What Do the 2014 Midterm Election Results Mean for State Tax Policy?

November 5, 2014

Like many of you, I was a little bit blown away by some of the election outcomes last night, particularly the unexpectedly close U.S. Senate race in Virginia (looks like Warner will win by a hair), and the Illinois, Maryland, and Massachusetts gubernatorial races (all those mansions flipped Republican). The Washington Post has a nice list of “firsts” for this election, while many other outlets are today trying to figure out why the polling got it so wrong. Larry Sabato even said he wants to “clean house” in the polling industry.

But what does it mean for next year in the states? My prediction is that this means that taxes will be one of the biggest, if not the biggest issue in state policy next legislative session, and that tax reform will become even more of a bipartisan issue.

We’ve already seen lots of action on taxes on both sides of the aisle this session. Incumbent Governors Walker (R-WI), Snyder (R-MI), Cuomo (D-NY), Brownback (R-KS), and DC Council Chairman Mendelson (D-DC) all made tax reform a significant issue on the campaign trail, and weren’t shy about mentioning legislation they led that broadened bases and lowered rates (with the exception of Kansas, which actually narrowed the base and lowered rates). Each of them was re-elected.

In other states where tax reform didn’t happen, it looks like voters want to put it at the top of the agenda. In Illinois for example, the scheduled expiration of sizeable tax hikes passed in 2011 is coming around quickly, and pension costs are still mounting. Voters chose Bruce Rauner (R) over the incumbent Pat Quinn (D), and even Cook County went 33.6 percent for Rauner, which is certainly not a majority, but is 5 percent more than went Republican in 2010. Rauner has been campaigning on a plan to phase the individual and corporate taxes back down to pre-hike levels, while Pat Quinn favored making the 2011 hikes permanent.

In Maryland, the governor’s mansion will flip to Larry Hogan (R), after a tenure by Governor Martin O’Malley (D), who by one count has raised taxes 40 times while in office. In Massachusetts, newly-elected Republican Governor Charlie Baker might now get a chance to lead a charge to shake the “Taxachusetts” label.

All of this is exciting and it means a lot for the tax policy debate. If you haven’t yet, now is a great time to sign up for our weekly newsletter. We’ll be covering it all.

Check out Scott Hodge’s take on what the election means for the federal debate here.

Follow Scott on Twitter.

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