Tax increases contained in state ballot initiatives soundly rejected.

• Author: Hines, Adam

On November 2, 2010, the midterm elections featured several ballot initiatives dealing with state tax matters. In most instances, voters rejected initiatives to the extent that they would raise taxes, implicitly requesting that their governments look for alternative means to solve their states' budget deficits.

California voters rejected a measure that would have repealed many of the favorable corporate income tax provisions scheduled to take effect January 1, 2011 (Proposition 24, rejected by California voters on November 2, 2010). Voters approved two measures relating to the legislative majorities that are needed to pass budget legislation and tax increases: One reduces the legislative majority needed to pass a budget from a two-thirds majority to a simple majority; the other maintains the two-thirds majority requirement for any legislative tax increase and expands the two-thirds majority requirement for any fee increase and certain tax measures that do not result in a net increase in revenue (Propositions 25 and 26, respectively, approved by California voters on November 2, 2010).

Missouri voters approved a measure that repeals cities' authority to enact an earnings tax and requires those cities that currently have an earnings tax to hold a referendum in 2011 whereby voters will decide whether to retain or abolish the earnings tax in their respective cities (Proposition A, approved by Missouri voters on November 2, 2010). In Nevada, voters rejected a measure that would have authorized the legislature to amend the state's sales and use tax laws without obtaining the approval of voters (State Question no. 3, rejected by Nevada voters on November 2, 2010). Washington voters rejected a proposal to impose a personal income tax but approved a measure that requires a two-thirds supermajority of the legislature to approve tax increases (Initiative Measure 1098, rejected by Washington voters on November 2, 2010; Initiative Measure 1053, approved by Washington voters on November 2, 2010).

California

Proposition 24: Repeal Corporate Tax Loopholes Act: Proposition 24 reached the California ballot as a voter initiative backed by several public service unions in an attempt to repeal several provisions characterized as special corporate tax breaks set to go into effect on January 1, 2011. The changes are projected to reduce the tax liability of large corporations by nearly $2 billion a year. Voters rejected the ballot initiative by approximately a 3-2 margin. With the failure of...