ATR Supports Kasich Tax Cuts, Education Reform
Yesterday, Ohio Gov. John Kasich unveiled his two year budget proposal. It includes some impressive reforms. The budget cuts taxes $1.3 billion over three years, including a 20 percent across the board income tax cut and cutting the sales tax rate while broadening the base.
It also will make school vouchers available to all low-income children in Ohio -- nearly half the total student population in the state. Education reform advocates call this one of the most far-reaching voucher programs in the country, up there with recent reforms in Indiana and Louisiana.
ATR President Grover Norquist wrote the following letter in support of the Kasich budget (PDF copy here):
February 5, 2013
I write in strong support of the tax and education reforms in Gov. John Kasich’s proposed budget. The governor’s plan recognizes the urgency of reducing income tax rates across the board for Ohio’s families and small businesses, and broadens the sales tax base while reducing the rate. The proposal is a net tax cut of over $1 billion, reducing the overall burden on taxpayers rather than using reform as a Trojan Horse for tax increases. And it expands access to school vouchers for an unprecedented number of low-income students currently locked into underperforming schools.
States compete for population, jobs, and investment. That is especially true today in the Midwest, where states like Wisconsin, Indiana, and Michigan have streamlined labor regulations and are proposing significant tax cuts. Ohio started this process in 2011 with the elimination of the estate tax. The governor’s proposal will continue the effort to transform the state, cutting taxes and giving new educational opportunities to an unprecedented number of Ohio’s children.
This budget reduces income taxes across the board, giving much needed tax relief to Ohio families and small businesses of all sizes. It also broadens the sales tax rate and lowers the rate from 5.5 percent to 5 percent. The overall impact of the tax changes is a $1.3 billion tax cut.
With respect to education, Ohio will join Indiana and Louisiana as a true leader on education reform. Nearly one-half of Ohio’s children will be provided a voucher to attend a private school of their choice, freeing many of them from failing or underperforming schools. School choice is a civil rights issue, and Gov. Kasich’s budget places Ohio at the forefront of the national reform effort.
For those of you who have signed the Taxpayer Protection Pledge, a vote for this budget is compliant with the Pledge.
Again, I urge your support for Gov. Kasich’s proposed budget. If you have any questions about ATR’s position on this issue, please contact Ohio state affairs manager Josh Culling at 202-785-0266.
President, Americans for Tax Reform
CC: The Honorable John Kasich
Norquist Statement on Bipartisan Immigration Plan
Today Americans for Tax Reform President Grover Norquist praised a bipartisan immigration reform proposal put forth by Republican Senators Marco Rubio, Jeff Flake, John McCain, and Lindsay Graham, and Democratic Senators Michael Bennet, Bob Menendez, and Dick Durbin.
The immigration reform outline includes allowing more low-skilled immigrants into the country to work, expanded access to green cards for foreign born residents who receive advanced degrees in science, technology, engineering, or math, stricter border security measures, and a pathway to citizenship for those undocumented immigrants already in the U.S.
Norquist issued the following statement of support:
"Immigration reform is one of the most important steps our country can take to grow America's economy and preserve our leadership status in the world. I believe this plan is a meaningful step toward fixing our broken immigration system, and I urge Congress to consider the positive economic ramifications of a vibrant guest worker program, more high-skilled visas, and a pathway to earned legal status and citizenship for those already in the country."
Minnesota Department of Revenue: Tax Hikes = Tax Avoidance
A 2009 study commissioned by the Minnesota Department of Revenue pointed out significant evidence of tobacco tax evasion after the state’s last cigarette tax increases in 2005 and 2006. Should Gov. Mark Dayton’s proposed 94 cent per pack cigarette tax increase succeed, it is likely that the state will see a large revenue shortfall due to smokers shifting their consumption across state lines, to the Internet, or to illicit black market tobacco.
Selected findings from the Department of Revenue’s 2009 study are below. Note that the effective tax increases and unpaid taxes include the cigarette excise tax and the sales tax applied to cigarette purchases.
After an effective 31.25 cent per pack increase from 2004 to 2005, the state’s foregone revenue increased 66 percent, from $9.3 million to $15.5 million.
