Kelly William Cobb

Alcohol Tax Brewing in Indiana


Posted by Kelly William Cobb on Monday, April 6th, 2009, 3:24 PM PERMALINK


The Indianapolis Capital Improvement Board (CIB), which runs the Indy Convention Center, Lucas Oil Stadium, and Conseco Fieldhouse, has run into a slight $47 million overspending problem.  So, following the lead of fiscal imprudence from Washington, D.C., the Indiana Legislature is taking up a bill to bail out the CIB by drastically raising taxes on the entire hospitality industry.

House Bill 1604 would raise the excise tax on liquor, beer, and wine sales by 100%.  This $42 million tax hike alone would cause the price of distilled spirits to rise by 7%, and would tack 25-cents onto a case of beer and 10-cents to a bottle of wine.  Additionally, the bill would raise the tax on Indianapolis hotel stays to 17% - the highest in the country - and raise the tax on food in restaurants.

Faced with significant backlash, State Senator Luke Kenley (R-Noblesville), who pushed the tax hike, also proposed sharing the revenue with other cities throughout the state to make it more politically palatable.  It should come as no surpise that the primary supporters of the bill at the Senate Appropriations Committee hearing last week included a few mayors salivating at the prospect of "free" cash.

Americans for Tax Reform and the Center for Fiscal Accountability have calculated that after accounting for excise taxes, licensing fees, corporate taxes, and other state and federal taxes, consumers across the country already spend 79.6% of the cost of distilled spirits and 56.2% of the cost of beer paying for government taxes and fees.

ATR's letter of opposition is below, or click here for a PDF.

 
Indiana State Senate
 
RE: Opposition to House Bill 1604
 
Dear Members of the Indiana Senate,
 
I write to urge you to oppose House Bill 1604, which will raise taxes across the board on the hospitality industry. The bill includes a massive tax hike on alcohol beverages, in addition to increasing the food and beverage tax and the hotel and motel tax. These taxes would likely not raise the stated revenue, but will hurt the state’s shrinking hospitality sector and unfairly target select industries and consumers.
 
House Bill 1604, as amended by the Senate Appropriations Committee, would raise the tax on liquor, beer, and wine sales by 100%.  This $42 million tax hike would cause the price of distilled spirits to rise by 7% and would tack 25-cents onto a case of beer. Additionally, the bill would raise the tax on Indianapolis hotel stays to 17% - the highest in the country - and raise the tax on food in restaurants.
 
These targeted tax hikes would result in higher prices for consumers and lower sales for a hospitality industry that is struggling to grow. Over the past year, two hundred jobs have been lost in Indiana’s hospitality sector and increasing taxes on consumers will only worsen this situation. Additionally, lower sales will mean lower tax revenues that will likely not meet the state’s projections. The last time the federal government raised the distilled spirits excise tax, it took 11 years to bring in more revenue.
 
Furthermore, this bill would result in significantly reduced cross-border purchases of alcohol beverages, thus harming retailers. Indiana has a lower excise tax on most beverages than neighboring states, and Kentucky just raised their tax on alcohol. Raising the alcohol beverage tax would hurt Indiana retailers who benefit from cross-border sales into higher taxed states.
 
HB 1604 unfairly bails out the Capital Improvement Board (CIB) and sports facilities by targeting unrelated industries for higher taxes. The Colts and Pacers are expected, but have not committed, to contribute $5 million each. It is patently unfair that those who use CIB facilities may pitch in a combined $10 million, but unrelated industries and consumers are required to foot the bill through higher taxes for nearly $50 million.
 
Americans for Tax Reform and the Center for Fiscal Accountability have calculated that after accounting for excise taxes, licensing fees, corporate taxes, and other state and federal taxes, consumers across the country already spend 79.6% of the cost of distilled spirits and 56.2% of the cost of beer paying for government taxes and fees.
 
I urge you to stand up for consumers and Indiana’s hospitality sector to oppose House Bill 1604 and any effort to raise the state’s tax on alcohol, food, or hotels. In this recession, tax increases will only serve to further depress economic activity. If you have any questions, please contact Kelly Cobb, state affairs manager, at (202) 785-0266.
 
