Kelly William Cobb

Georgia Committee Votes to Expand Telecom Slush Fund

Posted by Kelly William Cobb on Thursday, February 26th, 2009, 12:00 PM PERMALINK

In early February, the Georgia House Telecommunications Subcommittee considered a bill (HB 168) that would completely scrap the Universal Access Fund (UAF).  The UAF costs consumers and businesses in Georgia millions per year to subsidize inefficient telecom providers in rural areas.

But just when reform looked to be on the way, today the House Telecom Subcommittee passed House Bill 376 that would expand the size of the fund to $25 million from the current level of $10 million.  Even worse, the bill is being dubbed the major reformpackage from Georgia's telecom system.

Below is ATR's letter opposing expansion of the UAF.  Click here for a PDF copy.

Georgia House Telecommunications Subcommittee
RE: House Bill 376
Dear Members of the Telecommunications Subcommittee,
I write concerning House Bill 376, which would reform Georgia’s intercarrier competition system. While certain sections of this bill make needed improvements, Americans for Tax Reform strongly opposes any expansion of the Universal Access Fund.
Section 5 of HB 376 would establish an Access Transition Fund to replace the current Universal Access Fund (UAF) and drastically expand the size of the fund, which provides direct subsidies to inefficient service providers. In particular, setting a cap of $25 million on a fund that currently pays out roughly $10 million per year will result in significantly higher costs for consumers and companies that pay into the fund. Additionally, a larger fund will mean higher payments to independent carriers, promoting further inefficiency and wasteful spending.
In its current form, the UAF is a wasteful program that drives up costs for consumers. Telecom companies that collect UAF funds have become dependant on the subsidy, grossly expanding payments in recent years. The size of the fund has grown from roughly $3 million in 2007 to over $15 million today. Furthermore, the system is ripe with abuse and payment requests by independent carriers are often made for things that do not pertain to providing telephone service. Permitting the UAF to grow to $25 million will only further promote inefficiency and waste in Georgia’s telecom system.
Americans for Tax Reform and the Center for Fiscal Accountability have calculated that after accounting for the Universal Service Fund, city and state telecommunications taxes, and other federal, state, and local taxes and fees, consumers across the country already spend 51.8% of their landline phone bill paying for the cost of government. Expanding the size of the UAF will ensure that Georgians pay even more for their utilities as a direct result of this intervention.
Creating a new, larger UAF does not reform Georgia’s intercarrier compensation system; it continues and expands a system that does not work. Instead, Americans for Tax Reform supports House Bill 168, which would eliminate the UAF. Additionally, we support a “reverse auction” system that allows telecom companies to bid for the lowest cost service. This will drive down the price for consumers and bring needed competition that cannot exist under the UAF regime.
On another note, House Bill 376 rightly eliminates subsection (h) of 46-5-167, which prohibits companies from making the UAF charge a transparent line item on customers’ bills. Telecom customers bear the burden of the UAF’s costs and see higher monthly bills as a result. If companies are permitted to make the access fee transparent, Georgians will see exactly how the UAF inflates the cost of their services. Since the true burden imposed by government is often hidden, as is the case with these access charges, consumers and taxpayers lack the ability to hold their elected officials accountable and make informed decisions about their utility service.
In fact, a 2007 report by the Georgia Senate Communications Taxes, Fees, and Telecom Franchising Processes Study Committee concluded that the telecom tax structure in Georgia “is complex and does not abide by rules of fairness and transparency.” It continued, “This results in a discriminatory tax structure that creates both distortion in the free marketplace and customer confusion.”
I urge the committee to oppose expanding the size of the Universal Access Fund. Additionally, any reform of the current system should permit companies to make the access fee a transparent line-item on customers’ bills. Thank you for the opportunity to comment on your effort to reform the intercarrier compensation system in Georgia. If you have any questions, you can contact Kelly Cobb, state affairs manager, at 202-785-0266.
Grover Norquist
President, Americans for Tax Reform

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Chuck DeVore to Chair Taxpayer Protection Caucus in California Assembly

Posted by Kelly William Cobb on Wednesday, February 25th, 2009, 3:34 PM PERMALINK

Today, Americans for Tax Reform announced that Assemblyman Chuck DeVore (R - Irvine) will chair the Taxpayer Protection Caucus in the California State Assembly.  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 Assemblyman DeVore, there are now 37 active caucuses in 29 states.  From ATR's press release:

“Throughout the budget impasse, Chuck DeVore proved himself to be the leading advocate and voice for taxpayers,” said Grover Norquist, president of Americans for Tax Reform. “Under Chuck DeVore, the caucus will fight for California families and businesses who deserve to keep more of their hard earned money.”
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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Minnesota Seeks "Amazon Tax"

Posted by Kelly William Cobb on Wednesday, February 25th, 2009, 12:00 PM PERMALINK

Minnesota has become the latest state to consider taxing consumers on internet sales by proposing the so-called "Amazon Tax."  House Bill 401/Senate Bill 282 would require retailers with no physical presence in the state to collect sales tax on digital products purchased by Minnesotans and remit it back to the state.
Current federal law bars states from forcing businesses to collect sales tax unless they have a physical nexus in the state.  Following New York's lead, the legislation would circumvent the intent of the lawby presuming that a company has a physical nexus if business is solicited through a third-party advertiser that is based in Minnesota.
Read a joint press release from ATR, the Property Rights Alliance, and the Media Freedom Project below.  Click here for a PDF copy.
Minnesota is considering legislation that would require out-of-state retailers to collect and remit the state’s sales tax on products purchased by Minnesotans. The measure, known as the “Amazon Tax,” would collect taxes on Minnesota consumers who make purchases through online venders.
Current law under Quill v. North Dakota requires a business have a physical presence or “nexus” in a state in order for the state to compel that business to collect sales taxes. The measure (HB 401/SB 282) attempts to circumvent the federal interstate commerce law by presuming that a company has a physical nexus if business is solicited through a third-party advertiser that is based in Minnesota.
“The so-called ‘Amazon Tax’ is a clear violation of interstate commerce and puts an undue burden on businesses with no stores or employees in the state to figure out what the tax rate is in every county and city throughout Minnesota – then to collect and send it in,” said Grover Norquist, president of Americans for Tax Reform. “The bill essentially tells online retailers to sever all connections with advertisers in Minnesota and avoid the burden of collecting the tax.”
Since its initial passage by the New York legislature in 2008, states have sought to use the “Amazon Tax” as a means of expanding the tax base to collect more revenue. While the measure is undergoing legal challenge in New York, at least five states are currently considering the legislation. Critics contend that the bill will promote expansion of illegal music and movie downloads.
“It is no wonder that lawmakers are considering this backdoor tax-hike after finding themselves with what could be a $6 billion spending overage,” added Norquist. “It is not only unfair for out-of-state businesses, but unwise to raise taxes on consumers during an economic downturn – especially when the law is undergoing a legal challenge in another state.”
“Taxing consumers that download their music and movies will only encourage more illegal downloading at a time when legitimate digital music and movie providers are working hard to establish an online market,” said Kelsey Zahourek, executive director of the Property Rights Alliance. “This bill essentially incentivizes online piracy.”

“Imposing a download tax on users of one of the most important and thriving areas of our economy will only stifle ecommerce and harm consumers,” said Derek Hunter, executive director of the Media Freedom Project. “The free marketplace of the Internet can be the road map that leads us out of economic stagnation and recession. This bill will end up being nothing more than a roadblock on the path to recovery, not part of a cure.”

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To Wither or Rectify the Old Line State?

Posted by Kelly William Cobb on Monday, February 23rd, 2009, 11:36 AM PERMALINK

Last week, the Maryland House Ways and Means Committee held hearings on a number of bills that could either rectify or continue the Old Line State's recent plunge in their tax climate.  On Thursday, the committee considered whether to establish a Taxpayers' Bill of Rights (TABOR), which would tie state spending to population and inflation growth.  The measure was sponsored by House Taxpayer Protection Caucus Chair Warren Miller.  From ATR's testimony in support of House Bill 421:

Maryland currently has the 4th highest state-local tax burden, where 10.8% of residents’ incomes are consumed by taxes. HB 421 provides necessary spending limits and voter approval of tax increases that will help to lower this excessive burden on Marylanders. ... After increasing the size of the budget by 18% since 2006 alone and relying on future revenue from tax hikes that has not materialized, Maryland now predictably faces a $2 billion overspending problem. More than ever, Maryland is in need of spending restraint to prevent future overspending problems like this one.

