Rubio-Lee Tax Reform Plan: What Pro-Growth Looks Like in the 21st Century

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Posted by John Kartch on Wednesday, March 4th, 2015, 9:53 AM PERMALINK


Senators Marco Rubio (R-Fla.) and Mike Lee (R-Utah) have introduced a tax reform plan which aims to be simultaneously pro-growth, pro-family, and much more simple than the current tax mess.  Here are the major components:

Business tax rate of 25 percent.  The corporate income tax rate is reduced from 35 to 25 percent.  The top income tax rate for “pass through” or “flow through” firms like Subchapter-S corporations, partnerships, LLCs and sole proprietorships would fall from 39.6 percent to 25 percent.  All businesses face the same income tax rate.

Zero percent tax rate on capital gains, dividends, and interest.  The plan reduces the regular tax rate on capital gains and dividends from 20 percent today to 0 percent.  Interest would also face a 0 percent tax rate (though interest is no longer deductible for businesses), meaning that all savings—even in taxable brokerage accounts and deposit accounts—would benefit from tax free growth.  All savings would work much like Roth IRAs do today.

Top personal rate cut to pre-Obama levels.  The top personal income tax rate would be reduced from 39.6 percent to 35 percent.  Exceptions obviously apply for business income (25 percent) and savings income (0 percent).
Simple two-bracket tax system.  The first $150,000 of taxable income for married couples (half this for singles) would face tax at a 15 percent rate.  All income earned above these levels face tax at a 35 percent rate.  But see the business/investment exception rates above.

Full business expensing.  All business capital investments—including equipment, building, inventories, and land—would be immediately and fully deductible from taxable income.  This would replace our current slow, multi-year deduction regime known as “depreciation.”  All investments are deducted the year the cash is actually spent.

Moving from worldwide to territorial taxation.  Any money repatriated from overseas (where it has already faced local taxation) would see no additional tax from the IRS.  To help finance this, a special 6 percent one-time tax (paid over a decade) is assessed on current overseas profits.

Pro-family tax reforms.  Creates a new $2500 child tax credit (on top of the current $1000 one) creditable to both income tax and payroll tax liability.  No more marriage penalty.

Simplicity.  Two brackets for individuals. The AMT is repealed.  The standard deduction is repealed and replaced by a $4000 tax credit for couples (half that for singles).  Only mortgage interest and charitable contribution deductions remain (these can be taken in addition to the personal credit).  Most returns would be postcard-sized.

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It's Raining Taxes in Maryland

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Posted by Dorothy Jetter on Tuesday, March 3rd, 2015, 4:19 PM PERMALINK


In Maryland, the government has decided to tax residents for the privilege of having rain fall on their property.  For the past 5 years, Maryland has taxed residents for simply having a roof over their heads.  In order to comply with EPA regulations, the Maryland State legislature has implemented a "rain tax."  According to Forbes,

"This tax is an annual fee on impervious surfaces such as roofs, driveways, sidewalks, garages, and any other surface that could create drainage problems and water contamination situated on property owned by an individual or a business."

Because of the nature of this regulation, it only affects nine counties and the city of Baltimore; making them responsible for paying the fee.  Along with being intrusive and frivolous, the "rain tax" is implemented differently in each county.  This makes it difficult for Marylanders to correctly follow the law.  For example,  Charles County levies a flat fee of $43 per property, while Montgomery County has fee rates ranging from $29.17 to $265.20 depending on size of impervious surfaces.  

As previously stated, the rain tax has been implemented in order to comply with an EPA regulation, a $7.7 billion project mandated by the federal government.  This leaves the people of Maryland paying into a fund for something they did not even vote for.  

There is hope for tax payers in the Bay State.  Governor Hogan announced a plan earlier this month to repeal the rain tax.  Because the mandate falls under federal jurisdiction, even if the rain tax is repealed, the Maryland legislature would have to find an alternative way to fund the EPA's nanny state regulation.  