Onward,
Grover Norquist

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New York vs. New Jersey: The Battle for Higher Taxes


Posted by Kelly William Cobb on Thursday, April 2nd, 2009, 4:26 PM PERMALINK


New York and New Jersey are locked in an epic battle.  The fight: which state can raise the tax burden the highest until virtually every resident and business just leaves.

In mid-march, we reported on New Jersey's attempt to turn the Garden State into a depopulated ghost town by raising $1 billion in taxes on individuals, businesses, homeowners, and consumers.  As a result of having raised more taxes than any other state since 2002 (a combined $22 billion), the Garden State has seen hundreds of thousands of residents flee for low tax states like Pennsylvania and Florida.

Not to be outdone, this week New York countered with $7.8 billion in tax hikes as part of the state's FY09-10 budget.  The $131.8 billion budget agreement, reached in completely closed door sessions by Gov. David Paterson (D), Speaker Sheldon Silver (D), and Senate Majority Leader Malcolm Smith (D), has been passed by the House and will likely pass the Senate today.

The bill will raise the personal income tax to 8.97%, matching New Jersey.  It also gives New York City residents the highest income tax rate in the nation at 12.62%.  Additionally, the bill contains over $3.8 billion in other taxes and fees, including on rental cars, cigars, beer, wine, and internet sales.

In a resounding victory for fiscal imprudence, the budget will give the Empire State the worst-ranked business tax climate in the nation - stealing the number one spot away from rival New Jersey.  Not surprisingly, the Empire Center and Beacon Hill Institute have found that the budget will cost the state over 15,500 private sector jobs.

Over the past ten years, spending in New York has increased a disturbing 38.9%.  At the same time, the Empire State had a net loss of residents every year totaling over 1.9 million people who fled for lower tax states – the highest migration outflow of any state.  Taxpayers who left New York took with them a total of $39.9 billion in income and wealth.  Many of whom found themselves, like New Jersey exiles, in Pennsylvania and Florida.

ATR's full press release is below or click here for a PDF.

 
New York Budget a Slap in the Face to Taxpayers
Budget Contains Billions in Taxes and Fees; Drastically Increases Spending
 
Washington, D.C. – Americans for Tax Reform today strongly condemned the budget agreement reached by New York Governor David Paterson (D), Speaker Sheldon Silver (D), and Senate Majority Leader Malcolm Smith (D). The budget, which is currently under consideration by the New York legislature, would drastically increase taxes and fees by $7.8 billion.
 
The budget would bring the top income tax rate to 8.97%, matching New Jersey, but significantly higher than neighboring Connecticut, Pennsylvania, and Massachusetts. It would also give New York City residents the highest income tax rate in the nation at 12.62%. While the agreement eliminated a number of proposed tax hikes on soft drinks, digital downloads, and cable and satellite television, it continued to raise other taxes and fees by at least $3.8 billion, including on rental cars, cigars, beer, wine, and internet sales.
 
"It's as though New York’s severe overspending problem has taught the governor and legislative leadership nothing about governing,” said Grover Norquist, president of Americans for Tax Reform.  “Governing means making tough decisions, not passing massive tax increases and dramatically increasing government spending while families are getting hit by a recession and cutting back. That’s not a tough decision – it’s an abdication of leadership and an insult to New York taxpayers.”
 
The budget also increases spending by $12 billion over last year, a 9.8% increase. Over the past ten years, New York has increased spending by a staggering 38.9% when indexed for inflation. During the same time, the Empire State had a net loss of residents every year totaling over 1.9 million people who fled for lower tax states – the highest migration outflow of any state.  Taxpayers who left New York took with them a total of $39.9 billion in income and wealth.
 
“Instead of choosing to stop New York’s big-government juggernaut, the legislature recklessly aimed it straight at taxpayers, consumers, and small business,” added Norquist. “New York has seen more people flee its oppressive tax code than any state in the country. Under this budget, Governor Paterson, Speaker Silver, and Leader Smith can look forward to the continued erosion of the Empire State’s tax base.”

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Minnesota Lawmakers Continue Quest to Tax Downloads


Posted by Kelly William Cobb on Monday, March 30th, 2009, 2:28 PM PERMALINK


Last month, we reported on Minnesota's "Amazon Tax" bill that would require retailers with no physical presence in the state to collect sales tax on digital products purchased by Minnesotans.  Perhaps noting the unconstitutionality of the tax, another bill has been filed (HF 1980/SF 1839) that would require only instate retailers to collect and remit sales taxes on digital products.

