2020 State Ballot Hodgepodge: Florida Minimum Wage, Illinois Income Tax Reform, California Gig Economy, and Marijuana Legalization

One of the things I enjoy most about election season is not the presidential election hullabaloo or even when you have Supreme Court justice vacancies. I personally get a kick out of the state ballot measures voted on in November. They are voluminous, they cover a wide range of topics, and they have greater impact on our lives than we can anticipate. Some of the fun ones I have covered in past years have included  single-payer healthcare, condom use in the porn industry, the right to hunt, and labels for genetically modified food. Today, I will cover minimum wage, tax reform, labor market reform, and marijuana. 

Florida Minimum Wage: Florida is looking to increase its minimum wage to $15 per hour by September 2026 (Amendment 2). The legislative branch's research arm, the Florida Office of Economic and Demographic Research (EDR) conducted a fiscal analysis of the ballot initiative. The EDR found that by 2027, it would cost the state of Florida $540 million per annum. Proponents argue that Florida needs to increase the minimum wage to account for rising costs in housing and transportation. Aside from contributing to the broader economy, the additional spending would offset the unemployment losses. 

The Congressional Budget Office (CBO) released a study on what a $15 federal minimum wage would look like. CBO found that while 1.3 million would be pulled out of poverty, the same amount of people would become unemployed. That on top of the fact that it would have a net cost of $8.1 billion. Not exactly an economic booster! Data from the last recession also found that minimum wage increases prolong recessions. Not exactly a winning policy if one of the main goals is to pull Florida out of the recession. Generally speaking, minimum wage increases such as these make it more difficult for low-skill labor to find or retain work, it is a poorly targeted policy when it comes to poverty reduction, and adversely impacts business operations. If you live in Florida, vote "No" on Amendment 2. For further analysis on Amendment 2, see the Reason Foundation's analysis here. 

Illinois "Fair" Tax: The main ballot initiative in Illinois this November is for what has been colloquially referred to as a "fair" tax. Essentially, Illinois is looking to switch its income tax from a flat tax (everyone pays the same percentage) to a graduated tax system (the richer you are, the higher percentage you pay). I covered the Illinois "fair" tax last year, but the proposed brackets are the same, so the analysis still applies. Aside from asking what constitutes as "fair when it comes to taxation, I took issue with the following:

• The tax will not close the budgeting gap.
• The tax reform does nothing to change Illinois' atrocious spending habits.
• The "fair" tax does not adequately address the issues of fairness that proponents purport.
• Illinois already has lousy tax competitiveness. Switching to a graduated tax system will simply incentivize more people to move outside of Illinois. 

Illinoisans should vote "no" on the "Illinois Allow for Graduated Income Tax Amendment." If you want more recent analysis on the ballot initiative, here is one from the Tax Foundation.

California Gig Economy: Last year, the California legislature passed Assembly Bill (AB) 5, which applied a three-factor test to determine whether a worker could be classified as an independent contractor under California law. AB 5 had considerable implications for gig workers, but especially app-based drivers (e.g., Uber, Lyft). If it passes this November, Proposition 22 would essentially reverse AB 5. I covered AB 5 last year shortly before it became law this past January. I thought AB 5 was inferior policy because a) it would cause greater unemployment, b) cost the California economy millions, c) increase costs for consumers, and d) eliminate the flexibility in hours that most app-based drivers prefer to the 9-5 work hour. 

Looking at the analysis by the California Legislative Analyst, it would create a minor boost in income tax revenue because drivers would be earning more in income. More to the point, passing Proposition 22 would "would allow the companies to charge lower fares and delivery fees. With lower prices, customers would take more rides and place more orders. This could increase the companies' profits. High profit would increase the companies' stock prices." This analysis points out that AB 5 has been hurting app-based drivers, customers, and companies that hire gig workers alike. In case you need more convincing, here are analyses from Reason Foundation and the American Action Forum. I urge Californians to vote "Yes" on Proposition 22 this November. 

Marijuana Legalization: This November, we have four states looking to legalize recreational marijuana - Arizona, Montana, New Jersey, and South Dakota. Reason Foundation provides analysis on each of these ballot initiatives. There is a reason states have been trending towards legalizing marijuana in recent years. It is because the fears and stigma surrounding marijuana have been overblown, to say the least. Colorado legalized in 2014, and it has not been anywhere near the disaster that naysayers thought it would be. Economically speaking, marijuana legalization makes sense. We're not spending millions to enforce laws (that includes policing, prosecuting, and imprisonment costs), which means we can focus on more serious crimes. There is more government revenue, which means that if government dollars can be spent, it could spent where it could do more good, instead of punishing a victimless crime. Also, we can reduce the size of the underground market. This is great not simply because it expands the legal economy, but because less commerce in the underground market gives criminals and drug lords less power. Let's continue the trend towards marijuana legalization by voting these ballots and making them the law of the land for these states.