Measures on the November Ballot Could Improve or Worsen State Tax Codes

In a couple of weeks, voters in a handful of states will weigh in on several tax-related ballot measures that could make state tax codes more equitable and raise money for public services, or take states in the opposite direction, making tax systems less fair and draining state coffers of dollars needed to maintain critical public investments. Amid a slew of ballot initiatives that threaten to reduce funds available for public needs and skew tax codes in favor of the wealthiest, Massachusetts has a proposed initiative that would raise taxes on the wealthiest, increasing revenue for schools and making the tax code more equitable in the process.

Here are a few key measures we’re watching:

Arizona

Arizona’s Proposition 132 would allow just 41 percent of voters to defeat any tax-raising ballot measure, drastically limiting the ability of Arizonans to raise revenue and invest in their future. Arizona has seen over three decades of significant tax cuts decimate the state’s ability to fund schools, health care, higher education and other public services. A saving grace has been the fact that Arizona voters have often approved new revenue via the ballot – but five of these ballot measures that have raised money for education and health would have failed had Proposition 132 been in place, since they were approved by a majority of voters, but not more than 60 percent of voters.

Colorado

Colorado’s Proposition 121 would cut the state’s income tax rate to 4.4 percent from 4.55 percent, costing the state approximately $400 million a year while making Colorado’s tax code less equitable. The 1.2 percent of Coloradans who earn $500,000 or more a year would receive 23.2 percent of the tax cut, while the 67 percent of Coloradans earning $75,000 or less a year would receive just 18.5 percent.

Idaho

Idaho voters will be asked in a non-binding referendum whether they approve or disapprove of the massive tax cut and education funding bill the state’s lawmakers approved earlier this year. The tax cuts and one-time rebates in that package will cost Idaho $584 million next year, and $130 million a year after. That’s because the bulk of the cost goes to the one-time rebates, not the reduction in personal and corporate income tax rates. However, when combined with tax cuts passed earlier in 2022 and 2021, the total ongoing cost of Idaho’s recent tax cuts is estimated to be $571 million a year.

Massachusetts

The Fair Share Amendment in Massachusetts would apply an additional 4 percent income tax to household income above $1 million, raising an estimated $2.7 billion a year in annual revenue for schools and transportation. The proposal would also make the Bay State’s tax code more equitable, bringing the share of income paid toward state and local taxes by the wealthiest 1 percent of households to 8.7 percent (up from 6.8 percent), much closer to the share of income that the rest of Massachusetts households pay (8.9 percent).

West Virginia

West Virginia’s Amendment 2 would, if approved, be the first step in reducing property tax revenues by $515 million across the state. It would amend the state’s constitution to give the legislature the authority to exempt business machinery and equipment, business inventory and personal vehicles from property taxation, resulting in a severe loss of revenue for counties and local governments. The measure would mostly benefit out-of-state businesses. Businesses overall would receive two-thirds of the tax cuts.

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