After an effective 46.75 cent per pack increase from 2005 to 2006, the state’s foregone revenue increased 103 percent, from $15.5 million to $31.5 million.
The $31.5 million in revenue lost due to tax evasion in 2006 represented nearly 8 percent of Minnesota’s total cigarette tax revenue.
Gov. Dayton’s proposed tax increase would be more than double the 2006 tax increase.
- The propensity to evade the cigarette tax was highest in areas bordering North Dakota, which currently has a significantly lower cigarette tax rate than Minnesota. Should Gov. Dayton’s plan pass, South Dakota and Iowa will also have a lower rate than Minnesota.
This research is consistent with the idea that when government raises the cost of a product, consumers travel to lower-cost jurisdictions. This is especially harmful to border retailers, who will see a drastic cut to their bottom lines, to the benefit of small businesses in North Dakota, South Dakota, and Iowa.
And it leads to smaller-than-projected revenues and future budget deficits. Tobacco tax revenue is already declining; it will drop even more precipitously when consumers are given the incentive to buy outside the state. The Mackinac Institute has already noted that nearly 20 percent of cigarettes smoked in Minnesota are purchased elsewhere. As the Minnesota Department of Revenue has proven, that number will only climb should Gov. Dayton raise the tax even further.
Indiana: Mike Pence's Budget Cuts Taxes, Reins in Spending, Keeps Indiana Competitive
Last week, Indiana Gov. Mike Pence unveiled his FY 2014-15 budget proposal. It is an impressive first crack at the budgeting process, cutting income taxes across the board by 10 percent and holding spending growth well below the rate of inflation.
While Indiana has taken recent steps to improve its economic competitiveness, most notably passing a Right to Work law last year, Gov. Pence clearly recognizes the need to keep the state moving in the right direction. With neighboring states like Wisconsin, Michigan and Ohio taking proactive steps to cut taxes and eliminate burdensome regulations, Indiana can't rest on its laurels.
ATR President Grover Norquist wrote the following letter to the Indiana Legislature in support of Gov. Pence's budget (PDF copy here):
January 23, 2013
I write in strong support of Gov. Mike Pence’s proposed FY 2014-15 budget. It cuts taxes and reins in state spending, holding spending growth a full percentage point below projected inflation. Gov. Pence clearly realizes the direction most states in the region are heading, and is cutting taxes and curtailing the growth of government to ensure Indiana remains economically competitive with its neighbors.
Indiana’s current income tax is relatively low and flat, especially when compared to Illinois and Minnesota, which are raising taxes. But Wisconsin and Ohio are proposing significant tax cuts, making it important that Indiana stays ahead of the curve. Gov. Pence’s 10 percent income tax cut does just that – bringing the income tax rate paid by Indiana families and small businesses to just 3.06 percent.
The Pence budget is also impressive because of its spending restraint. It holds spending growth to 1.4 percent, which is well below the projected rate of inflation. In other words, this is a real net spending cut. It continues the prudence of the previous administration and ensures that state government funds its priorities while living within its means.
With higher taxes coming out of Washington, D.C., it’s important that Indiana lawmakers do all they can to reduce the tax burden at the state level. This budget is a strong step in that direction, by reducing spending and using surplus revenues to cut taxes.
After years of fiscal responsibility and labor reform, Indiana is positioned as an economic leader in the Midwest. But Gov. Pence correctly realizes that states like Wisconsin, Michigan, and Ohio are nipping at the Hoosier State’s heels. I urge you to stay competitive by passing Gov. Pence’s budget into law.
If you have any questions, please contact Josh Culling, state affairs manager, at email@example.com or 202.785.0266.
Mark Dayton's Budget: More Taxes, More Spending, a Less Competitive Minnesota
Today Minnesota Gov. Mark Dayton released his two-year budget proposal for FY 2014-15. As expected, with Minnesota's first all-Democrat state government since 1990, the plan includes billions in higher taxes and more spending.
The governor wants to take the state's top income tax rate, which kicks in at just $150,000 of income, to a stratospheric 9.85 percent. He also pushes for tax increases he called unfair and regressive just two years ago: higher levies on tobacco, clothing, and services.
