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What the Election Results Mean: State Tax Edition

3 min readBy: Joseph Bishop-Henchman

The implications of the presidential and congressional results are getting the most attention, but we’re tracking how the election changed the state landscape as well.

On ballot initiatives we have a full listing of results here, but these are the highlights:

  • Voters rejected experimental taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. ideas, defeating a carbon taxA carbon tax is levied on the carbon content of fossil fuels. The term can also refer to taxing other types of greenhouse gas emissions, such as methane. A carbon tax puts a price on those emissions to encourage consumers, businesses, and governments to produce less of them. in Washington, a tax on corporate gross sales in Oregon, and an income tax increase for universal health care in Colorado.
  • California approved extension of a high-earner income tax, and it looks like Maine narrowly adopted one as well.
  • Olympia, Washington refused to approve an income tax. (State voters have rejected a state income tax on a dozen occasions.)
  • Several cities enacted soda taxes, proving this is now not just Berkeley and Philadelphia but a real trend (Chicago is next).
  • Tobacco taxes were approved in California but rejected in Colorado, Missouri, and North Dakota.
  • Oklahoma rejected an education 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. increase, but voters in Seattle and Los Angeles approved mass transit sales tax packages.
  • Legalizing and taxing marijuana was approved by voters in California, Maine, Massachusetts, and Nevada. 1 in 5 Americans will now live in a state with legal marijuana.

In other races:

  • Republicans picked up three formerly Democratic governorships: Eric Greitens in Missouri, Chris Sununu in New Hampshire, and Phil Scott in Vermont. Republicans held the Indiana governorship, electing Eric Holcomb to replace Vice President-elect Mike Pence. Taxes were issues in all four races.
  • In the North Carolina Governor’s race, Democrat Roy Cooper has 2,280,972 votes, leading incumbent Republican Pat McCrory with 2,276,492 votes. Provisional ballots still have to be counted and a recount may also occur. Republicans maintained veto-proof majorities in both legislative chambers, picking up a Senate seat but losing one House seat. The state comprehensively reformed its tax system in 2013.
  • Missouri and New Hampshire now have Republican control of both executive and legislature, joined by Kentucky after Republicans took their state House and Iowa after Republicans took their state Senate. Iowa Majority Leader Mike Gronstal (D), who had been in the legislature since 1983 and is President of the National Conference of State Legislatures (NCSL), lost re-election. Iowa is expected to consider tax changes in the upcoming session.
  • Republicans took the Minnesota Senate. Minnesota has a Democratic governor and Republican House. Taxes have been a big sticking point between the parties in the state.
  • In the other direction, Democrats took Nevada’s Assembly and Senate and New Mexico’s House; both states now have Democratic control of both chambers but Republican governors. Nevada legislators boosted taxes in 2015, including enacting a new Commerce Tax on business gross receipts.
  • The Washington Senate now has 25 Democrats and 24 Republicans, but one Democrat caucusing with Republicans means Republicans will control the chamber. Democrats control the House 51 to 47, and Democratic Gov. Jay Inslee was re-elected.
  • The Connecticut Senate lost 3 Democrats to become a tied chamber, with the Democratic House majority narrowing by eight seats to 79 to 72. Connecticut recently raised business taxes, prompting General Electric to move its headquarters out of the state. The Delaware Senate is also now tied after the upset defeat of the Democratic Majority Leader, with a special election pending for a seat vacated by the newly elected Lieutenant Governor.
  • Several chambers that some predicted would flip to Democratic control did not and stayed Republican: the Colorado Senate, the Ohio House and Senate, the Maine Senate, the New Hampshire Senate, the Arizona Senate, and the New York Senate.
  • Illinois Republicans picked up four House seats, reducing the Democratic veto-proof supermajority to a majority. Illinois has a Republican governor who has been pressing for structural reforms.
  • Kansas Democrats picked up 12 House seats and 1 Senate seat. Moderate Republicans ousted 14 conservative incumbents in August primary elections, so the net result may be a majority opposed to Governor Brownback’s tax and spending policies.
  • The lone Republican in the Hawaii Senate, Sam Slom, lost re-election, making it an all-Democratic chamber. Slom had been a small business and low-tax voice.

Needless to say, many of these changes alter the landscape on tax reform opportunities and challenges.