Seven Right-Wing Ballot Initiatives That Could Ruin Your Government for Decades to Come

If you could create a political party that convinced a large number of people that by electing you they could eat all the ice-cream they want, and then sit on their butts watching TV all day and never put on an ounce, you’d have a pretty good chance at gaining power. That’s what the conservative movement has done in terms of taxes and spending. The idea of “limited government” is appealing in the abstract, but in the real world, people really like much of what the government does -- they want well-funded schools, safe food, a clean environment, good infrastructure and a whole lot more. Arguably, the conservative movement’s greatest achievement has been disconnecting the taxes we pay from the services we expect in the minds of a large chunk of the electorate.

Nobel Prize–winning economist Paul Krugman argues that the success of the Right’s crusade against taxes has resulted in “a fundamental mismatch between the benefits Americans expect to receive from the government and the revenues government collects.” Voters cast ballots for politicians who promise them tax cuts, but those same politicians know that if they propose draconian cuts, they won’t be re-elected. Large deficits are a natural and inevitable consequence of that.

Krugman’s “fundamental mismatch” will be put to the test with a string of anti-tax ballot initiatives in several states on Tuesday. What can be expected if they come to pass can be seen in California today, where a rule requiring a two-third super-majority for any law that results in a tax increase -- a rule that has given a conservative minority an effective veto -- is putting the once-Golden State deep and structurally into the red. Making the state even more ungovernable are the effects of the passage of Prop 13 30 years ago, which cut real estate tax revenues dramatically. Incredibly painful cuts are now being enacted to keep the state government afloat.

But voters will also decide on a handful of progressive measures on Tuesday that would undo some of the damage done by anti-tax crusaders in a couple of key states. According to the Center for Budget and Policy Priorities (CPBB), “Some of the ballot measures would make it easier for states to balance their budgets without excessive cuts in areas like education and health care. Others would make it much harder.”

Here are the key tax ballot initiatives to watch, courtesy of CPBB:

First, conservative proposals to tie state governments’ hands and force deep cuts in public services:

* In California:

Proposition 26 would extend the two-thirds requirement, which now applies to proposed tax increases as well as the budget, to cover proposed increases in fees and other charges. (More info here.)

* In Colorado, three ballot questions would restrict state and local governments’ flexibility to meet major needs:

Proposition 101 would sharply reduce vehicle registration fees as well as telecommunications taxes and fees.

Amendment 60 would eliminate all property tax increases that voters have approved since 1992 and cut property taxes in half over the next decade.

Amendment 61 would prohibit all future state borrowing and require voter approval of local borrowing.

(More info on all three initiatives here.)

*In Washington State

Initiative 1107 would repeal several sales tax increases the legislature approved in the recent session in order to avoid deeper cuts to services. (More info here.)

Initiative 1053 would require a two-thirds legislative vote (or voter approval) to raise taxes or fees in the future. (Voters adopted a two-thirds requirement in 2007, but the legislature suspended it earlier this year to help it close the state’s budget gap through a combination of spending cuts and revenue measures.) (More info here.)

* In Massachusetts:

Question 3 would cut the state’s sales tax rate in half, from 6.25 percent to 3 percent. (More info here.)

Fortunately, voters in a couple of states will have an opportunity to enact progressive legislation giving lawmakers the flexibility they need to govern. Here are those measures.

* In California:

Proposition 24 would give the state additional revenue by eliminating three special tax breaks for corporations.

Proposition 25 would begin to address the state’s perpetually gridlocked budget process by allowing the legislature to approve a budget by a simple majority vote. The current two-thirds requirement has often enabled a small number of legislators to hold the budget captive.

(More info on both measures here.)

* In Washington State:

Initiative 1098 would raise revenues for health care and education by establishing a state income tax for incomes above $400,000 for married households and above $200,000 for individual filers. (More info here.)

In my book, The Fifteen Biggest Lies About the Economy, I talk about an economic principle known as “Wagner’s Law,” which holds that as a country gets wealthier, its tax burden tends to increase. Wagner’s Law makes perfect sense: in a poor country, citizens are happy to have a paved road; in a middle-income country, they expect a public school on that road; and in the wealthiest countries in the world, the public expects safe air-traffic control to guide them into an airport where they can catch a cab to a world-class public university. As the expectations of what we want the government to do rise, so do the tax revenues that pay for it all.

Wagner’s Law holds true for every country in the world except for the United States, where conservative economic discourse prevails. It held true for us as well until about 20 years ago, when the Right convinced a lot of Americans they could enjoy tax cuts without losing out on any of the services they’d come to expect.

When the returns come in, we’ll see if the voters in a handful of states will embrace the reality that, when it comes to taxes and spending, they can’t endlessly have their cake and eat it too.


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