Sen. Jim Banks to Chair Indiana Taxpayer Protection Caucus
Today, Americans for Tax Reform announced that Sen. Jim Banks (R-Columbia City) will chair the Taxpayer Protection Caucus in the Indiana Senate.
To join the caucus, a legislator must have signed the Taxpayer Protection Pledge, thereby putting their commitment to constituents and state residents to “oppose and vote against any and all efforts to increase taxes” in writing. With the addition of Sen. Banks, there are now 39 Taxpayer Protection Caucuses in 31 states. Every state (with the exception of unicameral Nebraska) will soon have both a Senate and House caucus consisting of all pledge signers in the legislature.
“Jim Banks is a true fiscal conservative and will serve as an essential proponent for Indiana taxpayers in this leadership role,” said Joshua Culling, Indiana state affairs manager for Americans for Tax Reform. “We couldn’t be happier that Sen. Banks has agreed to chair the Indiana Senate Taxpayer Protection Caucus as an advocate of lower taxes and limited government policies that will help Indiana families and businesses through private sector-led job creation and economic growth.”
The Taxpayer Protection Caucuses provide a single voice on tax issues among pro-taxpayer legislators, and form entire bodies of legislators that believe in the same principle: no new taxes. In Indiana, these seven senators will join together to resist any bills that would raise the net tax burden on Hoosiers. Considering the budget battles many states face across the country, taxes continue to be very high on the radar screen of voters and the media. Journalists will be able to go to the chair of the caucus for comments on tax issues.
“We look forward to working with Jim Banks in securing more Pledge signers in the Indiana Senate. Until you take tax increases firmly off the table, true and lasting spending restraint is impossible,”added Culling. “Senator Banks is a leader on fiscal issues, and we are ecstatic about his commitment to a fiscally conservative Indiana.”
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ATR Urges YES Vote on Ohio Budget
I had the opportunity to testify in support of the Ohio budget yesterday in the Ohio House Finance and Appropriations Committee. A vote is expected in committee and on the House Floor this week.
The budget, which was proposed by Gov. John Kasich and favorably amended by the House, eliminates an $8 billion overspending problem without raising taxes. It in fact reduces Ohio's net tax burden; the House expanded on Kasich's net tax cuts by including a repeal of the state's onerous death tax. The budget is in keeping with the pledge made by Kasich and 22 members of the House, including Speaker Bill Batchelder, to oppose all tax increases. It is serious progress.
From my testimony in the House yesterday:
There are many reasons to oppose tax increases, especially amidst a slow economy. The primary justification is intuitive: Higher taxes extract more money from the productive private sector, where sustainable jobs and wealth are created. They transfer that wealth to the public sector, with its distorted incentive structure and penchant for waste. Tax increases grow government at the expense of productive private citizens and job creators. Every dollar the business community sends to Columbus is a dollar less that can be spent on new hires or re-invested in growing Ohio’s private sector. High taxes chase jobs and population across state lines.
Another important reason to avoid tax hikes speaks to the state’s long-term budget structure. Voters are clamoring for both the federal and state government to cut spending. But until tax increases are taken off the table, real spending cuts will never materialize.
Today ATR sent a letter to the Ohio Legislature urging support of the budget (House Bill 153). To see the text of that letter, see below. For a PDF, click here.
For a PDF of my testimony, click here.
May 3, 2010
I write in strong support of House Bill 153, the proposed state budget. In keeping with the pledge Gov. John Kasich and 24 state legislators have made to their constituents never to raise taxes, it eliminates an $8 billion overspending problem while reducing the state’s overall tax burden. I urge you to vote yes.
This budget restores the delayed final year of the 2005 income tax cut and phases out Ohio’s onerous estate tax. It tackles politically difficult but necessary reforms in corrections and Medicaid. It is the beginning of the end of the big government mantra that has plagued Columbus over the past few decades.
If you have signed the Taxpayer Protection Pledge, a YES vote on HB 153 as it is currently written is compliant with that pledge.
To be sure, this budget included some difficult decisions. The billions of dollars in one-time federal “stimulus” have evaporated. And local governments must make do with less, though they are aided in part by the cost savings associated with Senate Bill 5 and other labor reforms.
But the overall product is consistent with the message on which many of you campaigned and with the principles that drove voters to the polls in November. Government taxes and spends too much. Over the past decade, Ohio has hemorrhaged population and jobs as a result.
In the latest round of Census reapportionment, Ohio was one of two states to lose more than one Congressional seat. An ATR study found that taxes, spending and labor laws were to blame. Among the 18 states that gained or lost seats after this Census, taxes were more than twice as high and spending 33 percent greater in losing states than in the winners. In order to reclaim lost population and jobs, tax increases need to be taken completely off the table. This is achieved in HB 153.
