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    WILLIAMS And SCHALK: Here’s One Barely Discussed Story To Emerge From The Midterms

    daily caller

    By Jonathan Williams and Lee Schalk

    With Sen. Raphael Warnock’s defeat of Herschel Walker in Georgia this week, the dust is finally settling from the midterms. While the races for control of Congress and governors’ mansions captured most of the attention, an equally important, but much less discussed story unfolded on ballot measures across the states.

    California voters rejected Proposition 30, which would have pushed the Golden State’s top personal income tax rate from 13.3% to more than 15% for individuals making more than $2 million per year. Gov. Gavin Newsom opposed Prop 30 on the grounds that it was a corporate handout, but many speculate his opposition was more likely due to teachers unions’ complaints that the funds were not dedicated to education.

    California has lost more than 1 million residents on net — and major companies like Chevron and Tesla — in the past decade due to crushing economic policies like its high tax rates. On Prop 30, even liberal voters realized there is a limit to how high taxes in the Golden State should go.

    The teachers unions did, however, get their way in Massachusetts, where voters approved a millionaires tax in the name of education funding. Massachusetts had been a 5% flat tax state, but now will add a 4% surcharge for those earning more than $1 million, creating a new top income tax rate of 9%.

    With its already well-funded public schools and current budget surplus, some have noted that this new tax on millionaires is unnecessary. It’s also damaging to the state’s economic outlook in the competitive New England region, where neighboring New Hampshire boasts no sales tax and no personal income tax on wages. While five states — Mississippi, Georgia, Idaho, Iowa and Arizona — moved to a flat tax in 2022, Massachusetts unfortunately voted to shun the Flat Tax Revolution.

    Due to this policy blunder, the previous moniker of Taxachusetts is likely to make a comeback.

    While the millionaires tax results were split, Coloradoans voted to lower their existing flat personal income tax rate from 4.55% to 4.15%. Every little bit counts, and Colorado will continue to benefit from its flat tax and the new lower rate. Voters have a long history in Colorado of defending their pocketbooks from the forces of big government, most notably with the Taxpayer’s Bill of Rights (TABOR).

    Since 1992, TABOR has helped Colorado maintain a robust economy by limiting much of the state’s spending and taxation levels to increases in inflation and population growth, with surplus revenues being refunded to taxpayers. Despite repeated — and occasionally successful — attempts to weaken this fiscal rule, it has worked much the way it was originally intended.

    By approving their latest tax cut at the ballot, voters continued the Colorado tradition of restraining government and protecting taxpayers.

    Down South, Tennesseans voted overwhelmingly to enshrine Right-to-Work in the state constitution. This adds an even greater dose of worker freedom to the Volunteer State, where Right-to-Work has protected workers from having to join or pay money to a union as a condition of employment. In general, Right-to-Work laws have done wonders for the Southern states’ economies and led to faster wage growth compared to non-Right-to-Work states.

    Unfortunately, Illinois went the opposite direction on election night with a constitutional amendment guaranteeing the right to collective bargaining. After passing with close to 60% of the vote, the Land of Lincoln has cemented its reputation as a haven for Big Labor and hostile to worker freedom. Illinois will have even more trouble reversing the trend of companies like Caterpillar fleeing the state and taking thousands of jobs with them.

    Red tape reduction was on the ballot in Kansas with disappointing results. By a razor thin margin, Kansans rejected Question 1, which would have empowered state lawmakers to more easily eliminate burdensome regulations created by unelected state agency bureaucrats. Excessive government regulations lead to increased poverty rates, less freedom for individuals, and stifled growth for small businesses. The defeat of Question 1 was a missed opportunity for better policy in Kansas.

    In South Dakota, Gov. Kristi Noem cruised to reelection, but voters also approved costly Medicaid expansion – a key piece of President Obama’s Affordable Care Act. Once implemented, thousands of additional South Dakotans will be enrolled in the government health insurance program that is not only straining state budgets but rife with waste, fraud and abuse.

    Prior to the midterms, South Dakota was one of 11 states that had resisted expanding its Medicaid program. This is certain to add more pressure on lawmakers in states like North Carolina that have not yet taken the bait from the federal government to expand Medicaid.

    The midterm ballot measures results were, undoubtedly, mixed across the states. While there were several key wins for taxpayers, residents in states like Massachusetts and Illinois now face the economic consequences of election night.

    As the new year approaches, much work lies ahead for lawmakers striving to make their states more competitive.

    Jonathan Williams is the executive vice president of policy and chief economist at the American Legislative Exchange Council (ALEC). Lee Schalk is vice president of policy at ALEC. 

    The views and opinions expressed in this commentary are those of the authors and do not reflect the official position of Citizens Journal.



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