For a PDF of ATR's TABOR testimony, click here.

Also before the committee last week was a bill to make Maryland part of the Streamlined Sales Tax Project, a tax and spend cartel that aims to extend tax collection on consumers and businesses by sneakily eliminating current exemptions and expanding what items can be taxed.  From ATR's testimony:

The streamlined sales tax is not revenue neutral and states that have adopted it have automatically raised taxes on consumers and businesses by hundreds of millions of dollars. By signing up for the SST, Maryland would adopt a tax code that mirrors other states, thereby expanding the list of taxable items to currently untaxed goods. For example, when Minnesota implemented the SST, the new definition of “sales tax” broadened Minnesota’s sales tax to include shipping, handling, and postage, which was previously untaxed by the state. Now, Minnesota consumers pay a new tax on goods purchased outside of the state and higher prices for goods purchased in the state due to the tax raising the cost of transportation.

For a PDF of ATR's testimony opposing the streamlined sales tax, click here.

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Kentucky Hikes Alcohol and Tobacco Taxes

Posted by Kelly William Cobb on Monday, February 16th, 2009, 4:52 PM PERMALINK

Last week, Kentucky thanked the bourdon industry for putting the Bluegrass State on the map by giving them the highest distilled spirits tax in the country.  And why not double the cigarette tax while you're at it?

That's right.  Last week the House and Senate passed House Bill 144 to apply the state's 6% sales tax to beer, liquor and wine sales (in addition to the current 11% gross receipts tax) and to raise the cigarette tax by another 30-cents per pack.  Governor Steve Beshear (D) quickly and cheerfully signed the bill, even though he was seeking a much higher 70-cent per pack cigarette tax hike.  The measure was part of a plan to eliminate the state's $459 million overspending problem.

As two-dozen alcohol beverage delivery trucks circled the Capital and hundreds gathered on the Capital steps to pour out liquor in a Whiskey Rebellion protest, lawmakers in each chamber called the tax hike a measure of last resort - then narrowly passed it.  They apparently neglected to account for the fact that the state's budget has ballooned by 21% since 2006 alone.  The other option was simple: trim excessive spending.

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. Even worse, 81.3% of the price of cigarettes goes toward state and federal taxes.

Click the following links for PDF letters submitted to legislators throughout the week:

ATR Letter to House and Senate Opposing Alcohol and Cigarette Tax Hike

ATR Letter to Legislators Highlighting Kentucky's Overspending Problem

ATR Letter to Senate Pledge Signers Opposing House Bill 144

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Arkansas Passes Cigarette Tax Hike

Posted by Kelly William Cobb on Thursday, February 12th, 2009, 12:00 PM PERMALINK

Following the Arkansas House's lead, the Senate passed a law to raise the state’s cigarette tax by 56-cents per pack.  It is expected to be signed by Governor Mike Beebe (D) who was the chief proponent for the tax hike.
The bill barely passed the 3/4 supermajority requirement in both chambers – receiving exactly 75 votes in the House and one more than necessary in the Senate. The estimated $88 million tax hike will push Arkansas’s cigarette tax well beyond the rate in bordering states, which collectively average 63-cents.
Click here for ATR's alert to Arkansas Senators.  Also see here and here for prior alerts, letters, press releases, and blog posts opposing the tax hike.

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Georgia Legislature Weighing Cigarette Tax Hike

Posted by Kelly William Cobb on Tuesday, February 10th, 2009, 12:00 PM PERMALINK

With $2 billion in overspending estimated for this year, Georgia has joined a disturbingly long list of states looking to smokers to help fill state coffers.  House Bill 39 would raise the cigarette tax by $1 per pack and hike the tax on smokeless tobacco products by 150%.

Georgia’s nearby states have an average cigarette tax of just 36-cents per pack.  If the tax hike is passed, Georgians will have to pay $1.37 per pack, nearly quadruple that of their neighbors.  In a similar situation, Maryland raised the tobacco tax last year to cover a budget projection shortfall.  However, the problem was only made worse when sales fell 25% after consumers drove to nearby states with lower tax rates.

Click here for ATR's letter to Georgia Taxpayer Protection Pledge Signers.

