The 2022 general elections, held on Nov. 8, 2022, provided an opportunity for voters across the country to cast ballots on a variety of important state and local tax issues in addition to electing members of Congress and deciding state and local executive and legislative races.1 Some of the most significant tax ballot measures in this year’s elections concerned income tax rates. While California voters rejected a measure to increase income tax on high-income individuals, Massachusetts voters authorized an additional tax on high-income individuals. Colorado voters approved a measure to reduce the income tax rate, but also voted to limit itemized deductions for high-income individuals.
Voters also considered a wide variety of other tax issues. California voters defeated two measures that would have authorized sports wagering. In Los Angeles, voters approved a “mansion tax” on the transfer of real property valued at over $5 million. Voters in San Francisco approved a tax on residential building owners who keep units vacant for a long period of time. Arizona voters approved a measure requiring a 60% supermajority to approve a tax. In West Virginia, voters rejected a proposal that would have allowed the legislature to exempt certain types of property from ad valorem tax. Finally, voters in five states considered the legalization of recreational marijuana, with voters in Maryland and Missouri approving the marijuana measures, and voters in Arkansas, North Dakota, and South Dakota rejecting these measures.
Income tax initiatives
California Proposition 30
California voters rejected Proposition 30 with approximately 59% of the vote.2 This proposition would have required taxpayers to pay an additional 1.75% tax on personal income over $2 million annually. The revenue collected from this additional tax would have supported zero-emission vehicle programs and wildfire response and prevention activities. This tax was projected to increase annual state tax revenue by several billion dollars.
Colorado Propositions 121 and FF
Colorado voters enacted Proposition 121 with over 65% of the vote.3 This proposition makes a change to the Colorado Revised Statutes, reducing the state income tax rate from 4.55% to 4.40%. Also, Colorado voters approved Proposition FF by nearly 56% of the vote.4 Under this proposition, individuals who have federal taxable income of $300,000 or more will be limited for state income tax purposes in the use of their itemized deductions to $12,000 for single tax return filers and $16,000 for joint tax return filers. This is projected to annually increase state tax revenue by approximately $100 million to support healthy meals for public school students.
Massachusetts Question 1
In Massachusetts, approximately 52% of voters approved a constitutional amendment to impose an additional 4% tax on income over $1 million, with the proceeds going to education, roads and bridges, and public transportation.5 This income level will be adjusted annually for inflation, and the tax applies to tax years beginning on or after Jan. 1, 2023.
California gaming taxes
California voters rejected two different sports wagering propositions. Approximately 70% of voters rejected Proposition 26, which would have allowed four racetracks to offer in-person sports betting and tribal casinos to offer in-person sports betting, roulette, and games played with dice if permitted by individual tribal gambling arrangements with the state.6 Also, over 83% of California voters rejected Proposition 27.7 This proposition would have permitted licensed tribes or gambling companies to offer online sports betting over the internet and mobile devices on non-tribal lands in California.
California local ballot measures
Over 54% of voters in Los Angeles approved Proposition ULA.8 This proposition authorizes a “mansion tax” of 4% on sales or transfers of real property exceeding $5 million but less than $10 million and a tax of 5.5% on real property valued at $10 million or more. The property value thresholds will be adjusted annually for inflation. This tax is projected to generate annual revenue between $600 million and $1.1 billion and will be used to fund affordable housing.
In San Francisco, over 52% of voters approved Proposition M, which imposes a tax on vacant residential units.9 The city is directed to tax owners of buildings with three or more residential units for each unit that has remained vacant for more than 182 days in a calendar year. The tax will be imposed at a rate between $2,500 and $5,000 per vacant unit in 2024 and up to $20,000 in later years with adjustments for inflation. The tax is projected to generate estimated annual revenue of $20 million to $37 million per year and continue until Dec. 31, 2053. The funds will be used for rent subsidies and affordable housing.
