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Paul Blair

ATR Opposes Governor Beshear's Tax Hikes on Traditional Cigarettes and E-Cigarettes


Posted by Paul Blair on Thursday, February 6th, 2014, 4:25 PM PERMALINK


In a proposal to the Kentucky legislature, Democrat Governor Steve Beshear presented a "tax reform" package that included more than $124 million in higher taxes on both traditional tobacco cigarettes and e-cigarettes. The overall package is a $210 million tax hike, which we have written about here

Not only will his plan chase business out of the state, it will cost small business struggling to make ends meet tens of thousands of dollars in lost revenue. As described, Beshear's proposal is a violation of the Taxpayer Protection Pledge and should be rejected unless substantive changes are made. Americans for Tax Reform opposes the proposal, and ATR president Grover Norquist sent a letter to the legislature, which reads as follows: 

Dear Legislator,

I write today in opposition to all efforts to increase cigarette and e-cigarette taxes in Kentucky. Governor Steve Beshear’s “Kentucky Competes” tax reform plan includes both. His proposal increases the per pack tax on cigarettes from 60 cents to $1 dollar and creates a 20 percent excise tax on all e-cigarettes. Not only are these proposals punitive for low-income individuals, they make little sense.

Increasing taxes on tobacco and e-cigarettes will hurt countless Kentucky small businesses, especially convenience stores that rely on these products for one third of total store sales. Raising taxes on consumers will significantly decrease in-state sales, cutting into the state’s bottom line.

A 40-cent increase of the current cigarette tax will send consumers to surrounding states with lower rates and increase smuggling across state lines. Just ask Illinois lawmakers. In May of 2012 when Illinois raised the cigarette tax by $1-per-pack, the tax delivered $138 million less than expected. Local small businesses lost tens of thousands of dollars as a direct result as consumers purchasing tobacco across state lines in Indiana and Missouri. This is precisely why tobacco taxes are an extremely volatile revenue source that prompt future tax hikes. Revenue for Kentucky coffers would likely fall short of the annual $125 million projection cited by the governor. Furthermore, the last thing that those who seek to combat smoking should want is the commonwealth increasing its reliance on tobacco tax revenue.

The proposal to create a 20 percent excise tax on e-cigarettes is particularly troubling. A number of studies have shown that electronic cigarettes stand to improve health and prevent disease. By choosing to “vape” e-cigs instead of smoking traditional tobacco, consumers get their nicotine fix without the combustion and smoke, which are responsible for many of the negative health effects of tobacco cigarettes.

For decades, lawmakers have tried to mitigate smoking and the harm it causes through punitive taxation and heavy regulation. However, with e-cigarettes, the free market has provided a solution to a problem that social engineers have not been able to address through stiff government regulations. The imposition of new taxes on these products perpetuates an issue lawmakers have spent so much time trying to eliminate, as e-cigarettes cut down on smoking and people’s dependence on tobacco cigarettes.

The cigarette and e-cigarette tax hikes are shameless cash grabs that make little sense from a revenue or public health perspective. Legislators should remove these provisions from the plan before considering the rest of the package during this year’s legislative session. While Governor Beshear’s Kentucky Competes proposal is a good start for a discussion on the need for tax reform in the state, it represents a $210 million annual net tax hike on Kentucky taxpayers, which is the last thing Kentucky residents need after seeing over 20 new and higher federal taxes imposed from Washington in just the past few years.  

Please look to ATR as a resource and if you have any questions about ATR’s position on any number of tax issues, please contact state affairs manager Paul Blair at 202-785-0266 or by email at pblair@atr.org.

Onward,
Grover Norquist

[Click here for a PDF of the letter]

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Kentucky Governor Steve Beshear Proposes a $210 Million per Year Tax Hike


Posted by Paul Blair on Wednesday, February 5th, 2014, 4:39 PM PERMALINK


Kentucky Governor Steve Beshear just released a 22-point tax proposal, 20 days into a 60 day legislative session. The plan is a much smaller version of one put together by a 2012 blue ribbon commission on tax reform, which was a tax hike three times the size as the current one. It also comes one the heels of a $45 million gas tax hike he proposed last month. 

According to the Governor, his plan raises an additional $210 million in taxes per year. It has three major provisions which raise this revenue:

First, it broadens the base of taxable services subject to the sales tax of 6 percent. It subjects labor for installation, repair and maintenance of personal property to the sales tax. The sales tax is also then expanded to a select few other services bringing the total cost for this tax hike to $280 million per year.

Second, the plan raises the cigarette tax from 60 cents to $1 per pack and taxes e-cigarettes. The Governor projects this will generate $125 million for the state. Unfortunately for Beshear, raising tobacco taxes does not necessarily raise revenue. Take the Illinois example:

In May of 2012 when Illinois raised the cigarette tax by $1-per-pack, nearly doubling the state’s tax rate to $1.98 per pack, the tax delivered $138 million less than expected. What’s more, local small businesses lost tens of thousands of dollars as a direct result as consumers purchasing tobacco across state lines.

