The Week in Public Finance: Do Supermajorities Really Stop Tax Hikes?

Republican lawmakers in Florida want voters to approve a ballot measure that theoretically would make it harder to raise taxes. But it's debatable whether supermajority requirements actually do.
BY  JULY 20, 2018
A November ballot initiative would require the Florida legislature to have a supermajority to raise taxes. (TNS/Joe Burbank)

In an effort to protect conservative tax policy, Florida lawmakers are hoping to make their state the 15th with a supermajority requirement to raise taxes.

The push has drawn national attention because it comes as some are predicting a wave of Democratic victories this fall that could pull state policy more to the left. Opponents of the proposed Florida constitutional amendment -- which would require 60 percent voter approval to pass -- say Republican lawmakers put this on the November ballot to “stack the deck” against any Democrats taking office after them.

“It’s very clear that they’re getting ready for when they’re out of power,” Tallahassee Mayor Andrew Gillum, a Democrat, told The Washington Post. Gillum is running for governor on a platform of enacting "Medicare for All" and putting an additional $1 billion into education -- promises that would likely take tax increases to keep. “Everything we have proposed hinges on our ability to defeat this.”

So far, public support for the amendment is unclear and no polling has been published. Although Florida voters have a history of approving limits on legislators' taxing authority, the last such vote was more than two decades ago.

A total of 14 states impose some kind of supermajority requirement -- two-thirds, three-fourths or three-fifths of the legislature -- to raise taxes and revenue. But while supermajority requirements can be daunting for minority parties, there’s no evidence that they substantially change a state's tax policy one way or the other.

The prevailing argument for supermajorities is that they keep taxes low. The evidence doesn’t necessarily bear that out. California, for instance, has a supermajority requirement and has some of the highest income tax rates in the country.

What's more, research from the progressive-leaning Center on Budget and Policy Priorities (CBPP) has found no long-term average difference in tax rates between states with supermajority requirements and states with no such requirements.

Some research, though, has suggested that supermajority requirements can have unintended consequences. A study from the Mercatus Center at George Mason University warns that supermajority rules for tax increases “may lead to coalition building that actually increases pork-barrel spending in order to entice legislators to support a tax increase.”

The conservative-leaning Tax Foundation’s Joseph Henchman isn't surprised that research shows supermajorities have little effect. “If you have a state that’s reliably conservative, they’re not going to go wild on spending [in the first place],” he says. “I think [the supermajority requirement] is more of a protection that’s built in.”

But Michael Leachman, senior director of CBPP’s state fiscal research, disagrees. He thinks the requirements have a devastating impact.

Take Oklahoma, he says, which has a three-fourths approval requirement in its House and Senate for tax hikes. It has massively cut education funding over the past decade and -- until recently -- has failed time and again to pass tax increases that would restore that funding. Those cuts have forced a teacher shortage and some school districts to move to four-day weeks to save money. After teachers went on a statewide strike earlier this year, the Oklahoma Legislature, for the first time in 28 years, passed a tax hike to guarantee teacher raises and boost funds for schools. Funding still hasn't recovered from the recession, however, and educators have already said they plan to push for more progress next year.

To Leachman, Oklahoma is an example of the extreme conditions the supermajority requirement creates. “Getting there just took an enormous effort from a lot of people and you can’t expect the legislature to operate that way year in and year out,” he says. “They should be able to look at what [the] state needs and spend appropriately without having to meet this bar.”

Supermajority restrictions, Leachman adds, can negatively affect bond ratings because rating agencies tend not to like anything that hamstrings a government’s ability to raise taxes when needed.

But Henchman doubts that supermajority rules really limit lawmakers more than their state’s ideology and political climate. “If it’s a result, it’s an indirect one,” he says of Oklahoma’s struggle to fund education. “Oil prices went down," and because the state's economy and budget depends so heavily on oil revenue, "people were demanding more in services than they were willing to tax themselves.”

To read this regularly, subscribe to "The Week in Public Finance"newsletter for free.