| On November 2, voters in a number of states will consider tax-related ballot initiatives that could have dramatic impacts on the direction of fiscal policy and the provision of essential services. As states deal with the lingering effects of the severe economic downturn, taxes have become one of the most highly contentious political issues - so much so that over 25 percent of ballot measures to be considered on election day relate to tax and budget policy. As the Citizens for Tax Justice noted, "[w]ith a couple of notable exceptions, these ballot initiatives would make state taxes less fair or less adequate (or both)." Several ballots will feature misguided measures that would threaten economic recovery prospects and impede on a state's ability to provide funding for essential services, including efforts to implement property tax caps and require super-majority approval to generate revenue. However, there are a few noteworthy progressive initiatives. Some of the most prominent proposals will appear on the ballot in California, Colorado, Missouri, and Washington state. California Californians will consider Proposition 24 next week, which would eliminate three corporate tax breaks the Legislature enacted in 2008 and 2009. According to proponents of the initaitve, including the California Teachers Association, the League of Women Voters of California, and the California Tax Reform Association, these policies only benefit about 2 percent of the state's companies, overwhelmingly favoring large corporations and out-of-state corporate entities over small businesses. Passed at a time of extreme fiscal duress, the tax breaks are both economically inefficient and extremely costly. If voters approve this proposition, the state will save approximately $1.3 billion in revenue, that would be better directed towards funding essential programs and creating jobs through more effective investments in infrastructure and other public structures. Proposition 25 will additionally appear on the ballot, an effort to end the state's current two-thirds requirement to pass the budget or other appropriations-related issues other than tax increases. The Center on Budget and Policy Priorities explains, the "requirement has often enabled a small number of legislators to hold the budget captive." Considering the perpetual delays and budget fiascoes California has experienced in recent years, approval of this measure would undoubtedly be a step in the right direction. Colorado Colorado is confronting a package of particularly heinous proposals, Amendments 60, 61, and Proposition 101, crafted by anti-government advocate Doug Bruce. Dubbed the "Bad 3," they would limit the ability of the state and local governments to invest in communities. - Amendment 60 would require school districts to cut property taxes in half by 2020, void previous elections that retained property tax revenues above TABOR limits, and force the state to fill the gap in school funding.
- Amendment 61 would prohibit any state debt financing and place a limit on local bonds for school, fire, and hospital construction.
- Finally, Proposition 101 would cut state income taxes to 3.5 percent and would eliminate all state and local taxes and fees on telecommunications services. The proposition defines telecommunications services as including phone, pager, cable, television, radio, internet, computer, and satellite services (although some of these are not even taxed in the first place). State fees that would be eliminated include those that help telephone companies provide service to rural communities, working families, and disabled populations.
These measures reflect extreme fiscal irresponsibility. If approved, the proposals would cause a cumulative loss of 73,000 jobs, mainly in transportation, health care, and construction, and lead to a cumulative state and local deficit of $4.2 billion. Progressives have fought diligently to oppose these "backward-thinking" initiatives. Organizations, such as ProgressNow Colorado, the Colorado Progressive Coalition, the Bell Policy Center, the Colorado Fiscal Policy Institute, and countless others have expressed their opposition. Notably, several conservative lawmakers have also refused to support them. As reported in the Denver Post, 23 of 27 GOP lawmakers in the state House and 5 of 14 GOP state senators have signed a letter stating that these measures are "so far overreaching that it will ultimately kill Colorado jobs and strip local governments' ability to provide police and fire protection and to educate our children." Current polling indicates that a majority of Coloradans are opposed to these reckless ballot initiatives. Missouri Next week, Missourians will decide on Proposition A, an effort to prohibit the state and local governments from employing an earnings tax, which currently is only utilized in St. Louis and Kansas City. The proposition would require residents of those cities to vote every five years to allow the continued use of the 1 percent earnings tax and, if voters decide to end the tax, it would be phased out over 10 years. Rex Sinquefield, a retired financier and right-wing activist, authored the proposition and has subsequently donated over $10 million to push for its passage. The earnings tax comprises a substantial portion of both St. Louis' and Kansas City's general fund revenue, 32 and 40 percent respectfully. As the Missouri Budget Project points out, "[e]liminating the earnings tax would devastate the ability of St. Louis and Kansas City to provide public services. These...include police protection, fighting fires, schools, after school programs, street cleaning and...maintenance, services for seniors...and more. This would happen at a time when local budgets are already strapped." A diverse set of organizations is fighting back against this fiscally irresponsible initiative, including AFSCME, the International Association of Fire Fighters, and the Missouri Federation of Teachers, several business interests, and hospitals. Missourians can ill-afford to approve such a rash proposal at a time of heightened revenue pressures. Washington Washingtonians will decide on what is likely the most substantial tax reform initiative on the ballot this election season. If approved, Initiative 1098 would institute a statewide income tax of 5 percent on joint filers above $400,000 and 9 percent on filers over $1 million. The state currently does not employ an income tax and in fact, has the most regressive tax structure in the nation, placing a much higher burden on working and middle class families. The lowest 20 percent of earners in the state pay 17.3 percent of their income in state and local taxes, while the richest 1 percent contribute only 2.6 percent. I-1098 would generate $2 billion annually and only impact about 1 percent of the state. In addition to providing the state with greater ability to support education and health care, the initiative will reduce the state property tax by 20 percent and increase the small business tax credit from $420 to $4800, which would provide most of Washington state's small businesses with much-needed tax relief. As the Progressive States Network has detailed in previous Dispatches, progressive revenue generation, such as modest high-end income tax reform, promotes economic growth, provides necessary funds for public structures, benefits the middle class and small business, and does not cause out-migration of wealthy residents. A wide array of businesses, progressive organizations, elected officials and notable individuals support the ballot measure, including Gov. Chris Gregoire, Bill Gates Sr., the Economic Opportunity Institute, the Yes on 1098 campaign, and the Washington State & Budget Policy Center. Simply put, the measure "offers Washingtonians an opportunity to enact important long-term reforms to our state's inadequate revenue structure. The measure would reduce taxes for homeowners and small businesses while providing additional resources for education and health care." The initiatve garnered 42 percent of respondents' support in a recent poll. |
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