A TAX REVOLT IS QUIETLY BREWING IN SOME STATES

August 21, 2008

On Election Day, Massachusetts will vote on whether to eliminate its state income tax.  Advocates hope victory in a place long thought of as a free-spending liberal bastion will pave the way for similar initiatives in other states over the next few years. Critics insist a yes vote would lead to fiscal disaster, says the Wall Street Journal.

While Americans are focusing on the presidential and congressional races, voters in Massachusetts and other states will decide the fate of dozens of state and local tax and spending issues:

  • Oregon voters, for example, will decide whether to allow taxpayers to deduct an unlimited amount of their federal income taxes on their state returns.
  • Nevada is expected to vote on a constitutional amendment that would restrict property-tax increases.
  • North Dakota voters may vote on whether to chop the state's personal income tax in half.
  • Minnesota will vote on a proposed amendment to its state constitution to raise the state sales tax by three-eighths of a percentage point, with the money going to protect the environment and to benefit the arts.

These and other battles come at a time when many states are struggling to cope with tough economic times.  As the national economy's growth rate has slowed to a crawl, growth in state tax collections generally has withered, intensifying budget strains.  "Many states have reduced their revenue forecasts, some many times," said a recent report by the National Conference of State Legislatures, a Denver-based group.  "In a number of states, collections are even below the lowered expectations."

Source: Tom Herman, "A Tax Revolt Is Quietly Brewing In Some States," Wall Street Journal, August 20, 2008.

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