Tax ballot measures yield mixed results for progressives

The outcomes of state tax ballot measures on Election Day were a mixed bag for progressives.

In one high-profile contest, Arizona voters approved a tax increase for high earners. In other states, voters rejected revenue raisers or supported tax cuts.

Experts said messaging likely played a key role in the results. Measures that don’t specify a use for the new funds, they said, typically fare worse than those that explain to voters how the additional money will be allocated.

Voters in the battleground state of Arizona approved a measure, Proposition 208, to impose a 3.5 percent surcharge on income above $250,000 for individuals and $500,000 for married couples. That will have the effect of raising the top state income tax rate from 4.5 percent to 8 percent.

The ballot measure, backed by Democratic leaders and labor groups, specified that revenue raised from the surcharge will go to education-related expenses like hiring teachers, raising teacher salaries, and career and technical education programs for high school students.

Opponents argued the tax increase would hurt the state’s business climate, while supporters countered that providing more resources for education would strengthen Arizona’s economy.

“By voting Yes on 208, Arizona voters made it loud and clear they want teachers to be compensated properly and have the resources needed to successfully educate their students,” Joe Thomas, president of the Arizona Education Association, said in a statement.

Meanwhile, voters in Illinois, a state that consistently votes Democratic in presidential elections, rejected a ballot measure that would have raised taxes on high-income households.

The Illinois measure would have amended the state constitution to do away with the requirement for a flat income tax. The measure did not set new rates, but the state legislature had approved a new structure that would have taken effect had the amendment passed. Under that new rate structure, only people with income above $250,000 would have seen a top marginal tax rate that’s higher than the current flat rate of 4.95 percent.

Advocates for the measure, including Gov. J.B. Pritzker (D) and labor groups, argued it would help provide more revenue for education and address the state’s deficit, even though the ballot measure didn’t specify where the new funds would be allocated.

Opponents, including business groups and conservatives, argued the measure would increase taxes on small businesses and that state politicians can’t be trusted with additional taxpayer dollars.

The measure was rejected 55 percent to 45 percent.

In Colorado, a state that has trended Democratic in recent elections, voters approved a ballot measure to lower the state’s flat income tax rate from 4.63 percent to 4.55 percent. The change is retroactive to the beginning of the year.

The measure was authored by a Republican state lawmaker, and supporters argued it would provide tax relief to residents amid the coronavirus pandemic. Gov. Jared Polis (D) was supportive of the goal of the initiative.

Opponents argued it would primarily benefit the wealthy.

Progressives had tried to get a measure on the ballot to raise taxes on high earners and lower taxes for others, but were unable to secure enough signatures. 

Colorado voters also approved a measure to repeal an amendment to the state constitution that required residential property to be no more than 45 percent of the state’s property-tax base. The measure drew both bipartisan support and opposition.

Jared Walczak, vice president of state projects at the right-leaning Tax Foundation, said the overall outcome of state ballot measures this year is in line with the recent trend of income tax increases being more likely to pass when the revenue raised by the tax is dedicated to a specific purpose.

“Voters tend to resist income tax increases, even if just on high earners, unless the increase is tied to a spending priority they favor,” he told The Hill. “Just increases for general revenue struggle at the polls, but voters are more willing to consider a tax increase when it’s tied to education or health care or transportation.”

Frank Clemente, executive director of the progressive Americans for Tax Fairness, similarly said that ballot measures to raise taxes fare better when they specify the purpose. He also said voters can be particularly receptive to anti-tax messages when the economy is bad, regardless of whether those arguments are accurate.

Richard Auxier, a senior policy associate at the Urban-Brookings Tax Policy Center, which is led by a former Obama administration official, said the Arizona ballot measure “was so much simpler” than the Illinois one.

One key state tax-related ballot measure that had yet to be called by the Associated Press as of Friday afternoon was California’s Proposition 15.

That measure — championed by Democratic politicians and opposed by business groups — would raise taxes on commercial property by requiring properties worth more than $3 million to be taxed based on the price at which they could be sold, rather than their purchase price. Revenue raised under the measure would go to local governments and schools.

As of Friday afternoon, there were slightly more “no” votes than “yes” votes for the measure.

All four state ballot measures on legalizing and taxing recreational marijuana were approved. Those measures were on ballots in New Jersey, Arizona, South Dakota and Montana.