Kelly William Cobb

Teaching Blue Oregon about Taxes


Posted by Kelly William Cobb on Monday, May 11th, 2009, 8:06 AM PERMALINK


Oregon's progressive-liberal blog BlueOregon.com took aim at Americans for Tax Reform last Friday after ATR submitted a letter opposing a distortionary rental car tax increase in Multnomah County, the home of Portland.  Eager to attack those with who provide data contrary to their progressive, high tax agenda, BlueOregon posted a copy of the letter on their site along with some unrelated commentary on ATR (worth a read).  The blog likely got wind of ATR's position through Commissioner Jeff Cogen (one of five letter recipients), who proposed the tax increase and commented on their blog post.

BlueOregon contacted ATR with some questions about our opposition to the tax hike and Oregon's broader economic perils.  Below is an email exchange with questions from BlueOregon blogger Carla Axtman and responses from ATR state affairs manager Kelly Cobb.

BlueOregon: The letter sent by Mr. Norquist to the Multnomah County Commissioner cites a study on a localized tax rate led to "...a 9% reduction in car rentals and as much as an 86% reduction in the number of days cars were rented..."  Which study is this, specifically?  Can you provide a copy of this study as well, please?

ATR: The study referenced is titled “Taken for a Ride: Economic Effects of Rental Car Excise Taxes.”  It was written by William Gale, Ph.D. (Brookings Institution) and Kim Rueben, Ph.D. (Urban Institute).  Please note that both Brookings and Urban Institute are well-known left-leaning research groups.  The study was published in 2006 and looked at the economic effects on demand, specifically after a rental car tax increase in Kansas City, MO.  A copy is attached.

BlueOregon: Have you or Mr. Norquist lived in Oregon for any period of time?  If so, where?  Have you (personally) visited our state?  When and where?

ATR: I have not lived in Oregon and do not believe my boss, Grover Norquist, has either.  However, our state affairs staff travels constantly around the country, including to Oregon, and works with taxpayer and research groups in the state.  I do not believe you have to live in a state to understand good and bad tax policy.

BlueOregon: What evidence can you provide that the higher tax will push consumers to rent cars from counties in Oregon outside Multnomah?

ATR: Taxes discourage consumption or push consumers to seek lower prices elsewhere.  For proof of this, you can look to other left-leaning and progressive organizations that push for tobacco, alcohol, or “unhealthy” snack and food tax increases who argue strongly that it will reduce demand for products.  Unfortunately, it also often sends consumers elsewhere for cheaper products too (tobacco is a good example of this).  In the study mentioned above, there was a 41% to 50% drop in consumption from consumers in surrounding zip codes renting in the area the tax was raised.

Note that Multnomah County is already significantly higher than Washington County, which charges no rental car tax, and Clackamas County, which charges $1.44 per day, both of which are Multnomah’s two largest neighboring counties.

BlueOregon: As I search your website, I find very little in the way of information on what's happening in Oregon with our economy and why.  Given that Oregon has some of the lowest tax burdens in the nation (yet some of the highest unemployment), how does Americans for Tax Reform suggest that Oregon revitalilze it's economy, besides cutting taxes?

ATR: Since you insist that Oregon has such a low tax burden, here is a very brief overview of Oregon’s tax code:

  • Oregon’s 2008 state/local tax burden was 9.4% of income – the 26th highest in the country and just about in the middle of the pack – certainly not one of the lowest.
  • Oregon’s top income tax rate is 9% – the 4th highest in the country – and begins at $7,600 of income, so basically everyone pays that rate.
  • Two-thirds of small business owners pay under this 9% income tax rate – not the state’s corporate 6.6% rate.  According to IRS data, 96% of businesses in Oregon are small businesses.  The vast majority of employers having to pay the 4th highest tax rate in the U.S. might help explain your unusually high unemployment rate.

With regard to revitalizing the economy, there are some things the government can do to promote or hinder economic growth.  For example, to promote economic growth in Chicago, Democrat Mayor Richard Daley undertook privatization projects that brought in literally billions of dollars to the city by privatizing the Chicago Skyway, parking garages, and likely Midway Airport in the coming year.  The money can be used to cover overspending problems (like Multnomah’s $42 million overspending problem) or to reinvest in what Commissioner Jeff Cogen calls “vital” services – although I would ask him what services are “non-vital” and if he cut those before passing a distortionary tax increase.  In short, Chicago brought in billions, created jobs, and invested in improving the city’s decaying infrastructure by contracting with private companies.  This grows the economy.

