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Kelly William Cobb

eTax Wrapped into Rhode Island Budget


Posted by Kelly William Cobb on Tuesday, June 23rd, 2009, 2:40 PM PERMALINK


The following is cross-posted at www.stopetaxes.com.

An etax on all goods purchased online has been roped into the Rhode Island House Budget and is slated for a vote tomorrow.

The "affiliate nexus tax" was previously under consideration by the House Finance Committee, who also drafts the state budget.  At the time, Stop eTaxes reported that the Committee pegged the tax hike at roughly $100 million.

However, since including the etax in the state budget, the House Finance Committee Budget Report has downgraded the tax hike from $100 million to zero.  This is likely the result of the tax being unconstitutional and thus unenforceable by the state.

In addition to leaving a law inviting costly legal challenge on the state's books, the etax inadvertently punishes in-state advertisers and other businesses.  To circumvent federal interstate commerce law, it expands the definition of doing to business to include an out-of-state retailer that advertises through a Rhode Island based website.  This means retailers could simply end advertising agreements with in-state advertisers to avoid paying the unconstitutional tax.

CLICK HERE NOW to write your Rhode Island legislator in opposition to the etax included in the budget package.

Click here for ATR's letter opposing the affiliate nexus tax.  Also, click here for ATR's letter opposing the entire budget, which includes a massive 12% spending increase, as well as higher gas and capital gains taxes.

(photo by J. Stephen Conn)

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New Jersey: Moving from Highest Tax Burden to...Higher-est Tax Burden


Posted by Kelly William Cobb on Tuesday, June 16th, 2009, 4:18 PM PERMALINK


If Gov. Jon Corzine and the State Legislature have their way, we can all congratulate New Jersey for stealing the number one spot for highest state/local tax burden in the country from…New Jersey. 

That’s right. This week, the legislature is poised to vote on Gov. Corzine’s proposed budget that raises taxes by well over $1.5 billion.  New Jersey would essentially outdo itself for most inhospitable tax climate in the country.
 
Under the budget package passed by the Assembly and Senate Budget Committees, the personal income tax rate will become even more progressive with a top rate of 10.75% – just shy of the highest in the nation. Note that two-thirds of small businesses also pay under this tax rate. This comes despite the fact that New Jersey has had a net out-flow of residents every year for the past ten years. Two of the top destinations for those who left were Pennsylvania and Florida, which have flat income tax rates of 3.07% and 0% respectively. Surprise, surprise.
 
The budget also targets alcohol beverage and tobacco taxes for an estimated $40 million-plus in new revenue. Having completely failed to learn from history, policymakers are proposing a 12.5-cent per pack cigarette tax hike, despite the fact that the last time the cigarette tax was raised in New Jersey, the state collected $52 million less than projected and $22 million below what they collected before the tax hike. Similarly, the last time the federal alcohol tax was hiked, it took over a decade to raise more revenue.  As sales decline due to higher taxes, cigarettes and alcohol become shrinking and exceptionally volatile revenue sources.  These tax hikes are also poised to seriously impact the state’s huge hospitality and retail industry, where businesses will be forced to cut jobs, wages, or downsize to compensate from declining sales.
 
Businesses will see numerous tax increases, including the small business tax hike mentioned above.
  • Extending the 4% corporate tax surcharge that was set to expire at the end of June.
  • A $350 million payroll tax hike that resulted from so many people collecting unemployment checks (probably the result of business taxes that dramatically stifle job creation).
  • Raising the health insurance tax from 1% to 2.25%, which will also make health care most costly.
To top it off, despite having the highest property taxes in the nation – at $6,500 per household – the budget suspends property tax deductions and rebates for all but a few New Jersey residents.
 
If you need any other reasons to congratulate New Jersey on their fiscal irresponsibility, make sure to read our prior blog post on Gov. Corzine’s budget.
 