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Megan Ann

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Lickylick

What the hell is wrong with the brains of politicians? Once upon a time they understood that they must follow the constitution, to serve the people's best interests following the common law rule of law. Today law schools don't even teach them the law, they teach them to negotiate contracts and to postpone hearing dates indefinitely, and how to lie about everything in order to benefit their private association at any cost so long as those costs are paid by others. That is what is wrong with them. Remember that the next time you listen to one say anything. I promise you they will be lying in part or in whole. There will be no honesty or whole truth found.


Alabama Governor Unveils $541 Million Tax Hike

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Posted by Will Upton on Tuesday, March 3rd, 2015, 2:30 PM PERMALINK


Robert Bentley, entering his second term as Alabama’s governor, has announced a proposal that would increase taxes by $541 million in an effort to plug what he says is a $700 million budget shortfall. Bentley’s move for higher taxes clearly violates his written promise to Alabama taxpayers to: “…oppose any and all efforts to increase taxes” — a promise he was more than happy to campaign on for re-election

Gov. Bentley’s proposal would increase taxes on cigarettes in Alabama by 82.5-cents per pack — estimated to generate $205 million. Additionally, the plan would double the sales tax on automobiles, from 2 to 4 percent, generating roughly $200 million. The $136 million remaining in tax hikes, according to AL.com, includes $47 million from ending the municipal exemption for the public utilities license tax, increasing the rental-car tax from 1.5 percent to 4 percent, an insurance premium tax, and requiring “… combined income reporting for corporations that do business in other states.” 

Relying on cigarette taxes — often a declining source of revenue as more and more Americans either reduce how much they smoke or quit — seems like a foolish way to plug Alabama’s revenue shortfall. The Washington Policy Center’s John Barnes detailed the disastrous decision in Washington state of relying on cigarette taxes to fund a 12% increase in state spending: “But actual collections under I-773 have been $2.5 million less than expected. Cigarette sales decline about 1% or 2% each year. Raising the tax pushes consumers to seek cigarettes out of state or from Indian reservations, or it cuts how much they buy. The state Department of Revenue estimated $220 million in lost revenue in 2003 due to people buying cigarettes via semi-illicit or downright illegal means.” In addition to people quitting or reducing their consumption of cigarettes, higher prices means an increase in smuggling. 

The Tax Foundation has uncovered that nearly 60 percent of the cigarette market in New York is comprised of smuggled cigarettes — New York also happens to have the highest cigarette tax in the nation. The Tax Foundation study reveals that Alabama does not currently have a severe smuggling problem but with low cigarette tax states like Georgia, South Carolina, and Tennessee well within driving distance, higher prices could cause a spike in smuggling activity in Alabama. 

Cliff Sims, writing at Yellowhammer News, has raised concerns about the declining consumption of cigarettes and what that means for the Alabama budget as well: 

And outside of the obvious fairness issue, those who think a hike on cigarette taxes could be a longterm cure for Alabama’s budget woes should also consider the precipitous decline in cigarette sales over the years.

As a result of the tax hikes, laws banning smoking, aggressive anti-smoking ad campaigns and polling that indicates Americans no longer consider smoking “normal behavior,” the U.S. Surgeon General published a 980-page report last year actually predicting an eventual end to smoking in the United States.

 …Alabama hit its peak in 1979, when there were 123 packs of cigarettes sold       for every person living in the state. By 2012, Alabama’s yearly cigarette sales       per capita had plummeted to 67.

While the governor has claimed that he wants people to pay their fair share, the two largest components of his tax plan are targeted tax increases on two consumer markets — one that is a declining source of revenue and the other, automobiles, is a captured market that people have little ability to avoid (for every 1,000 people, there are 1030 cars in Alabama.)

Couple the cigarette and automobile tax increases with a slew of other discriminatory and volatile (the proposed rental-car tax to name one) tax increases in the governor’s plan and it becomes apparent that Bentley is less concerned with governing than with attacking industries and products he finds to be politically expedient. This is not the way in which Alabama should tackle its budget issues. The fact is, between 2000 and 2009, state spending in Alabama has exceeded the rate of inflation and population growth by just over $20 billion. There is room for spending restraint. A long term plan to reduce the state’s out-of-control spending would go a long way to solve the current budget mess and ensure predictable and sound budgets in the future. 