I strongly urge a yes vote on the budget, noting that the inclusion of Ohio’s estate tax repeal – the most punitive of its kind in the nation – is imperative to attracting investment, jobs and population.
If you have any questions, please contact Ohio state affairs manager Joshua Culling at firstname.lastname@example.org.
CC: The Honorable John Kasich
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U.S. Senate Candidate Kevin Coughlin Signs Taxpayer Protection Pledge
Former State Senator Kevin Coughlin has signed the Taxpayer Protection Pledge in his race for Ohio’s U.S. Senate seat. The Pledge, sponsored by Americans for Tax Reform (ATR), commits signers to “oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses … and oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates."
ATR has offered the Pledge to all candidates for federal office since 1987. To date, 41 U.S. Senators and 236 members of the U.S. House of Representatives have signed the Pledge. Additionally, thirteen governors and over 1,200 state legislators have signed the Pledge.
“I want to congratulate Mr. Coughlin for taking the Taxpayer Protection Pledge. The American people clearly showed their displeasure in November with the tax-and-spend policies coming from Washington. They want real solutions that create jobs and cut government spending,” said Grover Norquist, president of ATR.
“By signing the Pledge, Kevin Coughlin demonstrates that he understands the problems of hard-working taxpayers nationwide, but especially the taxpayers of Ohio,” Norquist continued.
“I challenge all candidates for federal office to make the same commitment to taxpayers by signing the Taxpayer Protection Pledge today.”
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Vermont Going in the Wrong Direction on Tobacco Taxation
For the most part, the constant upward pressure on cigarette taxes in the Northeast has subsided, as states have consistently failed to realize expected revenue gains. A number of states are even moving to cut these excise taxes to lure consumers that have begun to purchase contraband cigarettes or migrated to lower-tax jurisdictions. Credible proposals exist in New Hampshire, New Jersey and Rhode Island, while Maine Gov. Paul LePage campaigned on a promise to cut tobacco taxes.
But Vermont isn't getting the memo. A proposal to raise the cigarette tax by $1 per pack has passed out of the Senate Finance Committee. It would move Vermont from the 10th-highest cigarette tax in the nation to the 3rd-highest, at a time when New Hampshire seeks to cut its tax by 10 cents per pack. If the neighboring proposals are successful, the disparity between the two states will expand from $4.60 per carton to $15.60 per carton. States compete for commerce largely on the basis of price, and the Vermont Legislature seems keen on exacerbating its already-stark comparative disadvantage with New Hampshire.
This is obviously the wrong approach. Less than a week after we traveled to New Hampshire to testify in support of the state's proposed cigarette tax cut, ATR sent a letter in opposition to the Vermont tax hike. I'm sure New Hampshire's small business community wishes we hadn't.
To see ATR President Grover Norquist's letter to the Vermont Senate, see below.
19 April 2011
I write today to urge you to follow Gov. Shumlin’s lead in opposing the $1 cigarette tax increase included in H.436. With an existing cigarette tax of $2.24 per pack in the state of Vermont, the dramatic increase to $3.24 would have a significant negative impact on sales and state tax revenue.
Targeted excise taxes have proven to be unstable sources of revenue, and ultimately cause a reduction in tax receipts as consumption is discouraged by the higher cost. Washington D.C.’s 2009 cigarette tax hike ultimately ended up depriving the city of millions of dollars as tax revenue plunged below pre-increase levels. Vermont is already facing significant competition from neighboring states such as New Hampshire due to the other states’ friendlier environment for consumers and businesses. By increasing tax demands on this block of consumers, Vermont will exacerbate the problem by adding another incentive for consumers and businesses to look out of state.
In fact, the trend of perpetual tobacco tax increases in the region is reversing. Credible bills in New Hampshire, New Jersey and Rhode Island to reduce the cigarette tax are being considered. The current governor of Maine campaigned on a promise to cut the cigarette tax. Gone are the days of states in the Northeast competing for higher tobacco taxes; if Vermont increases the excise tax they will face an even more dramatic drop tax-paid sales within its borders.
And that means fewer jobs. Increasing the cigarette tax rate has a significant impact on local businesses such as convenience stores, as tobacco sales make up approximately one-third of their total sales nationally. Consumers will also be less likely to visit these stores to obtain cigarettes and stores thus will forego revenue from any additional items that may have been purchased during the visit.