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Arkansas House Adopts $88 Million Cigarette Tax Increase

Posted by Kelly William Cobb on Monday, February 9th, 2009, 7:52 PM PERMALINK

Last week, the Arkansas House of Representatives voted to increase the state's cigarette tax by 56-cents per pack.  The $88 million tax hike got 75 votes - the exact number necessary to pass the bill.  The tax hike was prompted by calls from Governor Mike Beebe (D), who argued the revenue was necessary to expand the state's trauma system, and immediately followed a 61-cent increase in the federal excise tax signed by President Barack Obama.  Click here for a PDF version of ATR's legislative alert to the Arkansas House opposing House Bill 1204.

The Arkansas Senate Revenue and Taxation Committee is expected to consider HB 1204 this Wednesday with a final Senate vote by the end of the week.  Below is ATR's letter to Arkansas Senators encouraging them to oppose the tax hike. 

Dear Members of the Arkansas Senate,
Last week the Arkansas House narrowly passed House Bill 1204 that would raise the tax on cigarette consumers by 56-cents per pack. As the Senate considers House Bill 1204, I urge you to stand with Arkansas consumers and businesses to oppose this $88 million tax hike, which will likely fail to bring in enough revenue to fund a new state healthcare system.
The Arkansas Constitution requires a three-fourths majority to pass all tax increases. Standing against House Bill 1204 is a critical step to keeping taxes low in Arkansas.
Last week, President Obama signed into law a new 61-cent hike in the federal cigarette tax. Combined with the new federal tobacco tax, HB 1204 would cause Arkansas smokers to see their cigarette tax rise by $1.17 per pack – a 119% tax increase!
Governor Beebe aims to use the estimated $87.8 million tax increase to expand spending on the state’s healthcare system. However, evidence from nearly every state that has unfairly targeted smokers for more revenue shows that very few cigarette tax hikes actually meet their revenue goals. Even Governor Beebe acknowledged during his State of the State address that “tobacco taxes are a dwindling revenue stream.” For example, when New Jersey raised the cigarette tax just 17.5 cents in 2007, expecting to bring in an additional $30 million, the state ended up losing $24 million in total tax revenue from tobacco.
Raising taxes on a declining revenue source like tobacco to fund new state spending programs is a recipe for higher taxes in years to come. As tax revenue decreases and commitments to a new state trauma system increases, legislators will be forced to raise taxes in the coming years for additional revenue. Furthermore, when combined with the new federal cigarette tax, this revenue from an increased state cigarette tax will decline even faster than projected. If the state’s trauma system is a priority, it should be funded through the current budget and existing resources.

It is critical to stand up for consumers and taxpayers in opposition to tax increases. In this economic downturn, the burden of larger government will only further depress economic activity. Instead, the state would do well to take a lesson from Arkansas families, who are cutting back their spending habits. If you have any questions, please contact Kelly Cobb or Nathan Pick, state affairs managers, at (202) 785-0266.


Grover Norquist

Click here for a PDF version of the Senate letter.

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Georgia House Considers Scrapping the Universal Access Fund

Posted by Kelly William Cobb on Thursday, February 5th, 2009, 12:00 PM PERMALINK

The Georgia House Telecommunications Subcommittee held a hearing this week to consider reforms to the state's telecom system.  At the center of the discussion is House Bill 168, which would eliminate the state's costly and inefficient Universal Access Fund (UAF).

The UAF costs consumers and businesses in Georgia over $15 million per year to subsidize inefficient telecom providers in rural areas.  The UAF slush fund has also become fraught with waste and abuse, leading to tens of thousands of dollars in payments to telecom companies for items completely unrelated to providing service - like reroofing cabins and throwing extravagent Christmas parties.

ATR submitted the following testimony to the Georgia House Telecommunications Subcomittee in support of HB 168 or for establishing reverse auctions to cut down excessive UAF costs.