Help Americans for Tax Reform stop Gov. Bentley’s tax hike. Call Gov. Bentley’s office at (334) 242-7100 or click here to email and tell him stand by his promise to Alabama taxpayers to oppose any and all efforts to increase taxes.

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Obamacare CEO: Website Will Not Be Finished until Obama Leaves Office

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Posted by Alexander Hendrie on Wednesday, February 25th, 2015, 4:25 PM PERMALINK


The Obama Administration’s Healthcare.gov back-end will not be completed until after the President leaves office, according to comments made by the website’s CEO yesterday. Despite starting construction on the website back in 2011 and pouring billions into the project, key structural problems remain. As Politico reported yesterday:

The ‘back end’ of the Obamacare website still isn’t properly wired to the health insurance companies. It’s slow going for health plans to make sure the 11.4 million people who have signed up end up in the right plan.”

Taxpayers should be alarmed that so much work remains to be a done on a website that was supposed to have been completed by November 2013. The exchange is closing in on the end of its second enrollment period, and yet the website remains unfinished. 

In fact, as of May 2014, the administration had spent almost $2.7 billion on the construction of Healthcare.gov alone. When federal subsidies for state-run exchanges are factored in, the federal government has spent almost $7.4 billion on construction of Obamacare websites for the 50 states and the District of Columbia.

Despite this spending spree, key features of the website remain uncompleted, and taxpayers that have signed up for Obamacare will have difficulty navigating the website to ensure they comply with the laws many complex regulations. As the Politico article states:

“Subsidy payments aren’t automated, so the insurers get payments based on estimates. And adding information like a marriage or the birth of a child is a convoluted, multi-step process. … Instead of a swift process, health plans use clunky workarounds and manual spreadsheets. It takes time and it costs money.”

As if on cue, it was revealed last week that 800,000 individuals received the wrong tax information through healthcare.gov due to an “erroneous glitch”. As ATR’s Ryan Ellis noted, these 800,000 families are “literally caught in limbo until healthcare.gov gets its act together.” If the latest reports are any indication, taxpayers may be waiting a long time.  
 

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philips66

The whole Administration wouldn't last a month in the private sector. Imagine going to your boss and saying 'hey you know that important project we've been working on for 5 years? Yeah that one, well the website will be ready in a couple more years,'

kimhil

Billions of people now get health "care" - how many people are forced into a scheme that delivers little positively, and lots negatively - how many have lost good health care for mediocre, lost their health care provider, and as always, with gov. control, pay more for less - all in the false name of "leveling the playing field" - next net neturality, and amnesty for illegals - will we ever learn? The one Republican on the net neutrality lie board/Ajit Pai is thoroughly vilified by the left - people need to learn, and fight for their freedoms because they are loosing them through executive fiat - which now is over-reach, corrupt manipulative activity by the executive branch ruled by thieves. Some people are fine with eating the crumbs from the progressive plate, but this does -not have to be the new (pathetic) normal.


Americans for Tax Reform Responds to Ohio Gov. Kasich’s Income Tax Plan

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Posted by Will Upton on Wednesday, February 25th, 2015, 12:31 PM PERMALINK


Grover Norquist, president of Americans for Tax Reform has released the following statement in response to Gov. John Kasich’s income tax cut plan in Ohio:

In last night’s State of the State Address, Governor Kasich unveiled a plan to lower income tax rates for Ohioans by $2 billion. While this is a laudable goal, the proposal also contains nearly $1.5 billion in tax hikes – primarily on job creators.

The recent drop in energy prices has already triggered layoffs in some Ohio steel plants as the demand for pipeline manufacturing has declined. Increasing taxes on Ohio’s energy producers and small businesses could lead to more layoffs and set Ohio back in its economic recovery.  

