Come January, the Democrats will be in control of the House and likely the Senate for the first time in over a decade. What will that mean for taxes?
First, forget estate tax reform. I can’t see it passing, unless it’s something like a $2 million exemption with 45% rates above that. Second, forget any other major changes in the Tax Code. The Democrats have said they’d like to see new programs (that cost money), but unless tax revenues increase, those aren’t likely to happen. I see two years of gridlock, which isn’t necessarily bad.
On the state level, Californians rejected all of the direct tax increase initiatives: Propositions 85 – 90 all failed. Notably, Proposition 88, which had a title that included the word “tax” failed by the largest percentage: 76.9% voted against it. The bond measures, Propositions 1A-1E and 84, did pass (though Proposition 84 might not be implemented as Proposition 1E passed with a larger percentage). We’ll be paying for those for the next 30 years.
On the local level, Measure M’s renewal passed, with 68.5% voting for it (a 2/3 yes vote was required), so sales taxes in Orange County will be 7.75% for the next 33 years.