Virginia Governor Terry McAuliffe's Budget Full of Costly Gimicks and Shell Games
Today, Gov. Terry McAuliffe (D-Va.) unveiled an outline for his two-year $109 billion budget, the largest in state history and the first ever to exceed $100 billion. Despite threats to shut down the government in 2014 over his failed attempt to expand Medicaid in Virginia, McAuliffe has included the proposal in his 2016-2017 budget.
Here are the highlights:
- Obamacare’s Medicaid Expansion
- This is the third year in a row an expansion of Medicaid has been proposed by Virginia’s governor, with McAuliffe even threatening to shut the government down if it wasn’t included in 2014.
- $3 billion of budget earmarked for Obamacare in Virginia
- The Republican-run legislature is unlikely to entertain this motion.
- Hospital Tax Increases
- Hospitals will pay a new tax equal to three percent of their revenue as part of the budget.
- The “bed tax” or “provider tax” authorizes collecting new revenue from hospitals in order to obtain a federal match of federal Medicaid funds, which are then usually paid back to the providers in the form of higher Medicaid reimbursement rates for new pools of Medicaid recipients.
- This gaming of the federal Medicaid system is one of the downfalls of Obamacare and results in higher costs for taxpayers nationally.
- Virginia added a Medicaid provider tax after 2009, and raised it in 2011.
- The President and Congress have both taken steps to reduce Medicaid provider assessments.
House Speaker Bill Howell has said, of this proposal, “This makes no sense at all. As I see it, it’s just a shell game.”
- Gimmicks and Tax Cuts
- McAuliffe’s budget “nominally linked $156 million in projected Medicaid savings to budget goodies with particular appeal to Republicans, such as individual and corporate tax cuts.”
- Proposed reducing the Virginia corporate tax rate from 6 percent to 5.75 percent.
- Proposed increasing the personal/dependent exemption on individual income tax returns from $930 to $1,000.
According to the governor, “Actual non-withholding receipts exceeded the cap in fiscal year 2015, contributing to the $549.6 million dollar revenue surplus, the largest in the Commonwealth’s history.”
Instead of gaming national taxpayers by relying on Obamcare expansion dollars to pay for tax cuts, the governor should demonstrate he’s serious about making Virginia more competitive with more aggressive tax reductions, paid for with surplus funds and with less spending increases. That would be a start.
Unfortunately, Gov. McAuliffe’s budget does nothing to rein in out of control spending in Virginia and only seeks to make it far worse. As North Carolina readies for another reduction in their corporate rate, down to 3 percent, the best McAuliffe has to offer is a quarter percent reduction promise contingent on an expansion of Obamacare in the state.
Hopefully Republicans view this for what it is, nothing more than a laundry list of overpriced wants, veiled in a pretend interest in minor tax reductions overall. If there's any silver lining, it's that McAuliffe recognizes that Virginia's corporate rate of 6 percent makes the state regionally uncompetitive.
Budget session begins January 13 in Richmond and will last 60 days.
ATR Supports Change in Predicate Date for New Tobacco and Vapor Products
Today, Americans for Tax Reform sent a letter to members of Congress urging them to change the predicate date at which new tobacco and tobacco-derived products like premium cigars and electronic cigarettes must undergo expensive and unnecessary regulatory hurdles imposed by the Food and Drug Administration (FDA).
Without Congressional action, the FDA will require all products that have hit the market since February of 2007 to undergo a Pre-Market Tobacco Applications (PMTA) process that could cost upwards of several million dollars per product simply to undergo review.
In 2009, the Tobacco Control Act (TCA) established a predicate date of February 15, 2007 at which all new tobacco and tobacco-derived products must establish “substantial equivalence” to products sold before then in order to avoid an expensive and lengthy pre-approval process by the FDA.