ATR President Grover Norquist wrote a letter in opposition to the governor's tax-and-spend budget today (PDF copy here):
January 22, 2013
I write in strong opposition to Gov. Mark Dayton’s proposed FY 2014-15 budget. The budget would increase both taxes and spending, erode Minnesota’s competitiveness in the region, and implement a number of unfairly regressive tax increases that the governor strongly opposed only two years ago. Minnesota has been on a relatively stable path over the past two years, with revenues steadily growing and unemployment falling. I urge you to avoid these massive and unnecessary tax hikes, which would stymie the state’s recent growth and stability and put it at a competitive disadvantage with nearby states.
The personal income tax increase is a massive step in the wrong direction. Throughout the Midwest, governors and state legislatures are reducing income tax burdens. Just this year, Kansas, Nebraska, and Oklahoma have proposed full phaseouts of their income taxes, while Wisconsin, Indiana, and Ohio are pushing significant tax cuts. Minnesota’s income tax burden is already higher than all of these states; to go to a 9.85 percent rate that kicks in at $150,000 of income will put the state at a serious economic disadvantage.
And state policymaking should not ignore recent changes at the federal level. Congress recently passed a top income tax rate increase, which will be coupled with any tax hike at the state level. This increases the incentive for taxpayers and small businesses to move to lower-tax jurisdictions to avoid surrendering more than half their income to the government.
Also important is the governor’s recent reversal on regressive taxes. This budget includes a significant increase in the cigarette tax, as well as an expansion of the sales tax base. On the campaign trail in 2010, Gov. Dayton explicitly opposed these tax hikes. With respect to the cigarette tax, he said, “You raise the price of a pack of cigarettes…that’s money out of the pockets of working people and poorer people, and that means kids don’t have as much to eat or have the same quality of food.” And on sales tax expansion, the governor remarked, “Extending the sales tax to clothing…is regressive. Extending the sales tax to all consumer services…I mean, taxing all that and turning those service businesses as tax collectors for the state is really a hornet’s nest…it’s more of a regressive tax.”
Now it seems Gov. Dayton is willing to push for an anti-competitive tax increase on the middle class and small business community in tandem with a collection of regressive tax hikes on middle- and lower-income families. This would be a major mistake for Minnesota.
What is most problematic about the governor’s plan is that he appears to be operating in a political vacuum. He ignores the tax hikes coming down from Washington. He ignores the fact that neighboring states are becoming more competitive by cutting taxes and regulations. And he ignores the fact that Minnesota has been on pretty sound economic footing to this point, which would no longer be the case after a round of massive tax increases and higher spending.
Minnesota’s revenues have climbed and its unemployment plummeted after two years of a stable tax code. You shouldn’t throw that in flux. I urge you to stand up for Minnesota taxpayers and reject each of Gov. Dayton’s tax hikes.
If you have any questions, please contact Josh Culling, state affairs manager, at firstname.lastname@example.org or 202.785.0266.
The State of Republican States: Strong, and Getting Stronger
Last night, a number of governors delivered their "State of the State" addresses, detailing their accomplishments while in office and laying out their plans to move their states forward. Often these speeches, given annually, are a boring rehash of old talking points and vague plans for a lukewarm future agenda. But last night, governors in three states laid out plans to eliminate or signicantly reduce state income taxes. Kansas's Sam Brownback, Nebraska's Dave Heineman, and Wisconsin's Scott Walker all put forth serious tax reform proposals that will boost economic growth and put their states on a more level playing field with the low- and no-income tax states with which they compete for jobs and economic growth.
While any meaningful reforms in Washington, D.C. have stalled, governors and state legislatures are at the forefront of reform, and they are delivering results. The 25 states with complete Republican control of the governship and legislature are fiercely competing with each other to reduce taxes, limit spending and eliminate harmful regulations.
Gov. Brownback detailed his accomplishments in Kansas, and spelled out his desire to scrap the state income tax:
When I started as governor, we began the fiscal year with $876.05 in the bank and a projected deficit of $500 million - even after taxes had been increased.
Working with the legislature, we ended last fiscal year with a $500 million ending balance…a billion dollar swing to the good AND we paid off all of our callable bonds!
