The election of Donald Trump as president, the first by a candidate who has never held political office of any kind or a top position in the military services, was not the only memorable result of this year’s national election.
There were many state ballot initiatives, including ones to legalize the sale of recreational marijuana, which would be taxed and could boost state revenues. Voters in four states approved the sale of recreational cannabis—California, Maine, Massachusetts and Nevada—but in Arizona voters defeated the measure.
In addition, several states had ballot questions to raise personal or corporate income taxes as well as sales taxes, which ThinkAdvisor reported on before Election Day. Here’s an update:
In Colorado—one of the few states that had legalized recreational marijuana sales before this year—voters rejected overwhelmingly an additional 10% payroll tax to fund a public option healthcare system called Colorado Care. If passed, the measure would have made Colorado the first state with a tax-funded universal health care plan.
By a margin of 62% to 38%, California voters approved a 12-year extension of a temporary income tax increase on high earners. Individuals earning more than $250,000 or couples earning more than $500,000 will pay an additional 1% to 3% in state income tax. The funds raised will continue to be used to help finance public schools and community colleges and health care programs.
Voters in Maine also approved an increase in the income tax for high earners but the margin for that vote was much tighter than California’s: roughly 50-50, with just over 6,000 votes, or 0.8%, making the difference. The funds will be used for educational expenses, raising the state’s contribution to education costs for K-12 to 55%.
In addition to raising taxes on its wealthier residents, Maine voters also approved a higher minimum wage for its lowest income workers. The minimum wage will increase gradually from $7.50 an hour currently to $12 an hour by 2020.
(Related: Trump’s Plan Aims to Repeal Estate Tax, AMT)
In Olympia, Washington, the state capital, voters decided against a 1.5% local income tax increase for households with incomes over $200,000 to fund a college grant program that would have helped the city’s high school graduates finance at least one year of attending a community or technical college or four-year educational institution. Supporters were hoping to use the vote, if the ayes had it, as a way to challenge the state’s prohibition against any state or local income tax.
Beyond the capital city, voters throughout the state of Washington were asked to approve a carbon tax, which would have increased the cost of gasoline for the average household by around $225. The tax was paired with a reduction in the state’s sales tax and business and occupation tax on manufacturing but failed by a margin of 58% to 42%.
Voters in this Western state were asked to approve a 2.5% tax on gross receipts of corporations with state-earned revenues topping $25 million. The tax increase would have impacted only C-corps and was directed primarily at large out-of-state companies. The referendum failed by a vote of 59% to 41%.
If voters in Louisiana had approved Amendment 3, the state’s corporate tax rate would have been lowered to 6.5% from 8% but companies would no longer receive a state tax deduction for federal taxes paid, which is unusual. The state legislature had already passed a bill to do just that but it could only take effect if the voters in Louisiana approved the idea. The initiative failed, 56% to 44%.
City Soda Taxes
Voters in three cities in California — Oakland, San Francisco and Albany—and in Boulder, Colorado all approved ballot measures to increase soda taxes to obesity and diabetes while simultaneously raising funds to help offset the health care costs associated with both. The taxes range from 1.5 cents to 2 cents an ounce.
Voters in Missouri approved Amendment 4, which prohibits extending a sales or use tax to any service or transaction that was not already subject to state or local taxes as of January 1, 2015. Cities, counties and special districts will no longer have the ability to enact a new local sales tax. The Tax Foundation has said the prohibition “ “could stifle the state’s ability to properly reform its tax code.” The state’s Association of Realtors was a big proponent of the Amendment.
— Related: Trump’s Plan Aims to Repeal Estate Tax, AMT