Politics & Policy

The 2014 Tax Revolt

Tax Cutters Triumphant (from left): Larry Hogan, Bruce Rauner, and Charlie Baker
The voters spoke loud and clear on taxes.

As they whistle past the post-election graveyard, Democrats have found a new tune: Voters may have rejected their candidates for everything from U.S. Senate to dogcatcher, but they really still agree with them on the issues.

Of course this clearly isn’t true when it comes to Obamacare, which just dropped to its lowest approval ever in the most recent Gallup poll. And as we examine the election results in more detail, it’s apparent that voters don’t much like other liberal ideas — like tax hikes — either.

Kansas is exhibit A. Democrats and much of the media were convinced that Republican governor Sam Brownback’s decision to slash state taxes would doom him. Brownback cut the personal-income-tax rate by more than a third, from 6.45 to 3.9 percent, and Kansas became the first state ever to completely eliminate taxes on pass-through income (income earned by individual business proprietors). The papers were full of stories suggesting that Brownback was “an object lesson in the limits of conservative governance,” according to the Washington Post. “Tax Cuts on Trial in Governors’ Races,” echoed a headline in the New York Times. The Fiscal Times warned “Brownback Feeling Big Backlash to Tax Cuts in Kansas.”

But when the smoke cleared, Brownback was reelected.

So were other tax-cutting Republican governors. Obviously taxes were far from the only issue in these races. Still, it is interesting that of the two Republican governors who lost reelection, the most prominent — Tom Corbett in Pennsylvania — was one of the few who raised taxes.

Taxes were a big issue in blue states, as well. In fact, they may have been the biggest reason that some normally solid-blue states turned red. In Massachusetts, for instance, Democratic candidate Martha Coakley said she wanted to explore ways to replace the state’s flat 5.2 percent income tax with a graduated one. She also opposed an initiative on the ballot that would repeal automatic indexation of the state’s gas tax. While Coakley left the door open to additional tax hikes in the future, her opponent, Charlie Baker, ran on a firm “no new taxes” platform. No doubt Coakley was a poor candidate all around, but this was still Massachusetts, the home of Michael Dukakis, Ted Kennedy, and John Kerry. That Baker will be the next governor shows that the power of taxes as an issue has not gone away.

In Maryland, too, taxes helped flip a deep-blue state. The Democratic candidate, Lieutenant Governor Anthony Brown, was closely tied to Maryland governor — and wannabe presidential candidate — Martin O’Malley, who had raised the state’s taxes by more than $9.5 billion since he took office. Republican Larry Hogan was outspent by roughly five to one, but hammered home relentlessly a message of rolling back taxes and reducing state spending. He won in a state where Democrats outnumber Republicans by two to one.

And, in President Obama’s home state of Illinois, incumbent Democratic governor Pat Quinn campaigned in favor of making a temporary 2011 income-tax hike permanent. He lost to Bruce Rauner, who promised to phase both individual and corporate taxes back down to 2011 levels.

Voter opposition to taxes was even more obvious when they had the opportunity to speak directly to the issue.

In several states, voters turned down proposals to hike taxes, even when tied to popular initiatives such as education or transportation. In Missouri, for instance, voters overwhelmingly turned down a sales-tax increase that would have funded a number of transportation projects. And, in Nevada, voters turned down measures that would have removed a cap on the state’s mining tax and imposed a 2 percent tax on gross receipts for businesses with revenue over $1 million. And, of course, voters in Massachusetts approved that ballot measure eliminating the inflation adjustment on the gas tax.

When they weren’t turning down proposed tax increases, voters were making sure that there would be fewer such proposed hikes in the future. For example, voters in Georgia put in place a cap on the state’s income tax. That measure passed by a three-to-one margin. Meanwhile, in Tennessee, voters prohibited the legislature from levying any taxes on payroll or earned personal income. In North Dakota, voters banned taxes on mortgages and real-property transfers. And Michigan voters approved a complex measure that eliminated the personal property tax, while also devolving a portion of revenues from the state’s “use tax” (similar to a sales tax but levied on things not subject to sales tax) to local governments.

Are we detecting a trend?

American voters are clearly fed up with a government that demands ever more and more of their money. A middle-income family today in a state with high taxes faces a total tax burden of more than $10,000, nearly a quarter of its income. Is it any wonder that voters have — yet again — told us that enough is enough?

The voters have spoken. The question is: Is anyone listening?

— Michael Tanner is a senior fellow at the Cato Institute and the author of Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution.

Michael TannerMr. Tanner is the director of the Cato Institute’s Project on Poverty and Inequality in California and the author of The Inclusive Economy: How to Bring Wealth to America’s Poor.


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