New Jersey Residents: CLICK HERE to write your state lawmakers and Governor Corzine in opposition to the budget package.
 
Also, click here and here for ATR’s letters to the New Jersey legislature.

(photo by mtstradling)

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Louisiana Legislature Pushing Internet Access Tax


Posted by Kelly William Cobb on Tuesday, June 9th, 2009, 6:05 PM PERMALINK


The following is cross-posted on www.stopetaxes.com.

Last Thursday, the Louisiana House of Representatives approved a 15-cent per month tax on Louisianans’ internet access. While it sounds like a small sum, the bill (HB 569) is expected to generate $2.4 million a year beginning in 2010.

The tax hike also attempts to circumvent federal law. Under the Internet Tax Freedom Act, recently reauthorized in 2007, states are barred from adding any new taxes on internet access, which is precisely what HB 569 attempts to do. Calling the tax a “fee” to bypass this law is not only misleading, but would invite significant and costly legal challenge if adopted.

While proponents of the bill, such as Attorney General Buddy Caldwell and bill sponsor Rep. Mack "Bodi" White (R-Denham Springs), argue the money will go toward the commendable goal of fighting cybercrime, funding for investigations and prosecutions should come from existing budgets set for these priorities – not new taxes on Louisiana residents. Claiming that more revenue from another tax is necessary shows that this is the lowest – not the highest – priority.

 

The bill passed 81-9 in the House and now heads to the State Senate. Luckily for Louisianans, Gov. Bobby Jindal is expected to veto the measure if passed by the legislature.

Click here for a copy of ATR's letter to the Louisiana State Senate in opposition to the measure.

(photo by stevesheriw)

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Tennessee eTax Stalls in Committee


Posted by Kelly William Cobb on Tuesday, June 2nd, 2009, 2:12 PM PERMALINK


The following is cross-posted on www.StopETaxes.com.

Good news for Tennessee taxpayers.  A proposal to tax online purchases in Tennessee stalled today after the bill was pulled from committee consideration.  One of at least seven "affiliate nexus tax" proposals around the states, the bill would tax all online sales by Tennesseans if the retailer advertised through an instate company, website, or blogger.

Instead of bringing the bill (HB 1947/SB 1741) before the House Finance, Ways, and Means committee, however, the measure was "taken off notice," meaning it is up to the bill sponsor to put it back on the committee's agenda.

While the "amazon tax" attempts to curb federal interstate commerce law that prevents states from forcing out-of-state retailers to collect sales tax, the Tennessee Department of Revenue (DOR) even admits in its fiscal note that the bill would likely not be sufficient to permit the state to collect taxes.  Similar proposals in other states have been estimated to raise taxes by hundreds of millions of dollars.  However, likely recognizing that the measure is currently undergoing significant legal challenge in New York, the DOR argued the amount of new revenue would be insignificant, as its enforcement is unconstitutional.

CLICK HERE NOW to write your legislator and ensure this onerous bill is not brought back up in committee.

Also, click here for ATR's letter of opposition to the House and Senate Finance, Ways, and Means Committees.

(photo by euthman)

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eTax on Internet Purchases Pending in Rhode Island


Posted by Kelly William Cobb on Friday, May 29th, 2009, 2:08 PM PERMALINK


This following is cross-posted on www.StopETaxes.com.

The Rhode Island House Finance Committee held a hearing on Tuesday regarding affiliate nexus tax, or "Amazon Tax", legislation that would tax virtually all goods purchased via the internet.

In addition to being a $100 million tax increase on Rhode Island consumers, House Bill 6164 would fly in the face of a supreme court ruling and the interstate commerce clause of the U.S. Constitution that bars states from requiring out-of-state retailers to collect a sales tax.  The bill will also put Rhode Island at a competitive disadvantage with other states working to ensure that internet transactions remain tax free.

The House Finance Committee has decided to reevaluate the measure and held it for further study following their hearing, however it is likely that the measure will reemerge in the coming weeks.