Dear Members of the Telecommunications Subcommittee,
I write to strongly support your efforts to reform or eliminate Georgia’s intercarrier competition system. In particular, House Bill 168 would eliminate an antiquated and inefficient Universal Access Fund (UAF) that has cost consumers and businesses millions of dollars each year.
The UAF is a wasteful and costly program that results in higher bills for consumers and direct subsidies to inefficient carriers. Independent telephone companies that collect UAF funds have become dependant on this subsidy program and over the past few years the size of the fund has skyrocketed from roughly $3 million to well over $15 million. For 2009-2010, 15 telephone companies have requested a staggering $10.5 million from other state service providers. Furthermore, the UAF has become fraught with waste and abuse, including tens of thousands of dollars in requests that do not pertain in the least to providing telephone service.
Customers of the telephone providers who pay into the UAF bear the cost for these payments and see a higher monthly bill as a result. The Center for Fiscal Accountability and Americans for Tax Reform Foundation have calculated how much taxes add to the cost of goods and services, including telecom utilities. After accounting for the Universal Service Fund, city and state telecommunications taxes, and other federal, state, and local taxes, consumers across the country already spend 51.8% of their landline phone bill and 46.4% of their wireless bill paying for government taxes and fees. Regulation through the Georgia UAF contributes to this staggeringly high cost for consumers.
If not eliminated, as in House Bill 168, the UAF should be replaced with a “reverse auction” system that eliminates the practice of making payments to subsidize inefficient and wasteful carriers. Reverse auctions permit rural providers to submit bids to the government to provide service and the lowest cost bid is accepted. This would bring much needed competition that currently does not exist under the UAF structure. Competitive bidding will bring down the costs to providers and their customers who currently fund the UAF, and provide service to rural areas with efficient telephone companies.
I urge the committee to approve House Bill 168 and thank you for the opportunity to provide input on your efforts to reform Georgia’s telecommunications system. If you have any questions, you can contact Kelly Cobb, state affairs manager, at 202-785-0266.
Grover Norquist
Click here for a PDF version of the testimony.


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Stop the $2 Billion Tax Hike in Oregon

Posted by Kelly William Cobb on Monday, January 26th, 2009, 4:14 PM PERMALINK

This month, the Oregon legislature reconvened to discuss a multi-billion dollar budget shortfall.  Unfortunately, now Governor Kulongoski and Oregon legislators are pondering $2 billion in taxes hikes on gas, cigarettes, health care providers, and corporations, and another $1 billion in additional spending – the same spending that caused the state’s current budget crunch.  In fact, Oregon has increased spending by a staggering 22.6% since 2003 alone.

Oregon residents take action now!  Click here to write your state legislators and governor and tell them that tax hikes will do more to slam families, consumers and businesses than they will to recitify the state's budget woes.

ATR and the Taxpayers Association of Oregon sent a letter to all Oregon lawmakers and the governor urging them to oppose tax hikes to solve the state's massive overspending problem.  The joint letter is below. 

Dear Members of the Oregon Legislature,
As Oregon 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 Oregon families, consumers, and businesses the hardest and further diminish the state’s economic growth.
Oregon’s current budget crisis was not caused by taxes being too low. The budget crisis was caused by a slowing economy combined with unsustainably high government spending. Oregon has increased spending by a staggering 22.6% since 2003. Now the state faces an estimated $2 billion budget shortfall over the next biennium. Excessive spending caused this problem and spending restraint - not tax increases - is the solution.
Nevertheless, Governor Kulongoski has proposed a budget that contains a staggering $2 billion in tax and fee increases. Furthermore, the governor’s budget contains a $1 billion increase in year-to-year expenditures - the very type of spending that started the current crisis. Unfortunately, these proposed tax hikes on gas, cigarette consumers, businesses, and health care providers are framing the debate in Salem.
Raising the gas tax not only directly impacts drivers and businesses, it also raises the price of transporting goods. This cost is eventually passed on to consumers in the price of nearly every good sold in the state - from groceries to school supplies.
Additionally, the governor has proposed a 60-cent per pack increase in the cigarette tax, which will do little to raise revenue. Of the nearly 60 tobacco tax increases around the country since 2003, only 16 actually met revenue projections. In fact, after New Jersey increased the cigarette tax just 17.5 cents in 2007, expecting to raise $30 million, the state lost $24 million in revenue from consumers who sought cheaper products across state lines or from other venders.
It is critical to revitalize the Oregon economy with tax cuts, not tax increases.  We must lift the burden of larger government from the backs of hardworking taxpayers and consumers instead of further depressing 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, ATR state affairs manager, at (202) 785-0266, or Jason Williams at (503) 603-9009.
Grover Norquist
President, Americans for Tax Reform
Jason Williams
Taxpayers Association of Oregon

Click here for a PDF version of the letter.


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