However, the government itself cannot grow the economy.  In other words, it cannot spend what it did not already remove from the economy.  Three examples:

  • The Japanese call the 1990s “the lost decade.”  Why?  The government increased spending from 32% of GDP to 38% of GDP in 9 years, only to have per-capita income fall from 86 percent of the U.S. level in 1991 to only 74 percent in 2000.

  • In 1997, Argentina’s government increased spending from 23% of GDP to 25% of GDP after the economy growth began to contract.  Despite this, average real GDP growth was a meager 0.7%.

  • Under failed Republican and Democrat presidents Herbert Hoover and FDR, the federal government increased spending from 3.4% of GDP to 10.3% of GDP.  Despite this, the economy actually shrank by nearly 10% in 10 years.  This failed policy of the past is now known, obviously, as the Great Depression.

If you want to help revitalize or grow Oregon’s economy, I recommend starting another small business.  Though consider you may have to hire less staff, maintain lower wages and benefits, or forgo some investments in capital due to the 9% state tax rate, plus the federal income tax rate.  In the meantime, I still would still like to know why taxes on rental cars are good economic policy – or better yet, how these taxes can help "revitalize the economy."

(photo by Ben Amstutz)

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Rich Zipperer and Randy Hopper to Chair Wisconsin Taxpayer Protection Caucuses


Posted by Kelly William Cobb on Friday, May 8th, 2009, 3:14 PM PERMALINK


Americans for Tax Reform is pleased to announce that Rep. Rich Zipperer (R- Pewaukee) and Sen. Randy Hopper (R- Fond du Lac) will chair the Taxpayer Protection Caucuses in the Wisconsin State Assembly and Senate respectively.  The Caucus consists of all signers of the Taxpayer Protection Pledge and provides a single voice on tax issues among pro-taxpayer legislators.  With the addition of Rep. Zipperer and Sen. Hopper, there are now 40 active caucuses in 30 states.  From ATR's press release:

“Rep. Zipperer and Sen. Hopper have proved themselves to be the leading advocates for Wisconsin taxpayers,” said Grover Norquist, president of Americans for Tax Reform. “As founders of the Wisconsin Jobs Now Task Force, over the past weeks they have been touring the state to meet with job creators about ways to make the Badger State more competitive through tax and regulatory reform.”
 
For a PDF of the press release, click here.  Also, click here for a list of all Taxpayer Protection Caucuses around the country.
 

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Portland Aims for a Record High Rental Car Tax


Posted by Kelly William Cobb on Friday, May 8th, 2009, 10:48 AM PERMALINK


An ordinance proposed in Multnomah County Oregon, which comprises the city of Portland, would drastically increase the Motor Vehicle Rental Tax from 12.5 percent to 17 percent, making it one of the highest in the country.
 
The Multnomah County Board of Commissioners is currently grappling with a $42 million overspending problem.  While the tax hike is estimated to raise a meager $4.7 million, it will likely result in less revenue due to a decline in car rental demand and a larger economic hit on local businesses, residents, and tourists.
 
Policymakers are increasingly looking at rental cars for higher taxes to try to export their tax burden to those who cannot vote or hold these lawmakers accountable.  What they often ignore is that the majority of car rentals are actually made by local residents and businesses.  Rental car tax hikes have large effects on the economy - especially at the local and county level.  One study shows that a recent localized tax hike led to a 9% reduction in car rentals and up to an 86% reduction in the number of days people rented cars. Residents and businesses simply rented from a surrounding county with a lower tax rate.
 
Additionally, car rental demand or the length of rentals often declines as tourists opt to walk or use other forms of transportation in downtown areas.  Even when visitors decide to rent a car, they compensate for increased travel costs by spending less on meals, hotels, and other activities.
 
Click here for ATR's recent letter to the Multnomah County Oregon Board of Commissioners.

 

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Minnesota's Tax Hike Standoff


Posted by Kelly William Cobb on Thursday, May 7th, 2009, 3:51 PM PERMALINK


As the deadline for passing a state budget approaches, Minnesota lawmakers have yet to find a way to rectify a $4.6 billion overspending problem.  The House and Senate recently passed two contrasting Tax Omnibus Bills that will dramatically raise taxes on small businesses, residents, homeowners, low-income individuals, and consumers.

