Kelly William Cobb
Brace Yourself Michigan: Granholm's Push for Higher Taxes Continues
As expected, Governor Jennifer Granholm has widened her search for additional tax revenue in this year’s budget. Last week, she floated hikes in both the cigarette and beer tax, but this week the proposal became even clearer – and much worse.
Digital and Amazon eTaxes Pass in North Carolina Budget
The following was originally posted on www.StopETaxes.com.
Lawmakers in the North Carolina General Assembly voted on Wednesday to approve a state budget that includes both an affiliate nexus etax and a new tax on digital goods.
While the state estimates the new etaxes will generate a combined $36 million - out of nearly $1 billion in higher taxes included in the budget - retailers have already ended programs to collect what is likely an unconstitutional tax. The Amazon Tax requires out-of-state retailers with no nexus in North Carolina to collect and remit taxes to the state when consumers arrive from a click-through advertisement on a website based in North Carolina.
The tax was included despite strong opposition from in-state advertisers who will directly lose business from retailers ending advertising contracts to avoid collecting the unconstitutional tax. Similar measures were vetoed in Hawaii and California last month for this very reason.
The budget was produced by a Senate and House conference committee on Tuesday and rapidly approved by the legislature on Wednesday. While the Democrat controlled General Assembly and Governor Perdue (D) negotiated for weeks on various tax hikes to be included, the eTaxes were consistently left on the table.
Jennifer Granholm Floats Cigarette and Beer Tax Hikes in Michigan
As budget negotiations continue behind closed doors in Lansing, Gov. Jennifer Granholm (D) has floated at least two new tax hikes on cigarettes and beer.
(photo by Matt Hampel)
Streamlined Sales Tax Project Helps Raise Taxes in Illinois
ATR Policy Brief: Internet and e-Commerce Taxes
ATR has released a new Policy Brief covering all state-level efforts to impliment e-taxes on the internet and online purchases. We mentioned earlier this year that with 46 states drowning in the red, money hungry politicians have become crafty at finding new ways to raise revenue - and taxing the fantastic free-market experiment that is the Internet is certainly no exception.
The brief covers four primary areas of taxation:
- Amazon Tax (or "affiliate nexus tax"): An unconstitutional effort to require out-of-state online retailers to collect taxes for the state.
- Streamlined Sales Tax Project: A tax-and-spend cartel that aims to extend tax collection to out-of-state retailers and rewrite states' tax codes behind closed doors to raise tax revenue - all under the guise of simplifying the tax code.
- Digital Goods Tax: A state-by-state effort to tax music, ringtones, books, and movies purchased online, as well as other digital goods.
- Internet Access Tax: New taxes on plugging into the internet.
Rhode Island Lawmakers Shoot Themselves in Foot Over eTaxes
The following is cross-posted at www.StopETaxes.com.
Last week, the Governors of Hawaii and California vetoed Amazon eTax bills that would unconstitutionally force out-of-state online retailers to become tax collectors. In vetoing the bills, the governors argued they were net tax increases and violated the interstate commerce clause. Additionally, the governors noted that online retailers would terminate contracts with in-state advertisers, as the legislation assumed these business affiliations provided a strong enough "nexus" in the state to force retailers to collect the tax. By simply severing this connection, retailers would no longer be forced to collect the tax.
However, Rhode Island lawmakers and the Division of Taxation failed to get the hint. After retailers sent letters to their advertisers and to legislators in Rhode Island stating they would be ending advertising agreements to avoid the unconstitutional law, lawmakers and Gov. Carcieri passed the tax hike as part of the budget anyway. Then, as if completely unaware of what had just happened, the state's tax collectors showed up late to the party and sent a notice to "a list of the top 100 internet retailers" explaining that they now need to collect the tax. This comes despite the fact that under current law, the Division of Taxation is in charge of collecting tax directly from consumers on purchases made out of state.
Thanks for the courtesy note, Rhode Island Division of Taxation, but the retailers already decided not to do your job for you.
Did policymakers in Rhode Island and the Division of Taxation not get the hint that passing a law in clear violation of the U.S. Constitution and current Supreme Court jurisprudence would cause their own in-state advertisers to lose business? Not only could they have looked to their counterparts in California and Hawaii, but lawmakers in Rhode Island were also informed through press and otherwise that termination of these contracts would occur if the law was passed.
Hawaii and California based advertisers have kept their business thanks to these vetoes, while Rhode Island policymakers simultaneously passed an unconstitutional law and caused in-state companies to lose business. Let this contrast between states be a lesson for other lawmakers around the country.
Click here for ATR's letter to Gov. Carcieri urging his veto of the budget, which included the eTax.
Arizona Standoff Continues: Legislature Rejects Gov. Brewer's Tax Hike; Brewer Vetoes Budget
In the early hours of Wednesday morning, the Arizona Legislature completed their annual session by sending Gov. Brewer a budget that rejected her massive $3 billion sales tax hike.
The rejection of the 17.8% tax hike came even as legislative leadership and the Governor had crafted a verbal budget compromise agreement that would have sent the tax increase to the ballot, while establishing a flat state income tax in Arizona.
While Americans for Tax Reform strongly advocates for a flat tax, the compromise agreement would have been at least a net $2.5 billion tax hike in Arizona and a violation of the Taxpayer Protection Pledge, a promise 9 state senators and 20 state representatives have made to oppose any and all tax increases. From ATR's press release:
eTaxes Vetoed in Hawaii, California
Unemployment and President Obama's Fudged Economics
The Department of Labor’s report this morning that unemployment rose to 9.5% nationally – a 26 year high – should come as a surprise to the Obama administration, who used a highly questionable formula to determine that the stimulus package would create more jobs. According to the original White House analysis, stimulus spending would increase GDP by 3.7% and a “1% increase in GDP corresponds to an increase in employment of approximately 1 million jobs.”
Not so. To the left, the blog Innocent Bystanders has conveniently highlighted just how well this White House multiplier has worked to stimulate GDP growth and thus create jobs. The graph shows the White House estimates for unemployment with and without the stimulus, while the red dots depict what actually occurred. Luckily, the White House has already come up with a terrific non-falsifiable theory called “jobs created or saved.” Under the assumption that the White House is never wrong, if the estimated 3.5 million jobs weren’t created, the stimulus must have saved them! (Note: the economy shed 467,000 jobs last month.)
eTaxes Galore in North Carolina's Budget
The following is cross-posted at www.StopETaxes.com.
As North Carolina's budget remains stalled in the legislature, proposed tax hikes on internet transactions are taking on heat.
Most notably, the budget includes an "affiliate nexus" etax, which requires out-of-state retailers to collect taxes on North Carolina consumers. The tax flies in the face of the U.S. Supreme Court's decision in Quill v. North Dakota, which determined that such a tax violates the interstate commerce clause of the U.S. Constitution. As a result, the proposed tax hike has caused online retailers to fire back against the legislature, noting the unconstitutionality of such a tax collection scheme.
The budget also would apply the sales tax to digital goods purchased online, such as music, movies, ringtones, and films. Together with the nexus tax, these provisions constitute a $31 million tax hike on North Carolinians.
Meanwhile, negotiations between the House and Senate budget writers have broken down and this week legislators are expected to pass "continuing resolutions" to keep state government operating. A conference committee is poised to work out the budget differences in the coming weeks. All told, the budget contains nearly $2 billion in tax and fee increases.
(photo by Mr. T in DC)