Election Day May Be About Taxes

The election of our next President quickly approaches. The ads, debate, and polls fill every media outlet. However, a bigger theme maybe brewing on state election ballots--tax reform.

States Voting on Taxes

Voters in many States will have an opportunity to significantly change their tax burden on November 4. Although all of the anticipated issues have not received final approval, Kristina Rasmussen, of the National Taxpayers Union, projects at least 60 ballot measures are expected to greet voters at the polls.

A major tax initiative to eradicate state income taxes entirely faces Massachusetts voters. Long held to be a liberal bastion of tax and spend, a sluggish economy may bring the ultimate tax cut.

Meanwhile, Oregon voters may have the choice to vote on an unlimited Federal income tax credit on their state returns.

Nevada voters are hoping to cap property tax increases on homes that are most likely rapidly declining in value.

Several other states have similar ballot initiatives that will reduce personal tax contributions. The natural question is what does this do to government programs, services, and employment rolls.

There is certain to be a secondary effect. Taxpayers, increasingly focused on their own household financial woes, probably don't care.

Tough Economic Times

The recent and rapid economic slowdown is certainly beginning to spook people. Along side the personal impact of the mortgage meltdown, taxpayers are more focused than ever on their own household. Tougher economic times are certain to send voters rushing to pull the lever for tax relief.

However, it seems that most of the economic recovery solutions being offered are dependent on these tax revenues. Potentially a major disconnect.

Again, voters are looking at their own shrinking account balances for answers to financial challenges. Perhaps state governments should begin to anticipate doing the same.

Backlash on Government Spending

Taxpayers may also be responding, in backlash, against these government "bailout" solutions. Solutions that taxpayers are clearly aware ultimately fall on their backs.

Yesterday the FDIC management of the failed IndyMac Bank announced plans to begin loan modifications on numerous delinquent and foreclosure destine mortgages. In loud contrast to expectations the response was more of taxpayer disgust than praise for benevolence.

This sentiment may be the prevailing tone for the November 4th elections.

Write Bill Rice at bill.rice@mortgageloan.com