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Alexander Bobroske

DC Council Approves Historic Tax Cuts


Posted by Alexander Bobroske on Thursday, July 17th, 2014, 4:35 PM PERMALINK


Earlier this week the DC Council voted 12-1 to override Mayor Vincent Gray’s budget veto. The budget vetoed by Mayor Gray includes historic tax cuts not been seen by DC residents in 15 years. Americans for Tax Reform applauds the DC City Council for restoring this much needed tax relief for District residents.

The budget includes triggers for tax cuts if revenue targets are met, providing tax relief for District employers and residents. Key provisions of the plan include the following:

  • Middle class taxpayers (making between $40,000 and $350,000) will see their top marginal tax rate drop from 8.5 percent to 7 percent next year and then 6.5 percent the year after that.
  • Those earning up to $1 million will see their top rate fall from8.95 percent to 8.75 percent.
  • Increase of standard deductions and person exemptions.
  • Childless low-income workers will see their Earned Income Tax Credit increase from 40 to 100 percent of the federal credit.
  • The business tax will drop from 9.975 to 9 percent in 2016, 8.5 percent by 2018, and finally to 8.25 percent by 2019. This places DC business taxes in line with Maryland’s.
  • Death tax threshold will increase from $1 million $5.25 million to match the federal death tax exemption threshold.

 

The $225 million tax cut is offset partially by the $67 million in new revenue from expansion of the sales tax base, leaving the majority of tax relief facilitated by spending restraint in the $10.6 billion budget, down from $12.85 billion in FY 2014.

There has been a lot of uproar over the alleged yoga tax included in the budget. But District yogis should fear not. There is no special wellness tax going into effect; the new tax plan merely applies the local sales tax to yoga and gym glasses, along with other previously exempt services. The amount of income tax cut far exceeds higher sales tax collections that this base broadening will generate. This newly increased disposable income will allow Washingtonians to afford even more yoga sessions.

The DC Council should be commended for clamping down on Mayor Gray’s expensive pet projects, such as his citywide streetcar service plans. Former mayor and current councilmember Marion Barry recently stated that taxpayers would have to pay $2,000 to subsidize each ride on the only existing streetcar line, a line which is yet to open even after years of planning and construction.

It appears that Washington’s business tax climate has become so onerous that even the DC Council realizes the status quo is unacceptable.  ATR applauds the DC Council members for overriding Mayor Gray’s veto of much-needed tax relief. After being hit with over 20 federal tax hikes signed into law by President Obama over the last four years, Washingtonians need tax relief at the local level now more than ever.

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Proposed Business Flat Tax Promising for New Hampshire


Posted by Alexander Bobroske on Wednesday, July 16th, 2014, 2:46 PM PERMALINK


The New Hampshire Center for Economic Policy recently unveiled a proposal to consolidate multiple state business taxes into a single Business Flat Tax (BFT). One gubernatorial candidate, Andrew Hemingway (R), has decided to make this revenue-neutral restructuring of the New Hampshire tax code a center point in his plan to revitalize the state’s economy.

The plan put forth by Hemingway and the New Hampshire Center for Economic Policy eliminates the 8.5 percent Business Profits Tax, the 5.5 percent Medicaid Enhancement Tax and restructures the Business Enterprise Tax to a 2 percent flat rate while cutting the Interest and Dividends Tax from 5 percent to 2.3 percent.

Meanwhile, not-for-profits, such as universities and hospitals, and state government would be subject to the tax for the first time. A 2006 report estimates almost 100,000 are employed by not-for-profits, a huge tax base. If these two loopholes were closed for the current business enterprise tax, the tax rate would fall from 0.75 percent to 0.55 percent.

Americans for Tax Reform supports this effort to simplify and reduce taxes on businesses while also curbing government’s cost for tax collection. If this proposal were enacted, the compliance cost for business is greatly reduced. The proposed businesses flat tax can be filled out on a post-card sized sheet and all business establishments are treated equally, regardless of organizational structure.

Another benefit of this proposal is that savings and investment are exempt from the BFT. This makes it theoretically possible for a business to pay no tax if all revenue was invested.

