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Residents in many states heading to the polls this November will be asked to approve ballot measures that could result in tax increases on residents and businesses.
Many state and local governments are looking for ways to generate more revenue as they battle ballooning debts after large swaths of the economy shut down following the coronavirus outbreak.
Measures make it on the ballot in one of two ways – either through the state legislature or a citizen initiative, whereby an idea must receive a qualifying number of signatures to place it on the ballot.
This year, as the economy continues to recover from a deep recession, residents in many cities and states will be asked to approve tax increases – or measures that would pave the way for the locality to raise rates at a later date.
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Here’s a look at some of the tax-related ballot initiatives that will be decided next month.
In Illinois, voters will be asked to approve a constitutional amendment that would allow for a progressive income tax bracket system. As it stands, the state constitution calls for a flat tax rate, which currently sits at 4.95%.
Lower-income individuals would pay rates between 4.75% and 4.9%. Those with incomes between $100,000 and $250,000 would pay the 4.95% rate. The top rate, however, for joint filers with incomes more than $250,000 would reach 7.75%; 7.85% on incomes more than $500,000 and 7.99% for people making more than $1 million.
The revised tax rates would earn the state an extra $3.6 billion in expected revenue. The change would not take effect until 2021.
As previously reported by FOX Business, billionaire Ken Griffin spent $20 million to campaign against the effort, alleging the change to the state’s structure would eventually end up costing all families more.
In Colorado, residents will decide whether to repeal the Gallagher Amendment, which was introduced as a way to limit residential property taxes.
Under the measure, residential property taxes cannot make up more than 45% of the tax base, which means nonresidential property taxes – like commercial property taxes – make up the remainder.
Proponents of the repeal claim the amendment has reduced funding for K-12 schools and fire districts as well as placing a larger financial burden on the state government.
On the flip side, residents would face higher property taxes as the U.S. economy struggles to come out of a coronavirus-induced recession that began in February.
The amendment has saved state residents an estimated $35 billion in residential property taxes since 1982 – when it was implemented – according to The Colorado Sun.
California is also asking residents to approve a ballot initiative that would allow the state to raise certain property tax rates.
Proposition 13 was passed in the 1970s, and it stipulates that residential and commercial property owners pay taxes based on what they originally paid for the property.
Rates of increase are also restricted to 2% or less each year, and there’s a limit on property taxes to 1% of the assessed value.
The proposition lawmakers want residents to approve would remove caps for large commercial businesses (properties worth more than $3 million).
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Voters in Alaska will decide whether some of the country’s largest oil companies – like ConocoPhillips – should pay more in production taxes.
The measure would only apply to producers that put out more than 40,000 barrels per day over the previous calendar year and more than 400 million barrels of cumulative production.
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