Because of the speed at which innovation has occurred with vapor products since that time, essentially all products currently being sold to consumers fall into this regulatory trap. The process of obtaining FDA approval to continue to be sold isn’t only expensive; it may not actually be possible given the lack of clarity and available data being demanded of each business for each product.
Congress must act to permit innovation to continue for these smoking cessation products that stand to save millions of lives and billions of tax dollars resulting from harm reduction associated with smokers making the transition to tobacco-free alternatives like e-cigarettes.
Below is a full text of the letter:
Dear Member of Congress,
I write today in support of efforts to save the thousands of small businesses in the United States who are selling tobacco-free technology products to adult consumers trying to kick their smoking habit. Though reliant on the sale of tobacco products for billions of tax dollars annually, Congress should help facilitate all efforts by the free market to accomplish what stiff regulations and taxes never could, getting smokers to quit for good.
Unfortunately, without Congressional action, an overreaching Food and Drug Administration (FDA) will proceed with an arbitrary bureaucratic hurdle for the sale of vapor products more akin to prohibition than reasonable regulation. Unable to regulate tobacco products until 2009, the Tobacco Control Act (TCA) established a predicate date of February 15, 2007 at which all new tobacco or tobacco-derived products must establish “substantial equivalence” to products sold before then in order to avoid an expensive and lengthy pre-approval process by the FDA.
Without Congressional action, the FDA pre-approval process will cost upwards of several million dollars per product, a cost affordable to none other than the large tobacco companies, for products already being sold to consumers. Since 2007, significant innovation in the electronic cigarette and vapor product category has occurred, meaning nearly 99% of the life-saving vapor products on the market will cease to exist.
This burdensome regulatory hurdle also stands to harm producers and retailers of cigars, pipe tobacco and dissolvable tobacco.
Amending the predicate date established in the Tobacco Control Act for new products will do nothing to impede upon the FDA’s general efforts to regulate this product category. In fact, grandfathering in all of the products currently being sold to consumers, will save the agency at least two year’s worth of paperwork and allow them to focus on encouraging good manufacturing practices, among other things.
A predicate date change to the date of FDA deeming regulation enactment will simply allow innovation to continue, without decimating an entire market of smoking cessation products and the consumers who use them.
In testimony to the Senate Commerce Committee last June, Matthew Myers of the Campaign for Tobacco-Free Kids explained, “Responsibly marketed and properly regulated, e-cigarettes could benefit public health if they help significantly reduce the number of people who smoke conventional cigarettes and become sick and die as a result.” He explained further that if properly regulated, “I don’t think there is any doubt that there would be a reduction in harm,” from smokers who switched to e-cigarettes. He is absolutely right on this point.
A recent Centers for Disease Control (CDC) survey suggests that there are more than 9 million adult consumers of vapor products in the United States. This represents the greatest accomplishment in public health in decades and is due entirely to the free market. This rise corresponds with a significant decline in smoking rates among Americans and is no coincidence.
That is why I support a change in the 2007 predicate date, which would permit products currently being used by consumers to quit smoking to continue to be sold. This very reasonable step has been put in legislative language authored by Rep. Tom Cole (R-Okl.) in the form of H.R. 2058 and exists in similar form in an amendment made to the House Appropriations Rural Development, Food and Drug Administration and Related Agencies agriculture appropriations bill earlier this year.
Unlike smokers, adult vapor product consumers are becoming single-issue voters who correctly attribute their switch from combustible tobacco products to smoke free alternatives like e-cigarettes to saving their lives. To crush this new and emerging industry would reverse decades of efforts to get people to quit smoking.
I urge Congress to amend the Tobacco Control Act predicate date for the tobacco-derived products in the electronic cigarette and vapor product category in an effort to protect public health and protect American jobs. Such a change in the predicate date would not interfere with the short-term goals of responsibly regulating the products; it would simply help avoid the looming economic and public health disaster associated with status quo prohibition.
