Ballot initiative outcomes clarify SALT taxation trends

The elections held on Nov. 5, 2024, provided an opportunity for voters across the U.S. to cast ballots on a variety of important SALT issues, including income tax and gross receipts taxes, sales taxes, property taxes, and various other tax proposals.

While the broad scope of the SALT issues considered by voters throughout the U.S. often makes it difficult to discern a consistent trend, the hesitancy of voters to adopt wide-ranging changes to existing SALT legislative policies in this election cycle was striking. The two most contentious and widely publicized state tax ballot issues — Oregon Measure 118 and Washington Initiative 2109 — were soundly rejected. Oregon voters were persuaded to vote against a proposal that would have provided immediate benefit in the form of rebates, but would also have affected businesses with significant Oregon markets in a way that could have resulted in the increased taxes being passed through to the voters in the form of higher prices. Accordingly, the Oregon corporate minimum tax, which already is one of the most significant minimum corporate income taxes that is imposed by a state, will not become even more onerous to businesses with large amounts of Oregon sales. Likewise, voters in Washington did not act to overturn the legislative and judicial outcome that endorsed and upheld a novel tax that directly affects only several thousand individuals a year.

Beyond Oregon and Washington, voters in some of the other states that offered ballot initiatives also chose a status quo outcome with respect to several tax policies. For example, the interesting proposals in South Dakota to prohibit the imposition of sales tax on groceries and in North Dakota to eliminate property taxes were both rejected.

Of course, there were some exceptions to the trend of voter reticence in the area of SALT policy this year. Georgia voters decided in favor of some property tax relief and approved the creation of a Georgia Tax Court. In addition, voters in the city of San Francisco decided to overhaul the numerous city tax regimes, resulting in significant tax changes that will affect businesses with significant presence in the city. However, one can infer that voters have concluded that at least in 2024, state legislatures and governors’ views on tax policy matters should remain relatively undisturbed for the time being.

Finally, the recent elections provided voters with an opportunity to determine political party control through gubernatorial and state legislative elections. Overall, party control in states remains very divided in the aggregate, and fairly stable from state to state with little change occurring in 2024.¹ None of the 11 gubernatorial elections resulted in a change in party control. Prior to the election, Republicans held trifectas in 23 states and Democrats had trifectas in 17 states.² The number of Democratic trifectas looks to have slightly decreased as the unofficial election results currently stand. In Michigan, the House changed to Republican control, which ended the trifecta of Democratic control of governor and both houses of the legislature. The Minnesota House, which had been controlled by Democrats, appears to be tied between parties.

Read more on the most prominent tax measures below.

Income/gross receipts tax initiatives  

Oregon Measure 118

Oregon’s Measure 118 failed by a substantial margin, with only about 22% support.³ This measure was designed to raise corporate taxes through an enhanced minimum tax, in exchange for rebates that would have been provided to individuals. The state’s current corporate minimum tax is a flat amount that (except for S corporations) rises progressively based on the amount of Oregon sales generated by a business, and is currently capped at $100,000 for $100 million or more in Oregon sales. The minimum tax is imposed when the corporation would otherwise owe less tax based on a measure of taxable income. Beginning in 2025, Measure 118 would have imposed an additional 3% corporate minimum tax on Oregon sales exceeding $25 million, effectively removing the minimum tax cap, and would have distributed the increased revenue to Oregon residents who spent more than 200 days in the state during the year. While many initially believed that the prospect of Oregon resident individuals receiving money largely at the expense of multistate businesses could be appealing to voters, the measure failed to overcome the widespread opposition of Oregon’s governor, legislators from both political parties, and business groups.

Washington Initiative 2109

Approximately 64% of Washington voters rejected a measure that would have repealed the long-term capital gains tax imposed on individuals with capital gains over $250,000.⁴ Washington is constrained from imposing income taxes and as such, heavily relies on the business and occupation, sales and property taxes as its main sources of revenue. The adoption of the long-term capital gains tax was designed to supplement the state’s revenue sources. Enacted by the state in 2021, the tax was quickly implemented by the Washington Department of Revenue. Following an immediate legal challenge, the tax was held to be constitutional by the Washington Supreme Court in 2023, on the grounds that the tax was a valid excise tax levied on the sale or exchange of capital assets.⁵ With less than 1% of all Washington voters actually subject to the tax, and educational funding potentially at risk, voters had little trouble in deciding that the long-term capital gains tax should remain in effect.  