In addition to music, movies, video games, and ringtones, the bill would vaguely impose a tax on "additional digital products" and would tax all goods for use on a "temporary or permanent basis."  This means almost all electronic goods are in the crosshairs: from software to streaming videos to virtually anything constructed with binary code.

Meanwhile, some states are enacting legislation to specifically exempt the sales tax on digital goods in an effort to drive retailers and tech companies to their states.  One just so happens to be North Dakota, which neighbors Minnesota and passed a bill just last month to this effect.

To read ATR's joint letter with the Media Freedom Project and Property Rights Alliance opposing this legislation, click here.

Meanwhile, Kentucky recently passed HB 347 to impose a similar, but more tailored, tax hike on digital products.  So, beginning July 1st, residents can look forward to their taxes going up on online purchases.

Click here to read ATR's letter of opposition to the Kentucky Senate Committee on Appropriations and Revenue on HB 347.

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Tobacco Taxes: How Many Times Do We Have To Say "I Told You So"?


Posted by Kelly William Cobb on Thursday, March 26th, 2009, 11:19 AM PERMALINK


Last month, Arkansas was the latest state to pass a tax hike on cigarettes.  The new $1.15 per pack tax was passed on the heels of President Obama's federal cigarette tax increase and raised the tax significantly higher than neighboring states, which collectively average 63-cents.

Throughout the battle, Americans for Tax Reform and numerous other opponents argued that this tax will never raise the $86 million the state was projecting (here, here, and here).  As It turns out, we were right.

Yesterday, the state's Finance and Administration Director Richard Weiss informed lawmakers that the state will take in $14 million less than projected from the tobacco tax increase - just one month after it passed.  This probably came as a surprise to Governor Mike Beebe (D), who said in his State of the State address that “tobacco taxes are a dwindling revenue stream," but quickly forgot when he began touring the state advocating for the supposed $86 million in new taxes.

Raising cigarette taxes is not only unfair for smokers and small businesses; it's flat out bad public policy. Revenue from tobacco taxes is exceptionally volatile. Smokers, behaving rationally, frequently cross state lines to find cigarettes at cheaper rates. Additionally, tobacco taxes are a declining revenue source that prompts future tax hikes once lawmakers become reliant on the statically budgeted revenue stream.

Moreover, proponents of cigarette taxes show a complete lack of understanding of basic economics.  It is absurd to argue, as most tax hikers do, that a cigarette tax will increase tax revenues and simultaneously decrease the number of people buying cigarettes - when prices go up from a tax, consumption declines, and it takes the new tax revenue with it.  This, by the way, goes for all tax increases.
 
There are 28 states this year looking to smokers to solve their overspending problems.  This includes a proposed 12.5-cent per pack tax hike by Gov. Corzine (D) in New Jersey, where the last time they raised the tax just 17.5-cents they actually had a net loss of $24 million.  And in Maryland, which doubled the tax last year only to see a 25% decrease in cigarette consumption and a 254% increase in cigarettes smuggled across state lines.
 
Lawmakers take heed: taking money out of the pockets of the 20% of Americans who smoke cigarettes will only leave you scratching your head and wondering why your budget problems are worse off than before you raised the tax.

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Vermont's Raising Taxes on...Well, No One's Quite Sure Yet.


Posted by Kelly William Cobb on Wednesday, March 25th, 2009, 12:17 PM PERMALINK


Every year, the Vermont legislature holds hearings on the "Miscellaneous Tax Bill", a disconcertingly named piece of legislation that overhauls the state's tax code.  The document undergoes weeks of hearings and constant revisions by the House Ways and Means Committee until the final bill is released and considered by the full House shortly after.
 
The worst part is that draft versions are not put into the public eye until the final bill is ready to go.  If you call or show up to the hearings they will kindly give you the most up to date version, but how anyone knows what punitive tax measures are in it requires quite a bit of proactive persistence.  For the sake of transparency, I called and got the most recent version (and in fairness, other states like New York and New Jersey have a significantly less transparent budget process).
 