Additionally, the proposed increase on tobacco products leaves open the door to future income tax hikes as tobacco has proven consistently to be a declining source of revenue. And increasing taxes on e-cigarettes and vapor products, devices many people use to quit smoking and improve their health, is counter-productive to the goal of a healthier Ohio.

Between the year 2000 and 2009, Ohio’s spending exceeded the rate of inflation and population growth by $73.6 billion. There is room to cut in the state budget. The legislature would better serve Ohio taxpayers by reducing state spending and reducing income taxes rather than cutting taxes on the backs of job creators.

Gov. Kasich’s plan to reduce state income taxes is a step in the right the direction for Ohio taxpayers, but doing so on the backs of job creators leaves the plan less than inspiring. 

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JD

The real "job creators" are when more people can afford to buy stuff Grover, Why do you insist that giving more and more to the rich really helps our country? Also you and your party say "job creators" like it's some sort of threat..,and it's become very typical of you.


Most Keystone Pipeline Oil Would Be Consumed in US

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Posted by Cassandra Carroll on Tuesday, February 24th, 2015, 4:22 PM PERMALINK


A new report by IHS finds that about 70% of oil from the Keystone Pipeline would remain in the US, in contrast with the left's perpetuated misunderstanding that most Keystone XL crude oil would be exported. In fact, it is currently illegal for the American companies to export crude oil, thanks to an arcane law. The report also highlights the impact of greenhouse gas from processing oil imported through the pipeline would be negligible, as the imported oil would be taking the place of, rather than being added to other imported crude oil with similar carbon intensity, such as from Venezuela. Overall, the report shows yet more solid evidence that the Keystone XL pipeline would be a net benefit to the US in terms of jobs, low environmental impact, and reduced dependency on foreign oil.

But no good thing is without its detractors: Senator Ed Markey (D-Mass) makes unambiguous claims that he believes most, if not all Keystone oil would be exported as part of an “Oil Industry Export Plan”. In a press release, Markey states:

“The Canadian Keystone export pipeline isn’t about helping Americans at the gas pump, it’s about pumping up profits for oil companies. This export pipeline would make the United States a middleman to ship Canadian oil to the thirstiest foreign markets abroad, where they can charge more for their oil while our country assumes all the environmental risk.”

Unfortunately for Markey, if you take advantage of widespread public misconceptions, you often find yourself eating crow. 

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Travis

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Beer Tax Relief on Tap in Congress & State Capitals

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Posted by Patrick M. Gleason on Tuesday, February 24th, 2015, 12:51 PM PERMALINK


Nearly half of the cost of beer, over 40 percent, is the result of taxes. The federal and all 50 state governments assess targeted taxes on beer, which is borne by consumers in the form of higher prices. Fortunately, two bills were introduced last month in Congress to provide some needed relief: The Small BREW Act & The Fair BEER Act. 

For those who don't think the tax code should be used to pick winners and losers, the Fair BEER Act is the better of the two bills, as it reduces taxes for all breweries, while the Small BREW Act only applies to some breweries. Scroll down to read a recent column in Reuters by ATR's Grover Norquist and Patrick Gleason that explains the differences between these two bills, along with similar efforts to reduce beer taxes at the state level: 

REUTERS

Title: The most expensive ingredient in beer? It’s not hops, it’s taxes.

By: Grover G. Norquist & Patrick Gleason

Whether you like craft beer brewed in small batches or the mass-produced variety, the most costly ingredient that goes into every pint of beer in the United States is taxes. Between federal, state and local levies, taxes make up, on average, more than 40 percent of the cost of beer purchased in the United States. In an effort to reduce the excessive tax bite, two competing bills have been proposed this month on Capitol Hill, along with legislation at the state level.

One of the proposed bills, the Small BREW Act, would, if passed, provide targeted federal excise-tax cuts for beer made by domestic brewers, with tax relief based on volume. This bipartisan bill would change the definition of a small brewer.