Rather than making tough choices to resolve an overspending problem approaching $200 million by reducing the size of government, the legislature is looking to taxpayers to help prop up irresponsible spending habits and place an unfair burden on a targeted sector of consumers. While levying an additional tax on cigarettes is a politically easy “quick fix” to shore up state revenue, you must face the economic reality that it is ultimately not in the best interest of the state. We urge you to support a stronger, more prosperous Vermont by opposing all tax increases.
If you have any questions regarding ATR’s opposition to H.436, please contact ATR’s director of state affairs Patrick Gleason at email@example.com
CC: The Honorable Peter Shumlin
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"Bloomberg Thinks He's Stopping People from Smoking"
Yesterday the New York Times ran an instructive piece detailing the correlation between high tobacco taxes and vibrant black markets:
Itinerant cigarette vendors have long been a fixture in some parts of the city, like bodegas that sell individual cigarettes in violation of state law. But with cigarette prices up and the number of smoke-friendly places down, the black market for loosies is now thriving on the streets.
The administration of Mayor Michael R. Bloomberg has outlawed smoking in restaurants, bars and playgrounds, and outside hospital entrances. Even city parks, beaches and pedestrian plazas are now off limits to smokers. Then there have been successive rounds of taxes — the most recent one, a $1.60 rise in the state tax in July — that raised the price of a pack of cigarettes to $12.50 at many Midtown newsstands.
“The tax went up, and we started selling 10 times as much,” Mr. Warner said. “Bloomberg thinks he’s stopping people from smoking. He’s just turning them onto loosies.”
For the squares reading the ATR blog, "loosies" are loose cigarettes sold separate from a full pack.
It's easy to see why single cigarette purchases are popular and profitable in Manhattan. Lonnie Warner, the black market salesman mentioned above, buys cartons of cigarette shipped to New York City (cigarette tax: $5.85 per pack) from Virginia (cigarette tax: 30 cents per pack) illegally and sells them for a profit a couple cigarettes at a time. It's not legal, but it's lucrative.
The NYT story reads like an episode of The Wire, with Warner shuffling from block to block in search of action, retreating to Harlem to replenish his stash via a network of suppliers. The constant struggle for control of the market can be as bloody as the drug trade. New York in particular has seen violence in response to cigarette tax increases for nearly a decade.
In New York such tax hikes are particularly problematic from a budgetary standpoint, as naive politicians claim to be weaning people off cigarettes by artificially increasing the price. In reality they are simply shifting the tax-paid sales to other states or the black market. People don't quit smoking because of high taxes, they merely find cheaper cigarettes. In the case of Lonnie Walker, that means a "criminal" filling the void.
And for every dollar New Yorkers spend on Mr. Walker's contraband cigarettes, state government is losing about 50 cents in foregone revenue. Maybe they'll get the message and cut the tax to a more realistic level, New Hampshire style.
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ATR Supports Revenue Neutral Tax Reform in Georgia
Today Americans for Tax Reform sent a letter to Governor Nathan Deal and the Georgia General Assembly confirming that amended tax reform legislation does not violate the Taxpayer Protection Pledge. The bill will cut personal income tax rates while broadening the sales tax base, but does not constitute a net tax increase.
The revenue neutral proposal is a significant improvement from its first iteration, which constituted a large net tax increase. ATR opposed the initial proposal, as it was in violation of the Taxpayer Protection Pledge, a written promise to oppose all tax increases. Gov. Deal and 54 Georgia legislators have signed the Pledge.
The new proposal brings Georgia’s personal income tax down from 6 percent to 4.5 percent while taxing casual sales, auto repairs and communications. It also adds a $163 million tax exemption for energy. The new bill achieves revenue neutrality by eliminating some of the largest and most harmful tax hikes from its initial language, including tax increases on groceries and tobacco, both of which would have hit Georgia’s small business community.
“I have been pleased to work closely with the tax reform council and the state legislature over the past few months to help craft quality tax reform legislation in Georgia,” said ATR President Grover Norquist. “The final product is something conservatives in the state can support: a serious reduction in marginal tax rates that does not grow the size of state government.”
“I commend the legislature and Gov. Deal for recognizing that tax reform can never include tax increases,” Norquist continued.That axiom is reflected in this amended legislation, which is in compliance with the Taxpayer Protection Pledge.”
“Reducing the personal income tax rate is especially important for Georgia, as it is wedged between two states which levy no personal income tax at all,” Norquist concluded. “As Gov. Deal and the legislature continue to work together to reduce the size and burden of state government, the next goal is clear: Scrap the income tax altogether.”