The last decade was unfortunately a lost decade where Kansas lost thousands of private sector jobs while the rest of America grew. In December 2010, our unemployment rate was seven percent.
Today our state’s unemployment rate is 5.4 percent – the 10th lowest in America - and Wichita State University projects we will add more than 24,000 private sector jobs in the state this year alone.
When I started as governor, we had the highest state income tax in the region, now we have the 2nd lowest and I want us to take it to zero. Look out Texas, here comes Kansas!
Gov. Heineman made the case for tax reform that does not grow the size of government:
In recent months, I have asked business leaders if they would give up their sales tax exemptions if we could eliminate the individual income tax and the corporate income tax or at least lower the individual and corporate tax rates. You may be surprised, but many are willing to have that discussion. They want simplicity and fairness. They want a modern tax code that rewards productivity, profits and job creation rather than having their lawyers and accountants spending time mining the tax code for exemptions.
Our tax system shouldn’t favor one industry over another. Change is not easy, especially when it involves taxes, but this is the discussion that our state needs to have.
Our tax reform proposal is revenue neutral and budget neutral. I know there are organizations that want to tax more services with the overall goal of growing government. These organizations want to spend more tax dollars on more government programs. That is not what most Nebraskans want and that is not what our plan is about.
Our goal is a better business tax climate that will create more high-paying jobs and more rewarding careers for our sons and daughters. We need a tax climate that rewards middle class families for their hard work. In the next few days, I will have legislation introduced that provides alternative options for eliminating many business sales tax exemptions that could lead to the elimination of the individual income tax and the corporate income tax or at least lowering Nebraska’s individual and corporate tax rates.
And Gov. Walker listed his impressive accomplishments, including turning his inherited $3.6 billion deficit into a surplus, cutting property taxes, reducing unemployment and putting localities on a more sound financial footing. His next act is a significant income tax cut:
Two years ago, when I first stood here as your new governor, Wisconsin was facing a $3.6 billion budget deficit, property taxes had gone up 27 percent over the previous decade, increasing every year, and the unemployment rate was 7.8 percent.
Today, Wisconsin has a $342 million budget surplus, property taxes on a median valued home went down in each of the last two years, and the unemployment rate - well - it's down to 6.7 percent.
And unlike other states, we avoided significant tax increases, massive layoffs and cuts in programs, like Medicaid. Instead, we put in place long-term structural reforms that helped us balance state and local government budgets for years to come. What we did was think more about the next generation than we did about the next election—and it worked.
With the introduction of my proposed budget next month, I will lay out a clear plan for reducing the burden on hard-working families by lowering income taxes on the middle class. We want to continue to put more money in the hands of the hard-working taxpayers and small business owners in our state.
These governors join a number of others - Jindal, Kasich, McCrory, Fallin, and Pence, by my count, in calling for serious income tax cuts. Because GOP governors know that to be successful, you need to be more like Texas and less like Illinois.
Norquist Urges Gov. Snyder to Sign Freedom to Work Law
Americans for Tax Reform President Grover Norquist released a statement of support today for Michigan’s Right to Work law.
Right to Work prohibits unions from terminating employees that choose not to pay union dues. It does not ban unionization; it ends forced unionization. Over the past 30 years, Right to Work states have vastly outperformed forced unionization states in most measures of job creation and economic growth.
Norquist issued the following statement:
“I commend Gov. Rick Snyder, Speaker Jase Bolger, and Senate Majority Leader Randy Richardville for their leadership in promoting worker freedom in Michigan. As the governor stated today, ‘Freedom to Work is all about creating more and better jobs in Michigan.’
“This is an economic measure first and foremost. There are 23 states that have enacted Right to Work, and they are dominating the competition for more jobs and economic growth. Over the past 30 years, Right to Work states have seen total employment grow by 71 percent, compared to 32 percent in forced unionization states.
“But this is also a moral imperative. Just as workers deserve the right to unionize and bargain collectively – a right that is preserved under Right to Work – they should be able to choose not to join a union. That is currently not the case in Michigan.