The federal government now levies a $7 tax on each of the first 60,000 barrels produced by small brewers. After that, the tax spikes to $18 a barrel. Businesses not defined as small brewers — those that produce more than 2 million barrels annually — must pay the $18 federal tax on every barrel they make.

The proposed bill, however, would halve the tax for small brewers on the first 60,000 barrels to $3.50 a barrel and redefine a small brewer as a business producing fewer than 6 million barrels a year, as opposed to the current 2-million barrel standard.

Senators Ben Cardin (D-Md.) and Susan Collins (R-Maine) introduced this bill. It has 25 Senate sponsors from both parties.

A competing bill, the Fair BEER Act, would provide federal tax relief for brewers of all sizes that are headquartered both domestically and abroad. Brewers producing 7,143 barrels or less a year, which represents 90 percent of brewers — would be exempt from paying federal beer excise taxes.

Brewers who produce between 7,144 and 60,000 barrels would face a $3.50 a barrel excise tax. Production in excess of 60,000 and up to 2 million barrels would face a $16-a-barrel tax. An $18-a-barrel tax would apply to production beyond 2 million barrels.

This bill, introduced by Representatives Steve Womack (R-Ark.) and Ron Kind (D-Wis.) has 23 co-sponsors.

But not just lawmakers on Capitol Hill are looking to provide tax relief for beer drinkers. State legislators seek to reduce the excessive tax burden on suds. In addition to the federal excise tax, all 50 states apply punitive taxes on beer. Tennessee, for example, levies the highest excise tax on beer at $1.17 a gallon. Alaska comes in second, with a rate of $1.07 a gallon. Wyoming has the lowest beer excise tax, at $0.02 a gallon. Wisconsin and Missouri have the next lowest, at $0.06 a gallon.

CLICK HERE to read the rest of the column

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Surprise: Poorest Obamacare Enrollees Face $530 IRS Tax Bill

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Posted by Ryan Ellis on Tuesday, February 24th, 2015, 10:56 AM PERMALINK


The majority (52 percent) of Obamacare enrollees receiving an advance premium tax credit to purchase Obamacare insurance is facing the prospect of paying back $530 of that tax credit to the IRS, according to a new study from H&R Block.  This clawback is reducing the refunds for these taxpayers by 17 percent this filing season.

Under Obamacare, taxpayers earning between 133 and 400 percent of the federal poverty level are eligible to receive a tax credit to help purchase insurance on Obamacare exchanges.  This tax credit is calculated using old tax data of the recipients.  The credit is advanced ahead of time to the taxpayer's insurance company.  The taxpayer must reconcile at tax time the advance credit received with the actual credit she is eligible for.

Families of four earning less than $97,000 are eligible for a credit.  So is a single mother with two children earning less than $80,000 and an unmarried/childless taxpayer earning less than about $12,000.  By definition, these are the lowest income recipients of Obamacare health insurance outside the Medicaid-eligible population.  Higher income taxpayers received no tax subsidy and aren't facing this tax season surprise.

According to the study, a majority of credit recipients--52 percent--have had to pay back the IRS an average of $530, reducing their refunds by an average of 17 percent.

It remains unclear how this information relates to the revelation last week that 800,000 healthcare.gov Obamacare customers (and a further 100,000 in California) received inaccurate 1095-A tax reporting forms.  Doing the reconciliation described here would not be possible for these nearly 1 million families.

Also in the H&R Block report is the news that the individual mandate penalty is averaging $172. This is likely to rise in future years as the penalty for most taxpayers will equal 2.5 percent of their adjusted gross income.  A family earning $100,000 would see a penalty of $2500 for failing to obtain qualified Obamacare health insurance.

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StevenNewsom

Suckers.

There is a downside to voting based on likes and wants, instead of an informed opinion, that downside is that you are easily manipulated. Now own what you wanted, but were too lazy or too stupid to learn about.