Vermont is expecting $1 billion in overspending over the next four years and the draft Miscellaneous Tax Bill reflects just that, with tax hikes galore.  Amongst the worst parts:
  • Tax hike on consumers of digital goods including music, movies, books, and ringtones - $1 million.
  • Sets the current death tax exemption at $2 million, lowered from $3.5 million - $3 million tax hike.
  • Repeals select tax credits - a tax increase described only as "Positive".
  • Then SPENDS at least $1.47 million through 2011 to hire new staffers at the Department of Taxation just to make sure they can collect these new taxes.
The bill also requires that anyone hired by the government be in good standing with their state taxes - a lesson clearly learned from President Obama's Cabinet appointees.
 
Below is ATR's joint letter with the Property Rights Alliance and Media Freedom Project opposing a digital products tax in Vermont.  Click here for a PDF version of the letter.
 
 
Vermont House Committee on Ways and Means
 
RE: Miscellaneous Tax Bill - Download Sales Tax
 
Dear Members of the Committee,
 
We write to oppose extending the Vermont sales tax onto digital products in the Miscellaneous Tax Bill. Taxing digital goods, such as music, movies, books, and ringtones will dramatically raise taxes on businesses and consumers of digital products during an economic downturn when families are already cutting back on purchases. Taxing downloads will also put Vermont at a competitive disadvantage with other states, encourage online black-markets, and hamper a growing free-market.
 
Taxing digital products puts Vermont at a competitive disadvantage with other states that are working to ensure digital goods remain untaxed. This tax will hit the state’s consumers and small businesses the hardest. As such, some states are rightly considering legislation to specifically exempt digital products from the sales tax and drive technology sector companies to their states. In fact, North Dakota passed a bill to exempt digital goods earlier this month.
 
Additionally, taxing consumers that download their music, movies, and books will encourage illegal downloading.  At a time when legitimate providers of these digital goods are working hard to establish an online market, taxing digital goods encourages consumers to turn to illegally pirated copies of music, movies, and books that are easily obtainable online. Taxing digital downloads would essentially incentivize online piracy, reversing a hard fought trend toward legal downloads.
 
During this recession, the free marketplace of the internet can provide products that cost less in taxes to families with smaller budgets. Imposing a tax on users of one of the most important and thriving areas of our economy will only stifle commerce and harm consumers in Vermont.
 
For these reasons, we urge you to oppose subjecting digital goods to Vermont’s sales tax. Tax increases during this economic downturn will only further depress the state’s economy. If you have any questions, please contact Kelly Cobb, state affairs manager, at (202) 785-0266.
 
Onward,
 
Grover Norquist
President
Americans for Tax Reform
 
Kelsey Zahourek
Executive Director
Property Rights Alliance
 
Derek Hunter
Executive Director
Media Freedom Project

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NJ Gov. Corzine Punishes Taxpayers for his Own Fiscal Incompetence


Posted by Kelly William Cobb on Monday, March 16th, 2009, 11:16 AM PERMALINK


Since 2002, the Garden State has raised taxes on each resident by $2,601 – the highest nationally. The combined $22 billion in tax hikes has also resulted in a mass exodus of residents. Over 330,000 people left New Jersey since 1997 and over two-thirds of them left since 2002. Two of the top destinations for New Jersey exiles: Pennsylvania and Florida, with income tax rates of 3.07% and 0% respectively.
 
New Jersey taxpayers already spend 211 days a year working just to cover the cost of government – the second highest burden nationally. New Jersey also has the highest state and local tax burden, the second highest business tax burden, and collects more property taxes per capita than any other state.
 
But apparently, Governor Jon Corzine’s plans to turn New Jersey into a depopulated ghost town are occurring just too slowly. So, last week he announced a plan to further drive residents out of the Garden State and simultaneously rectify his $7 billion overspending problem: an executive budget with $1 billion in new tax increases. The Governor’s newly released budget increases the New Jersey income tax to the 3rd highest nationally, eliminates most property tax deductions, extends a 4% tax surcharge on businesses, raises the tax on alcohol beverages by 25%, and hikes the tax on cigarettes to $2.70 per pack.
 
Below is ATR's press release condemning Gov. Corzine's budget or click here for a PDF version.
 