Rhode Island residents, CLICK HERE NOW to write your state legislator in Rhode Island and tell them to oppose taxes on internet purchases!

Similar proposals were also under consideration in Minnesota and have been passed by the legislature in Hawaii.  Click the following links for letters to Hawaii Gov. Linda Lingle and Minnesota Gov. Tim Pawlenty urging their opposition to the bills.

Also, see below for ATR's letter of opposition to the Rhode Island House Committee on Finance or click here for a PDF copy.

The Honorable Steven M. Costantino
Chairman, House Finance Committee
Rhode Island House of Representatives
120 Courtland Street
Providence, RI 02909
 
Dear Representative Costantino,
 
I write in opposition to House Bill 6164 and urge you to reconsider your support for the measure.  This bill would require out-of-state retailers to collect and remit the state’s sales tax on products purchased online by Rhode Islanders. The measure would not only circumvent federal interstate commerce law and the Dormant Commerce Clause of the United States Constitution; it would also put Rhode Island at a competitive disadvantage, encourage online-black markets, and – worst of all – raise taxes on Rhode Islanders.
 
Current jurisprudence, under the Supreme Court’s ruling in Quill v. North Dakota, requires that a business have a physical presence or “nexus” in a state in order for the state to compel that business to collect and remit sales taxes. However, House Bill 6164 attempts to circumvent this federal law by presuming that a company has a physical nexus if business is solicited through a third-party advertiser in the state – thereby requiring the retailer to collect sales tax. Not only does this legislation fly in the face of the Supreme Court’s ruling, but it will bring an unnecessary lawsuit to Rhode Island at a time when the affiliate nexus tax is already undergoing significant legal challenge in New York.
 
The affiliate nexus tax is also a net tax increase on Rhode Island residents and consumers. Economists of all political and ideological stripes concur that increasing taxes during a recession is bad for the economy and worse for consumers.
 
Additionally, this effort puts Rhode Islanders at a competitive disadvantage by inadvertently punishing in-state advertisers and other businesses. This tax expands the definition of doing business to include a retailer that, while based out of state, advertises on a Rhode Island-based website using a banner ad or other link. If advertising with Rhode Island-based websites were to create a nexus for out-of-state retailers, these retailers will simply choose to terminate advertising agreements with Rhode Island-based websites.
 
Finally, taxing consumers that download products such as music and movies from out-of-state retailers will encourage illegal downloading at a time when providers of these digital goods are working hard to establish a legitimate online market.  The bill would essentially incentivize online piracy, reversing a hard fought trend toward legal downloads.
 
For these reasons, I urge you to oppose any effort to enact an affiliate nexus tax in Rhode Island. If you have any questions, please contact Kelly Cobb, state affairs manager, at (202) 785-0266.
 
Onward,
Grover Norquist
 
CC:         Rhode Island House Finance Committee

 

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Urge Governor Quinn to Veto the Alcohol Tax


Posted by Kelly William Cobb on Friday, May 29th, 2009, 11:49 AM PERMALINK


On Tuesday, ATR reported on the Illinois legislature's massive tax hike on alcohol, soft drinks, and candy.  Now the bill containing $600 million in new annual taxes has landed on Governor Pat Quinn's desk.  The backroom deal struck by legislators would raise the tax on distilled spirits by 90%, wine by 90%, and beer by 21%.

Gov. Quinn has rightly stated his reluctance to such tax increases on the hospitality industry, especially as the city vies to host the 1016 Summer Olympics.  However, your help is needed to urge him to veto the bill.

Illinois residents, CLICK HERE NOW to write Gov. Quinn and urge him to veto HB 255.

See below for ATR's letter to the Governor requesting his veto of this onerous tax increase or click here for a PDF copy.