Hemingway noted, “In order to make New Hampshire more competitive both nationally and globally, we must restructure out tax rates.” Simplifying and flattening New Hampshire’s business tax code will give the state a huge advantage against its regulation heavy neighbors like Massachusetts.

Both Hemingway and his primary opponent, George Lambert, signed the Taxpayer Protection Pledge, a written commitment to New Hampshire voters to oppose and veto any and all efforts to raise taxes. Revenue-neutral tax code restructuring, such as Hemingway’s is consistent with this important commitment to taxpayers.

Photo Credit: ***Karen

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The Ted Kennedy Death Tax Loophole


Posted by Alexander Bobroske on Friday, July 11th, 2014, 12:36 PM PERMALINK


Forbes recently reviewed how the billion dollar Kennedy family actively avoids the death tax by their cunning use of various accounting gimmicks and family trusts.

The Kennedy hypocrisy is astounding given the average American can’t afford such pricey lawyers and investors to protect their savings. Small business owners and farmers could lose 40% of their life savings by the death tax, on top of additional taxes, crippling their ability to pass on the American Dream to their children and grandchildren.

Despite living large as the very type of family he claimed should be taxed more, the late Senator Ted Kennedy cried out, “The tax system is stacked against the average taxpayer.” He was absolutely right; Ted Kennedy’s votes in the Senate did safeguard a tax system stacked against Americans.

Ted Kennedy ensured this by voting against raising death tax exemptions in March 2007, against the permanence of the Bush years death tax cuts August 2006, against a repeal of the death tax June 2006 and against extending tax cuts on capital gains and dividends November 2005. The list goes on.

Meanwhile through coolly calculated transactions, Forbes concluded, the Kennedy trust could maintain an un-taxable fortune indefinitely.

For the farmer, the small business owner, and the grandparents of America, there remains hope. Representative Kevin Brady (R-Tex) is pushing for H.R. 2429 to repeal the Death Tax.  ATR encourages all members of Congress to co-sponsor this legislation.

 

Photo Credit: studio08denver

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G L

Not much different than Warren Buffet or Bill Gates, who openly advocate higher taxes, but then place their assets in a charitable trust, effectively keeping them and taxes on their income out of the hands of the government entirely.

Clearly, what they're saying is just meaningless lip service, because their actions show us that they don't trust the government and its solutions at all.

No drama no more

Hypocracy from wealth democrats! This is my surprised face!

G L

Yes, and trusts can pay people that work for the trust a considerable amount of money in salary and reimbursement for expenses. People like family members, for example. So it's not exactly like donating to a trust completely divorces a person and his or her family from access to their money.

The point of my comment was in the second paragraph. Both of those guys are advocating for higher taxes, thereby advocating for the government reaching further into our pockets to pay for the policies advocated by the left to which they belong.

Yet, what the government is doing and the policies it supports don't seem to be important enough for either Gates or Buffet to support as well. They're making a very political "do as I say, not as I do" kind of statement, then, when they advocate for higher taxes, and they're also doing what leadership among the left always does - excluding themselves from having to live according to the principles they're trying to push onto the "little people."


Governor Chris Christie Signs Budget After Vetoing Democrat Tax Hikes


Posted by Alexander Bobroske on Tuesday, July 1st, 2014, 4:01 PM PERMALINK


Yesterday, New Jersey Governor Chris Christie signed a $32.5 billion budget after vetoing $1.6 billion in proposed tax hikes. New Jersey taxpayers and business owners have something to celebrate since the Democrats do not hold the votes necessary to override the line-item vetoes.

The Democrat’s proposed income tax hike would have pushed the top tax bracket from 8.97% to 10.75%. The tax increase would have placed New Jersey as the third highest state income tax rate after only California and Hawaii. Not to be outdone, the proposed 15% corporate income tax surcharged would have crippled the “Jersey Comeback.”

The 800-pound gorilla in the room is this broken entitlement program which eats away at billions of taxpayer dollars a year. If Democrats want to show they are serious on closing future budget shortfalls they need to implement the pension reform Governor Christie is advocating for.