J. Moore

So what?! The majority of the folks paying the 'penalty' will be paying it from the EIC or 'refund' amount from taxes they never paid anyway. It's STILL redistribution from the paying class to the moocher class back to the gov.

Jay Loveless

Money is real when it is backed by a substance having intrinsic value, as ours used to be; first with gold, then after 1933 with silver. I'm old enough, at 63 to remember being paid in Silver Certificates. It was only when we dropped that backing and went to "Federal Reserve Notes" that our money became trash.


Alabama Gov. Bentley Breaks “No New Taxes” Promise, Pushes for Higher Taxes

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Posted by Will Upton on Monday, February 23rd, 2015, 5:05 PM PERMALINK


Governor Robert Bentley has made it clear that he intends to break his WRITTEN pledge to voters to oppose and veto “any and all efforts to increase taxes.”  Shortly after his re-election this past November, Gov. Bentley began making a push to increase taxes. Americans for Tax Reform pushed back, noting:

According to the Cotton State’s governor, eliminating tax deductions is not the same as raising taxes.

"I am not for raising taxes and this actually would not be raising taxes," Bentley said. "It would be taking away some deductions. That is certainly one of the things we'll be looking at."

Bentley is wrong. By signing the Taxpayer Protection Pledge, the governor has committed to “oppos[ing] changes in tax deductions or credits that increase the net tax burden on Americans.” 

Enacting legislation that burdens taxpayers with higher taxes and fees to fuel exorbitant state spending, goes against his written promise to the people of Alabama to "oppose and veto any and all efforts to increase taxes." Americans for Tax Reform encourages Gov. Bentley to pursue revenue neutral, pro-growth tax reform and enact spending restraint instead of raising taxes on Alabama families.

Now Gov. Bentley is floating a plan which would raise taxes in Alabama by roughly $700 million, according to Yellowhammer News, despite having previously opposed tax increases:

“When you hurt businesses and you tax businesses, you’re going to lose jobs and we need to be creating jobs,” he said. He went a step further and signed Americans for Tax Reform’s “Taxpayer Protection Pledge,” committing himself in writing to opposing all tax increases. During his most recent campaign, Gov. Bentley’s re-election ads also prominently displayed the words “No New Taxes.” 

That’s right. Despite having won two gubernatorial races by campaigning against higher taxes, featuring his promise to not raise taxes on his website, and making a written promise to the people of Alabama to not raise their taxes, Gov. Bentley is now pushing for just that. Higher taxes.

The American people have historically reacted poorly to politicians who promise not to raise taxes and then do. Broken promises on taxes cost George H.W. Bush a second term as President and Tom Corbett a second term as Governor of Pennsylvania. When you make a promise, people expect you to keep it. This might explain why Gov. Bentley waiting to announce his intention to break his promise against higher taxes until after he won re-election. 

The Alabama Republican Party has already responded to Gov. Bentley’s plan, passing a resolution in opposition to any proposed tax hikes. Yellowhammer News reported that the resolution read:

“Alabama is still in a state of recovery from the recent and extended recession that has gripped this state and the entire nation for the past several years,” the resolution said. “Be it therefore resolved that we, the members of the Alabama Republican Party State Executive Committee call upon Governor Bentley and legislative leaders to consider options other than an increased tax burden on Alabama citizens as a solution to the state’s fiscal problems.” 

Between 2000 and 2009, state spending in Alabama has exceeded the rate of inflation in population growth by just over $20 billion. Gov. Bentley should take the lead and work with legislative leadership to pursue reductions in state spending and truly pro-growth tax reform like that enacted in North Carolina and Wisconsin. 

Help Americans for Tax Reform stop Gov. Bentley’s $700 million tax hike. Call Gov. Bentley’s office at (334) 242-7100 or click here to email and tell him stand by his promise to Alabama taxpayers to oppose any and all efforts to increase taxes.

