Election 2020: Arizona voters raised taxes on some, Illinois rejected measure, and Colorado gave everyone a tax cut
Arizona voters passed a new tax on higher earners on Tuesday, while Illinois residents voted against moving to a tiered tax structure. In Colorado, voters opted for a tax cut for everyone.
The disparate outcomes on state income taxes aren’t uncommon, one expert said, because an initiative’s likely success depends not on partisanship but often where the tax money goes.
Read more: How to reduce your taxable income
“The results are interesting but not surprising and are consistent with how voters across the country respond to income tax measures,” Jared Walczak, vice president of state projects at the Tax Foundation, a Washington, D.C.-based think tank, told Yahoo Money. “Voters usually favor a lower income tax option when presented with a measure.”
That’s the case in Colorado, where Proposition 116 passed. The measure decreases the state income tax rate from 4.63% to 4.55% for individuals, estates, trusts, and foreign and domestic C-corporations operating in the state.
“But where we see that diverge is when higher taxes are tied to spending they support,” Walczak said.
For instance, in Arizona, a new 3.5% tax on individuals making more than $250,000 ($500,000 for joint filers) looks likely to pass, with 98% of precincts reporting and 52.55% of voters in favor and 47.45% against the initiative, according to Ballotpedia.org.
Read more: How to defer or reduce taxes
That’s on top of the existing income tax of 4.5% these earners already pay. But the revenue would fund teacher and classroom support staff salaries, teacher mentoring and retention programs, career and technical education programs, and the Arizona Teachers Academy.
Voters “embraced” the measure because it was tied to a popular cause — higher salaries for teachers and education programs, Walczak said. Transportation is another issue voters get behind, he said.
In Illinois, voters rejected an amendment allowing a graduated income tax structure. The state now has a flat tax on personal income, which assesses one tax rate for all taxpayers, regardless of income. The amendment would have repealed the flat tax and allowed the state to enact a graduated income tax, which assesses higher tax rates on higher levels of income.
One reason the tax didn’t pass, according to Walczak, is because the revenue generated from it would go to general purposes.
“Voters don’t think rates should be higher on most people, economically,” he said, “when they don’t know where it goes to or if it’s just to increase revenue.”
Janna is an editor for Yahoo Money and Cashay. Follow her on Twitter @JannaHerron.
Read more:
Workers will see smaller paychecks next year under Trump's payroll tax deferral
President Trump's payroll executive order could leave Americans with 'substantial tax liability'
The IRS is failing to collect billions in back taxes owed by super rich Americans
Tax expert: Americans who don't file leave ‘billions of dollars’ on the table
Read more personal finance information, news, and tips on Cashay