The 2020 election is expected to generate record voter turnout, with much attention squarely focused on the outcome of the presidential race and which party will end up with control of Congress. There has been a lot of talk about federal tax policy too, but taxpayers should be aware that races significantly affecting their wallets don’t just occur at the federal level but also through state and local ballot questions, propositions, and measures.
While these measures often get overshadowed, it would be a mistake to understate the importance of how they can affect taxpayers. This year is set to feature more than 2,300 tax and fiscal measures across 37 states.
After analyzing tens of thousands of sample ballots supplied by secretaries of state offices, county election officials, and publicly-accessible website data, we estimate voters will decide on ballot measures that total at least $24.769 billion in annual tax increases or extensions. Of this amount, $14.643 billion is from higher property taxes, $6.2 billion from higher income and payroll tax rates, $1.65 billion from higher sales tax rates, and billions more from other sources. There are also hundreds of measures to issue $50.2 billion in bonds, higher debt obligations that could affect taxpayers for decades.
To put these tax hikes in perspective, the near $25 billion figure is the size of the entire yearly budget of North Carolina. While the COVID-19 pandemic has cast uncertainty over some budgetary forecasts, it has also made one thing certain: Higher taxes would only lengthen the recovery period and take more money out of the pockets of hardworking people and small business owners at a time when they need it as much or more than ever.
Individually, each tax increase may not sound like a lot, but collectively, the total is massive. Even more astonishing is the “unknown” factor of these ballot measures. Because not every election office was able to provide a revenue estimate for every ballot measure — such as Austin, Texas’s Proposition A (an 18% property tax hike) or a measure that would increase income taxes by an additional five-hundredths of 1% in the small Lower Frederick Township, Pennsylvania — we don’t know the full impact of the taxes on the ballot.
By our calculations, there are at least 1,248 measures that provide no information on how much revenue they will raise annually. That means when taxpayers go to fill in their ballots, they will be kept in the dark on the tax implications of their vote. This is a problem that all state and local governments should remedy immediately so their constituents can make better-informed decisions in the future.
Here is a look at some of the states that have the most tax measures on their ballots:
- California: The Golden State is hardly a favorable place for taxpayers, and November is unlikely to change that. There are a few concerning statewide measures, especially those changing to the commercial property tax that would constitute a $12.5 billion tax increase and granting local governments more power to expand rent control, which could exacerbate affordable housing shortages. Locally, it doesn’t get much better. In San Francisco, voters are considering measures to change how businesses are taxed ($97 million tax hike), a new real estate transfer tax ($196 million), and a new gross receipts tax with rates depending on the pay ratio of their executives and employees ($140 million). At least there is one statewide measure to improve the state’s disastrous gig-worker law and two local measures to reduce taxes by $50 million. California’s total potential state and local net tax increase: $14.773 billion annually.
- Illinois: The Prairie State has been plagued by high outbound migration numbers, stalled economic metrics, and a ballooning budget deficit. This year, voters will decide on a constitutional amendment that would allow a progressive income tax. While it won’t increase taxes directly, the legislature has already passed a bill indicating what the new higher rates will be. At least they’re transparent about their taxation hopes. Locally, voters will vote on six measures to raise property taxes by $42.5 million and two measures to increase sales taxes by $3.8 million. There are also seven measures to issue $87 million in bonds and one measure to lower taxes by $1 million. Illinois’s total potential state and local net tax increase: $3.645 billion annually.
- Colorado: The Centennial State is home to strong taxpayer protections, a decent business environment, and a pro-growth tax code. Statewide, there is a measure to impose a new payroll tax ($1.34 billion tax increase), higher “sin” taxes ($294 million tax increase), and an eight base point reduction to the state’s income tax ($158 million tax cut). Locally, voters will see 63 ballot measures totaling $267 million in tax increases and 20 local measures to issue $1.77 billion in bonds. There are also a couple of measures to allow for government-run internet utilities and six measures that have no revenue estimates. Colorado’s total potential state and local net tax increase: at least $1.743 billion annually.
- “Honorable” mentions: A number of states and localities have major measures on their ballots that could impact their fiscal health. For instance, a $15 minimum wage in Florida, a $1.1 billion oil tax in Alaska, an $827 million income tax hike in Arizona, $451 million in income tax hikes in Portland, Oregon, $16 billion in bonds across Texas, and a payday loan cap in Nebraska.
The aforementioned jurisdictions are just a few of the many states and localities that have fiscal proposals on their ballots this year. Taxpayers should keep one eye on the outcomes of the federal elections and the other on the proposals that come out of their state capitals, city halls, and county councils in the new year.
Thomas Aiello is a policy and government affairs manager with the National Taxpayers Union, a nonprofit organization dedicated to advocating for taxpayers at all levels of government.
