On the Ballot in the States

Ray Keating

Voters will not just be choosing which party controls Congress, governor seats and state legislatures on November 2, but they'll also be voting directly on issues presented as ballot measures that directly impact small business.

These ballot questions touch on a wide range of political, social and economic issues. Many are important to the small business community and the overall economy. Consider the following sample:

-Arguably, the biggest issue to affect entrepreneurs, small business, investors and a state's competitiveness and economy is ballot initiative 1098 in the state of Washington. The measure calls for imposing an income tax in the state, with a 5% rate on incomes over $200,000 and 9% on income over $500,000.

It is important to understand that Washington's economy benefits tremendously from the lack of any income taxes. For example, on the most recent editions of SBE Council's "Small Business Survival Index" and "Business Tax Index," Washington ranked fifth best on each. That was overwhelmingly due to the fact that the state imposes no personal or corporate income taxes.

If voters approve this measure, Washington will move from one of the most attractive places in the nation to start up and build a business, and create jobs to one of the more costly states.

-Colorado has a ballot measure that would go in the opposite direction than Washington's proposal. Proposition 101, if approved, would phase down the state's income tax rate from 4.63% to 3.5%, while also reducing or eliminating various vehicle fees and eliminating assorted telecommunications taxes.

These tax reductions would be plusses for those who live, work, invest and run a business in the state.

-California has three measures on the ballot worth noting. One question, if approved, would be a clear negative - should the legislative vote threshold for passing a budget be reduced from two-thirds to a simple majority? This would make it far easier to pass budgets that jack up spending and taxes to levels even worse than the state is already suffering under.

A second question, if approved, would be a positive for businesses as new fees and charges would need a two-thirds legislative vote to pass. This would serve as extra protection against fees and charges that raise costs for entrepreneurs and businesses.

Third, California voters will get a chance to put off the implementation of a costly emissions cap-and-trade regulatory scheme until unemployment drops to 5.5 percent or less for four consecutive quarters. Approving this measure would go a long way in stopping the loss of jobs in California.

-A ballot question in Massachusetts, if approved, would reduce the state's general sales tax rate from 6.25% to 3%. Consumers and retailers certainly would a get a much-needed boost if this were passed.

-The push by labor unions for a federal "card check" law (i.e., union representation could be achieved by a majority of workers signing a pro-union card, as opposed to a traditional secret ballot which protects individuals from coercion, intimidation and retaliation) has been pushed to the back burner ... at least for now. In addition, voters in four states - Arizona, South Carolina, South Dakota and Utah - will have the opportunity to stop "card check" legislation in their respective states.

The Wall Street Journal recently pointed out: "The four ‘save our secret ballot' initiatives on the November ballot, as they are called, would provide constitutional protection for secret ballot elections before a union is certified... These measures have the added benefit of helping to keep businesses and jobs in these states. Private employment grew 3.7% in states with right-to-work laws in the last decade compared to a decline of 2.8% in states that have more favorable organizing laws, according to data from the National Right to Work Foundation."

-Finally, it is worth noting that voters in Arizona and Oklahoma will have the opportunity to vote to block ObamaCare mandates on having health insurance. These will serve as interesting tests. Meanwhile, Amendment 63 in Colorado, while not addressing ObamaCare, would prohibit the state from forcing anyone to participate in health coverage plans, or from stopping anyone from making or receiving direct payments for health care services.

ObamaCare and other government coverage/participation mandates raise costs for individuals, including the self-employed, and allow the government to supplant private decisions and dictate, in the end, what coverage is appropriate and what is not.

So, the big action on November 2 is not simply limited to who gets elected, but what kinds of policies voters across the nation approve and disapprove.

Raymond J. Keating, chief economist for Small Business & Entrepreneurship Council.
Copyright 2010, Small Business & Entrepreneurship Council. All Rights Reserved.

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