Eleven states will give voters an opportunity to change state tax policy on election day this year. However, most of these initiatives — according to Citizens for Tax Justice — “would make state taxes less fair or less adequate (or both).”
But some ideas are worse than others. Here are the three worst ideas voters will decide on:
So-called “Taxpayer Bill of Rights” (TABOR): Florida voters will decide whether to accept Amendment 3, which limits public spending and revenue collection through a proscribed and — according to the Center on Budget and Policy Priorities (CBPP) — flawed formula. It also requires a supermajority of the legislature to override the revenue limit. TABOR virtually guarantees revenue shortages and makes it extremely difficult to raise more, so Amendment 3 will likely lead to drastic cuts in public spending. As the CBPP shows, if all the spending cuts were enacted at once, revenue losses would exceed $11 billion in ten years.
Colorado is the only state to have enacted TABOR, but after 13 years of harmful budget cuts, Colorado voters suspended it in 2005.
Supermajority requirements for changing tax policy: Both Michigan and Washington are debating requiring a two-thirds legislative supermajority in order to end tax breaks or increase tax rates. Such a requirement virtually guarantees legislative gridlock and a host of other problems.
In 2010, Washington put in place a supermajority requirement for revenue changes, known as I-1053, but it was struck down as unconstitutional in May 2012.
Again, history provides a useful lesson. California passed a supermajority requirement in 1978, Prop 13, which Time called “the root of California’s misery.” Among the many problems Prop 13 caused, it resulted in legislative dysfunction and multi-billion dollar drops in spending and revenue. By design, revenue plunged 60 percent the first year after the law’s passage, and education funding dropped.
Since the legislature is virtualy unable to raise taxes, proposals to increase taxes come through popular referendum.
Repealing the estate tax: Oregon voters will decide on Measure 84, which gradually repeals the estate tax and will cause a $120 million loss in revenue for the state every year. Though other parts of the law are unclear, it could potentially “open a new egregious loophole allowing individuals to avoid capital gains taxes on the sale of land and stock by simply selling property to family members.” If this analysis is accurate, Oregon would lose up to $175 million by 2021.
There is no evidence to suggest repealing the estate tax increases the number of wealthy tax payers who live in a state, a constant claim of proponents. In the end, repealing the estate tax would be an extremely regressive move and would only benefit the very wealthy.
– Greg Noth