Midterm Tax Measure Results for 2018
Every year at the ballot box, there are several tax measures across the country. On average, about half of those measures will pass, impacting residents in a variety of ways – from new sales tax regulations to levies and property tax increases for local education initiatives.
This year was no different, with 18 midterm election tax measures considered on November 6. Let’s take a closer look at which of these passed and what the new laws will mean for affected residents.
Michigan Proposal 1
Michigan became the first state in the Midwest to legalize marijuana by passing Proposal 1 by a vote of 55.9% to 44.1%. The new law not only makes marijuana legal, it sets up a 10% excise tax on all purchases, expected to act as a boon to State revenue.
Washington Initiative 1634
Passed by a vote of 55.5% to 44.5%, Washington Initiative 1634, to “Prohibit Local Taxes on Groceries” is designed to keep local municipalities from taxing groceries and is similar to a proposal in Oregon that did not pass. Washington already has sales tax exemptions for most groceries in the state, so the new law is expected to largely be a preemptive act to block current and future attempts to levy new taxes on sodas and other non-essential foods and beverages.
Arizona Proposition 126
Arizona’s Proposition 126, to “Prohibit New or Increased Taxes on Services” passed with overwhelming support, 64% to 36%. The new law is designed to keep new taxes from being implemented on existing services. The state already has exemptions on services such as gym memberships, digital memberships (e.g. Netflix, Amazon Prime), or landscaping. These services have recently been affected by new taxes in other states. This law will prohibit implementation of new taxes to expand the tax base in Arizona.
Florida Amendment 5
Similar to Arizona’s recently passed proposition, Florida Amendment 5, “Two-Thirds Vote of Legislature to Increase Taxes or Fees”, passed overwhelmingly with 65.7% of the vote. The new law makes it much more difficult for the state to implement new tax increases, requiring a two thirds majority in the legislature to increase taxes or fees from their current levels.
Nevada Question 2
Nevada’s Question 2 provides a sales tax exemption for feminine hygiene products and passed with 56.5% of the vote to 43.5%. The new law now makes these products, such as tampons, exempt from state and local sales taxes.
North Carolina Income Tax Amendment
North Carolina’s Income Tax Amendment proposal passed with 57% of the vote and will reduce the maximum allowable income tax rate from 10 percent to 7 percent. The state currently has a flat tax of 5.499 percent, so this is most likely to affect municipalities that might otherwise have additional taxes and would limit future tax increases at the state level.
Ballot Measures that Did Not Pass
The following ballot measures did not pass in their states, representing a number of different types of tax issues:
- Washington Initiative 1631 – This Carbon Emissions Fee Measure failed with only 43.5% of the vote.
- California Proposition 6 – This would have repealed the 2017 12 cent per gallon tax increase but failed with only 44% of the vote.
- Colorado Proposition 110 – Colorado residents voted down this initiative to increase the sales tax rate from 2.9 percent to 3.52 percent over the next two years to cover the cost of new transportation projects. It only garnered 40% support.
- Colorado Amendment 73 – Colorado’s amendment to income tax would have changed their flat tax of 4.63 percent to a bracketed system with tax increases for those making more than $150,000 to fund education initiatives. It failed with only 45.7% of the vote.
- Missouri Proposition D – This would have increased the per-gallon gas tax over four years by 10 cents per gallon. It failed with only 46% of the vote.
- North Dakota Measure 3 – North Dakota was also set to vote on marijuana legalization but voted it down by a margin of 19 points.
- Oregon Measure 103 – Oregon had a similar initiative to Washington to stop future taxes on groceries by local governments, but it failed with only 42.5% of the vote.
- Montana I-185 – In a close vote, Montana residents declined an initiative to extend Medicaid expansion and increase tobacco taxes.
- South Dakota Measure 25 – South Dakota’s measure to increase tobacco taxes also failed with 45% of the vote in favor.
- Maine Question 1 – Maine residents turned down an initiative to increase taxes on income over the social security contribution limit to fund the creation of a home health-care system for disabled and elderly residents.
- Oregon Measure 104 – This would have required a supermajority moving forward for any new bills that included tax deductions, credits or exemptions. It only received 34.7% of the vote.
A range of new measures were passed, but more than the average number were rejected by voters in this year’s midterms, most of them by relatively close margins, showing the divisive nature of anything that changes the status quo for state and local taxes.