Grover G. Norquist
ATR Launches Campaign to Defeat Tax Hikes in Pennsylvania
Today, Americans for Tax Reform launched a campaign to defeat the pending budget “compromise” being negotiated between Governor Tom Wolf (D-Penn.) and the Republican-run state legislature. The first set of over 75,000 phone calls began going out this morning, asking constituents to contact their state legislators to tell them to stand strong against Gov. Wolf's efforts to raise taxes.
In the fifth month of the budget impasse, a plan that includes a massive 21 percent sales tax hike is currently under consideration. This constitutes a $2 billion sales tax hike. Though it is offset with some property tax relief, the plan still remains a net tax hike and is likely to include new and higher taxes elsewhere.
"Gov. Tom Wolf's desire to spend and tax more without reforming government by doing common sense things like getting the government out of the booze business isn't a mainstream position. Given how long this budget impasse has gone on, it's time legislators start hearing more from their constituents," said ATR President Grover Norquist. "Tax reform shouldn't be used as a trojan horse for tax increases, as can be the case when one tax is lowered and others are raised and new ones are created. Republicans should stand strong against Tom Wolf's plan to raise the sales tax and they should continue to demand that Pennsylvania get out of the liquor business altogether."
The first set of Republican lawmakers’ constituents who will receive phone calls urging them to oppose Wolf's tax hikes are as follows:
- House Speaker Mike Turzai (HD-28)
- Senator Dominic Pillegi (SD-9)
- Senator Robert Tomlison (SD-6)
- Senator Stewart Greenleaf (SD-12)
- Senator Chuck McIlhinney (SD-10)
Suburban moderates in the Senate are the top target of this campaign.
A 30-second recorded call will be delivered to households with residents identified as likely Republican voters in each of these districts. Call recipients are asked to “Press 1” at the conclusion of the message to be directed to their representative’s capitol offices in Harrisburg.
Messages vary by district, with some legislators being urged to reject the massive sales tax hike and others being asked to reject efforts to create a new and higher tax on electronic cigarettes, a tobacco-free alternative to combustible cigarettes.
"The Centers for Disease Control (CDC) estimates that there are 9 million adults who use electronic cigarettes in the United States. These are former smokers who are living healthier tobacco-free lives while the small businesses and shops who help them in this effort contribute to state property, sales, and income taxes. To kill these businesses with a new tax on vapor products would fly in the face of efforts to reduce smoking rates in Pennsylvania," continued Norquist.
Grover Norquist Speech in New Orleans: The Vaping Movement Will Win!
In a speech to vapor product business owners and consumers, ATR president Grover Norquist recently outlined his view on how vapers can defeat efforts to tax and regulate electronic cigarettes and vapor products. New CDC data suggests that there are more than 9 million adult consumers of vapor products in the United States.
As Grover explains, the large number of consumers using these products to live healthier tobacco-free lives represents a political movement that politicians would be wise to recognize, especially as we head into the 2016 election cycle.
This event took place on November 8, 2015 at Mardi Gras World in New Orleans, Louisiana. The Vaper’s Exhibit helped organize this event.
New CDC Data: More Than 9 Million Adults Vape Regularly in the United States
A recently released report by the Centers for Disease Control and Prevention (CDC) showed that in 2014, 3.7 percent of American adults used electronic cigarettes or vapor products on a regular basis. That figure represents more than 9 million adult consumers, according to the U.S. Census Bureau.
E-cigarettes are tobacco-free technology products, which are increasingly being used as smoking cessation tools for traditional cigarette users. The National Health Interview Survey also revealed that 12.6 percent of adults in the U.S. have tried an e-cigarette at least once.
Key CDC Survey Findings:
- About 3.7 percent of adults used e-cigarettes every day or some days;
- Almost one-half of current cigarette smokers (47.6%) and more than one-half of recent former cigarette smokers (55.4%) had ever tried an e-cigarette;
- About one in six current cigarette smokers (15.9%) and nearly one in four recent former cigarette smokers (22.0%) currently used e-cigarettes;
- Fewer than 4 percent of adults who had never smoked conventional cigarettes have ever tried an e-cigarette.
