Kelly William Cobb
Alcohol Tax Brewing in Indiana
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.
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.
New York vs. New Jersey: The Battle for Higher Taxes
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.
Minnesota Lawmakers Continue Quest to Tax Downloads
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.
Tobacco Taxes: How Many Times Do We Have To Say "I Told You So"?
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.
Vermont's Raising Taxes on...Well, No One's Quite Sure Yet.
- 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.
NJ Gov. Corzine Punishes Taxpayers for his Own Fiscal Incompetence
“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.”
Survey Shows Floridians Looking to Spending Cuts, Not Tax Hikes for Budget Fix
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
Washington Goes After Digital Downloads
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.
New York's Looming Tax Hike
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.