States have several tax-related ballot questions slated for November. Here they are, along with my musings:
Massachusetts voters will decide whether to repeal the state's inflation adjustment to its gasoline tax (Question 1). The adjustment causes the tax to go up every year. That could be a good thing. The gas tax is the only good way to pay for roads, and politicians are always shy about increasing it. The problem in Massachusetts is that lawmakers use the gas tax to pay for things other than roads, which makes an inflation-adjusted gas tax awful. In an ideal world, politicians would increase or decrease the tax as needed to maintain the roads. Thus, I would vote for repeal, and I think the citizens of Massachusetts will agree.
Tennessee voters will decide whether to enshrine their anti-income-tax policies in their constitution (Amendment 3). Tennessee has no broad-based personal income tax, and proponents of the measure want to keep it that way forever. I'm not sure it matters, because there's no chance the state will adopt an income tax in the foreseeable future. I'm always a little nervous about saying never or always; there may come a time when adopting an income tax makes sense. I do not like income taxes, but I would vote no on this measure. Tennesseans will say yes.
Georgia voters will vote on a similar income tax limitation in November and decide whether to prohibit increasing the top marginal income tax rate above whatever it is on January 1, 2015 (Amendment A). Again, I think this is unnecessary. The top tax rate hasn't been increased in 30 years, and there's no chance of it happening anytime soon. Who knows if it may be necessary someday. I would vote no, but I'm pretty sure Georgians will say yes.
Nevada voters will decide whether to adopt a 2 percent margin tax to support schools (Question 3). The tax is a terrible idea for several reasons. First, it's basically a gross receipts tax and is imposed regardless of profit, so you can have lots of revenue, no profit, and still be hit with a tax. That's neither fair nor encouraging to business development. Second, the tax will give taxpayers the option of calculating their burden by either taking 70 percent of total revenue, total revenue minus compensation, or total revenue minus cost of goods sold. The taxpayer chooses the formula. Everyone will pick the formula with the lowest burden, of course -- but all any of that means is full employment for tax lawyers and accountants. Optional methods for calculating tax are almost never a good idea. A bigger problem with the tax is that the first million dollars is exempt. That's good for start-ups. But if you make $1 million dollars and 51 cents, you pay tax on the entire amount. That's crazy. It's a bad tax. I predict Nevadans will be swayed by arguments that the tax will hurt economic growth and say no.
Illinois voters will decide whether to impose a 3 percent surtax on incomes over $1 million in order to support schools (HB 3816). The ballot measure is advisory only and won't bind anyone. There are many folks -- namely, the teachers' unions -- who would like nothing better than to stick it to the rich to bolster education finance. Nothing says we really care about schools more than having some rich minority pay for them. I don't make $1 million a year, although my family wishes I did. I'd vote no, but I predict Illinois voters will say yes.