Where Taxes Are on the Ballot

Coloradans could raise taxes, while other states could lock in their rates.


Where Taxes Are on the Ballot

Tuesday’s ballots in several states will include referendums that offer voters a catastrophic tax increase—or an opportunity to make it harder for politicians to raise taxes. State competitiveness in attracting people and business is thus also on the ballot.

Most ominously, Colorado’s Amendment 73 would do away with the Centennial State’s 4.63% flat tax in favor of five brackets up to 8.25%. The corporate tax would jump from that same base to 6%. The goal is to raise $1.6 billion a year for education. Polling suggests the vote could be close even though Amendment 73 needs 55% support to be enacted. In an online YouGov survey of registered voters last month, 58% said they backed the amendment.

If a huge tax increase weren’t reason enough to vote no, consider Amendment 73’s complicated mechanism. The money would go into a Quality Public Education Fund, enshrined in the state’s constitution where it would be difficult to revise.

That’s why Jared Polis, the Democratic gubernatorial nominee, isn’t boosting the amendment, despite his endorsement from the state’s biggest teachers union. “I’ve long been on the side of trying to simplify and get many of these fiscal provisions out of our state constitution so that our state can be more governable,” he said in September.

At the same time, Amendment 73 adjusts and then freezes Colorado’s property-tax assessments for education. But this could have knock-on effects because a previous constitutional amendment requires residential property taxes to be roughly in balance with business property taxes. The fear is that Amendment 73’s adjustments to one side of the ledger could unintentionally diminish tax revenue for cities, fire districts and more.

In three states, voters could head off future tax increases by tying their legislature’s hands. North Carolina’s state constitution caps the income tax at a top rate of 10%. An amendment on the ballot Tuesday would lower that to 7%. Since the state’s actual income tax today is a flat 5.499%, Democrats have called the amendment a political ploy to drive conservative votes. But as recently as 2013 the top rate was 7.75%, and it was 8.25% in 2006. So voting yes could lock in recent tax cuts. A SurveyUSA poll last month showed 47% of likely voters in favor, 41% against and 12% undecided.

Florida’s Amendment 5 would change the state constitution so the Legislature needs a two-thirds supermajority to raise taxes or fees. The Sunshine State has a similar rule currently if lawmakers want to increase the corporate tax above 5%, but it requires only a three-fifths vote. Opponents argue such strictures make it harder to raise taxes during “emergencies.”

But progressives like Andrew Gillum, the Democratic candidate for governor, also admit Amendment 5 would make their big-government dreams harder to achieve. “Everything we have proposed hinges on our ability to defeat this,” Mr. Gillum said in July. The amendment needs 60% to pass. A survey last month by St. Pete Polls had 47% of registered voters in favor, 34% against and 18% undecided.

Oregon’s constitution has a three-fifths requirement for “raising revenue,” but courts have said it does not apply when lawmakers are adding “fees” or reducing tax breaks and deductions. Measure 104 would fix that by broadening the constitutional definition of “raising revenue.”

Surveys last month showed a third of voters undecided. Opponents like Democratic Governor Kate Brown argue it would create gridlock, forcing a three-fifths vote every time the state bumps up fees on hunting licenses and so forth. But Knute Buehler, the Governor’s Republican challenger, says he will vote yes. When it comes to taking money out of taxpayers’ wallets, gridlock sounds good.

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