Last Tuesday, everyone was glued to their TV screens. And you know why—they just couldn’t wait to find out what happened with the tax ballot measures Americans were voting on in many states. Annoyingly, networks kept cluttering their tax ballot measure coverage with other stuff. Well, never fear, we have the results here.
Ballot Measures
Obviously, that “other stuff” mentioned above was a blue tsunami in elected offices. But that blue tsunami didn’t carry over to issues on the ballot. From how those turned out, you’d think it was a fairly standard, hard-fought midterm campaign.
So let’s look quickly at what passed, and what failed.
Passed
California Proposition 3: Made permanent California’s existing tax rates on high earners, which were previously on track to expire in 2031 after having been extended once already.
Colorado Amendment 87: Replaced the state’s current 4.4% flat income tax rate with a graduated system with rates up to 8.4%. Colorado voters approved Amendment 87 by a razor-thin margin, despite uncompetitive races for statewide elected positions.
Colorado Proposition NN: Expanded the cap on state spending by around 25%, meaning that Coloradans will likely not see TABOR refunds for at least several years.
Florida Amendment 3: Created a homestead exemption on non-school district property taxes that will scale up to $250,000 for current residents. New residents will have the exemption phased in over a period of five years.
Iowa Amendment 1: Requires a two-thirds majority in both houses of the state legislature to approve new individual or business income taxes.
North Carolina Property Tax Levy Limit Amendment: Directs the state legislature to adopt limits on the year-over-year increase in property tax revenue that localities can collect.
North Carolina Reduce Income Tax Rate Cap from 7% to 3.5% Amendment: Cuts the state’s flat income tax rate from 3.99% to 3.5% and caps it at that level.
Tennessee Amendment 2: Prohibits the state from imposing a statewide property tax. Tennessee does not currently tax property at the state level.
Failed
California Proposition 40: The much-ballyhooed billionaire’s tax failed at the ballot box, and it does not seem like the vote will end up being particularly close.
Oklahoma State Question 847: Would have further lowered the cap on property tax assessment increases. Oklahoma already has assessment limits of 3% for homestead properties and 5% for all other properties.
Washington Initiative 645: Would have overturned the new state income tax that is set to go into effect in 2028. The focus of repeal efforts will now shift to ongoing legal challenges.
Wyoming Initiative 1: Would have exempted 50% of a primary residence’s value from property taxes.
The takeaway: the midterm election results were not really a reflection of an electorate that has embraced tax-and-spend policies and has shifted to become more progressive ideologically. Rather, it was an indication that voters were fed up with the high cost of living and were looking for change.
Shifting State Legislatures
It is worth noting that the midterms resulted in a lot of new elected officials at the state level as well as at the federal. Republican trifectas in five or six states (Georgia, Iowa, New Hampshire, Ohio, Texas, and possibly Alaska) were broken, while Democrats picked up new trifectas in six other states (Arizona, Michigan, Minnesota, Nevada, Pennsylvania, and Wisconsin). This will have an impact on the tenor of tax policy conversations in these 11 or 12 states in the coming two years.