Gov. Corzine Calls for Billion-Dollar Tax Increase
New Jersey Governor Punishes Taxpayers for Own Fiscal Incompetence
 
Americans for Tax Reform today condemned New Jersey Gov. Jon Corzine’s plans to impose $1 billion in tax hikes on New Jersey residents. To rectify $7 billion in overspending, Gov. Corzine’s newly released budget increases the New Jersey income tax to the 3rd highest nationally, eliminates most property tax deductions, and extends a 4% tax surcharge on businesses. The budget also includes a 25% tax increase on alcohol beverages and raises the tax on cigarettes by 12.5-cents to $2.70 per pack.
 
New Jersey has overwhelmingly led all states in tax increases. The Garden State government has increased taxes on each resident by $2,601 since 2002, for a total of over $22 billion in tax hikes – the highest nationally.  According to the Center for Fiscal Accountability, New Jersey taxpayers spend 211 days a year working just to cover the cost of government – the second highest burden nationally. New Jersey also has the highest state and local tax burden, the second highest business tax burden, and collects more property taxes per capita than any other state. After factoring in inflation, government expenditures have increased 47.5% since 1998.
 
“New Jersey taxpayers are groaning under the oppressive weight of not just big – but colossal government,” said Grover Norquist, President of Americans for Tax Reform. “There is one thing all  economists can agree upon: the last thing you want to do in a recession is raise taxes. Yet Gov. Corzine wants to do just that. After a spending binge that would put a drunken sailor to shame, he wants New Jersey taxpayers to suffer the fiscal hangover and foot the bill!  In fact, Gov. Corzine already tried raising the cigarette tax in 2007. The result? New Jersey lost $24 million in total revenue as smokers bought cigarettes across state lines. Governor Corzine can not keep hoodwinking the taxpayers of New Jersey with the failed policies of the past.”
 
The State of New Jersey has had a net population decline every year for the past 10 years.  According to the IRS, the Garden State has had a net loss of 335,339 people since 1997 - one of the highest state population outflows in the country.  In total, residents who fled took with them $12.9 billion in income and wealth. Two of the most popular destinations for residents who left were Pennsylvania and Florida, which have income tax rates of 3.07% and 0% respectively.

“Garden State taxpayers are already voting with their feet by fleeing Gov. Corzine’s oppressive regime to low tax states,” added Norquist. “If passed, Gov. Corzine’s budget plan will turn the exodus of tax-refugees into a flood. This plan will not only hurt New Jersey taxpayers, destroy jobs, and cause businesses to relocate across state lines - it will turn New Jersey into a depopulated ghost town. New Jersey taxpayers can no longer pay the price for Gov. Corzine’s exorbitant spending.”

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Survey Shows Floridians Looking to Spending Cuts, Not Tax Hikes for Budget Fix


Posted by Kelly William Cobb on Wednesday, March 4th, 2009, 1:52 PM PERMALINK


As the Florida legislature returns this week to solve the state’s $5 billion-plus spending overage, a new poll sponsored by Americans for Tax Reform has found that Florida voters believe state spending is too high and that any tax increase would leave families worse off.  Florida lawmakers are currently considering options to raise the cigarette tax, tax internet transactions, and eliminate current tax exemptions.  Some key findings:

  • 59% of Floridians disapprove of the way the Legislature is handling the state's budget
  • 63% believe they would be worse off if taxes in Florida were increased
  • 53% believe state spending is too high

Read ATR's press release below or click here for a PDF copy.  Also, click here for a copy of the poll results.

As the Florida legislature returns this week to solve the state’s $5 billion-plus spending overage, a new poll sponsored by Americans for Tax Reform, in partnership with Americans for Prosperity, has found that Florida voters believe state spending is too high and that any tax increase would leave families worse off.
 
Amidst the budget negotiations, lawmakers are considering raising the state’s cigarette tax, taxing internet transactions, and eliminating current tax exemptions. Yet, the poll shows that 59% of Floridians disapprove of the way the Legislature is handling the state’s budget. Further, 63% of those surveyed believe they would be worse off if taxes in the Sunshine State were increased. 85% oppose taxes that affect those making less than $40,000, such as an increase in the cigarette tax.
 
Additionally, the poll found that a plurality 43% of respondents said that they would vote to reelect a legislator if the legislator signed a written pledge to oppose tax increases. Currently, Gov. Charlie Crist (R) has joined 8 state Senators and 22 House members in signing the Taxpayer Protection Pledge, a promise to Floridians that they will "oppose and vote against any and all efforts to increase taxes."
 
