Voters reject California tax hike; other initiatives affect retailers

California voters said no to Proposition 15, a measure that would have led to higher taxes on commercial and industrial property. By a narrow margin, furniture retailers were spared a large increase in the cost of doing business.

Proposition 15 was just one ballot initiative with real or potential impacts on Home Furnishings Association members. They ranged from marijuana legalization to tax hikes. Here’s a roundup:

Arizona

Voters said yes to Proposition 207, which legalizes the recreational use of marijuana by adults 21 and older. Employers will retain the right to maintain a drug-free workplace. That leaves questions for employers about pre-employment testing and other screening measures, especially for jobs – warehouse and delivery, for example – where safety is a concern.

Proposition 208 also was approved. It adds an income-tax surcharge on incomes of $250,000 or greater for individuals and $500,000 or greater for married couples. But many small businesses will be affected, too.

Arkansas

Voters decided to continue a sales tax to fund highways and bridges.

Business groups opposed Proposition 15

California

Proposition 15 would have changed how commercial and industrial properties are valued for tax purposes. Retail stores, offices, warehouses and production facilities would have been assessed according to current value rather than purchase price with a limited allowance for growth. The HFA sent alerts about Proposition to all its members in California warning about the impact. Following opposition from a broad coalition of business groups, a slim majority of voters said no.

[HFA alerts California members to tax threat]

Proposition 24, the California Privacy Rights Act, was approved. While it expands protections under the California Consumer Privacy Act, it “makes one notable change that will benefit smaller businesses,” law firm Clark Hill PLC reports. “A business falls under the purview of the CPRA if it buys, sells, or shares the personal information of 100,000 or more California consumers or households. This is double the previous threshold.” This should exclude furniture retailers.

Colorado

Colorado voters were busy Nov. 3. They approved Proposition 116, which cut the state’s flat income-tax rate from 4.63 percent to 4.55 percent.

They said yes to Proposition 118, a paid family and medical leave program. It will grant up to 12 weeks of paid leave for qualifying reasons, funded by a payrolls tax split evenly between employers and employees. It will take effect in 2023.

They also agreed to Amendment B, a complicated proposal that erases the long-standing Gallagher Amendment. That measure tilted the share of property taxes paid from residences to businesses, so the impact of its repeal could be favorable for furniture retailers.

Meanwhile, voters in Denver approved two separate citywide sales-tax increases.

Higher minimum wage approved in Florida

Florida

The statewide minimum wage will increase gradually from $8.56 per hour to $15 by 2026, voters directed. The first jump will be to $10 per hour next September.

Illinois

Voters said no to a proposal that would have shifted the state from a flat income tax to a graduated income tax. Small businesses may have paid less but larger businesses more.

Marijuana legalization is popular

Mississippi

Voters said yes to allow the use of marijuana to treat more than 20 specified medical conditions.

Montana

Voters took two steps to allow recreational use of marijuana for individuals 21 and older. One directs legislators to approve legalization. The second enshrines that action in the state constitution.

New Jersey

Voters approved recreational marijuana use through a state constitutional amendment.

North Carolina

Voters in Guilford County, which includes High Point and Greensboro, rejected a sales-tax increase. It would have impacted furniture retailers as well as furniture market vendors and visitors.

South Dakota

Voters agreed to amend the state constitution to allow recreational marijuana use.

Voters raise taxes for transportation

Texas

Austin voters endorsed a hefty property tax increase to pay for a $7 billion “Project Connect” transportation plan.

Washington

Seattle voters approved a local sales-tax increase to fund public transportation.

In an advisory vote peculiar to Washington, state voters indicated they would repeal an increase in Business and Occupation tax rates enacted earlier this year. The vote carries no weight of law but could inform legislators to re-examine the measure.

Furniture retailers should participate in public policy debates at the state and local level so they have a chance to influence measures that affect their business.

[HFA webinar: The 2020 election and the impact on your business]

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