The academic research and evidence suggesting e-cigarettes are at least 95 percent and as much as 99 percent healthier than combustible cigarettes continues to mount. Despite the potential boon to public health, tax-hungry lawmakers and fraudulent “public health” groups have waged a war on vaping, pushing for excise taxes on the products throughout the U.S.
Listen to U.S. Senator Ed Markey (D-Mass.) call for an end to the e-cigarette industry:
The same groups that for years argued we had to raise taxes on cigarettes to decrease use are now pushing for tax hikes on the products actually achieving that exact goal among adult smokers.
Threats of imposing excise, or “sin taxes” on e-cigarettes have varied state by state. States like Washington, Vermont, and Oregon have considered wholesale tobacco taxes as high as 95 percent. The reaction of the small business vape shops, working in their communities to help smokers quit has been consistent. The threat of taxation stands to kill their businesses, and the public health benefits they are providing.
A recent tax hike imposed in the District of Columbia immediately resulted in the closure of at least one business, which couldn’t afford to compete and comply.
Politicians waging a war on vaping are doing so to balance bloated budgets on the backs of smokers trying to live healthier lives. If these big government bureaucrats wanted to help people actually quit smoking, they would embrace the growing evidence suggesting these products could save governments billions in health care costs and millions of lives.
9 million adult consumers aren’t going to sit idly by as the products they accurately attribute to saving their lives are under the threat of prohibition. With the growing number of adult e-cigarette consumers in the United States, vapers represent a significant single-issue voting bloc. Candidates for federal, state, and local office would be wise to recognize this constituency as the latest addition to the “Leave Us Alone” coalition, especially in swing states and close elections.
Passage of Washington State Initiative Shows Just How Toxic Tax Hikes Are
Early returns in Washington state show that voters approved Initiative 1366 by a margin of 54% to 46%, requiring a reduction in the state sales tax or the referral of a constitutional amendment to the ballot that requires a two-thirds legislative or public vote to impose any future tax hikes. The legislature has until April 15, 2016 to decide which will happen. At that point, the sales tax will automatically be reduced from 6.5% to 5.5% unless the legislature sends a Constitutional amendment to the ballot, requiring a two-thirds super majority for future tax hikes. The state's Office of Financial Management estimates that a one percent sales tax reduction would result in a $1 billion annual tax cut for taxpayers.
“Gov. Jay Inslee lied to voters to get elected in 2012, saying he wouldn't raise taxes. After his massive multi-billion job-killing tax hike proposals this year, voters again demonstrated that they were no longer going to trust Democrats to keep them safe from tax hikes, big government, and overspending, said ATR president Grover Norquist. "This is a huge win for Blue State taxpayers. The increasing popularity of supermajority requirements for tax hikes should send a strong message that tax hikes are toxic to a bipartisan majority of voters."
As the Seattle Post-Intelligencer pointed out, "The voters have on five occasions endorsed the requirement for a two-thirds 'super majority' in both the House and Senate for tax increases." A two-thirds requirement for tax hikes in the legislature was last approved by voters in 2010 by a 64-36 margin but was ruled unconstitutional by the state Supreme Court in 2013 on the basis that only a majority is required for legislation. Washington Democrats filed the lawsuit leading to that ruling.
In their endorsement of the initiative, the Post-Intelligencer continued, "Gov. Jay Inslee was elected in 2012 on a [verbal] no-new-taxes pledge, yet Inslee went to the Legislature this year with a proposed capital gains tax and a polluters-pay tax... I-1366 would be the taxpayers shield against runaway costs of government and those seeking to defy the will of the people."
Tuesday’s passage of Initiative 1366 would change the Constitution to comply with that ruling, if the legislature does not simply allow for a reduction in the state sales tax.
