Investment/Taxes

 

For years, Washington D.C. based anti-government leaders and organizations have used the state ballot initiative process to advance anti-government tax measures. This year there, such measures were once again rejected by voters in Massachusetts, New Hampshire, North Dakota, and Oregon.

In 2006, BISC helped bring about the total failure of so-called Taxpayer Bill of Rights (TABOR) initiatives. The radical anti-government ideology was pushed and funded by New York City real estate investor Howie Rich and his secret shell groups. Rich originally pushed TABOR in 25 state legislatures, all of which rejected the gimmick. He then tried to launch TABOR initiatives in nine states. After six TABORs were stripped from the ballot for signature fraud and other problems, voters in Maine, Nebraska, and Oregon firmly rejected the rest.

One might imagine that anti‐tax ideologues would have learned an expensive lesson after their 2006 defeats, but they are back again in 2008.

Massachusetts

In Massachusetts, an initiative that would have repealed the income tax was rejected by a wide margin- 70%-30%. This proposed constitutional amendment would have reduced the state personal income tax rate to 2.65% for all categories of taxable income for the tax year beginning on or after January 1, 2009, and would eliminate the tax for all tax years beginning on or after January 1, 2010. The initiative would have eliminated $12.7 billion in state revenue, or 40 percent of the state's budget, and would have likely led either to deep cuts to investments in education, public safety, roads and bridges and many other areas, or to massive property tax hikes. Voters rejected a similar question on the 2002 ballot.

Opponents of the measure educated voters on the potential negative impact the initiative would have had on the state's investments in education, health care and infrastructure- teacher layoffs, school closings, cuts to higher education and worker training programs, road and bridge repairs, cuts to health care services and the roll-back of funding for local police and firefighters.

Oregon

In Oregon, an income tax initiative, Measure 59, also went down in defeat with voters rejecting the measure 63%-37%. Oregon voters rejected a similar proposal, Measure 91, on the November 2000 ballot.  

The initiative sought to create an unlimited deduction for federal income taxes on individual taxpayers' Oregon returns beginning in 2010. The deduction would have applied only to federal income taxes paid on income taxed in Oregon and does not apply to corporate excise/income taxes. Had the measure passed, the average tax cut for the richest one percent would have been $15,809, while the average tax cut for the middle class would have been $1. The 40 percent of Oregonians with the lowest income would have received no tax break.

The initiative was being pushed by Bill Sizemore, a long time ballot initiative activist who ran for governor in 1998 as a Republican and lost with only 30% of the vote.

In 2000, Sizemore was the subject of a racketeering lawsuit against two of his organizations: Oregon Taxpayer's United and the OTU Education Foundation. The jury found Sizemore's organizations guilty of racketeering, and the organizations were fined approximately $2.5 million. Sizemore refused to pay the fines and attempted to avoid the liability by changing the name of his organizations to Oregon Taxpayers Association and carrying on with business as usual. Without a trial, Sizemore was found personally liable for his organization's civil racketeering liability, and a judge shut down his education foundation. Nearly a million dollars were added to the fine as a result of Sizemore's resistance to earlier court orders/decisions.

According to estimates from the state and the nonpartisan Oregon Center for Public Policy, Measure 59 would have cut state revenues and cost the state budget $1.1 billion to $2.4 billion every two years, resulting in overcrowded classrooms, more Oregonians without health coverage and higher college tuition. The low-end $1.1 billion revenue cut estimate was equivalent to the total funding that Oregon's public universities will receive from the state in the current biennium or equivalent to cutting the salaries of all Oregon K-12 public school teachers by 70 percent.

North Dakota

North Dakota‘s ballot included an initiative that was intended to cut the income tax rate by 50% and cut the corporate income tax by 15%. The initiative was defeated by voters 70%-30%.

The measure, Leave No Taxpayer Behind, would have greatly reduced the funds available to invest in state priorities like education and health care, or would have required large increases in other taxes, such as sales taxes and property taxes, at a time when working families are feeling squeezed by rising costs of food, gas and health care.

Most of the benefits of this failed measure would have benefited a small number of high-income individuals and large corporations in the state. The relatively modest benefits that would have gone to middle-income families- less than $15 per month by one estimate- would have likely been wiped out by increased tuition costs at public universities, reduced access to health services, increased sales and/or property taxes.

The North Dakota initiative was advanced by the Washington D.C. based Americans for Prosperity, a political arm of the big oil, chemical and mining corporation, Koch Industries.

Koch was also behind an Oil Tax constitutional amendment (Amendment 1). The amendment was defeated by a margin of 64%-36%. The initiative would have inserted into the state constitution a proposal that would lock the state's oil money away.

Koch has a checkered past in North Dakota and their involvement proved fatal to the effort. In 1995 the state Supreme Court found that Koch failed to record and pay taxes on 137,822 barrels of oil it collected from small producers in the state.  The tax commissioner ordered Koch to pay taxes on the oil after an audit showed that Koch was delivering more oil than it was reporting it had collected from producers. Subsequent events indicated that this was oil that Koch received through a systematic practice of underestimating the amount of oil it took from its clients.

In addition, a federal jury found in 1999 that Koch Industries had systematically under-reported the amount of oil it was taking from clients in tribal and federally managed lands.  One of the allegations was that between 1981 and 1989 Koch took 492,742 more barrels of oil than it reported from 286 producers in North Dakota alone. Nearly 9,000 producers nationwide allegedly were defrauded. The jury found that Koch made more than 24,000 false claims as part of this process. 

New Hampshire

In New Hampshire, voters in two municipalities gave a split verdict on a revenue cap requiring local officials to restrict revenue and spending for community services( although 9 measures were attempted and rejected). In Somersworth the revenue cap lost 58%-42% and in Rochester the cap passed 70%-30%.

Rochester will now have to deal with a budget cap that will threaten or freeze investments in road maintenance, public safety through police and fire departments, parks, libraries, and economic development. The initiative will cap municipal property tax increases to the rate of inflation plus population growth.

The initiative didn't take into account rising health care, gas and energy costs that are exceeding the rate of inflation and burdening local budgets. It is now likely that tax-payers will bear the brunt of higher user fees that could become a backdoor way of paying for the alleged ‘savings' a tax cap will bring.

Colorado

In Colorado, voters weighed in on a ballot initiative that sought to fix a problematic component of the TABOR initiative that passed in 1992. That measure capped the growth of spending and required state and local agencies to refund money to taxpayers when revenue exceeded the cap. It also addressed a constitutional amendment that voters passed in 2000 which required funding increases to raise the state's support for public schools to the national average. When Colorado's economy took a downturn, the two initiatives came into conflict as legislators found themselves slashing other programs to keep the promise to public schools.

This year's Amendment 59, SAFE (Saving Account for Education) would have created a savings account for public education. It proposed dedicating a permanent source of funding for education and preserves the right of citizens to vote on taxes and the constitutional requirement to balance the budget. The savings account for schools would have been filled when economic times are good and spent when times are bad.

The amendment was defeated at the ballot box 58%-42%, forcing legislators to continue pitting investments against education against other priorities.