PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

In the States: Tax Measures on the Ballot

By at 12 October, 2018, 10:01 am

 

by Raymond J. Keating-

Small Business Policy Index 2018: SBE Council’s “Small Business Policy Index 2018” ranks the 50 states according to 55 different policy measures, including a wide array of tax, regulatory and government spending and performance measurements.

Small Business Tax Index 2017: SBE Council’s “Small Business Tax Index 2017” ranks the states according to 26 different tax measures. Among the taxes included are income, capital gains, property, death, unemployment, and various consumption-based taxes, including state gas and diesel levies.

The Small Business Policy Index 2018: Ranking the States on Policy Measures and Costs Impacting Small Business and Entrepreneurship, which I write for the Small Business & Entrepreneurship Council, arguably offers the most comprehensive comparison of the states in terms of policy decisions affecting the economy. Of the 55 measures included in the 2018 edition of the Index, 27 are taxes or tax related, 20 relate to rules and regulations, 5 deal with government spending and debt issues, and the 3 remaining gauge the effectiveness of government undertakings.

In turn, the Small Business Tax Index 2017: Best to Worst State Tax Systems ranked the states exclusively based on tax or tax-related policies.

So, yes, taxes matter to entrepreneurs, small businesses, and a state’s competitiveness and economy.

In a variety of states on November 6, voters will have a direct say on ballot measures that will impact the relative costs of living, working, investing, and/or starting up and running a business. Consider the following:

● Arizona. With Proposition 126, residents will vote on a constitutional amendment prohibiting state and local government from imposing new or increasing existing taxes on services.

Arizona ranked 6th on the “Small Business Policy Index 2018” and ranked 11th on the “Small Business Tax Index 2017.”

● California. With Proposition 6, residents will vote to repeal or keep gas and car tax increases that were imposed by the state legislature in 2017.

California ranked 50th on the “Small Business Policy Index 2018” and ranked 50th on the “Small Business Tax Index 2017.”

● Florida. With Amendment 2, residents will vote on a proposal to amend the state constitution to permanently limit property tax assessment increases on non-homestead real property (such as second homes, rental properties, vacation homes, vacant land and commercial property), excluding school district taxes, to 10 percent annually. This would make permanent a measure currently in effect that is scheduled to be repealed in 2019.

With Amendment 5, residents will vote on an amendment that would require all increases in taxes or fees, or the creation of new taxes or fees, to pass both chambers of the Florida Legislature by a two-thirds vote.

Florida ranked 5th on the “Small Business Policy Index 2018” and ranked 6th on the “Small Business Tax Index 2017.”

● North Carolina. Residents will vote on a state constitutional amendment that would reduce the maximum state income tax rate allowed from 10 percent to 7 percent. As explained by the North Carolina secretary of state: “This proposed amendment does not reduce your current taxes. It does not change the current individual income tax rate of 5.499%, and it does not change the current corporate income tax rate of 3%. Instead, it limits how much the state income tax rate could go up.”

North Carolina ranked 17th on the “Small Business Policy Index 2018” and ranked 9th on the “Small Business Tax Index 2017.”

● Oregon. Under Measure 103, residents will vote on a state constitutional amendment prohibiting state and local government from imposing taxes on the sale or distribution of groceries.

Under Measure 104, residents will vote to amend the state constitution to basically clarify what the current constitutional requirement for a 3/5 super majority vote to raise revenue means. It would define “raising revenue” as “any tax or fee increase, whether accomplished by the creation, imposition or increase of any tax or fee, or by the modification, elimination or change in eligibility for any exemption, credit, deduction or lower rate of taxation.”

Oregon ranked 42nd on the “Small Business Policy Index 2018” and ranked 42nd on the “Small Business Tax Index 2017.”

● Washington. Initiative 1634, if passed, would prohibit local governments from imposing taxes on groceries.

Washington ranked 7th on the “Small Business Policy Index 2018” and ranked 5th on the “Small Business Tax Index 2017.”

As voters go to the polls in each of these states, and others, it pays to keep in mind that providing tax relief, and/or limiting or serving as a check on the ability of governments to impose or raise taxes, are positive measures from the standpoint of economic growth, entrepreneurship, investment and overall competitiveness.

_______

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP:  The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.

News and Media Releases