State Rundown 10/28: Anti-Tax Horror Stories Proving Less Spooky in 2020

Even with Halloween coming up this weekend, months of dealing with the horrors of the Covid-19 pandemic have made it hard to scare anyone in the closing months of 2020, which state lawmakers and residents are showing by voting in droves and supporting policies they had been more trepidatious about in recent years. For example, the shock value of “Reefer Madness” has finally worn off as many states consider legalizing and taxing cannabis, including news from Minnesota and New York this week. Similarly, the spooky story made up and repeated endlessly by anti-tax zealots—in which taxes on rich households and profitable corporations curse state economies and make their residents and businesses disappear—is finally losing its grip on more mature-minded voters and leaders in many states, including those going to the polls now in Arizona, California, and Illinois. Readers should also make sure to check out the many delectable treats in our “What We’re Reading” section, including commentary on how voters can reduce inequalities at the ballot and how states can advance racial justice and economic recovery simultaneously.

Major State Tax Proposals and Developments

• MINNESOTA Gov. Tim Walz has expressed that all options to address the state’s estimated $2.3 billion budget gap are on the table, including tax increases and legalizing recreational marijuana. The House Speaker has advocated for a tax plan to cut corporate loopholes and tax havens, while Republicans have championed a 5 percent cut across all state agencies. —MARCO GUZMAN
• As voters head to the polls across the country, some states have sound tax policy options on their ballots that could help raise much-needed revenue to fund vital public services while also addressing longstanding adequacy and equity issues in their tax codes. A moment as important as this is why ITEP has decided to endorse several measures that voters will find on their ballots, including ones in ARIZONA, CALIFORNIA, and ILLINOIS. —MARCO GUZMAN

State Roundup

• Polling shows a tight contest for CALIFORNIA Proposition 15, which would raise $6.5 to $11.5 billion for priorities like schools and infrastructure by requiring commercial and industrial properties to pay property taxes based on their up-to-date market value. We recently wrote about the measure here and here, and the New York Times adds further historical perspective here. Meanwhile the local budget crises Proposition 15 is designed to help with have deepened, as illustrated by the $400 to $600 million hole projected in Los Angeles City alone.
• LOUISIANA voters will decide on multiple constitutional amendments on Election Day including Amendment 4 which would create a restrictive limit on what the state can spend on public services even though Louisiana already has a constitutional spending cap and state spending on public services is comparatively low.
• MARYLAND voters will decide whether to legalize sports betting, but details about the proposal and potential revenue estimates will not be clear until afterwards. In other news, a recent audit found that the State Department of Assessments and Taxation (DAT) overcharged low-income homeowners millions of dollars by miscalculating property tax credits.
• The MASSACHUSETTS House and Senate approved a short-term budget to keep the state government operating beyond the October 31^st expiration of the existing interim budget.
• Revenue shortfalls and the continued skyrocketing of millionaire incomes in NEW YORK are leading to greater focus on taxing the rich and legalizing and taxing cannabis.

What We’re Reading

• In addition to the three ballot initiatives we highlight in our own blog, Inequality.org provides a list of 17 opportunities for voters to reduce economic inequality through state and local ballot questions.
• The Center on Budget and Policy Priorities urges states to respond to pandemic-induced revenue shortfalls with anti-racist policies that will improve their finances and advance racial justice simultaneously. Specifically, they call for drawing down Rainy Day Funds for urgent needs, taxing rich households and profitable corporations, rolling back wasteful business tax subsidies, and allowing local governments more flexibility to raise revenues for their own needs.
• Route Fifty reports that after some initial confusion over how federal coronavirus aid could be spent, and some hesitation by states as they got their bearings, about 89 percent of the $150 billion distributed to states through the CARES Act has now been allocated.
• An investigation by The Verge found that the Taiwanese tech company Foxconn failed to build a factory that promised to create over ten thousand jobs despite receiving $3 billion in state subsidies.
• Pew reports on the devastating impact of the pandemic on tourism-based state economies like those in Florida, Hawaii, and Nevada.
• The impact of state budget cuts as a result of the coronavirus pandemic are becoming very real in colleges and universities across the country, as reported by the New York Times.
• Nebraska’s OpenSky Policy Institute is wrapping up its webinar series on policies to advance racial and ethnic equality today. Recaps and video recordings for all four installments will be available at the link above.
• Washington State’s Economic Opportunity Institute recently released a report calling for progressive revenue solutions to improve on the state’s regressive tax code, economic and racial inequalities, and fund state priorities through the pandemic and beyond.

If you like what you are seeing in the Rundown (or even if you don’t) please send any feedback or tips for future posts to Meg Wiehe at [email protected]. Click here to sign up to receive the Rundown via email.

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