|CO Prop 119 – Cannabis Tax Increase
|CO Prop 120 – Property Tax Cut
|TX Prop 7 – Homestead Exemption
|TX Prop 8 – Homestead Exemption
|WA AV 36 – Phone Line Tax
|WA AV 37 – Capital Gains Tax
|WA AV 38 – Premiums Tax
Election Day will be a modest affair in 2021, perhaps a welcome respite from the inflamed politics of recent years. Despite few statewide races, however, voters in some states will decide important questions by ballot measure. Of particular note, through 10 ballot measures across four states—Colorado, Louisiana, Texas, and Washington—voters will decide significant questions of state tax policy. We summarize each of these ballot measures below, and link to more extensive discussions of the five most significant measures. And you’ll want to bookmark this page, because after the polls close on Election Day, we’ll do live tracking of results.
Only New Jersey and Virginia have major state-level races on the ballot, with those states electing a governor, lieutenant governor, and, in Virginia’s case, an attorney general, along with state House (both states) and Senate (just New Jersey) candidates. Louisiana and Wisconsin will choose judicial and education officials, and Pennsylvania and Washington also have statewide judicial elections. There are three congressional special elections, one in Florida and two in Ohio. And there are, of course, municipal offices on the ballot across the country. Turnout in much of the country is likely to be light, though two of the states with statewide tax questions on the ballot—Louisiana and Washington—have statewide offices up this year as well.
The 10 tax-related statewide ballot measures cover everything from a significant overhaul of an antiquated state tax code (Louisiana) to higher marijuana taxes (Colorado). In three of the four states, Election Day falls, as per usual, on the first Tuesday after the first Monday of November—in this case, November 2nd. In Louisiana, however, voters will go to the polls on Saturday, November 13th. Here are the tax questions they’ll decide when they go to the polls.
Colorado Proposition 119: Increasing Cannabis Taxes
Proposition 119 would increase the excise taxAn excise tax is a tax imposed on a specific good or activity. Excise taxes are commonly levied on cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting, and typically make up a relatively small and volatile portion of state and local and, to a lesser extent, federal tax collections. on marijuana retail sales by 5 percentage points, phased in over four years. The total tax on retail marijuana sales would increase from 15 percent today to 18 percent in 2022, 19 percent in 2023, and 20 percent by 2024. The proposal represents a significant tax increase on businesses and consumers who are already taxed at relatively high rates in Colorado. The additional revenue is intended to partially fund a new out-of-school program. For analysis of this ballot measure, click here.
Colorado Proposition 120: Reducing Property TaxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. es and Offsetting Homestead Exemptions
Originally intended as a significant tax cut for all residential property and most classes of nonresidential property, Proposition 120 would now lower property tax assessment rates for only two classes of property: (1) multifamily housing property (apartments, duplexes, and triplexes), and (2) lodging property (hotels, motels, and bed and breakfasts). Other types of property, such as single-family homes and commercial properties, will not receive a tax cut under Proposition 120, assuming courts uphold legislative changes made in anticipation of the ballot measure, which revised property classifications to moot much of the impact of the ballot question. For analysis of this ballot measure, click here.
Louisiana Amendment 1: Streamlining State Sales TaxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding.
Amendment 1 is a legislatively referred constitutional amendment that would create the State and Local Streamlined Sales and Use Tax Commission to unify the separate boards that currently oversee state and local sales taxes. The new commission would consolidate the filing and remittance of sales and use taxes from the present 64 taxing jurisdictions to a single, state-operated electronic system, dramatically reducing complexity and compliance costs for retailers. For analysis of this ballot measure, click here.
Louisiana Amendment 2: Income Tax Reform
Amendment 2 is a legislatively referred constitutional amendment enabling a comprehensive package of tax reforms. It would lower the maximum individual income taxAn individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S. rate allowable under the state constitution from 6 percent to 4.75 percent and empower the state legislature to make changes regarding the deductibility of federal income taxes. Ratification will lead to the implementation of a bipartisan tax reform plan (HB 278, HB 292, and SB 161) that would repeal federal deductibility to create a simpler income tax code with lower rates for both individuals and businesses. For analysis of this ballot measure, click here.
Louisiana Amendment 3: Levee District Taxes
Amendment 3 is a legislatively referred constitutional amendment that would grant levee districts created after January 1, 2006 the authority to levy a real property tax of up to five mills to fund the construction or maintenance of levees or other hurricane and flood protection systems. The amendment would also permit increases in the tax rate above the five mill limit if they are approved by voters. Presently, the state constitution only affords levee districts established prior to January 1, 2006 the right to a five mill tax.
Texas Proposition 7: Homestead Exemption for Surviving Spouses of Disabled Individuals
Proposition 7 is a legislatively referred constitutional amendment that grants surviving spouses of disabled individuals a resident homestead tax exemptionA tax exemption excludes certain income, revenue, or even taxpayers from tax altogether. For example, nonprofits that fulfill certain requirements are granted tax-exempt status by the Internal Revenue Service (IRS), preventing them from having to pay income tax. on real property taxes assessed by elementary and secondary school districts. The amendment effectively transfers the homestead tax exemption benefit of the decedent to the surviving spouse, provided the surviving spouse is at least 55 years old at the time of the person’s death. The homestead exemption only applies against school district taxes, and prevents any increase in tax liability.
Texas Proposition 8: Homestead Exemption for Surviving Spouses of Disabled Individuals
Proposition 8 is a legislatively referred constitutional amendment that empowers the legislature to grant surviving spouses of members of the armed forces killed or fatally injured in the line of duty an exemption from property taxation up to full market value of the homestead. The amendment removes the existing provision from the constitution that only afforded the property tax exemption to spouses of service members killed in action. The exemption would remain in effect until the widow or widower is remarried. The homestead exemption only applies against school district taxes, and prevents any increase in tax liability.
Washington Advisory Vote 36: Higher Phone Line Taxes
Advisory Vote 36 is a nonbinding advisory question asking whether additional tax should be imposed on phone services to fund behavioral health and suicide prevention services in Washington. The tax would apply to all landline phone numbers, cellular phone numbers, and voice over internet protocol (VOIP) companies. The current tax rate is 24 cents per line. On January 1, 2023, the tax is scheduled to increase to 40 cents per line. The ballot question is nonbinding but will signal whether Washington voters want legislators to maintain the tax as currently enacted or whether they want it repealed.
Washington Advisory Vote 37: Capital Gains Income Tax
Advisory Vote 37 is a nonbinding advisory question asking whether a newly enacted capital gains income tax to fund education and child services should be repealed. Beginning January 1, 2022, the sale or exchange of long-term capital gains assets will be subject to a 7 percent tax, which the legislature calls an excise tax—even though it is imposed on net income—in a dubious effort to work around a constitutional limitation on income taxation. Notable exemptions include the transfer of real property, certain retirement assets, livestock, and timberland. The first $250,000 of capital gains, regardless of filing status, are also excluded from taxation. The ballot measure would signal whether Washington voters want legislators to maintain the tax as currently enacted or whether they want it repealed. For analysis of this ballot measure, click here.
Washington Advisory Vote 38: Captive Insurance Premiums Tax
Advisory Vote 38 is a nonbinding advisory question asking whether to tax captive insurance premiums at a rate of 2 percent. A captive insurer is a subsidiary company that provides risk mitigation to a parent company. The tax went into effect January 1, 2021. All premium taxes are credited to the general fund. The ballot measure would signal to legislators whether Washington voters want to maintain the tax as currently enacted or whether they want legislators to repeal it.
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