Election 2018

Voters in Florida, North Carolina Just Made It Much Harder to Pass Future Tax Hikes

North Carolina capped income tax rates at 7 percent, while Florida will now require a supermajority to increase taxes or fees.



While voters in San Francisco were saying yes to a huge (and possibly unconstitutional) tax increase, and while voters in Maine were soundly defeating an income tax hike on high earners, voters in two Southern states took big steps Tuesday to fend off future tax increases.

North Carolina voters approved an initiative to amend the state's constitution to cap the income tax rate at 7 percent, down from the old constitutionally mandated cap of 10 percent. That won't have any affect on the current income tax rates in North Carolina—the state has a flat income tax of 5.5 percent—but supporters say it's a forward-looking measure that will force the growing state to live within its means in years to come.

In Florida, voters endorsed what could be an even more powerful tool for limiting the growth of government. More than 65 percent of the state's voters said yes to Amendment 5, which changes the state's constitution to require a two-thirds vote in both chambers of the General Assembly for any future increase in taxes or fees, rather than the simple majority previously required. The change effectively guarantees that Florida will retain its status as one of the lowest-tax states in the country for the foreseeable future—and is perhaps another sign that Florida is moving away from its longtime status as a swing state.

"North Carolina and Florida, two states that have enacted repeated rounds tax relief in recent years, are indicative of what conservative Republican policymakers can accomplish when in power," says Patrick Gleason, vice president of state affairs at Amercians for Tax Reform, a conservative nonprofit that favors tax cuts. "Those low-tax, free market fiscal policies were affirmed by voters in those states."

Indeed, both measures garnered widespread support. In Florida, Amendment 5 received more than 5.1 million yes votes. That's more than 1 million more than any of the candidates for governor or Senate who were on the ballot Tuesday.

There was no statewide election in North Carolina to measure the tax cap amendment against, but it got more than 57 percent of the vote despite opposition from Democratic Gov. Roy Cooper and a collection of special interests. The lead-up to the election featured a variety of scare tactics from opponents, who warned that schools would be underfunded and the state would be unprepared for an emergency such as a hurricane if it was unable to raise income taxes in the future—implying that politicians would be incapable of doing the basic budget-making task of determining priorities for spending.

The fact that North Carolina has any cap on income taxes was unusual to begin with. Georgia, where voters approved a constitutional cap of 6 percent in 2014, is the only other state with such a mechanism. Voter approval of the lower cap comes five years after the state legislature replaced a progressive tax system with a flat income tax. Under the previous system, the state's highest-earning individuals and households paid 7.75 percent, so Tuesday's vote is perhaps most significant for how it would forbid North Carolina lawmakers from returning to the old model in the future—or would at least require lower rates if they do.

In Florida, the two-thirds majority required to raise taxes will change the political calculus in Tallahassee. Future tax increases will likely have to be bipartisan in nature, but tax cuts could still be enacted with a simple majority. That's "a wise and common sense policy" that will "preserve one of Florida's most attractive assets: our low-tax climate," according to the James Madison Institute, a pro-market think tank.

Amendment 5's success was another political rebuke for the state's Democrats. Democratic gubernatorial candidate Andrew Gillum had called for raising the state's corporate income tax from 5.5 percent to 7.5 percent in order to spend more money on schools. Not only did he lose the election, but it will now be significantly more difficult for a similar policy to be enacted by a future governor—and, indeed, it changes how Democrats in particular will have to campaign at the state level.

That opponents of the measures in North Carolina and Florida leaned heavily on the idea that limits on future tax increases would harm schools is not really a surprise. Voters are generally unwilling to support tax increases, but many are interested in making sure schools are up to snuff. While special interests are happy to draw a connection between higher taxes, more spending, and better schools, the reality is that how much a state spends on education is only one factor in determining the effectiveness of a school system—as Stan Liebowitz and Matthew L. Kelly pointed out in a recent Reason cover story.

"Expenditures are not linked to student performance," they conclude. "It turns out that throwing more money at something isn't guaranteed to yield improvement."

But it's easier to throw more money at a problem when you have an unlimited supply of money. Limits like the ones adopted this week mean lawmakers will have to prioritize how to spend existing tax revenues without reaching deeper into residents' wallets.

NEXT: The Meaning of the Midterms: They Solve Nothing, Mean Nothing

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. “…Florida will now require a supermajority to increase taxes or fees.”

    Until the pols find a judge who disagrees.

  2. So Amendment 5 is over its threshold by about 450,000 votes. Broward may want to start thinking big.

  3. Limits like the ones adopted this week mean lawmakers will have to prioritize how to spend existing tax revenues without reaching deeper into residents’ wallets.


  4. North Carolina capped income tax rates at 7 percent, while Florida will now require a supermajority to increase taxes or fees.

    You know what’s cool about that? Is the state will continue to increase spending beyond the increased revenue that a 7% income tax would bring (assuming an expanding economy) and it’ll be all the fault of that damned initiative.

