Voters in Five States Consider Tax-Related Initiatives

November 2, 2015

Update: Election results here.

Tomorrow, voters in five states will decide tax– and spending-related ballot initiatives. Here are some of the highlights, with links to more details at the excellent website Ballotpedia:


Colorado Proposition BB – Decides whether to refund or spend $66 million in marijuana tax revenue. Yes means keeping the money and spending it on school construction and youth programs; No means refunding the money with an $8 per taxpayer income tax refund, $24 million refund to marijuana cultivators, and reducing the marijuana sales tax from 10 percent to 0.1 percent. (Tax Foundation analysis here.)

Mississippi Initiative 42 and Alternative 42 – Initiative 42 would add language to Mississippi's Constitution giving courts the power to determine funding levels for schools. Alternative 42 adds language to the Constitution without judicial enforcement power. Voters can indicate "either measure" of these two competing proposals and then select one, or indicate "neither measure" to reject them both. (Tax Foundation analysis here.)

Ohio Issue 3 – Legalizes use and sale of marijuana and grants exclusive monopolies to cultivate and sell marijuana to ten facilities. These facilities would pay a ten percent tax; marijuana retail sales would be further taxed at five percent. Issue 2, also on the ballot, amends the state Constitution to ban ballot initiatives that grant monopolies, which will make it interesting if both pass.

Texas Proposition 1 – Increases the homestead exemption from property taxes from $15,000 to $25,000.

Texas Proposition 2 – Clarifies that the property tax exemption for surviving spouses of disabled veterans applies to spouses whose partners died before January 1, 2010.

Texas Proposition 7 – Revenue trigger designating two categories of extra revenue for transportation spending: (1) the first $2.5 billion of sales tax revenues above $28 billion and (2) 35 percent of car rental tax revenue above $5 billion. The first threshold is likely to be met in 2018; the second threshold in 2020.

Washington Initiative 1366 – Reduces sales tax by one percentage point unless the Legislature refers a tax increase supermajority requirement to voters. Washington voters have passed such a supermajority requirement on five occasions but the Legislature has repealed it each time. Only the Legislature can refer constitutional amendments to the ballot, resulting in this proposal's unique mechanism.

Washington Advisory Vote No. 10 – Non-binding measure asking voters to express views on annual $1.8 million oil spill administration and response tax.

Washington Advisory Vote No. 11 – Non-binding measure asking voters to express views on $1 fee for medical marijuana cards issued by retailers, which raises about $437,000 per year.

Washington Advisory Vote No. 12 – Non-binding measure asking voters to express views on 11.9 cent gas tax increase that funds a transportation expansion.

Washington Advisory Vote No. 13 – Non-binding measure asking voters to express views on the expansion of the Washington Business & Occupation (B&O) gross receipts tax to copyrights, patents, licenses, franchises, trademarks, and software, raising $150 million per year.

We'll post an update this week with election results.

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A 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.

A gas tax is commonly used to describe the variety of taxes levied on gasoline at both the federal and state levels, to provide funds for highway repair and maintenance, as well as for other government infrastructure projects. These taxes are levied in a few ways, including per-gallon excise taxes, excise taxes imposed on wholesalers, and general sales taxes that apply to the purchase of gasoline.

A 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 IRS, preventing them from having to pay income tax.

A gross receipts tax is a tax applied to a company’s gross sales, without deductions for a firm’s business expenses, like costs of goods sold and compensation. Unlike a sales tax, a gross receipts tax is assessed on businesses and apply to business-to-business transactions in addition to final consumer purchases, leading to tax pyramiding.

A 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.

A 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.