“Lawmakers who are seeking tax hikes to fix Florida’s overspending problem should take heed,” said Grover Norquist, president of Americans for Tax Reform. “Floridians rightly believe that higher taxes and unsustainable spending are simply not options during an economic downturn. Spending cuts – not tax hikes – is the solution to Florida’s budget trouble.”
 
In the survey, 53% of those polled believe that Florida’s spending is too high. Between 2003 and 2007 total state expenditures increased by 20.8%, when adjusted for inflation. As a result of the current economic downturn 72% of respondents stated they had to cut back their personal expenses.
 
“When a child overspends their allowance and comes begging for more money, you don’t say the kid has a revenue problem – the kid has a spending problem. Likewise, Florida does not have a revenue problem – Florida has a spending problem,” added Norquist. “Lawmakers should take a hint from the overwhelming majority of Florida families that are cutting back their spending habits during this downturn.”

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Washington Goes After Digital Downloads


Posted by Kelly William Cobb on Monday, March 2nd, 2009, 12:00 PM PERMALINK


The Washington House Finance Committee passed a bill on Monday that would cost online consumers millions by taxing digital downloads.  House Bill 2075 expands the sales tax base to include everything from iTunes music to streaming videos.  The tax hike is estimated to raise $38.5 million for the state government alone, not counting local sales taxes.

While roughly a dozen states are considering similar legislation, Wyoming and North Dakota are moving in the exact opposite direction and considering measures to specifically exempt digital goods from taxation.  They argue the bills will drive tech-sector companies to their states, while keeping taxes low on consumers.

Below is a joint letter of opposition sent to the Washington House Finance Committee from ATR, the Property Rights Alliance, and the Media Freedom Project.  Click here for a PDF version.

Members of the Washington House Committee on Finance
 
RE: House Bill 2075
 
Dear Members of the Committee,
 
We write in strong opposition to House Bill 2075, which will dramatically raise taxes on businesses and consumers of digital products by subjecting these goods to the state’s sales and use taxes. The measure will put Washington at a competitive disadvantage with other states, encourage online black-markets, and hamper a growing free-market.
 
House Bill 2075 imposes the state’s sales tax to digital goods, automated services, and remote access software - such as streaming online videos. Expanding the sales tax base to include these digital goods would amount to a $38.5 million tax increase, not including the additional millions of dollars that would be collected by local taxes. While the Department of Revenue currently levies taxes on some digital products through administrative rule, this bill would greatly expand what items are taxable.
 
The measure also puts Washington at a competitive disadvantage with other states that are working to ensure digital goods remain untaxed. The tax would only apply to Washington companies and consumers, directly hitting the state’s technology industry. Washington consumers will also seek products from out-of-state venders who are not subject to the tax, putting Washington companies at a further disadvantage. Meanwhile, states such as Wyoming and North Dakota are considering legislation to exempt digital products from the sales tax to drive technology sector companies to their states.
 
Additionally, taxing consumers that download their music, movies, and books will encourage illegal downloading at a time when legitimate providers of these digital goods are working hard to establish an online market. The bill would essentially incentivize online piracy, reversing a hard fought for trend toward legal downloads.
 
For these reasons, we urge you to oppose House Bill 2075. Tax increases during this economic downturn will further depress the state’s economy and a growing industry. If you have any questions, please contact Kelly Cobb, state affairs manager, at (202) 785-0266.
 
Onward,
Grover Norquist
President, Americans for Tax Reform
 
Kelsey Zahourek
Executive Director, Property Rights Alliance
 
Derek Hunter
Executive Director, Media Freedom Project

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New York's Looming Tax Hike


Posted by Kelly William Cobb on Friday, February 27th, 2009, 2:26 PM PERMALINK


The New York Legislature will convene in the coming weeks to solve a near $15 billion spending overage, sparked by excessive expenditures in Albany and a slowing economy.  New York has increased spending by a staggering 12.4% since 2003, while population increased by only 0.5% during the same period.