    *cough*prop 13*cough*

  5. Party affiliation is at or near historically low levels, and who can blame us? Neither party even pretends to offer an appealing, let alone viable, vision of the future.

    Hey, I’ve caught a little bit of the POD Save America on HBO. Those young democratic hipster politicos sure seem excited to be on board.

    1. Political operatives are enthused about the party that employs them? No way!

  6. But in an age of Uber, Airbnb, Netflix, and Amazon, who wants the government to control every aspect of our personal, cultural, commercial and economic lives?

    It’s funny how Nick just rattled off everything that unite modern Democrats against the free market. The only thing missing in that list was Big Tobacco and Russian Meddling.

      1. Yeah, you must have taken the wrong tab, all right.

        /just a little joke

  7. Yes, very good for NC and FL. But the biggest loophole of all is the US Constitution, that says all capitations have to be apportioned among the state by number of representatives. A tax on incomes is a capitation, since your receipts are your property. The exception is if you are a federal worker, or otherwise your receipts are from a federally connected privileged activity. Then they can be taxes as excise taxes, not direct taxes, whereby the tax is on the privilege, and the money earned is merely a measure of the privilege.
    Some pocket constitutions have an asterisk after the Art I clause that limits the power of the federal government to tax property directly, saying see 16 Amendment. This illustrates the confusion over the tax that is sown by the federal government in order to maximize revenue. The 16th Amendment actually affirmed the taxing clauses in ART1. It is the inability of conservatives to understand this that creates so much confusion.
    Fortunately, one libertarian does understand the law. He is the most successful Tax Honesty activist ever. Those who follow his simple and legal return procedure have gotten full refunds of state and federal withholdings, including payroll taxes, since 2003.
    Pete Hendricksen will be in Bakersfield tomorrow. Will anyone from Reason cover his appearance? http://www.losthorizons.com

    1. Has Reason ever investigated this and reported on it? I am a bit skeptical about any scheme that may be seen as fraud by the irs.

      Is this the same guy that brought us the Flying Spaghetti Monster? Him, I’d believe.

  8. The difference between a 99% income tax and a 1% income tax is nothing compared to the difference between a 1% income tax rate and a 0% rate. For the 1% rate to take place, a government needs an intrusive, engorged bureaucracy, not encumbered by old fashioned ideas such as the 4th amendment, to accurately track everyone’s income.

  9. Hmm, the Broward Supervisor of Elections is ignoring the court order about the recount of the vote, refusing to state how many ballots are left to count.

    1. Palm Beach supervisor is banning media from the public recount and is threatening to arrest reporters.

      I, uh, note that CNN does not seem concerned.

      1. Acosta will be sent, to make sure it is fair.

      2. Call their bluff, I say.

        1. Rick Scott’s eventual concession speech is going to be sweet.

          Mostly because it will be a fake-grievance-laced, unhinged, bitter, inconsequential rant.

          Carry on, clingers. Without Rick Scott, though.

  10. When Democrats control legislatures and defund right-wing pet projects to comply with the caps, the howling from yahoo precincts should be entertaining.

    It’s about time conservatives provided some worthwhile entertainment.

    (Kenny Chesney, Greg Gutfeld, and Roseanne Barr fans might not understand that one.)

  11. “But the schools!”

    No one raises taxes for the schools, but for bureaucracy, administration and sports. If anyone cared a lick about the schools the money would go directly to teachers and students.

  12. Thank you for sharing valuable information. Nice post. I enjoyed reading this post
    Agen BandarQ
    BandarQ Online

  13. I do not understand the abiding interest libertarians have with imposing austerity budgets onto citizens accustomed to well-functioning government, since it so readily and consistently boomerangs on their small-state interests.

    It wasn’t so long ago that a socialist paradise like California attempted to structurally bind itself to lower spending levels, and that ended about as catastrophically as you might expect. Why Florida wants to engage in its own demonstration of this failed experiment, what with its aging population, fascination with gun violence, and the fact that the state is sinking into the damned sea, I have no idea – but by all means, have at it.

    Just don’t expect the federal government to bail them out.

    1. [C]itizens accustomed to well-functioning government paid for with other people’s money.

      FIFY–understand now?

      1. Well, their money.

        The whole revelation that tax revenue is derived from “other people’s money” is may a cute aha! moment from one’s adolescent rebellion days, but its relevance fades as one’s understanding matures.

        Anyway, (in typical adolescent libertarian fashion) you have totally missed my point, which was that – notwithstanding the ideological rationale in imposing austerity budgets and collapsing governments, most people (who aren’t, that it is to say, stunted in their moral and political development) simply don’t want those outcomes. And so, when these kinds of structural “fixes” result in manifestly undesired results, people vote out the politicians responsible for implementing them and pursue referenda to undo them. The long-term result, then, is more government and spending, not less.

  14. I recommend that “just” in a headline, in the sense of something having just happened, be used only if the article is posted within 15 minutes of the event that it reports. After that using “just” is just fake news.

Please to post comments

Comments are closed.