Tax ballot season started early this year, with Missouri voters overwhelmingly rejecting Amendment 5 last month. The measure, which would have set the state on a path toward eliminating its income tax and replacing it with much higher sales taxes, was defeated by a staggering 83 percent of voters.
This fall, voters in other states across the country will consider a host of ballot measures that could reshape the fairness and adequacy of their states’ tax systems. These range from progressive taxes on high-income individuals to fund healthcare, education, and transportation on the one hand, to steeply regressive tax cuts and measures that would close the door to future progressive reforms on the other. Voters will not merely be deciding questions of policy, they will be helping shape and determine the fiscal future of their states.
Here’s some of what we’re following.
Ballot Measures to Tax the Rich
California
In November, voters will decide under Prop. 3 if the state will keep its current income tax rates intact on a permanent basis for the richest households. In 2012, voters increased the top three brackets starting at $250,000 for single filers and $500,000 for couples (with inflation adjustments, roughly $371,000, single and $743,000 for couples today), later renewing them in 2016. These rates contribute $10 billion every year to California’s schools, roads, and other priorities, but will expire after 2030 without further action. Failing to extend them would mean not only a massive loss of revenue, but a huge tax cut for the state’s richest households.
California voters will also decide under Prop. 40 if the state should levy a one-time 5 percent tax on the wealth of the state’s billionaires to fund the state’s MediCal healthcare program. The measure has drawn enormous spending in opposition from billionaires, who have sponsored several opposing measures (Prop. 41 and Prop. 42) that, if passed, could counteract and invalidate the revenue potential of the measure. These are discussed in more detail below.
Colorado
Coloradans will soon vote on whether to raise taxes on the highest-income households and cut them for most others under Initiative 195. The measure would ditch the state’s constitutional flat personal and corporate income tax rates in favor of graduated rate structures that would tax income under $500,000 at or below the current rate of 4.4 percent and levy higher rates on income over $500,000. If passed, it would reduce income taxes for an estimated 97 percent of Coloradans while generating $2 billion annually for public services such as K-12 education, healthcare, and early childhood education – all by asking the richest in the state to pay more. However, like in California, an anti-tax measure (Initiative 232) will be competing, threatening to undermine or completely undo this progressive revenue measure.
Ballot Threats to Tax Revenue and Equity
Florida
This November, Floridians will vote on Amendment 3, put forth by the legislature, to phase-out non-school property taxes statewide, creating a pathway for the elimination of these taxes. The measure would leave property taxes the same for school spending. But for property taxes that go to other priorities, it would drastically increase the homestead exemption, exempting more property value from taxation. The increase — to $150,000 in 2027, $250,000 in 2028 and by inflation thereafter — would be extremely expensive while draining resources to fund core priorities and providing no benefit to renters. On top of that, currently properties’ assessed values cannot rise by more than 10 percent a year but the measure would lower that cap to 5 percent a year. Ultimately, if passed, the measure would drive up home prices over the long run and will make it harder for young families to gain access to the housing market.
The state’s Revenue Estimating Conference estimated the $250,000 2028 exemption and stricter assessed value cap would reduce revenue for the state by $12 billion a year. The initiative will need 60 percent approval from voters to pass and has seen broad opposition from a range of interest groups such as the Sheriff’s Association, child welfare advocates, municipal government officials, mosquito control districts, and more.
North Carolina
The legislature this year approved two constitutional amendment proposals that will appear on the ballot. The measures would limit the ability of both the state and its local governments to raise revenue while locking in outsized tax breaks for the state’s richest residents.
The first proposal, created via Senate Bill 1080, would ban the state legislature from raising the personal income tax rate above the 3.49 percent level that is scheduled to go into effect next year. Currently, the state constitution has a maximum personal income tax rate cap of 7 percent, so this proposal would cut the cap in half.
The practical effect of this lower cap would be to make it impossible for the legislature to enact tax measures like a millionaires’ tax, that could be used to generate revenue for schools and other services by asking more of those who can clearly afford to pay more. It would lock in a set of rules designed to protect extraordinarily wealthy people from ever having to pay a higher state income tax rate than the state’s teachers, nurses, and first responders.