To avoid higher cigarette taxes, consumers constantly demonstrate that they are willing to purchase the products in less expensive markets. Additionally, tobacco taxes are an extremely volatile revenue source that prompt future tax hikes. Proponents of cigarette taxes neglect economic realities. To argue that a cigarette tax will increase revenues while decreasing the number of people buying cigarettes is absurd. When prices increase, consumption declines, taking revenue with it.

Additionally, increasing the level of taxation on e-cigarettes is counterintuitive to the concept of reducing the number of smokers in the state. Studies have shown that electronic cigarettes stand to improve health and prevent disease. By choosing to “vape” e-cigs instead of smoking cigarettes, consumers get their nicotine fix without the combustion and smoke — responsible for much of the negative health effects of tobacco cigarettes. It's clear this is simply about money. 

Third, the plan reduces pension and retirement income tax breaks for taxpayers, subjecting more of their well-earned and saved income to taxation. This results in $176 million in additional revenue for the state. 

Not everything about this plan is ill-conceived. It cuts hundreds of millions of dollars in taxes in a way that would make the state more competitive, if not for the three provisions explained above.

The plan reduces the individual income tax for the middle class ($180 million tax cut) and corporate income tax by one-tenth of one percent ($6 million tax cut), which a step in the right direction but a step that pales in comparison to the historic tax reform package signed into law in North Carolina last year.

It also grants an income tax credit for bourbon distillers ($13 million tax cut), lowers the wholesale taxes on beer, wine and distilled spirits ($16 million tax cut), and changes the formula for income tax for multi-state corporations ($155 million tax cut). Click here for the full list. 

If not for the three proposals clearly designed to raise money for more state spending, this wouldn't be a net negative for Kentucky taxpayers. State legislators would be wise to strip the three tax hike provisions out of the proposal and focus on broadening the base and lowering the rates in a revenue neutral way. North Carolina provided a good example on how to do this the right way.

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West Virginia Foolishly Weighs Tobacco Tax Increase


Posted by Paul Blair on Tuesday, February 4th, 2014, 5:27 PM PERMALINK


Mountain State smokers beware: Democrat Delegate Don Perdue has (again) introduced legislation to raise the state tax on cigarettes by $1 per pack. In justifying the proposal, Purdue claimed that the state "needs the estimated more than $90 million such a tax increase could generate every year," according to the West Virginia Metro News. 

The tax hike would be aimed at raising $90 million per year for the Bureau of Medical Services, with $6 million going into tobacco "control" annually and $1 million per year going to West Virginia University's School of Public Health. Doubling down on his motivations, Delegate Perdue said, "we need the money." 

Unfortunately, cities and states who have made the same argument about revenue time and time again have been disappointed at the results. Raising tobacco taxes does not necessarily raise revenue. 

Take the Chicago and Illinois examples:

In 2006, Chicago collected $32.9 million in cigarette taxes. After two consecutive tax hikes, revenue fell to $16.5 million last year. Carrie Austin, chairman of the City Council’s Budget Committee acknowledged this reality, stating, “we’ve run sales away.”

In May of 2012 when Illinois raised the cigarette tax by $1-per-pack, nearly doubling the state’s tax rate to $1.98 per pack, the tax delivered $138 million less than expected. What’s more, local small businesses lost tens of thousands of dollars as a direct result as consumers purchasing tobacco across state lines.

To avoid higher cigarette taxes, consumers constantly demonstrate that they are willing to purchase the products in less expensive markets. For West Virginia, that would be neighboring Virginia, whose state tax on cigarettes is 30 cents per pack, the lowest in the nation. For proof that consumers and businesses will purchase cigarettes across state lines, New York provides the best evidence. Nearly 21 percent of cigarettes in the state are smuggled into the state as a direct result of extremely high tobacco taxes, which disproportionately target low income individuals. 

Tobacco taxes are an extremely volatile revenue source that prompt future tax hikes. Proponents of cigarette taxes neglect economic realities. To argue that a cigarette tax will increase revenues while decreasing the number of people buying cigarettes is absurd. When prices increase, consumption declines, taking revenue with it.

Delegate Purdue's proposed tax hike will do little to solve West Virginia's budget shortfalls. It will hurt Mountain State small businesses and when tobacco sales fall, resulting in less revenue for the state, West Virginia legislators will again be debating what to do about the state's empty coffers.

