This election season, there are 25 tax measures on the ballot across 12 states, as well as numerous local and district tax issues. Although Utah doesn’t have any state-wide tax propositions, there are many bonds on local ballots which have potential tax implications. For example, Salt Lake City voters will have to vote on a proposed $85m bond for parks, trails, and open spaces; Alpine School District voters will have to vote on a proposed $595m bond for schools. While it is appropriate that simple bond propositions be referred directly to voters, not all propositions are so simple.
No one likes paying taxes, and we all have different prejudices regarding who we think should be paying more or less. However, taxes are also complicated and nuanced, and any changes to tax policy requires appropriate consideration. It could be argued that this is best done by legislators rather than voters.
The legislative process is better suited to designing robust tax policy than simple ballot measures. The legislative process requires that a bill be drafted, reviewed, amended, deliberated, and finally voted on by experienced decision-makers. By contrast, ballot measures can simply be added to the ballot with no further discussion. Such efforts are often riddled with mistakes and unintended consequences.
A recent example of this was Proposition 1 in Idaho, which was scheduled to be voted on this November by Idaho voters. After further analysis and discussion revealed the mistakes in drafting and consequences, proponents pulled the measure from the ballot. In seeking to implement a top marginal income tax rate in Idaho of 10.925% (which would be one of the highest in the nation), the initiative would have reversed a previously adopted across-the-board income tax cut, created a large tax cliff, and instituted an inverted inflation adjustment.
Another example is Constitution Amendment A on the Utah ballot this year. It had no arguments submitted – in favor or against. Still, it appears on the ballot, and will ultimately be decided on by voters who have no information on the potential impact of the change. Equally, ballot measures can result in lively public debate with misinformation, propaganda, and fear mongering.
Another consideration is that all voters are (potential) taxpayers, but not all taxpayers are (potential) voters. Tax measures being decided in the legislature allows non-voting taxpaying entities such as businesses to have an opportunity to be heard. This would have been important in the example of San Francisco’s Proposition K (now pulled from the ballot by its proponents). The proposition was intended to impose higher taxes on Amazon by creating a new classification under the city’s gross receipts tax for e-commerce businesses, but further research showed that Amazon might have been exempt from this tax, but small local retailers and restaurants probably would have been subject to it. Happily, this measure was removed from the ballot, but had it not, small businesses with no voting power would have been at the mercy of voters and their comprehension of a complicated gross receipts tax scheme.
As can be seen by these examples, voting by the public remains an often important component deciding various issues. However, there are some issues that are best drafted, reviewed, debated, amended and voted on in the legislature to make sure policy fulfills its intended goals. Your Utah Taxpayers Association will continue to review every tax-related bill in the Utah legislature and advocate on behalf of taxpayers in our continued mission to educate elected officials on tax policy.