The Honorable Pat Quinn
Governor, State of Illinois
207 State House
Springfield, IL 62706
RE:      Vote Request for House Bill 255
 
Dear Governor Quinn,
 
I write to urge your veto of House Bill 255 that would dramatically raise taxes on alcohol beverages, soft drinks, and candy. This bill will likely do little to raise the estimated hundreds of millions of dollars in new revenue, but it will hit retailers and the hospitality industry the hardest.
 
HB 255 would raise the tax on distilled spirits by 90% to a staggering $8.55 per gallon. Similarly, the tax on wine would rise by 90% and the tax on beer by 21%. Additionally, the amendment would restructure the tax code to raise taxes on soft drinks and candy.
 
These tax hikes will almost certainly result in lower tax revenue for the state as consumption naturally declines. Just this week, Kentucky announced that after applying the state’s 6% sales tax to alcohol beverages earlier this year, total tax revenue dropped by over $1.7 million and was 55% below last year’s revenue at this time. Similarly, tax revenue from wine consumption in Kentucky dropped by more than $75,000. Furthermore, the last time the federal government raised the distilled spirits excise tax, it took 11 years to bring in more revenue.
 
This tax increase will result in increased smuggling of alcohol products across state lines. Illinois already has alcohol beverage taxes nearly double that of all neighboring states – even without the tax hike. This proposed tax increase will push the tax on distilled spirits to nearly 4 times that of Illinois’s neighbors and will result in significant smuggling across the borders – harming tax revenue and retailers alike.
 
If Illinois needs to raise money for capital infrastructure improvements, it should undertake privatization projects similar to that employed by the City of Chicago and the neighboring state of Indiana. In 2005, Chicago leased the Chicago Skyway landing the city $1.8 billion in new funding and allowing them to pay off debt and use the money for other operating costs. Similarly, in 2006, the Indiana Toll Road was leased for an upfront payment of $3.8 billion. Privatization projects would invest in infrastructure, create jobs, promote economic growth, and bring billions into the state’s coffers – all while avoiding unnecessary tax increases.
 
As you have rightly stated your reluctance to raising these taxes, I urge you to stand up for consumers and small businesses to veto the distortionary and excessive tax increases in House Bill 255. If you have any questions, please contact Kelly Cobb, state affairs manager, at (202) 785-0266.
 
Onward,
Grover Norquist

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Wisconsin's Latest Round of Budget Fixes


Posted by Kelly William Cobb on Tuesday, May 26th, 2009, 3:26 PM PERMALINK


Add Wisconsin's cell phone tax to the list of temporary tax hikes that are anything but temporary.

Earlier this year we reported on Governor Jim Doyle's proposed budget with $1.7 billion in higher taxes, as well as his "state economic stimulus bill" that amounted to $1.2 billion in tax hikes.  Now, Doyle has announced further proposals to rectify the state's $6.6 billion overspending problem, including extending the tax on cell phones.

In 2003, the state created the cell phone tax to upgrade 911 response services.  When the upgrade was done, it left a balance of $20 million in the state's coffers, which was slated to be returned back to consumers as a credit on their phone bill.

However, Gov. Doyle has now proposed extending the cell phone tax, raising it by 75-cents, and then making it applicable to all landlines as well.  Oh, then he would then add another 56-cent tax to cell phones for the state's Universal Service Fund, which has nothing to do with cell phone usage.  All told, the proposal amounts to a $100 million per year tax increase on cell phone users.

The latest round of budget fixes also includes raiding the $165 million hospital tax just passed in February.  While the tax hike was originally sold as a way to provide increased care for medical assistance patients, it would now go toward fixing Governor Doyle's fiscal mismanagement.

The proposals are currently being considered by the Joint Committee on Finance, which is aiming to complete the FY2009-2011 budget by the end of the month.

CLICK HERE NOW to write the Governor and your state lawmakers urging them to oppose any new tax increases in the Wisconsin budget.

