For 2024, my pick for the most important referendum is Measure 118 in Oregon. As described by the Tax Foundation, it is a very harmful revenue grab.
The all-in Oregon state and local tax rate on large businesses could exceed 56 percent under a proposed ballot measure that purports to impose only a small tax increase on large businesses. …Under Measure 118, Oregon’s corporate income tax will contain a gross receipts-based minimum of 3.0 percent—which is like imposing a 42.9 percent corporate income tax if profits ran 7 percent! Add in the calculated equivalent rate of the existing gross receipts tax and you’re at 49.6. Then, of course, there’s the federal income tax of 21 percent, and if in Portland, another 6.6 percent in other business income taxes. Suddenly, for a business with 7 percent profit margins, the all-in rate on net income for sales into Portland would be about 77.2 percent for large businesses (federal, state, and local combined).
To make matters worse, supporters want to use the money to create a universal handout. Here’s some of what’s been reported by (should be privatized) Oregon Public Broadcasting.
With its pledge to redistribute money…, the measure offers a simple pitch…slap a 3% tax on a business’s Oregon sales above $25 million, then divvy up the money raised among Oregon’s more than 4 million residents, no matter their age. …The measure could…send around $1,600 a year to every Oregonian beginning in 2026… At its most basic level, the measure would institute a form of universal basic income… Proponents say that yearly checks will slash poverty for the state’s poorest residents, give children and seniors more stable footing, and infuse the economy with new spending. …“I see this as a massive redistribution of wealth…,” said Stacey Rutland, founder of the Portland-based nonprofit Income Movement, which advocates for basic income policies.
For those of us who don’t like the idea of a “massive redistribution of wealth,” let’s hope the normally left-wing voters of Oregon show a bit of common sense.
For the year’s second-most important ballot initiative, let’s travel up the Pacific coast.
Initiative 2109 aims to repeal the state capital gains tax, which is imposed annually on the sale or exchange of long-term Washington capital assets. The state capital gains tax applies to an individual with an adjusted annual Washington capital gain above $250,000. …The money goes to measures like childcare subsidies for qualifying families, bonuses for childcare centers offering hard-to-cover hours, and school construction. The tax went to the state Supreme Court and was ruled constitutional. Most property owned by an individual for personal purposes is considered a “capital asset.” This includes houses, furniture, cars, stocks and bonds. Selling these items could result in a capital loss or a capital gain.
Now let’s shift to Illinois, where there is another effort to kill the state’s flat tax.
The good news is that’s it’s only an advisory referendum. The bad news is that it will encourage the pro-spending lobbies if voters say yes.
Illinois’ Nov. 5 ballot will ask state residents..the next multi-billion-dollar tax hike proposal from Gov. J.B. Pritzker and the General Assembly’s Democratic supermajority. The $4.5 billion tax hike has been dubbed the millionaires tax because it proposes to hit Illinoisans that make a million dollars or more with an additional 3% surcharge on any amount they make above one million. To entice more Illinoisans to support the referendum, the proposal is sugar coated with legislators saying they’ll dedicate “funds to property tax relief.” To be clear, it’s only an advisory referendum, meaning the result will be nonbinding. But Illinois politicians and the public sector unions, in particular the Chicago Teachers Union, are desperate for more money to fund their big, expensive budgets and contracts. They need this referendum to tell them whether the framing of a progressive tax hike sweetened with property tax “relief” will work as a proposed constitutional amendment in 2026. If it does, look for them to try again to end Illinois’ flat tax structure.
Now let’s head back to the Pacific coast.
California voters are being asked to decide whether to have more rent control. Here are some excerpts from a Reason column by Christian Britschgi.
California voters will be asked for the third time in six years whether they want to give local governments a freer hand in adopting rent control. “The state may not limit the right of any city, county, or city and county to maintain, enact or expand residential rent control,” reads the succinct but potentially far-reaching text of Proposition 33. …By repealing all existing state-level limits on rent control and forbidding the state Legislature from adopting future restrictions, Prop. 33 is…most radical. …there’s evidence that California’s rent control policies have reduced the supply of rental housing. A landmark 2019 study on rent control in San Francisco found that the city’s rent stabilization ordinance encouraged landlords to convert rental units into owner-occupied condominiums (which could be sold at any price). …rent control cannot solve a housing affordability crisis caused by decades of underbuilding. Only significant liberalization of land use regulation will do that. …States like Texas that prohibit rent control in all its forms are doing a much better job of adding new housing supply to keep up with demand.
For our fifth ballot initiative, let’s travel to Kentucky where there’s an important referendum about school choice.
Here are some excerpts from House Speaker David Osborne’s supportive column in the Louisville Courier-Journal.
Amendment 2…would amend the Kentucky Constitution to allow lawmakers to debate meaningful alternatives to our current approach to education. …This proposal is not an attack on public education. …we can both offer additional opportunities to educate our students and support our public schools — but we can’t afford to leave another generation behind, trapped in a system that does not meet their needs. …some say we already have school choice and parents should just pay tuition. In reality, it is only an option if parents can afford it. Otherwise, they are stuck in a system that cannot meet the needs of their child. Is it not the ultimate hypocrisy and elitism to say the single mother working two jobs in the West End of Louisville to pay for her child’s tutoring has a choice? …all seven neighboring states…have some form of school choice, and study after study shows that increasing choice helps students. …Amendment 2 is…a declaration of war on the persistent acceptance of failure because it only impacts children marginalized by how much their parents make or where they live.
I’ve picked five important ballot initiative to highlight, but if you want more contests to follow on election night, here are some other initiatives identified by the National Association of State Budget Officers.
We’ll start with another referendum on school choice.
Nebraska Referendum 435 Asks voters to approve or reject a bill that authorizes the state to implement a scholarship program for students attending private elementary or secondary schools.
California’s big spenders want to make it easier to expand government.
California Proposition 5 Lowers the vote threshold from 66.67 percent to 55 percent for local special taxes and bond measures to fund housing projects and public infrastructure.
South Dakota voters will decide whether welfare recipients have any obligation to be productive.
South Dakota Amendment F Allows the state to impose a work requirement on individuals who are eligible to receive Medicaid and have not been diagnosed with a mental or physical disability.
California voters will choose whether marginally skilled workers should lose their jobs.
California Proposition 32 Increases the minimum wage to $18 per hour by 2026.
Last but not least, Arizonans will decide if major expansions of red tape need legislative approval.
Arizona Proposition 315 Prohibits a proposed rule from becoming effective if that rule is estimated to increase regulatory costs by more than $500,000 within five years after implementation, until the legislature enacts legislation drafting the proposed rule.
Since this is an election-related post, I’ll remind readers that I’m predicting Harris will win the electoral college by a 284-254 margin. That being said, taxpayers will lose regardless of which big spender prevails.
Dan Mitchell is co-founder of the Center for Freedom and Prosperity and Chairman of the Board. He is an expert in international tax competition and supply-side tax policy.