Senate Bill 2074 would raise every single income tax bracket with the top income tax rate moving to 9.25%.  This $2.2 billion tax hike would give Minnesota residents and small businesses the 4th highest tax rate in the nation.

House Bill 2323 raises the top income tax rate for individuals and businesses to 9%, but unlike the Senate bill, leaves other rates untouched.  However, the House bill also contains a number of targeted tax increases including a 54-cent per pack cigarette tax, a 50% increase on distilled spirits, a similar tax hike on beer and wine, taxes on digital products, and elimination of a number of tax deductions for mortgages, property taxes, and charitable contributions.  All together, taxes would go up by $1.5 billion.

Meanwhile, as the conference committee began working out the differences between the bills, Governor Tim Pawlenty (R), a signer of the Taxpayer Protection Pledge, has given a clear veto threat of any tax increase passed by the legislature.  The standoff was made even more interesting after thousands of Minnesotans held yet another tax rally on the steps of the State Capitol earlier this week, where Pawlenty joined the stage with other presenters.

Click here for ATR's recent letter to the Tax Omnibus Conference Committee opposing both deleterious plans to drastically raise taxes in Minnesota.

(photo by theakshay)

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Hawaii Tax Hike Vetoes Face Possible Override


Posted by Kelly William Cobb on Wednesday, May 6th, 2009, 7:12 PM PERMALINK


Good news and bad news for Hawaii taxpayers.

Good News: After a barrage of tax hikes were recently passed by the Hawaii Legislature, Governor Linda Lingle has announced her intent to veto most, if not all of them.  In fact, she has planned a combined veto ceremony and taxpayer rally tomorrow, May 7, for the public to come celebrate the tax hike vetos.  Details here and below:

When: Thursday May 7, 2009
Where: Hawaii State Capitol Rotunda

However, while the income, small business, property sale, and hotel tax hikes are definitely on the chopping block, the Governor has not yet committed to vetoing the cigarette and tobacco tax hikes.  Click here for ATR's recent letter to Governor Lingle urging her to uphold her Taxpayer Protection Pledge.

Now the bad news: The Hawaii Legislature is strongly positioned to override the Governor's vetoes.  In fact, they extended their regular session last week for the sole purpose of sticking around in case they needed to override her vetoes.  Needing a two-thirds vote, Democrats control the Senate 23 to 2 and the House 45 to 6.

Now is your chance to take a stand in Hawaii.  CLICK HERE to write your state legislator and urge them to oppose overriding the Governor's vetoes and any new tax hikes.  Also, make sure that you, as well as friends and family, show up tomorrow to the tax rally/veto ceremony at the State Capitol to show the state legislature that tax hikes are not the answer to solving the state's budget woes.

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eTaxes: The State's Latest Foray into Your Wallet


Posted by Kelly William Cobb on Tuesday, May 5th, 2009, 7:11 AM PERMALINK


How about paying tax on that 99-cent music download? The new pair of shoes you just ordered online? What about a tax on viewing online streaming videos? That’s right – the effort to tax binary code is underway.

For years, the internet has flourished as a free marketplace where the only extra cost a consumer pays for is shipping – unless you buy the product digitally. It’s opened expansive new markets, lowered product costs for consumers across the country, and given rise to tons of new online businesses.
 
Enter the money hunger politicians. Forty-six states overspent their way into budget crises, and to cover their tracks state legislators and governors are becoming increasingly desperate to steal more of your hard earned dollars. Now they want to tax your online purchases.
 
Americans for Tax Reform recently started a project called “Stop eTaxes.” The website (www.StopETaxes.com) tracks state and federal legislation and is working to mobilize grassroots opposition to these targeted tax hikes.
 
Kentucky, Wisconsin, and Mississippi have passed tax hikes on digital music, movies, books, and ringtones this year. Washington, Vermont, North Carolina, Minnesota, and Massachusetts are now looking at similar legislation – some of which goes so far as to tax “additional digital goods,” whatever that means.
 
More frightening, states like New York and California are seeking ways to tax everything you buy online – both digital and tangible goods. The so-called “Amazon Tax” provides that a business has a sufficient nexus in the state (which is necessary to collect the tax) by simply advertising through a third party in the state. This nexus can be anything from a newspaper to a state blogger putting up ads on their site.
 
