CTJ's Tax Justice Digest, November 8, 2006 - Election Special 2006

 

Voters Reject TABOR, Estate Tax Repeal and Regressive Education

Funding Proposals

Some Regressive Property Tax Caps and Cigarette Tax Hikes Approved

While the Democratic takeover of the House of Representatives (and apparently also the Senate) on Tuesday has has given new hope to advocates of progressive tax policies at the federal level, the results of ballot initiatives across the country indicate that state tax policy is also headed in a progressive direction. In the three states where they were on the ballot, voters rejected TABOR proposals, which involve artificial tax and spending caps that would cut services drastically over several years. Washington State defeated repeal of its estate tax. Several states also rejected initiatives to increase school funding which, while based on the best intentions, were not responsible fiscal policy. Two of four ballot proposals to hike cigarette taxes were approved and the night also brought a mixed bag of results for property tax caps. 
 

Taxpayer Bill of Rights (TABOR)

Maine - Question 1 - FAILED 

Nebraska - Initiative 423 - FAILED 

Oregon - Measure 48  - FAILED

Voters in three states soundly rejected tax- and spending-cap proposals modeled after Colorado's so-called "Taxpayers Bill of Rights" (TABOR). Apparently people in these three states had too many concerns over the damage caused by TABOR in Colorado. 

 

Property Tax Caps

Arizona - Proposition 101 - PASSED - tightening existing caps on growth in local property tax levies.

Georgia - Referendum D - PASSED - exempting seniors at all income levels from the statewide property tax (a small part of overall Georgia property taxes. (The Georgia Budget and Policy Institute evaluates this idea here.)

South Carolina - Amendment Question 4 - PASSED - capping growth of properties' assessed value for tax purposes. The State newspaper explains why the cap would be counterproductive. 

South Dakota - Amendment D - FAILED - capping the allowable growth in taxable value for homes, taking a page from California's Proposition 13 playbook. (The Aberdeen American News explains why this is bad policy here - and asks tough questions about whether lawmakers have shirked their duties by shunting this complicated decision off to voters.)

Tennessee - Amendment 2 - PASSED - allowing (but not requiring) local governments to enact senior-citizens property tax freezes.

Arizona's property tax limit will restrict property tax growth for all taxpayers in a given district. South Dakota's proposal was fortunately defeated. It would have offered help only to families whose property is rapidly becoming more valuable, and those families are rarely the neediest. Georgia's is not targeted at those who need help but would give tax cuts to seniors at all income levels. The Tennesse initiative, which passed, is a reasonable tool for localities to use, at their option, to target help towards those seniors who need it.

 

Cigarette Tax Increase

Arizona - Proposition 203 - PASSED - increase in cigarette tax from $1.18 to $1.98 to fund early education and childrens' health screenings.

California - Proposition 86 - FAILED - increasing the cigarette tax by $2.60 a pack to pay for health care (from $.87 to $3.47) 

Missouri - Amendment 3 - FAILED - increasing cigarette tax from 17 cents to 97 cents

South Dakota - Initiated Measure 2 - PASSED - increasing cigarette tax from 53 cents to $1.53.

 

State Estate Tax Repeal

Washington - Initiative 920 - FAILED 

Complementing the heated debate over the federal estate tax has been this lesser noticed debate over Washington Stats's own estate tax which funds smaller classroom size, assistance for low-income students and other education purposes. Washingtonians decided it was a tax worth keeping.

 

Revenue for Education

Alabama - Amendment 2 - PASSED - requiring that every school district in the state provide at least 10 mills of property tax for local schools.

California - Proposition 88 - FAILED - would impose a regressive "parcel tax" of $50 on each parcel of property in the state to help fund education 

Idaho - Proposition 1 - FAILED - requiring the legislature to spend an additional $220 million a year on education - and requiring the legislature to come up with an (unidentified) revenue stream to pay for it.

Michigan - Proposal 5 - FAILED - mandating annual increases in state education spending, tied to inflation - but without specifying a funding source. The Michigan League for Human Services explains why this is a bad idea.

Voters made wise choices on education spending. The initiative in California would have raised revenue in a regressive way, while the initiatives in Idaho and Michigan sought to increase education spending without providing any revenue source. Alabama's Amendment 2 takes an approach that is both responsible and progressive.

 

Income Taxes

Oregon - Measure 41 - FAILED - creating an alternative method of calculating state income taxes.

Measure 41 was an ill-conceived proposal to allow wealthier Oregonians the option of claiming the same personal exemptions allowed under federal tax rules and would have bypassed a majority of Oregon seniors and would offer little to most low-income Oregonians of all ages.

 

Other Ballot Measures

California - Proposition 87 - FAILED - would impose a tax on oil production and use all the revenue to reduce the state's reliance on fossil fuels and encourage the use of renewable energy  

California - Proposition 89 - FAILED - using a corporate income tax hike to provide public funding for elections 

South Dakota - Initiated Measure 7 - FAILED - repealing the state's video lottery - proceeds of which are used to cut local property taxes 

South Dakota - Initiated Measure 8 - FAILED - repealing 4 percent tax on cell phone users.

 

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Gubernatorial Candidates Touting Reckless Tax Policies Rejected - Mostly 

Tax and budget issues played a role in deciding some bitter contests for governors' mansions across the country. Democrat Ted Strickland won by a large margin in Ohio against Republican Ken Blackwell. Blackwell's flat tax proposal was highly criticized and this tax reform clearly didn't resonant with enough voters. Ohioans interested in fiscal responsibility and tax fairness should breathe a sigh of relief. Despite his popularity as a football player, Hall of Famer Lynn Swann lost resoundingly to Pennsylvania's current Governor Ed Rendell in his race for Governor. Clearly Swann's "tax-slashing blue print" didn't score him a touchdown with voters.

Secretary of State Chet Culver will advance to the governor's mansion in Iowa.  Culver's opponet, Rep. Jim Nussle, suffered from his association with the President’s fiscal recklessness because of his position as Chairman of the House Budget Committee.  Fiscal irresponability also dogged Republican challenger Dick DeVos  in Michigan, who went down in defeat to Democratic incumbent Governor Jennifer Granholm.  DeVos lead the Republican effort that repealed the state's Single Business Tax, which generated 20% of the the revenue in the state's general fund, while offering no alternatives to replace that revenue.  Deval Patrick, the incoming governor of Massachusetts, defeated Republican Kerry Healey in a race that focused in large part on a proposed income tax rate rollback.  Ultimately, voters sided with Patrick, and voted against politically-motivated rollbacks in the face of sagging state revenues.  

Not all winners of the gubernatorial races have exemplary tax policies. In Florida, neither major-party candidate was willing to repeal the state's property tax cap. Democratic candidate Bill Davis at least wanted to pay for property tax cuts. He would have revived the state's recently-repealed tax on intangible property such as stocks and bonds. Davis was defeated by Republican Charlie Crist, who wants to expand the state's "Save our Homes" tax cap (the defects of which we have cataloged here and here), which limits the amount by which a home's taxable value can grow in each year to 3 percent.