Sixteen states require more than a simple majority to raise all or some taxes. In seven states, the constitution requires a supermajority vote of each house, plus the governor’s signature to enact any tax hike. Delaware, Mississippi, and Oregon require a three-fifths vote of each house; Arizona, California, Nevada, and Louisiana require a two-thirds vote of each house.
Vaping Claimed First Victim One Year Ago
Electronic cigarettes are dangerous, so dangerous in fact that they’re banned from checked bags on airplanes, so dangerous that no one under the age of 18 can purchase them legally nearly anywhere, so dangerous that the Food and Drug Administration (FDA) has spent years trying to ban them.
In fact, e-cigarettes claimed their first victim just one year ago. Elizabeth “Liz” Thomson was a Democrat member of the New Mexico House of Representatives, who had a career as a pediatric physical therapist before serving in the legislature beginning in 2013.
But, Representative Thomson didn’t die; voters kicked her out of office for her baseless assault on vapor products and the consumers and voters who use them.
Every reasonable person and business supports restricting the sale of nicotine containing products to minors.
The FDA’s overreach is an extension of the Obama administration’s anti-public health agenda, dead-set on protecting the government’s excise tax collections on traditional cigarettes.
Over the objection of some so-called public health groups last year, New Mexico banned the sale of e-cigarettes to minors. Some, like Rep. Thomson, wanted the products stripped from the hands of adults and teens alike. They wanted to subject the products to “sin” taxes, limit the types of products available, and ban their use in public places.
In October, vapor businesses and consumers organized a sizable group to attend a hearing in Santa Fe. Rep. Thomson was among those who attacked public health professionals like Dr. Joel Nitzkin in her quest to expose the “dangers” of e-cigarettes.
Vapers discovered soon after Rep. Thomson’s assault on the products they attribute to saving their lives that she was involved in one of the most closely contested races in New Mexico. Her opponent, Republican Conrad James, was a more market-oriented candidate, open to science and facts and not jaded by his hunger for more tax dollars and control over consumer choices.
Vapers made significant financial contributions, knocked doors, made phone calls, and were involved in a significant Get Out The Vote (GOTV) effort in the days leading up to the election. Financial contributions were so great, James started turning down contributions out of a lack of need.
Rep. Liz Thomson was defeated by Conrad James by 374 votes and Republicans won control of the New Mexico House for the first time in 60 years.
The next time you hear about the dangers of electronic cigarettes from Democrats, Republicans, or the press, remember Liz Thomson of New Mexico. She became the first victim of these dangerous products just one year ago.
Wow! You'd better not enter a hospital then. Most hospitals use PG as a purifier in their air systems. That actually modifies the air you breathe in a safe way. (And, for the same reason, a vaper's breath is probably a lot cleaner than yours!)
Alabama House Committee Passes Massive Porn Tax
Rather than fix a $200 million overspending problem before October 1, the Alabama House Ways and Means Committee has passed a 40 percent “porn tax” on the gross receipts from the sale, rental, or admission charges of pornographic material. This includes pornographic magazines, adult videos, and online adult rentals.
Alabama lawmakers have struggled to pass a budget this year, now into their second special legislative session. Negotiations began in February with a proposal from Gov. Robery Bentley to raise taxes by more than $500 million. Despite having campaigned on his personal written commitment to oppose tax hikes, the governor has rejected budget restraint and reforms that did not include tax increases. The governor has attacked conservative lawmakers, threatened to withhold state funding for local projects, and neglected the will of taxpayers who elected him as a result of his promise to oppose tax hikes since the beginning of session.
Though Bentley's proposals to raise cigarette taxes, eliminate state deductions for F.I.C.A. taxes, and a wide range of other targeted tax hikes have been rejected by the legislature thus far, the legislature has until October 1 to balance the budget in order to avoid a government shutdown.