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New Hampshire Swimming Against the Tide on Tobacco Taxes
It seems like we've seen a new tobacco tax increase pop up every day at the state level over the past few years. Though a dubious revenue raiser and all-around ill-advised policy change, tobacco tax hikes are politically palatable ways for politicians to "balance" their budgets on the backs of an unpopular minority without making difficult decisions about how to shrink the size of government.
Most recently, Illinois (surprise!) is looking at a 102 percent cigarette tax increase to help fund a massive ongoing spending project. Nevermind the fact that roughly 80 percent of such tax hikes at the state level fail to meet their revenue projections. Recently New Jersey and Washington, D.C. actually realized a net revenue loss after increasing the levy.
Some states, however, are beginning to realize that tobacco tax hikes very rarely raise the amount of revenue promised, leaving gaping budget holes in their wake. Maine and Vermont have begun serious discussions about cutting taxes on tobacco and alcohol. But New Hampshire may be the closest to getting a bill through the legislature.
HB 156, which would reduce cigarette taxes by 10 cents per pack while also bringing down the rate on other tobacco products, passed out of committee on a 14-5 vote and looks to be headed for a floor vote in the House this week. With tobacco taxes especially high in the Northeast, HB 156 would increase New Hampshire's comparative tax advantage in the region, helping along the state's small business environment relative to that of its neighbors.
And the bill could actually be a boon to government coffers as well. A study done by the University of Southern New Hampshire shows that a 10 cent-per-pack tax cut could raise as much as $13 million for the state as consumers from other jurisdictions come to New Hampshire to purchase tobacco at a lower cost.
To see ATR's vote alert to the New Hampshire General Court, see below.
Vote "YES" on HB 156
Americans for Tax Reform urges you to vote “YES” on HB 156, which reduces the excise tax on cigarettes and other tobacco products.This is a commonsense measure to reduce New Hampshire’s tax burden on the job-creating private sector and improve its competitive tax advantage with other New England states.
HB 156 reduces New Hampshire’s tax burden while states like New York and Connecticut allow theirs to continue to rise. States compete – for jobs, investment and people. New Hampshire has set itself apart in the past with its low tax burden. By reducing the tobacco tax, consumers from other states will be even more inclined to come to New Hampshire to purchase tobacco, along with the gasoline and food they buy during their trip.
HB 156 is about getting government out of the way of the private sector. Convenience stores and other retailers that realize a significant portion of their incomes via tobacco sales are struggling like any other small business. In the recent past in New Hampshire and elsewhere in the region, they have been a target of state government through consistent tax hikes. Now, as the small business community looks to pull itself out of the economic downturn and continue to create jobs, it’s time to give them (and their consumers) a tax break.
New Hampshire can be a national leader on this issue. Other states in the region like Maine and Vermont have begun to discuss tobacco tax reductions. They recognize that tobacco tax revenue is an unstable funding source for state government, and that most attempts to fund ongoing expenditures via higher tobacco taxes in other states have failed miserably. In keeping with New Hampshire’s low-tax legacy, we encourage you to lead on this issue by supporting HB 156.
Support HB 156, which gets government out of the way of small business.
Stand up for Taxpayers and Consumers.
Vote “YES” on HB 156.
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IL: Here We Go Again
Illinois Senate President John Cullerton wants to raise cigarette taxes. Again. This is two months after billions of dollars in personal and corporate income tax increases (a cigarette tax hike almost made it through as well, though it was ultimately removed from the package). And it comes after two years of failed attempts to raise the cigarette tax, which lost support due to its impact on border retailers and the poor.
Cullerton ostensibly wants to use the new revenue generated by the tax for a massive multi-billion dollar statewide construction project:
Sen. President John Cullerton, D-Chicago, proposed the measure as a way to fund the state's massive $31 billion capital project, and Clayborne is not yet sure if he agrees with Senate leadership.
I'm skeptical of his motive (this is a tax increase Cullerton has wanted for a long time), but even so, there are few funding mechanisms for a massive capital project than cigarette taxes. They represent a perpetually declining source of revenue, even moreso after a 102 percent tax increase. To tie an enduring spending program to an unstable revenue source is just silly. But then again, this is Illinois.
To see ATR's letter in opposition to Cullerton's tax increase, see below.
March 16, 2011
Here we go again. I write today for what seems like the hundredth time in opposition to John Cullerton’s cigarette tax increase. Every year a cigarette tax increase is introduced in Illinois, and every year it is recognized as a regressive tax increase on small businesses and voted down. This year should be no different. I urge you to vote no on Sen. Cullerton’s cigarette tax increase.
It seems like just yesterday that you slammed Illinois with billions of dollars in tax increases at the behest of Gov. Quinn. I suppose that’s because it practically was. Now Sen. Cullerton is back for yet another bite at the apple. Why is there no discussion of serious spending restraint? Why is the tax hike reflex so strong and so sudden in Illinois?