Arizona supermajority approval for tax proposals
In a very close election, over 50% of Arizona voters approved a ballot measure, Proposition 132, amending the Arizona Constitution to require that an initiative or referendum to approve a tax receives 60% approval by voters, rather than by a simple majority.10 The Arizona legislature put this measure on the ballot after a simple majority of voters approved a tax on high-income individuals under Proposition 208 in Nov. 2020, but the Arizona Supreme Court ruled that the proposition was unconstitutional.11 On remand, an Arizona trial court permanently enjoined Proposition 208.12
West Virginia personal property tax exemption
In West Virginia, approximately 65% of voters defeated Amendment 2, which would have amended the state constitution to provide the legislature with authority to exempt personal property (including machinery, equipment and inventory) directly used in business activity and personal property tax on motor vehicles from ad valorem property tax.13
In the 2022 general elections, voters in five states addressed whether to legalize, and in some cases how to tax, the sale of marijuana. Maryland’s Question 4, enacted with over 65% of the vote, legalizes the use of marijuana beginning in July 2023 and directs the Maryland legislature to enact laws for the use, distribution, regulation, and taxation of marijuana.14 In Missouri, approximately 53% of voters approved Amendment 3, which legalizes the purchase, possession, consumption, use, delivery, manufacture, and sale of marijuana for personal use and enacts a 6% tax on the retail price of recreational marijuana.15 Approximately 56% of Arkansas voters rejected Issue 4, which would have legalized marijuana for personal use and imposed a 10% tax on marijuana sales.16 North Dakota voters rejected Statutory Measure 2, which would have legalized marijuana, by a vote of nearly 55%.17 In South Dakota, approximately 53% of voters rejected the legalization of marijuana by voting down Initiated Measure 27.18
1 Please note that the voting percentages in this SALT Alert are the unofficial results as of the dates indicated in the footnotes. The results are subject to change as additional votes are counted.
2 California Secretary of State, California General Election, Nov. 8, 2022, Unofficial Election Results (updated Nov. 10, 2022).
3 Colorado Secretary of State, 2022 General Election, Unofficial Results (updated Nov. 11, 2022).
5 Massachusetts Election Results, The New York Times (unofficial results) (updated Nov. 11, 2022). This adds a new paragraph to Mass. Const. art. IV.
6 California Secretary of State, California General Election, Nov. 8, 2022, Unofficial Election Results (updated Nov. 10, 2022).
8 Los Angeles County Registrar-Recorder/County Clerk, 2022 General Election Unofficial Results (updated Nov. 10, 2022).
9 San Francisco Department of Elections, Nov. 8, 2022 Preliminary Election Results (updated Nov. 10, 2022).
10 Arizona Secretary of State, 2022 General Election Unofficial Results (updated Nov. 14, 2022). This amends Ariz. Const. art. IV, pt. 1, § 1; Ariz. Const. art. XXI, § 1.
11 Fann v. Arizona, 439 P.3d 246 (Ariz. 2021). For further discussion of this case, see GT SALT Alert: Arizona rules against high-earner tax for schools.
12 Fann v. Arizona, Maricopa County Superior Court, No. CV2020-015495, March 11, 2022.
13 West Virginia Election Results, The New York Times (unofficial results) (updated Nov. 11, 2022). This adds a new paragraph to Mass. Const. art. IV.
14 Maryland State Board of Elections, Unofficial 2022 Gubernatorial General Election Results for All State Questions (updated Nov. 11, 2022).
15 Missouri Secretary of State, 2022 General Election, Unofficial Results (updated Nov. 11, 2022).
16 Arkansas Secretary of State, 2022 General Election, Unofficial Results (updated Nov. 10, 2022).
17 North Dakota Election Officials, County Auditors and Secretary of State, Unofficial 2022 General Election Results (updated Nov. 11, 2022).
18 South Dakota Secretary of State, 2022 General Election, Unofficial Results (updated Nov. 11, 2022). Note that 54% of South Dakota voters approved Amendment A and the legalization of recreational marijuana at the Nov. 2020 general election, but the South Dakota Supreme Court struck down the amendment in violation of the South Dakota Constitution’s single subject requirement. Thom v. Barnett, 967 N.W.2d 261 (S.D. 2021).
19 P.L. 117-2 (2021).
20 NCSL State Elections 2022, National Conference of State Legislatures, updated Nov. 9, 2022.
Jamie C. Yesnowitz
Jamie Yesnowitz, principal serving as the State and Local Tax (SALT) leader within Grant Thornton's Washington National Tax Office, is a national technical resource for Grant Thornton's SALT practice. He has 22 years of broad-based SALT consulting experience at the national and practice office levels in large public accounting firms.
Washington DC, Washington DC
More SALT alerts
No Results Found. Please search again using different keywords and/or filters.