Expect Tax Hikes on Your Ballot This Year

Reuters
October 21, 2020 Topic: Politics Region: Americas Blog Brand: The Reboot Tags: 2020 ElectionBallot MeasuresTaxesGovernmentSpending

Expect Tax Hikes on Your Ballot This Year

With both sales and income taxes, the small‐​government side wins most of the time.

There have been 20 questions to increase, cut, or limit income taxes on statewide ballots over the past decade, as compiled by Ballotpedia. I examined those ballots here and found that voters favored the small‐​government side 60 percent of the time.

What about sales and excise taxes? In November, Oregon voters will decide on Measure 108, which would increase taxes on cigarettes by $2 per pack. Governor Kate Brown—who received an “F” on this year’s Cato fiscal report—has pushed for the increase.

Cigarettes are a demonized product and the pro‐​tax campaign in Oregon is far out‐​spending the anti‐​tax side, according to Ballotpedia. Nonetheless, voters in many states over the years have rejected cigarette tax increases. In 2007, Oregon voters defeated 59 percent to 41 percent Measure 50 to raise cigarette taxes by 84.5 cents per pack.

In Colorado, voters this November will decide on Proposition EE, which would phase in a cigarette tax increase of $1.80 per pack. The Colorado and Oregon proposals would also increase taxes on vape products.

For the 2010 to 2019 period, Cato intern Hunter Brazal found 55 sales and excise tax questions on statewide ballots, of which 37 were for tax increases and 18 for tax cuts. The questions regarded general sales taxes, tobacco taxes, alcohol taxes, and carbon taxes.

Of the 55 questions, voters took the small‐​government or low‐​tax side 42 times. That 76 percent support for the low‐​tax side was more than the 60 percent for income tax questions.

With both sales and income taxes, the small‐​government side wins most of the time. The bad news is that two‐​thirds of sales and income tax questions on ballots are for increases, not cuts.

Here is a sampling of the 55 statewide votes on sales and excise taxes, with vote percentages from Ballotpedia:

Wins for Smaller Government

  • In 2018, South Dakota Measure 25 would increase cigarette taxes by $1 per pack to fund education. Failed 44.9 to 55.1.
  • In 2018, Colorado Proposition 110 would increase the general sales tax rate from 2.9 percent to 3.52 percent to fund transportation. Failed 40.6 to 59.4.
  • In 2018, Missouri Proposition D would raise the gas tax by 10 cents per gallon to fund transportation. Failed 46.4 to 53.6.
  • In 2018, Washington Initiative 1631 would impose a fee or tax on the sale or use of fuels based on the carbon content with the funds directed to environmental and community programs. Failed 43.4 to 56.6.
  • In 2018, Montana I-185 would increase cigarette taxes by $2 per pack to fund Medicaid. Failed 47.3 to 52.7.
  • In 2016, Washington Initiative 732 would impose a fee or tax on the sale or use of fuels based on the carbon content with the revenue increase offset by cuts to sales and business taxes. Failed 40.8 to 59.2.
  • In 2016, Colorado Amendment 72 would increase taxes on cigarettes by $1.75 per pack to fund health programs. Failed 46.9 to 53.1.
  • In 2016, North Dakota Measure 4 would raise cigarette taxes by $1.76 per pack to fund veterans and health care. Failed 38.3 to 61.7.
  • In 2016, Missouri Amendment 3 would raise cigarette taxes by 60 cents per pack. Failed 40.4 to 59.6. The ballot in 2016 also included Missouri Proposition A to raise cigarette taxes by 23 cents per pack. Failed 44.8 to 55.2.
  • In 2016, Oklahoma Question 779 would increase the sales tax rate from 4.5 percent to 5.5 percent to fund education. Failed 40.6 to 59.4.
  • In 2015, Michigan Proposal 1 would raise gas taxes and sales taxes to fund transportation. Failed 19.9 to 80.1. Despite that overwhelming rejection, the governor and legislature pushed through a large gas tax and vehicle fee increase for transportation later the same year.
  • In 2014, Missouri Amendment 7 would temporarily raise the general sales tax rate by 0.75 percentage points to fund transportation. Failed 40.8 to 59.2.
  • In 2012, Arizona Proposition 204 would renew a 1 percentage point sales tax increase for education. Failed 36.2 to 63.8.
  • In 2012, South Dakota Measure 15 would increase the general sales tax rate from 4 percent to 5 percent to fund education and health care. Failed 43.3 to 56.7.
  • In 2012, California Proposition 29 would increase cigarette taxes by $1 per pack to fund cancer research and other activities. Failed 49.8 to 50.2.
  • In 2010, Massachusetts Question 1 would remove the 6.25 percent sales tax on alcohol sold in liquor stores. Passed 52 to 48.
  • In 2010, Washington Initiative 1107 would end sales taxes on candy and some beverages. Passed 60.4 to 39.6. 

Wins for Bigger Government

  • In 2019, Washington Advisory Vote 23 would retain a sales tax on vape products. Passed 66.9 to 33.1.
  • In 2018, Oregon Measure 103 would ban taxes on groceries. Failed 42.7 to 57.3.
  • In 2016, California Proposition 56 would increase cigarette taxes by $2 per pack. Passed 64.4 to 35.6.
  • In 2012, Arkansas Issue 1 would temporarily increase the sales tax rate by 0.5 percentage points to fund transportation. Passed 58.2 to 41.8.
  • In 2010, Massachusetts Question 3 would cut the general sales tax rate from 6.25 percent to 3 percent. Failed 43 to 57.
  • In 2010, Arizona Proposition 100 would temporarily raise the general sales tax rate from 5.6 percent to 6.6 percent. Passed 64.3 to 35.7.

I discuss some of these ballot questions in current and past issues of Cato’s Fiscal Report Card on America’s Governors.

This article first appeared on Cato at Liberty, a publication of the Cato Institute.

Image: Reuters.