Albeit the most significant vote on this year’s election day ballot was the choice for President of the United States, numerous consequential statutory amendments and propositions having a direct impact on state tax constructs were also included on ballots. Taxpayers across the country voted on ballot initiatives that would amend state constitutions and alter tax impositions in their state, approving some while denying others.
“One, if by land, and two, if by sea ...”
Georgia tax court
Georgia voters approved the creation of the Georgia Tax Court via Amendment 2 to their state’s constitution. This tax court will replace the administrative Georgia Tax Tribunal, which is currently within the Office of State Administrative Hearings, with a state tax court that has judicial power. The Georgia Tax Court will have concurrent jurisdiction with the state business court and superior courts in equity cases.
Of the 35 states that have a tax tribunal or tax court, only six of those tax courts are within the state’s judicial branch. David Brunori, a highly regarded state and local tax practitioner and analyst, wrote for Law360 in favor of the Georgia Tax Court. He argued that taxpayers often lose in administrative tax tribunals because the appeal officers and administrative law judges work for the Department of Revenue or the state’s governor.
South dakota grocery tax
In South Dakota, taxpayers rejected Measure 28, which would have exempted “food for human consumption” from the state’s 4.2% sales tax. The state sales tax would continue to be imposed on prepared food, tobacco and alcoholic beverages, and localities would continue to have the option of imposing local tax. The initiative was fairly strongly opposed, however, with 152,281 to 57,405 votes and 64.8% of votes counted.
The likely reason for the opposition is the projected loss in revenue that the tax cut would cause. To wit, a fiscal note suggested that the exemption would reduce state annual revenue by $124M. Opposers of the bill argued that this reduction in revenue could lead to an increase in other taxes or decreases in public services.
california managed healthcare plans
In California, Proposition 35 was approved by approximately 5M to 2.5M votes with 56.4% of the vote counted. This ballot measure will make California’s tax on managed healthcare insurance plans a permanent tax. The tax was set to expire in 2026.
The tax funds the state’s “Medi-Cal” program and is imposed on managed care organizations and insurance companies. Revenue from the tax funds higher reimbursement rates for doctors and other providers and is expected to generate between $6B to $9B in annual revenue. However, uncertainty as to whether the tax meets federal requirements means that the long-term effects of the bill cannot be accurately estimated.
conclusion
This election highlighted the importance of taxation with representation and the potential impact of having your voice heard. With the approval of new laws comes the obligation of learning how each one impacts your individual and professional role and responsibility pertaining to tax compliance ~ know what you owe.