“Leaders of the Democratic Party are now calling on Gov. Snyder to veto Right to Work for purely political reasons. This is bigger than politics. I look forward to the governor signing this landmark legislation and to a new era of worker freedom and economic growth in Michigan.”
ATR Supports Right to Work in Michigan
The Michigan Legislature is expected to consider Right to Work legislation in the next week. The law prohibits forcing workers to financially support a union as a condition of employment. Michigan would be the 24th state to pass such a law; Indiana is the latest, having enacted a Right to Work law earlier this year.
ATR President Grover Norqusit sent the following letter of support to Michigan lawmakers:
November 30, 2012
I write in strong support of proposed Right to Work legislation in Michigan. This is one of the most important steps you can take to jumpstart the state’s economy, boost employment, and spur population growth.
Right to Work states have a much better economic track record than those states that allow compulsory unionization. Over the past 30 years, Right to Work states have seen total employment grow by 71 percent, compared to just 32 percent among forced unionization states and a paltry 14 percent in Michigan, according to the Mackinac Institute. And according to a recent Americans for Tax Reform study, seven of the eight states that gained Congressional seats in the 2010 Census reapportionment had Right to Work laws. Among the 10 states losing Congressional representation, only two were Right to Work.
That’s because job creation and population growth takes place in states that put an emphasis on worker freedom, in addition to low taxes and limited government. And individual workers will be better off, too. Over the past decade, compensation in Right to Work states has grown four times faster than in forced unionization states.
To be clear, this legislation will not ban collective bargaining. Unionization will still be perfectly legal. It will merely prohibit unions from terminating employees that choose not to pay union dues. In addition to an economic imperative, it is a moral one. To force all workers to financially support a union they may not agree with is absurd.
Far from extreme, Right to work is the law of the land in 23 states. It passed in Indiana just this year with virtually no negative political fallout for its champions.
Michigan is poised to pull itself out of protracted economic decline and start creating jobs and fostering economic growth once again. Right to Work is a key step in that direction. I urge your full support of this important measure.
If you have any questions, please contact Michigan state affairs manager Joshua Culling at email@example.com.
CC: The Honorable Rick Snyder
Americans for Tax Reform Releases Michigan Ballot Guide
Americans for Tax Reform (ATR) has issued its recommendations for the most important ballot measures to be decided on by Michigan voters on November 6. As part of its comprehensive 2012 State Ballot Measure Guide, ATR is highlighting four Michigan measures that will have serious implications for taxpayers in the state and across the country.
ATR urges “NO” votes on Proposals 2 and 3, and “YES” votes on Proposals 5 and 6.
Proposal 2: “First, it would enshrine private and public sector employees’ collective bargaining rights in the state constitution. Second, it would empower most union contracts to override state and local laws regarding employee compensation, work conditions, and union funding…Proposal 2 is akin to a steroid injection for already powerful government employee unions. Americans for Tax Reform urges voters to vote “NO” on Proposal 2.”
Proposal 3: “Known as a “renewable portfolio standard,” this is an inflexible measure that will drive up energy prices while making it very difficult for the state to adapt to advances in energy technology in the future…Proposal 3 is unique in that it would enshrine the mandate in the constitution. This will prevent state lawmakers from revising the mandate should its target become unrealistic…But perhaps most important is this measure’s impact on energy prices. Some estimates peg the implementation of Proposal 3 above $10 billion. Those costs will be passed on to Michigan’s energy consumers at a time when they can scarce afford them. Americans for Tax Reform urges a “NO” vote on Proposal 3.”
Proposal 5: “Proposal 5 would require a two-thirds “supermajority” vote in each chamber of the legislature in order to raise taxes…Proposal 5 will help keep the growth of state government in check, and impose an additional safeguard against tax hikes. Americans for Tax Reform urges voters to vote “YES” on Proposal 5.”
Proposal 6: “This measure would require voter approval for any new publicly funded international bridge or tunnel. The specific issue at hand is a new government-funded bridge to Canada, funded by the federal government, the Canadian government, and a Canadian loan to the State of Michigan…The bridge project is already dubious; voters should at least be given the opportunity to weigh in on its construction. Americans for Tax Reform urges voters to vote “YES” on Proposal 6.”