Gubernatorial Elections and the Message on Taxes

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While there is plenty to analyze from the elections as a whole, one of the most important lessons that we can glean from the 2014 mid-terms is on taxes. The message sent this election cycle to the nation’s governors is unmistakable. Governors who enacted bold tax reforms were reelected, even when facing daunting odds. Many governors who raised taxes, or even showed support for increased taxes, were ousted by voters.

Perhaps the most dramatic demonstration of this point was the reelection of Governor Sam Brownback in Kansas. In 2012, Governor Brownback signed significant tax cuts into law that were aimed at decreasing the overall tax burden on Kansas residents and especially jumpstarting small business. The main planks of the tax plan included the following:

  • Simplified personal income taxes from a three-tiered system to a two-tiered system
  • Reduced the top tax rate (on income over $15,000) from 6.25 percent to 4.8 percent
  • Reduced the tax rate on income below $15,000 from 3.5 percent to 2.7 percent
  • Exempted non-wage personal income from taxation entirely; effectively eliminating income taxes for pass-through businesses

Despite a massive misinformation campaign about the supposed “destructive” nature of the Kansas tax cuts, voters were clear on what they wanted: less taxes and more economic growth.

Other governors that pursued significant tax cuts were also reelected. Governor Paul LePaige of Maine, Governor Rick Snyder of Michigan and Governor John Kasich of Ohio all won their bids for reelection. Governor Scott Walker of Wisconsin cut taxes several years in row and won his third statewide election in the state.

Arizona voters sent State Treasurer and businessman Doug Ducey to the governor’s mansion by a margin of more than 12 percent. Ducey had campaigned on cutting the states personal and corporate income taxes and even saying that he wanted to get the state’s 4.54 percent income tax rate “as close to zero as possible.” The Arizona economy was a central part of his campaign and voters decisively approved of his low tax message.

Nevada voters soundly defeated a ballot measure to implement a 2 percent margin tax on all business revenue by voting it down with nearly 80 percent voting against and only 20 percent voting in favor. Governor Sandoval, who was quoted as saying that the margin tax would be a “fatal blow” to Nevada’s economy, was reelected with more than 70 percent of the vote.

In North Carolina, …read more    

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