(photo by imdrugfree)

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Shocker: Illinois Legislature Makes Backroom Deal to Raise Taxes


Posted by Kelly William Cobb on Tuesday, May 26th, 2009, 11:35 AM PERMALINK


Surprise!  The Illinois legislative leadership made an eleventh-hour deal to dramatically raise taxes on alcohol, soft drinks, and candy and shoved it through the legislature within two days.  Ok, who really expected accountable government to return to the Prairie State after all?

To help fund a massive transportation spending package (HB 255, HB 312, HB 2400), a backroom deal was made between Senate President John Cullerton (D) and legislators to raise taxes by some $600 million per year.  The tax amendment was proposed last week on the 20th and passed both chambers of the legislature by the 21st.

If signed by Gov. Pat Quinn (D), the tax on distilled spirits would rise by 90% to a staggering $8.55 per gallon.  Similarly, the tax on wine would rise by 90% and the tax on beer by 25%.  The amendment also sneekily restructured the tax code to reclassify the tax status of soft drinks and candy to raise even more money.

While all tax hikes are avoidable, the worst part is that these taxes were especially so.  The revenue will be directed toward a $26 billion transportation infrastructure spending plan.  However, as the legislature could have learned from their fellow Democrats in Chicago or from the neighboring state of Indiana, privatization projects for transporation could have fixed or built new infrastructure without raising taxes.

In 2005, Chicago leased the Chicago Skyway landing the city $1.8 billion in new funding and allowing them to pay off debt and use the money for other operating costs. Similarly, in 2006, the Indiana Toll Road was leased for an upfront payment of $3.8 billion.  Privatization projects invest in infrastructure, create jobs, promote economic growth, and bring billions into the state’s coffers, all while avoiding unnecessary tax increases.

As the legislature considered the tax increase, Gov. Quinn rightly stated his hesitation to raise the alcohol tax.  Don't get too excited though: the Governor is continuing to push for a 50% increase in the income tax.

Click here for a copy of ATR's letter to the legislature opposing the tax increase.

(photo by Vidiot)

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Governor Tim Pawlenty: Hero of the Taxpayer


Posted by Kelly William Cobb on Friday, May 15th, 2009, 11:49 AM PERMALINK


After the legislature proposed billions in higher taxes this year, Minnesota Governor Tim Pawlenty (R) announced yesterday that he will trim and balance the state's budget without raising taxes.

Earlier this week, the legislature finished passing a series of budget bills that authorized $34 billion in spending over the next year.  However, in a glaring sign of fiscal irresponsibility, the legislature's budget overspends anticipated revenues by nearly $3 billion.  Gov. Pawlenty, a signer of the Taxpayer Protection Pledge to oppose all tax increases, announced he would use a line item veto to balance the budget, while maintaining his commitment to veto any tax increases.

The Democratic-Farmer-Labor (DFL) led legislature has been pressing for numerous tax hikes since the beginning of the legislative session.  The Senate proposed $2.2 billion in higher income taxes, while the House proposed $1.5 billion in higher taxes on resident and small business income, digital goods, cigarettes, and alcohol beverages, as well as eliminating a number of tax deductions.

Legislators recently approved a bill proposed by the Tax Omnibus Conference Committee that would raise $1 billion in higher taxes on income, alcohol beverages, and credit card companies. However, Gov. Pawlenty - maintaining his no-tax pledge - quickly vetoed the bill last week.

Below is ATR's press release commending Gov. Pawlenty or click here for a PDF version.

Taxpayer Group Commends Gov. Tim Pawlenty
for Pledging to Balance Budget Without Tax Increases
 
Washington, D.C. – Americans for Tax Reform commends Gov. Tim Pawlenty (R) for upholding his Taxpayer Protection Pledge and vowing to balance Minnesota’s budget without any tax increases passed by the legislature.
 
Gov. Pawlenty is a signer of the Taxpayer Protection Pledge, a written commitment to Minnesotans to “oppose and veto any and all efforts to increase taxes.”
 
