EXTRAS ON EXCISE—ELECTION EDITION: NEW SIN TAXES COMING TO A STATE NEAR YOU!

The polls have closed and votes have been tallied; the 2016 election season is over, and the U.S. has a new president-elect. But while politicians across the nation are making their victory or concession speeches, taxpayers in several states can prepare for new or higher taxes, courtesy of state-level initiatives that were on the Nov. 8 ballot. 

Marijuana and tobacco topped the list of tax topics on the ballot this year. Nine states had initiatives on whether to legalize medical or recreational marijuana, and four states had measures regarding increasing taxes on cigarettes and tobacco. Here is a quick rundown of the results and their tax implications: 

Recreational Marijuana: 

  • Arizona Proposition 205: FAILED
    • Would have imposed a 15 percent excise tax on marijuana sales
  • California Proposition 64: PASSED
    • Levies a 15 percent excise tax on marijuana sales and a $2.75 or $9.25 tax on marijuana leaves or flowers, respectively; medical marijuana sales are exempt from sales tax beginning Nov. 9, 2016
  • Maine Question 1: TOO CLOSE TO CALL
    • Imposes a 10 percent excise tax on recreational marijuana sales; medical marijuana is exempt
  • Massachusetts Question 4: PASSED
    • Levies a 6.25 percent sales tax and additional 3.75 percent excise tax on marijuana; medical marijuana is exempt
  • Nevada Question 2: PASSED
    • Imposes a 15 percent excise tax on wholesale marijuana sales 

Medical Marijuana: 

  • Arkansas Issue 6: PASSED
    • Sales tax will apply to medical marijuana
  • Florida Amendment 2: PASSED
    • Sales tax will apply to medical marijuana
  • Montana Initiative 182: PASSED
    • No specific tax implications
  • North Dakota Measure 5: PASSED
    • No specific tax implications 

Cigarettes and Other Tobacco Products: 

  • California Proposition 56: PASSED
    • Levies a $2.00 increase per 20-pack of cigarettes; other tobacco products and e-cigarettes are subject to an equivalent increase
  • Colorado Amendment 72: FAILED
    • Would have increased the tax on cigarettes by $1.75 per-20-pack and the tax on other tobacco products by 22 percent
  • Missouri Amendment 3: FAILED
    • Would have increased the cigarette tax by $0.15 and levied a $0.67 per 20-pack of cigarettes equity assessment on manufacturers not participating the Tobacco Master Settlement Agreement
  • Missouri Proposition A: FAILED
    • Would have increased the cigarette tax by $0.23 per 20-pack of cigarettes and imposed a 5 percent additional tax on other tobacco products
  • North Dakota Measure 4: FAILED
    • Would have increased the cigarette tax by $1.76 increase per 20-pack and increased the tax on other tobacco products by 28 percent 

Other sin taxes also featured in this year’s election. 

For example, Washington voters rejected the nation’s first official carbon tax, which would have levied a $15 per metric ton tax on carbon dioxide for fiscal year 2017-2018 and increased the tax in subsequent years, along with decreasing the state’s sales tax by half a percent and slightly lowering the business and occupation tax rate on manufacturers.

Several localities considered taxes on soda, following in the footsteps of Berkeley, Calif., which enacted a tax in 2014, and Philadelphia, which enacted a tax earlier this year. Three California cities—Albany, Oakland and San Francisco—approved a $0.01 per-ounce tax on sugary-beverages; Boulder, Colo., residents voted on and approved a $0.02 soda tax. 

Sales, property and income taxes also featured in the 2016 election. Below is a list of some of the initiatives that were decided on Election Day (this list is not comprehensive of every state or local measure on the November ballot). 

  • California Proposition 55: PASSED
    • A 12-year extension of the personal income tax increase on high-income earners
  • Colorado Amendment 69: FAILED
    • Would have imposed a 10 percent “premium” tax on wage income (6.67 percent payable by employers; 3.33 percent payable by employees) to support ColoradoCare, a new statewide healthcare system; a 10 percent tax on non-wage income also would have been applied   
  • Colorado Amendment U: FAILED
    • Would have authorized a property tax exemption for possessory interests under $6,000
  • Florida Amendment 3: PASSED
    • Authorizes a homestead property tax exemption for permanently disabled first responders
  • Florida Amendment 5: PASSED
    • Revises homestead property tax exemption for low-income senior citizens
  • Louisiana Amendment 3: FAILED
    • Would have eliminated the deduction for federal income taxes paid when computing state corporate income tax
  • Louisiana Amendment 4: PASSED
    • Authorizes a homestead property exemption for surviving spouses of armed forces members and first responders
  • Maine Question 2: TOO CLOSE TO CALL
    • Levies an additional 3 percent individual income tax on high-income earners
  • Missouri Amendment 1: PASSED
    • Extends the 0.1 percent sales and use tax used for parks, soil and conservation efforts for an additional 10 years
  • Missouri Amendment 4: PASSED
    • Prohibits new state or local sales taxes on services or transactions that were not subject to tax on Jan. 1, 2015
  • Nevada Question 4: PASSED
    • Requires the legislature to enact a sales tax exemption for medical devices and equipment
  • Oklahoma SQ 779: FAILED
    • Would have levied an addition 1 percent sales and use tax to increase funding for public education
  • Oregon Measure 97: FAILED
    • Would have levied a 2.5 percent gross receipts tax on C-corporations, in addition to the state’s corporate income tax
  • Utah Amendment C: PASSED
    • Allows a property tax exemption for tangible personal property leased by state and local governments and political subdivisions
  • Virginia Question 2: PASSED
    • Allows a property tax exemption for surviving spouses of first responders killed in the line of duty 

Note: These results are accurate as of Nov. 9 at 3:30.

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: With four additional states legalizing marijuana for adult recreational use this election, will the federal government decide to tackle the issue? 

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