The second proposal, created by House Bill 1089, would hamstring local officials’ ability to set property tax levels by requiring the General Assembly to create a property tax levy limit that would restrict local property tax revenue growth. Property taxes are the largest single source of revenue for local services, providing over one-third of funding for local governments in North Carolina. Limiting them in this way risks deep cuts to public and emergency services. State income tax cuts have already deeply cut aid to North Carolina localities, making it even more alarming that the state could block other ways of funding local services.
California
A handful of anti-tax measures will appear on the ballot in California this November: Propositions 41, 42 and 43.
The first two seek to undermine the wealth tax ballot measure (Prop 40). Prop 41 would exclude new state taxes from the spending limit and make it harder to pass new special taxes by requiring the state auditor to review any special tax proposal before they move to voters. Prop 42 would prohibit new taxes on the ownership of assets (like investment accounts, business interest, and personal property) that are typically only taxed when they are sold or generate income. If Prop 41 and Prop 42 receive more votes than the wealth tax ballot measure (Prop 40), Prop 40 is nullified, even if it also passes.
Prop. 43 would require a two-thirds threshold of voter approval for any local initiative that would create, extend, or increase a special tax. This would make future local taxes – like Los Angeles’ mansion tax, which was initially the target of this initiative – more difficult to approve but would not affect existing law or practice.
Colorado
Under Initiative 232, Colorado voters will decide whether to cap the state’s corporate and personal income tax rates at 4.4 percent (the state’s existing flat rate). The measure is at odds with Initiative 195, described above, that seeks to establish graduated income tax structures with higher rates for high income individuals.
Similar to the rate cap on the ballot in North Carolina this November, the measure would take away the legislature’s ability to enact popular, progressive tax measures, like a millionaires’ tax or higher taxes on high earners, that could be used to generate revenue for schools and other public services.
Iowa
The legislature approved a constitutional measure – SJR 11 – to impose a two-thirds supermajority requirement on any future legislative efforts to raise personal or corporate income taxes. It now heads to the November ballot. If passed by a simple majority of voters, any future income tax increases would then need to be approved by a two-thirds majority in each chamber of the state legislature before being sent to the governor.
Massachusetts
Massachusetts voters will weigh in on Question 5 in November, which would expand the state’s revenue limit, above which the constitution requires automatic refunds. The existing formula inflates the cap by the maximum of the last 3 years in wage and salary growth; the measure up for vote would convert the formula to a mean, limiting potential resources for the state’s core priorities.
Oklahoma
Voters in Oklahoma will decide on whether to pass State Question 847. The measure would reduce annual increases in property tax values, adjusting the state’s existing property tax assessment growth caps (from 5 to 4 percent for commercial properties and 3 to 1.75 percent for primary residences) and create income tiered caps that freeze property taxes for lower income seniors. Ultimately, if passed, younger families will be likely to take on more of property tax payments.
Washington
Initiative IP26-645 in Washington seeks to repeal the state’s newly passed millionaires’ tax, which fewer than 1 percent of the wealthiest in the state are likely to pay, and would prohibit any future state and local taxes on income.
This year, Washington lawmakers created a 9.9 percent income tax on income over $1 million. The measure, which is slated to go into effect in 2028, is estimated to raise $3.1 billion in the first year (2029) and $8.3 billion for the biennium for K-12 and higher education, healthcare, and other services. Opponents are exploring all avenues to challenge the new millionaires’ tax in court, and voters are slated to decide the issue this fall.
Wyoming
Initiative 1 will appear on the state ballot this year. If passed, it would cut Wyoming’s property tax by drastically reducing assessments via a new homestead exemption program. The measure would create a property tax exemption for 50 percent of a primary residence’s assessed value, at an overall cost of about $125 million a year. Officials are still unable to certify the state’s assessments of home values over a likely unconstitutional prior cut. Concerns remain that the newly enacted assessment freeze violates Wyoming’s constitutional conformity clause.