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Tennessee Has Opportunity To Become A True No Income Tax State In 2015

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Posted by Cooper Lohr, Patrick Gleason on Monday, February 23rd, 2015, 4:14 PM PERMALINK


Tennessee is smart to not tax wages. However, the state does have a tax investment income, known as The Hall Tax. Enacted in 1929 by then Tennessee Senator Frank Hall, the Hall Tax imposes a 6% levy on investment income. Senator Mark Green and Representative Charles Sargent have proposed legislation to repeal the Hall Tax and make Tennessee a true no income tax state. With other states, including many in the same region as Tennessee, moving to cut taxes and make their codes more competitive this year, it is important for Volunteer State legislators to make the most of the 2015 session by passing reforms to make the state as attractive as possible to investment, job creation, and retirees looking for a friendly place to settle down. The best way to do so is to get rid of the Hall Tax

Below is a copy of the letter Americans for Tax Reform sent to Tennessee Legislators, urging them to phase out the Hall Tax:

 

Dear Members of the Tennessee Legislature,

On behalf of Americans for Tax Reform and our supporters across Tennessee, I urge you to use the 2015 session to pass legislation that protects Tennessee taxpayers and fosters economic growth. After being hit with over 20 federal tax increases in recent years, it is imperative that state lawmakers stand up for Tennessee taxpayers.

One piece of legislation that does nothing to help taxpayers at all and should be rejected is Senate Bill 246, which would prohibit beer producers from owning distributorships except under very restricted and temporary circumstances. Legislation like SB 246 represents the classic case of government seeking to pick winners and losers. Passage of SB 246 would stifle investment and damage Tennessee’s reputation as a business-friendly state. The type of government meddling in legitimate private sector business transactions that would result from passage of SB 246 is the sort of thing one would expect to encounter in Illinois or California, not Tennessee. As such, I urge you to reject and vote “no” on SB 246.

A better use of time for lawmakers looking to benefit the state’s economy during the 2015 session is to pass legislation to phase out the six percent tax on dividend income, referred to as the Hall Tax. The non-partisan Tax Foundation released analysis showing how elimination of the Hall Tax would boost Tennessee’s economic competitiveness. Tennessee currently has the 15th best business tax climate in the nation. However, if lawmakers repeal the state’s tax on investment income, Tennessee would have the 11th best business tax climate in the nation.

The Hall Tax does far more damage than it’s worth, raising what amounts to less than one percent of state and local revenue. With average economic growth and modest spending restraint, lawmakers can easily cope with the Hall Tax’s elimination. It’s even more manageable when considering that proposals to eliminate the Hall Tax, such as those put forward by Senator Mark Green and Representative Charles Sargent, phase the tax out over a number of years.

Tax relief isn’t just good politics, it’s good policy. Tax Foundation economist William McBride reviewed academic literature going back three decades and found, "While there are a variety of methods and data sources, the results consistently point to significant negative effects of taxes on economic growth even after controlling for various other factors such as government spending, business cycle conditions and monetary policy."

In McBride's survey of 26 studies dating to 1983, he found "all but three of those studies, and every study in the last 15 years, find a negative effect of taxes on growth." John Hood, chairman of the John Locke Foundation, found that keeping state and local tax and regulatory burdens as low as possible fosters economic growth when he analyzed 681 peer-reviewed academic journal articles going back to 1990. "Most studies find," Hood discovered, "that lower levels of taxes and spending, less-intrusive regulation correlate with stronger economic performance."

Tennessee has lower taxes than most states, but that doesn’t mean lawmakers should rest on their laurels while other states in the region and across the country continue to propose and enact reforms that make their tax codes more competitive. As such, I urge you to use the 2015 session to make Tennessee a true no-income-tax state by beginning to phase out the Hall Tax and to reject onerous regulations, such as those that SB 246 would lead to. Americans for Tax Reform will continue to follow these issues closely throughout session and will be educating your constituents as to how you vote on these important matters. If you have any questions, please contact Patrick Gleason, ATR’s director of state affairs, at (202) 785-0266 or pgleason@atr.org.

Onward,

Grover Norquist

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Ronnie R.

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John

Tennessee is misspelled.


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