Say you live in New York and want to buy some super sweet, rare pogs (or a ShamWow or whatever) from an online retailer in Florida. If that Florida company advertises at all in New York, not only do you pay tax, but the out-of-state company is tasked with trying to figure out which of the thousands of tax jurisdictions you live in and how much you have to pay.
 
If it sounds like a complicated scheme to raise taxes and circumvent the Interstate Commerce Clause of the U.S. Constitution – that’s because it is. But what else is the government for?
 
For more information, visit www.StopETaxes.com. Also, follow “Stop eTaxes” on Twitter (@eTaxes) and Facebook (search “Stop eTaxes”).

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Litany of Tax Hikes Land on Hawaii Governor's Desk


Posted by Kelly William Cobb on Friday, April 24th, 2009, 12:00 PM PERMALINK


Last week, Hawaii lawmakers passed a litany of tax hikes to cover the state’s overspending problem. Possibly to avoid public attention, the tax increases were quietly passed during a House-Senate Conference Committee meeting on Saturday, April 18 – shortly after the Tax Day Tea Parties took place around the country, including one on the Capitol steps.

Included in the slew of bills that are now on the Governor’s desk are:
  • Raising the cigarette tax from $2 to $3 per pack and the tax on smokeless tobacco products from 40% to a whopping 70%. Hawaii’s cigarette taxes have been raised 6 times in the last 7 years alone. (House Bill 1175 and House Bill 895)
  • Hiking the hotel occupancy tax from 7.25% to 9.25%. This comes even as Hawaii’s tourism industry has significantly declined. The state’s hotel occupancy rates in February dropped to 75% - the lowest level since 1991. (Senate Bill 1111)
  • Increasing the state’s top income tax rate to 12% - easily surpassing California’s 10.3% rate to become the nation’s highest. (House Bill 1747)
  • Raising the tax on sales of property and second home purchases. (House Bill 1741)
Governor Linda Lingle, a Taxpayer Protection Pledge signer, is expected to veto the tax hikes, but the legislature can easily override her veto. Democrats control the State Senate 23 to 2, and outnumber Republicans in the House 45 to 6.
 
Click here and here to read ATR’s letters to Governor Lingle urging her veto. Also, click here for a letter to the Legislature in opposition to the tax hikes.

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Tea Party Highlights: Afternoon Report


Posted by Kelly William Cobb on Wednesday, April 15th, 2009, 5:51 PM PERMALINK


A second update on tea parties around the country:

TENNESSEE: A staggering 10,000 people met on the Legislative Plaza, spillling over into sidewalks and up the hill towards the capitol building.  See the picture below.  Cars also circled the area honking horns.  H/T to Blue Collar Muse.

ILLINOIS: The Chicago Tea Party is estimated at 4,000 attendees.  Click here for some great pictures.

NEW YORK: As many as 1,000 gathered in Rochester, which would its way to the County Administration Building and on to City Hall.

OHIO: About 4,000 people packed Fountain Square in Cincinnati.  Pictures here.

WISCONSIN: Over 8,000 gathered in Madison, including U.S. Rep. Paul Ryan.

RHODE ISLAND: The smallest state in the U.S. brought 1,000 protesters out to the Capitol.

WASHINGTON: More than 5,000 protesters gathered in Olympia according to State Police.

IDAHO: 2,500 marched down the streets of Boise, according to the police department.

From our first update at 3:45 pm:

MICHIGAN: With dozens of protests planned in the Great Lakes State, Lansing led the pack with a crowd estimated to be as high as 7,000 people - and growing.  "Joe the Plumber" is scheduled to speak on the capitol steps as well.  An hour south of Lansing in my liberal college town of Ann Arbor, about 200 people marched from the University of Michigan campus down Liberty Street towards the federal building.

KENTUCKY: In Louisville, one thousand people gathered at Jefferson Square downtown.

PENNSYLVANIA: About a thousand people gathered in Market Square in Pittsburgh.

RHODE ISLAND: The Providence tea party kicked off at 3:00 today, but the smallest state in the country has lined up over 20 speakers, from average moms to radio talk show hosts.  The protest is being held on the State House steps.  They expect over 500 attendees.

