If there’s one thing Americans can still agree on it’s that tax policy is one of the most consequential decisions our government makes that impacts our economy and family budgets.
With the exception of Washington state, policymakers in the Mountain States (Idaho, Montana, and Wyoming) have been very active the last few years prioritizing tax relief for citizens while making fiscally conservative budget investments. While this ongoing tax relief effort is to be commended, more can be done to help provide taxpayers the peace of mind that tax increases will always be the last resort when budgeting.
One way to do this is by adding requirements to a state’s constitution that require a supermajority vote or voter approval to raise taxes. Now you may say that the current makeup of the legislatures in Idaho, Montana, and Wyoming are already sufficient to avoid tax increases. While that may be true today, it may not be tomorrow as experienced by taxpayers in Washington state.
Consider the fact Washington voters over the years passed ballot measures requiring a supermajority vote to raise taxes not once, twice, or thrice, but six separate times. Yet today this taxpayer protection does not exist in Washington because it was not added to the state constitution. Instead, Washington taxpayers now face tax increases on an annual basis without this protection.
Rather than leave certain taxpayer protections subject to changing political winds, lawmakers in Texas have acted in recent years instead to forward voters constitutional amendments on various tax restrictions. As noted by the Tax Policy Center in a recent blog post:
“Texas Proposition 3 would amend the state’s constitution to prohibit legislators from enacting a wealth tax. No one in Texas is proposing a wealth tax. But no one in Texas was proposing an income tax in 2019, and that didn’t stop three-quarters of Texans from amending the constitution that year to keep the income tax permanently out of the Lone Star State.”
Although wealth and income tax prohibitions are different policies than supermajority requirements, these efforts demonstrate Texas policymakers acting to provide voters the opportunity to make sure the tax climate in the state remains stable.
According to the Washington Policy Center, there are currently 17 states with supermajority for tax increase requirements:
“Alabama – State income and property taxes cannot be increased without a constitutional amendment
Arizona – requires a two-thirds vote in the legislature
Arkansas – requires a three-fourths vote in the legislature
California – requires a two-thirds vote in the legislature (includes fee increases)
Colorado – Voter approval required for all tax increases
Delaware – requires a three-fifths vote in the legislature
Florida – requires a two-thirds vote in the legislature
Kentucky – requires a three-fifths thirds vote in the legislature
Louisiana – requires a two-thirds vote in the legislature
Michigan – requires a three-fourths vote in the legislature to raise property taxes
Mississippi – requires a three-fifths vote in the legislature
Missouri – requires voter approval to raise taxes above a set revenue cap
Nevada – requires a two-thirds vote in the legislature (includes fee increases)
Oklahoma – requires a three-fourths vote in the legislature
Oregon – requires a three-fifths vote in the legislature
South Dakota – requires a two-thirds vote in the legislature
Wisconsin – requires a two-thirds vote in the legislature”
Along with providing constitutional tax increase protections, several states (like Oregon and Colorado) also require automatic tax rebates when revenues grow above a certain level. For example:
Oregonian: “Oregon taxpayers are set to receive their biggest kicker tax rebate on record when they file their taxes next spring — a $5.6 billion refund, according to near-final forecasts issued Wednesday. That works out to $980 for the median taxpayer.”
CPR News: “Colorado is set to pay out more than $3.5 billion in TABOR refunds next spring — one of the largest paybacks that the state has ever had to return to taxpayers. In fact, the state is in the middle of what could be a record-busting string of revenue years. For the first time ever, the state government could be forced to pay refunds for six straight years, stretching from 2022 through 2027 or longer. Those refunds are expected to average more than $2 billion per year — a level never before seen in Colorado, even accounting for inflation.”
Proactively acting to protect taxpayers by sending voters a supermajority for tax increases constitutional amendment is a prudent thing for policymakers to do. As occurs in Oregon and Colorado, this type of policy could also be coupled with automatic tax rebate triggers based on revenue growth to help avoid the temptation of overheating a state budget and increasing the pressure for tax increases.
Whether requiring voter approval for all tax increases like in Colorado or needing a 2/3 legislative threshold as occurs in Florida, increasing the tax burden imposed on families and businesses should first secure a broad consensus and always be the last resort when budgeting.