Unfortunately, Governor David Paterson proposed a budget that continues this reckless trend with $4.1 billion in 137 tax and fee hikes on consumers, businesses, and families.  Furthermore, the governor's budget increases expenditures by $1.4 billion - the same fiscal irresponsibility that caused the state's current budget crunch.  The governor's misguided budget proposal includes everything from taxing soft drinks to music downloads to simply being a security guard.

New York residents, click here now to write your legislator and urge them to stand up for taxpayers and oppose any tax hike during the budget debate.

Below is ATR's letter to the New York Legislature and Gov. Paterson.  Click here for a PDF version.

Dear Members of the New York Legislature,
 
As New York faces serious budgetary challenges, it is critical now more than ever to oppose attempts to increase taxes. In the face of a slowing economy, tax hikes will hit hardworking New York families, consumers, and businesses the hardest and further diminish the state’s economic growth.
 
New York’s current budget crisis was not caused by taxes being too low. The state’s budget crisis was caused by a slowing economy combined with unsustainably high government spending. New York has increased spending by a staggering 12.4% since 2003, while population increased by only 0.5% during the same period. Now the state faces an estimated $15 billion spending overage by next year.  Excessive spending caused this problem and spending restraint - not tax increases - is the solution.
 
Despite stating flatly in November that “there will be no tax increase” in the Executive Budget, Governor Paterson has proposed a budget that contains $4.1 billion in 137 new tax, fee, or fine increases. Furthermore, the governor’s budget contains a $1.4 billion increase in expenditures - the very spending that started the current crisis. This egregious set of proposed tax hikes hit everything from alcohol beverages, soft drinks, and tobacco, to rental cars, digital downloads, television, and movies.
 
Governor Paterson’s executive budget contains numerous so-called “sin taxes” that hurt both consumers and small businesses. Under the guise of public health, but with the sole purpose of raising revenue, a case of beer could cost 30-cents more and the tax on a bottle of wine would more than double in New York. Additionally, polls show that at least 70% of citizens oppose a new 18% “obesity” tax, which could make a non-diet can of soda cost 25-cents more. Cigar consumers and tobacco retailers would also see tax and fee increases.
 
These so-called “sin tax” proposals don’t just hit the pocketbooks of New Yorkers; they hurt small businesses. Soft drinks and other beverages comprise 13% of convenience store sales and beer comprises 11%. With higher prices, these businesses will see decreased sales. Furthermore, these taxes are declining sources of revenue. It is absurd to argue that a tax hike will decrease the number of people buying a product and simultaneously increase tax revenues - when prices go up, consumption declines, and it takes the tax revenue with it.
 
The Governor is also calling for a 20% increase in the car rental tax and eliminating the cap on the gasoline sales tax, thus paving the way for a higher gas tax. Increasing the rental car tax will not export the tax burden to visitors and tourists, but will hit local businesses and residents hardest.
 
Taxing digital downloads like music, books, and movies will severely impede interstate commerce. Taxing music and movie downloads will only encourage more illegal downloading at a time when legitimate digital music and movie services are establishing an online market. Furthermore, the budget also seeks to expand the definition of “nexus” for internet sales, requiring out-of-state businesses with no physical presence in New York to collect tax on purchases. This unfairly puts the burden on businesses not located in New York to collect New York taxes and disrupts commerce between states. A similar measure, known as the “Amazon tax” is currently undergoing legal challenge in New York.
 
The budget also contains a local option for cities to tax wireless service, despite New York currently having the fourth highest tax on wireless consumers nationwide. The Center for Fiscal Accountability has calculated that 46.4% of the cost of wireless service already goes toward paying for government taxes and fees.
 
Lastly, by extending the state sales tax to cable and satellite services, well over 90% of New Yorkers would see their monthly utility bills rise. Cable television subscribers alone could see their utility bill taxes rise to over 13% per month if the governor’s package is passed.
 
It is critical to revitalize the New York economy with tax cuts, not tax increases. We must lift the burden of larger government from the backs of hardworking taxpayers, consumers, and businesses instead of further depressing the state’s economic activity. As you continue to weigh options to rectify the state’s overspending problem, I urge you to stand up for taxpayers and oppose all tax increases. If you have any questions, please contact Kelly Cobb, state affairs manager, at (202) 785-0266.
 
Onward,
Grover Norquist
President, Americans for Tax Reform
 
CC:           Governor David Paterson

 

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