State Tax Ballot Measures to Watch on Election Day 2022

Arizona Proposition 132 is a legislatively referred constitutional amendment that would modify the Arizona constitution to require ballot measures authorizing a tax to be approved by at least 60 percent of votes cast. Under the current system, a ballot measure imposing or increasing a tax only needs the approval of a simple majority—50 percent plus one. Such was the case in 2020 with Proposition 208, which attempted to impose a 3.5 percent surtax on income above $250,000. To impose new taxes or to increase taxes in the Arizona legislature requires a two-thirds majority.

California Proposition 30 would create a 1.75 percentage point surtax on income above $2 million, which would bring the top marginal rate to 15.05 percent. (Separately, the scheduled uncapping of a 1.1 percent payroll tax in 2024, combined with the passage of Proposition 30, would yield a 16.15 percent top rate on wage income.) The projected $3 to $4.5 billion in revenue would be earmarked for zero-emission vehicle infrastructure and purchasing incentives, but the measure—championed by Lyft, which would benefit from the EV rebates as it transitions to a zero-emissions fleet—has divided policymakers on the Left in addition to generating opposition on the Right. The surtax contains a marriage penalty and would not be adjusted for inflation. Click here for the Tax Foundation’s full analysis of Proposition 30.

Colorado Proposition FF would create a tax cliff and introduce a marriage penalty in an effort to limit both standard and itemized deductions for high earners. The revenue from this limitation would fund a universal school meals program. Legislation enacted this year already requires Coloradans with taxable income of $400,000 or more to add back itemized or standard deductions over $30,000 ($60,000 married filing jointly). Proposition FF would tighten those caps to $12,000 ($16,000 married filing jointly)—below federal treatment—even before taxes can be paid under the new rules. Click here for the Tax Foundation’s full analysis of Proposition FF.

Colorado Proposition 121 would reduce the statutory income tax rate from 4.55 percent to 4.4 percent, retroactively effective for tax year 2022. Although revenues in coming years are expected to trigger TABOR reductions, statutory rate reductions enable investment and other decisions to be made in anticipation of a lower tax burden, providing more economic benefit than after-the-fact temporary tax relief. Click here for the Tax Foundation’s full analysis of Proposition 121.

In Idaho, an error-riddled ballot initiative to create a new top marginal income tax rate of 10.925 percent was pulled from the ballot after lawmakers adopted legislation in a special session creating a 5.8 percent single-rate income tax with a higher standard deduction while simultaneously providing additional funding for public education. The withdrawn ballot measure would have reversed a previously adopted across-the-board tax cut, created a large tax cliff, and instituted an inverted inflation adjustment. Proponents initially argued these problems could be fixed legislatively but ultimately chose to pull the measure and lend support to new state legislation championed by Gov. Brad Little (R) that would have preempted it. In place of the former Proposition 1, Idaho voters will weigh in on an advisory question approving or disapproving of the legislature’s action. Click here for a summary of the legislation in question, and click here for our analysis of the former Proposition 1.

Massachusetts Question 1 is a legislatively referred constitutional amendment that would modify the state’s constitution to add a 4 percent surtax to the current 5 percent individual income tax rate for annual income above $1 million. Massachusetts has had a flat-rate individual income tax since 1917. If approved, the amendment would effectively transition the state to a graduated income tax on January 1, 2023. Further analysis of the amendment, including its potential economic impact, is available here.

Missouri Amendment 3 is one of the most comprehensive measures related to marijuana to appear on state ballots this November. This proposed constitutional amendment would remove state prohibitions on purchasing, possessing, consuming, using, delivering, manufacturing, and selling marijuana for personal use by adults over the age of 21 and would impose a six percent tax on the retail price of recreational marijuana. State revenue estimates suggest initial revenues of $7.9 million for the state and $13.8 million for local governments. In addition, persons with certain marijuana-related, non-violent offenses would be permitted to petition for release from incarceration or parole and probation and have their criminal records expunged.

West Virginia Amendment 2 would grant the legislature the authority to reform tangible personal property taxes in the state. West Virginia is unusual in not only taxing business machinery and equipment but also business inventory and vehicles, including personal vehicles. Policymakers have long sought to reduce reliance on these taxes by using state revenue to backfill reduced local tangible property tax collections, but their ability to do so is contingent upon a constitutional change. Click here for the Tax Foundation’s full analysis of Amendment 2.