CONNECTICUT: A crowd of 3,000 gathered at the state capitol in Hartford.

SOUTH CAROLINA: Thousands gathered in Columbia, also cheering for Governor Mark Sanford who has been a strong opponent to Obama's "stimulus" package.

FLORIDA: 2,000 showed up in Jacksonville to pour wagons of tea into the St. Johns river.

IOWA: Over 1,000 gathered at the Capitol in Des Moines.

TEXAS: 1,500 people rallied in the capitol of Austin where Governor Rick Perry (another critic of the "stimulus") spoke to the crowd.  A second Austin tea party will take place this afternoon, where they will re-enact the 1773 Boston Tea Party.

For more updates, click here.

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Tea Party Highlights: Mid-Day Report


Posted by Kelly William Cobb on Wednesday, April 15th, 2009, 3:52 PM PERMALINK


With hundreds of tea parties taking place today, we thought we'd provide you with highlights from some of the events half-way through the day.

MICHIGAN: With dozens of protests planned in the Great Lakes State, Lansing led the pack with a crowd estimated to be as high as 7,000 people - and growing.  "Joe the Plumber" is scheduled to speak on the capitol steps as well.  An hour south of Lansing in my liberal college town of Ann Arbor, about 200 people marched from the University of Michigan campus down Liberty Street towards the federal building.

KENTUCKY: In Louisville, one thousand people gathered at Jefferson Square downtown.

PENNSYLVANIA: About a thousand people gathered in Market Square in Pittsburgh.

RHODE ISLAND: The Providence tea party kicked off at 3:00 today, but the smallest state in the country has lined up over 20 speakers, from average moms to radio talk show hosts.  The protest is being held on the State House steps.  They expect over 500 attendees.

CONNECTICUT: A crowd of 3,000 gathered at the state capitol in Hartford.

SOUTH CAROLINA: Thousands gathered in Columbia, also cheering for Governor Mark Sanford who has been a strong opponent to Obama's "stimulus" package.

FLORIDA: 2,000 showed up in Jacksonville to pour wagons of tea into the St. Johns river.

IOWA: Over 1,000 gathered at the Capitol in Des Moines.

TEXAS: 1,500 people rallied in the capitol of Austin where Governor Rick Perry (another critic of the "stimulus") spoke to the crowd.  A second Austin tea party will take place this afternoon, where they will re-enact the 1773 Boston Tea Party.

For more updates, click here.

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Wisconsin Gov. Doyle's One-Two Tax Hike Punch


Posted by Kelly William Cobb on Wednesday, April 8th, 2009, 9:11 AM PERMALINK


In mid-February, a $1.2 billion tax hike labeled as a "state economic stimulus bill" snuck through the Wisconsin legislature.  The bill was introduced and passed by the legislature within 36 hours - perhaps modeled after the Pelosi-Obama-Reid "stimulus."

By “economic stimulus,” Gov. Doyle meant taxing music, movie, and book downloads; making it easier to collect sales tax on Wisconsinites' online purchases; and taxing businesses that invest and operate in multiple states.

If you're wondering why you never heard of Wisconsin's tax hike "stimulus", it's because the bill was strategically overshadowed by Gov. Doyle's timely announcement of a proposed executive budget with another $1.7 billion in tax and fee increases.  Talk about a one-two punch.
 
Gov. Doyle's budget includes:
  • Raising the individual income tax to 7.75% - $312 million
  • Higher capital gains tax on savings and investment - $181 million
  • A series of tax hikes on Wisconsin businesses - over $208 million
  • A huge targeted tax hike on smokers - another $344 million

But if you don't fall into one of those catagories, don't worry.  The budget includes other tax and fee hikes that will hit virtually every Wisconsin resident.  For example:

  • A $272 million tax on oil companies that means higher energy prices and prices at the pump
  • A $1.5 million fee increase on processing poultry and beef that means higher prices for groceries
  • A new coverage mandate for auto insurance that means higher prices for drivers
The state’s Joint Committee on Finance has just wrapped up a series of gimmicky boondoggle public hearings and will now begin editing the executive budget.  If you're from Wisconsin, now is the time to tell your legislator that the $1.7 billion in tax increases should be off the table.
 
TAKE ACTION: Wisconsin residents, Click here to write your legislator and urge them to oppose any tax hikes in the budget.

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