the budget gaps could have been filled in other ways. One option would have been to cut costs, ???which is something the Mackinac Center would support,??? LaFaive said.