And raising the tobacco tax is a particularly harmful idea, especially when attempting to close a budget gap. Because tobacco is a declining source of tax revenue (even more so after artificially increasing its price), it rarely raises the amount of money projected. New Jersey and Washington, D.C. notably saw a net decline in revenue after cigarette tax increases in recent years. And with Illinois’ unemployment rate at 11.5 percent, now is certainly not the time to raise taxes on retailers, for whom tobacco represents nearly one-third of sales nationwide.
I am keeping this short because there is not much left to be said. At ATR we believe there are better solutions to budget problems than painful tax increases. And we do not believe in attempting to fund enduring spending programs with declining revenue sources. Because Sen. Cullerton’s proposal runs afoul of both of those principles, I urge you to vote NO.
For more information on this issue or on the broader issue of tax and budget policy, please contact ATR state affairs manager Joshua Culling at firstname.lastname@example.org.
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ATR Applauds Kasich's First Budget
Today Americans for Tax Reform (ATR) commended Gov. John Kasich’s FY 2012-13 budget proposal, which eliminates an $8 billion hole without raising taxes. Relying on commonsense spending reductions and budgetary reforms, Gov. Kasich was able to balance Ohio’s books while reducing the personal income tax burden nearly $850 million.
Gov. Kasich is one of 13 sitting governors who have signed the Taxpayer Protection Pledge, a written commitment to constituents to oppose and veto all tax increases. The governor joins 24 Ohio state legislators in signing the Pledge, which is maintained by ATR.
The biggest complication in dealing with the state budget comes from the expiration of billions of dollars in federal “stimulus.” The governor’s predecessor leaned heavily on Washington, D.C. to keep the budget ostensibly in balance, only to see Ohio deep in the red as the program came to an end.
“While the tide has clearly turned in Ohio, this should come as little surprise,” said ATR President Grover Norquist. “Gov. Kasich campaigned from day one on the idea that the status quo in Columbus is unsustainable. Today’s announcement is simply the governor putting his money where his mouth is.”
“And he is doing it the responsible way,” Norquist continued. “With the expiration of President Obama’s failed stimulus plan, the need for spending reductions is a fact of life. But to relieve pressure on those facing cuts, he is reforming the spending side of the ledger. The cost curve for local government compensation is being bent downward; Medicaid costs are being contained; corrections are being streamlined where possible. These are humane, sustainable spending cuts.”
“And most importantly,” concluded Norquist, “Gov. Kasich is putting the brakes on the rampant tax increases that have chased business, investment and people across state lines. Until tax hikes are definitively off the table, government will not shrink and Ohio cannot prosper. And tax increases are most certainly off the table for the entirety of the Kasich Administration.”
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ATR Commends Walker, Fitzgeralds for their Leadership
Today Americans for Tax Reform (ATR) commended Wisconsin Governor Scott Walker, Senate Majority Leader Scott Fitzgerald and House Speaker Jeff Fitzgerald for their principled backing of collective bargaining reform. Their unwavering support came in the face of intense, well-funded backlash from labor unions and their allies in the White House.
The bill, which passed the House this afternoon and is headed to Gov. Walker’s desk, will help address the state’s $3.6 billion overspending problem by requiring public employees to pay a more realistic share of their pension and health benefits and by eroding some aspects of collective bargaining for government employees. It also ends the practice of automatically deducting union dues from government employee paychecks.
ATR President Grover Norquist released the following statement:
“I commend Scott Walker, Scott Fitzgerald and Jeff Fitzgerald for their unwavering commitment to the people of Wisconsin in standing up to a handful of union bosses. This is what an electoral mandate looks like. Republicans campaigned on these commonsense reforms leading into November, won the election, and are carrying out their promises. But to do it in this environment, with the White House and its Big Labor allies throwing everything they have into the fight against reform, proves that these Wisconsin Republicans have steel in their spines.
“Wisconsin is in an economic hole, and collective bargaining is a fiscal issue. By soliciting shared sacrifice from government unions and bending the compensation cost curve downward, Gov. Walker and Republicans in the legislature are ensuring that they can balance Wisconsin’s budget without painful tax increases.
“Democrats have decided the electoral drubbing of 2010 does not present a clear enough mandate for change. Instead, they literally fled the state while President Obama’s allies planned to bankroll an effort to remove from office those Republicans who won a democratic election just four months ago.
“The Republicans, on the other hand, decided to get down to the task of governing. Hats off to these heroes of the conservative movement.”