Rep. Jack Williams (R-Vestava Hills) explained his reasoning for proposing the massive tax by saying “any entertainment product that’s adult in nature, that you have to be over 18 to purchase, would have an excise tax like cigarettes and tobacco do.”
Despite declining tobacco use and tax revenue, typical proponents of tobacco tax hikes have cited the impact on public health costs borne by taxpayers as a result of smoking. Proposals, like those from the governor, that include cigarette tax hikes will only increase the state'd dependence on cigarettes, an extremely volatile source of revenue. It is unclear what public health program porn tax revenue would fund.
It is also unclear how books and movies will be treated with regards to the new tax. One person described a conflicting scenario where "Fifty Shades of Grey" the book would be taxed as porn but the movie, which is rated “R” by the Motion Picture Association of America might not be.
Proposals like this come as a result of pressure from Governor Bentley, who threatened to release criminals unless lawmakers raised taxes this spring. He noted in April, "you may not care about prisoners…but when you have them in your basement, you're going to care."
A fiscal note is not available. The porn tax now heads to the full Alabama House for a floor vote.
Governor Cuomo Rejects Math Showing New York Biggest Population Loser in 2013
In 2013, New York lost more taxpayers than any other state in the nation according to IRS data released this week. As we recently pointed out, 114,929 people left the Empire State, taking with them $5.7 billion in annual adjusted gross income (AGI).
Upon learning about the mass migration of taxpayers fleeing to more friendly states, Governor Andrew Cuomo’s office responded by saying the data “wasn’t fair because it didn’t include migration into the state.”
He continued, “Looking at one-half of the equation is not how you do math.” We agree. Which is exactly why we used outflow and inflow data, provided by the IRS.
Here’s how that math works.
The New York state-to-state migration data is broken down by state outflow and inflow. Three data points are provided: number of tax returns, number of exemptions, and adjusted gross income (AGI).
Whereas the number of returns only represents the number of individuals that filed tax returns, the number of exemptions represents individual filers and their dependents. Parents would claim a child as a dependent, for example.
In calendar years 2012-2013, 386,395 exemptions were filed on 219,652 tax returns. That represents a loss of 386,395 individuals (half of the equation; outflow).
In calendar years 2012-2013, 271,466 exemptions were filed on 167,337 tax returns. That represents a gain of 271,466 individuals (the other half of the equation; inflow).
To simplify this even further for the math-challenged in Albany, 386,395 minus 271,466 results in a NET LOSS of 114,929 residents.
(Graphic from New York Post)
New York remains…the biggest loser.
Taxpayers Fleeing Democrat-Run States for Republican Ones
In 2013, more than 200,000 people on net fled states with Democrat governors for ones run by Republicans, according to an analysis of newly released IRS data by Americans for Tax Reform.
"People move away from high tax states to low tax states. Every tax refugee is sending a powerful message to politicians," said ATR President Grover Norquist. "They are voting with their feet. Leaders in Texas and Florida are listening. New York and California are not."
That year, Democrat-run states lost a net 226,763 taxpayers, bringing with them nearly $15.7 billion in adjusted gross income (AGI). That same year, states with Republican governors gained nearly 220,000 new taxpayers, who brought more than $14.1 billion in AGI with them.
Only one-third of states with Democrat governors gained taxpayers, compared to three-fifths of states with Republican governors.
Top 5 loser states for Democrat governors in 2013:
· Illinois (68,943 people with $3.8 billion in AGI)
· California (47,458 people with 3.8 billion in AGI)
· Connecticut (14,453 people with $1.8 billion in AGI)
· Massachusetts (11,915 people with $1 billion in AGI)
Top 5 winner states for Republican governors in 2013:
· Texas (152,912 people with $6 billion in AGI)
· South Carolina (29,176 people with 1.6 billion in AGI)
· North Carolina (26,207 people with $1.5 billion in AGI)
· Arizona (16,549 people with $1.5 billion in AGI)
The single largest net migration from one state to another took place between New York and Florida (17,355 people).