Democrats in the legislature sought to put a Band-Aid over the state pension’s open wound, and not a very good one at that. Hiking taxes across the board would have driven away even more residents and businesses. The last thing New Jersey needs is a flood of wealth and residents heading to Florida and Texas’ business friendly climates, where income taxes aren’t imposed.

Besides avoiding new and exorbitantly high corporate and income tax increases, New Jersey residents won’t see a 75% e-cigarette tax increase either. Instead, these vapor products will continue to be subjected to a much lower sales tax rate, a victory for small businesses, especially convenience stores.

With the start of the 2015 fiscal year, New Jersey residents can breathe a short sigh of relief. There still remains much work to be done. The state pension system’s long term underfunded liabilities require real reforms, not short-term revenue increases that would have long-term negative economic consequences. Democrats will have to work with Governor Christie to enact meaningful reform if New Jersey’s fiscal problems are ever to fully subside.

 

Photo Credit: Bob Jagendorf                       

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E-Cigarette Tax Hikes Threaten State Revenue, Public Health


Posted by Alexander Bobroske on Thursday, June 26th, 2014, 3:23 PM PERMALINK


A number of states over the past two years have attempted to impose new and higher taxes on e-cigarettes and vapor products. Though many legislative efforts have been thwarted, potential e-cigarette tax increases continue to pose a threat to state revenue, businesses, and public health.

States are scrambling to find new funding to replace the decline in tobacco tax revenue. Earlier this year the Surgeon General published a 980-page report predicting an eventual end to cigarette smoking in the United States. Whether those predictions come true or not, what’s clear is that as tobacco use declines, consumers are transitioning to healthier products like e-cigarettes. Higher excise taxes on these products will result in cross-border sales and even less revenue for states.

New and higher e-cigarette taxes are not serious public policy alternatives to declining tobacco revenue. The sale of these products is highly mobile due to the popularity of online sales. That’s precisely why state efforts to generate more revenue from these products are misguided. Massachusetts’s proposed 90% wholesale tax hike and Vermont’s proposed 92% would have crippled the industry and further harmed small businesses, like convenience stores, who are already suffering from a decline in tobacco related purchases had they become law.

For tobacco sales, tax evasion is a significant issue for states. The Washington Department of Revenue estimated $376 million in tax revenue was lost in 2012 due to tobacco tax evasion. A combination of tax evasion and higher online sales (not subjected to sales taxes) may become a growing issue for states if they impose higher in taxes on e-cigarettes and vapor products. States like Washington have taken note. The state Senate this year rightfully rejected a 95% tax on e-cigarettes and vapor products, preventing a further loss of revenue for convenience stores and brick and mortar vapor shops as a result of the fleeing of consumers across state lines.

Besides hurting taxpayers and diminishing state coffers, e-cigarette tax hikes also pose a threat to public health. Overtaxing products accredited to potentially saving lives makes little sense. In opposition to former New York Mayor Michael Bloomberg’s hypocrisy on public health for raising taxes on these products, ATR’s Patrick Gleason wrote:

Studies have shown that electronic cigarettes stand to improve health and prevent disease. By choosing to “vape” e-cigs instead of smoking cigarettes, consumers get their nicotine fix without the combustion and smoke — responsible for much of the negative health effects of tobacco cigarettes. For smokers already addicted to nicotine, e-cigs provide an alternative delivery mechanism that does not come with the proven harm that results from smoking.

Lawmakers like Bloomberg claim to champion public health and crusade against rising health care costs, yet they miss the irony of their contradictory legislation. While saying they seek to encourage smokers to successfully move away from tobacco products, their proposed higher taxes on e-cigarettes and vapor products are contributing to the high health care costs associated with a lifetime of smoking cigarettes. With e-cigarettes, neither tobacco nor second hand smoke poses a threat to anyone.

Despite the evidence staring them blankly in the face, there are still legislators and governors attempting to make money off of this growing industry. Democrats like Rep. Reuven Carlyle (D-WA) vow to revive failed attempts in future legislative sessions for tax hikes. ATR encourages Ohio, New Jersey, and legislators across the country to kill all bills aimed at increasing e-cigarette and vapor product taxes. These tax hikes will not result in new revenue, but instead declining economies.

 

Photo Credit: Wendy

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