Illinois income tax advisory question

Illinois voters approved a nonbinding ballot measure, with approximately 60% of the vote,⁶ advising state officials to amend the Illinois Constitution to create an additional 3% tax on income greater than $1 million for the purpose of providing property tax relief. Although this measure is nonbinding, it indicates voter support for an additional tax on high-income individuals and has the potential to drive the future debate on this subject in next year’s legislative sessions. 

Sales tax initiative

South Dakota Initiated Measure 28

In South Dakota, approximately 69% of voters rejected Initiated Measure 28, which would have prohibited the imposition of state sales tax on anything sold for human consumption, not including alcoholic beverages or prepared food.⁷ If adopted, this measure effectively would have eliminated South Dakota’s sales tax on groceries, which is currently imposed at a 4.2% tax rate (temporarily reduced from 4.5%).

Property tax initiatives

Georgia Constitutional Amendment 1 

In Georgia, approximately 63% of voters authorized the legislature to amend the Georgia Constitution to provide a statewide homestead exemption that limits increases in the assessed value of homesteads beginning Jan. 1, 2025.⁸ However, the amendment will allow any county, consolidated government, municipality, or local school system to opt out of this provision if it completes certain procedures.

Georgia Statewide Referendum Question A

Approximately 64% of Georgia voters approved a referendum to increase the personal property tax exemption from $7,500 to $20,000.⁹

North Dakota Initiated Measure 4

In North Dakota, approximately 63% of voters rejected a measure to amend the North Dakota Constitution to prohibit political subdivisions from levying a tax on the assessed value of real or personal property, except for the payment of bonded indebtedness incurred through a certain date.¹⁰ Had the measure passed, North Dakota would have been the first state to largely eliminate widespread property taxes, which could have caused significant budgetary issues for the state and increased reliance on sales and income taxes.

Miscellaneous state and local tax initiatives

California: San Francisco Measure L

In San Francisco, over 56% of voters approved a measure to provide an additional business tax on transportation network companies and autonomous vehicle businesses that provide passenger services for compensation.¹¹ However, this proposition will not take effect because Measure M (as discussed below) received a higher percentage of votes than Measure L.¹² The rates would have ranged from 1% to 4.5% of gross receipts in San Francisco above $500,000, resulting in additional estimated annual revenue of $25 million.  

California: San Francisco Measure M

Approximately 70% of San Francisco voters approved a measure that makes significant changes to the city’s business taxes.¹³ The changes, which are estimated to produce annual revenue of $50 million once fully implemented, address the city’s gross receipts tax, homelessness gross receipts tax, overpaid executive gross receipts tax, business registration fees, and administrative office taxes.  

For the gross receipts tax, the measure exempts most small businesses with gross receipts up to $5 million (increased for inflation);¹⁴ reduces the number of business types from 14 to seven; calculates San Francisco gross receipts reflected more by sales than by payroll expenses, depending on the type of business; and increases applicable tax rates to a range between 0.1% and 3.716%.¹⁵ The homelessness gross receipts tax will be imposed on business activities with San Francisco gross receipts over $25 million at rates ranging from 0.162% to 1.64%.¹⁶ The measure modifies how the city calculates the overpaid executive gross receipts tax, determines who pays the tax, and changes the rates to range from 0.02% to 0.129%.¹⁷ The business registration fees are increased, and will range from $55 to $60,000 (adjusted for inflation).¹⁸ Finally, the measure adjusts the administrative office tax rates for certain large businesses to range from 2.97% to 3.694%¹⁹ and the business registration fees for these businesses to a range between $500 and $35,000 (increased by inflation).²⁰  

Colorado Proposition JJ

Approximately 76% of Colorado voters approved a proposition to allow the state to keep and spend all sports betting tax revenue in excess of the $29 million increase in state tax revenue approved by voters in 2019 for the purpose of funding water conservation and protection projects, rather than refunding the excess revenue to casinos.²¹

Colorado Proposition KK

In Colorado, approximately 54% of the voters approved a proposition authorizing a 6.5% tax on the net taxable sales of firearm dealers, firearm manufacturers, and ammunition vendors from the retail sale in the state of any firearm, firearm precursor part, or ammunition.²² The tax, which begins on April 1, 2025, will raise $39 million to fund mental health services, including for military veterans and at-risk youth, school safety and gun violence prevention, and support services for victims of domestic violence and other violent crimes.

Georgia Constitutional Amendment 2

Approximately 52% of Georgia voters approved a constitutional amendment, the Creation of Tax Court Amendment, which creates a Georgia Tax Court vested with the judicial power of the state and having venue, judges, and jurisdiction concurrent with superior courts.²³ Georgia currently has a Tax Tribunal that is outside the scope of the state’s judicial system.