Minnesota lawmakers have pushed for over a dozen new tax increases this year. The Senate proposed $2.2 billion in higher income taxes, while the House proposed $1.5 billion in higher taxes on resident and small business income, digital goods, cigarettes, and alcohol beverages, as well as eliminating a number of tax deductions. Legislators recently approved a bill proposed by the Tax Omnibus Conference Committee that would raise $1 billion in higher taxes on income, alcohol beverages, and credit card companies. However, Gov. Pawlenty quickly vetoed the bill last week.
 
“Raising the income tax would destroy small businesses that are the state’s primary job creators,” said Grover Norquist, president of Americans for Tax Reform. “Additionally, taxing declining revenue sources like alcohol or cigarettes will only lead to more tax increases in the future to compensate. I applaud Gov. Pawlenty for his leadership and dedication to the taxpayers and consumers of Minnesota by maintaining his steadfast opposition to higher taxes.”
 
On Wednesday, the legislature finished passing a series of budget bills that authorize $34 billion in spending over the next year. However, the passed budget overspends anticipated revenues by nearly $3 billion. Gov. Pawlenty yesterday announced he would use a line item veto to trim and balance the budget without raising taxes.
 
“It is fiscally irresponsible for the legislature to approve a budget that overspends revenues for the next year, while continuing to press for tax hikes on small businesses, residents, and consumers,” added Norquist. “Thankfully, Gov. Pawlenty understands that you do not raise taxes and take more money out of Minnesotans’ pockets during a recession. By vetoing tax increases and vowing to trim the bloated state budget, Gov. Pawlenty has shown he is truly a hero of the taxpayer.”

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Hawaii: The Islands of Aloha...and Higher Taxes


Posted by Kelly William Cobb on Monday, May 11th, 2009, 3:08 PM PERMALINK


Well, it's official.  The "Islands of Aloha" just became the "Islands of...eh...I can probably find a better deal in Puerto Rico."

As expected, the Hawaii Legislature last week overrode Governor Linda Lingle's vetoes of income, hotel, property sales, and smokeless tobacco tax increases.  The move followed a public ceremony and tax rally with Gov. Lingle on May 7 for citizens to watch her veto the four tax hikes.
 
While ATR applauds Governor Lingle, a Taxpayer Protection Pledge signer, for vetoing these oneorus tax hikes, the Governor wrongly signed HB 1175 into law, which increases the tax on cigarettes to $3 per pack.  Click here, here, and here for letters to Gov. Lingle urging her to keep her Pledge.
 
In addition to higher tobacco taxes, here’s a look at some of the other new taxes citizens, visitors, and businesses will enjoy:
  • SB 1111 increases hotel tax occupancy tax by 28%. This is an especially good idea given that Hawaii’s tourism industry is already suffering.  What better way to continue to discourage tourists to spend their money in Hawaii than making accommodations more expensive?
  • HB 1747 increases the top income rate to 11% - now the highest in the nation.  This tax increase will be imposed on individuals and about 37,000 small-business owners in Hawaii, arguably the backbone of the Hawaiian economy.
  • HB 1741 raises the tax on sales of property and second home purchases.  Apparently, now is not the time to buy or sell in Hawaii.
Additionally, ATR commends Taxpayer Protection Pledge signers Representative Cynthia Thielen and Senator Fred Hemmings for reversing their stance on HB 895 and voting to sustain Governor Lingle’s veto of all of these tax increases.  The reversals came after ATR sent letters to Rep. Cynthia Thielen, Rep. Corrine Ching, Sen. David Ige, and Sen. Fred Hemmings urging them to uphold their Taxpayer Protection Pledge and oppose the veto overrides.  All four legislators originally voted in favor of a higher tax on smokeless tobacco.  Also, click here for ATR's letter to the entire legislature opposing a veto override.
 
(photo by photolulu)

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