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Governor Steve Beshear Proposes Gas Tax Hike to Pay for $2 Billion in New Road Projects


Posted by Paul Blair on Tuesday, February 4th, 2014, 4:41 PM PERMALINK


In his two-year budget proposal to Kentucky lawmakers, Governor Beshear recently proposed reversing the 1.5 cents-per-gallon gas tax decrease that automatically went into effect on January 1. The Governor’s proposal would increase the current gas tax that Kentucky motorists pay from 24.4 cents per gallon at the state level to 25.9 cents.

Fluctuating gas tax rates in the state are the result of legislation that tied the tax to the wholesale price of motor fuels, which is automatically recalculated every three months. When the price of gasoline falls, so does the calculated gas tax and revenue to the state.

Governor Beshear takes issue with the relief that falling gas prices provide Kentucky motorists. His proposal would ensure that Kentucky drivers wouldn’t ever pay less than 32.2 cents per gallon, regardless of gas prices. This is because he isn’t concerned with taxpayers pain at the pump; in typical fashion, he’s much more concerned about new government contracts

Though he'll be announcing a more comprehensive tax reform package soon, his first tax hike proposal would range from $45 million to $100 million depending on gas prices in the next two years. This revenue would comprise between 2.3 percent to 5 percent of his planned $2 billion in new spending for transportation. The rest will likely be made up of additional tax hikes he will be proposing in the coming days. 

It seems likely that the Democrat Governor's legislative agenda will not be comprised of reforms that make the state more competitive for businesses or provide much relief to taxpayers.

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Americans for Tax Reform Announces Virginia Legislative Scorecard for 2014 Session


Posted by Paul Blair on Monday, January 13th, 2014, 3:23 PM PERMALINK


As Virginia legislators begin the 2014 legislative session, Americans for Tax Reform will be tracking and issuing “key votes” on important bills up for consideration. Voters in search of a legislator’s record on taxes, spending, and regulatory matters will be well equipped to judge elected officials on their records instead of their rhetoric.

Virginia State Capitol, Richmond

The first factor considered on ATR’s 2014 Virginia Scorecard will be whether or not a legislator has signed the Taxpayer Protection Pledge. The Pledge is a written commitment to voters to “oppose any and all efforts to increase taxes.”

ATR offers the Pledge to all candidates for elective office. To date, fourteen governors and over 1,000 state legislators have signed the Pledge, including 31 in the Commonwealth of Virginia. Additionally, 39 U.S. Senators and 219 members of the U.S. House of Representatives have signed the Pledge.

“Last year, a number of Republicans joined Democrats in passing the largest tax hike in Virginia history so that the outgoing governor could have a ‘transportation legacy.’ As a result, two powerful Republicans were held responsible by voters when they were defeated in primaries last June,” said Grover Norquist, president of ATR.

“Our 2014 scorecard will track legislators’ willingness to put their name on and vote for legislation that begins to rein in state spending, cut taxes, and help small businesses thrive. Voters deserve easy access to a politician’s record on these issues and to know whether their legislative record matches their campaign rhetoric,” continued Norquist.

[PDF of Press Release]

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Oregon Spends $200,000 to Figure Out How to Impose a Carbon Tax


Posted by Paul Blair on Wednesday, December 18th, 2013, 5:31 PM PERMALINK


Following a “regional climate change agreement” with California and British Columbia, Oregon legislators have commissioned a taxpayer-funded $200,000 study to examine a new state carbon tax. The study aims not to examine the impact on consumer energy costs, but merely on how to implement it in Oregon.

A new cap-and-trade tax regime will do little to address concerns of legislative do-gooders who are worried about The Day After Tomorrow (or any other sort of apocalypse).

In fact, California Governor Jerry Brown said, “This is global. So, if it’s only Oregon, Washington, California, and British Columbia, nothing’s going to happen.”

He's right. As developing countries exponentially increase their emissions, there isn’t much a few states can down to lower overall global emissions. The clear impact of cap-and-trade, however, is an increase in the cost of electricity. Precise numbers are hard to acquire, given that most studies focus on how to implement the policies not on their economic impact. President Obama, however, in support of national cap-and-trade legislation admitted that utility rates would “necessarily skyrocket.”

Peter Orszag once noted that electricity “price increases are essential to the success of a cap-and-trade program.” Cap-and-trade is regressive and hits hardest poor and middle-income households who spend more of their paychecks on energy.

For Oregon taxpayers that could mean anything from several hundred extra dollars per year up to several thousand. The legislature, unfortunately, has expressed no interest in a cost-benefit analysis.

Supporters of the plan told an Oregon legislative committee that the tax revenue generated from the selling and trading of cap-and-trade credits could “replace portions of existing revenues” in the form of “corporate tax cuts, low-income tax relief, and targeted investments in certain industries.”

The predictive reality of such tax increases would be investing in "green" technology that is far more expensive than coal and if California is any indicator, an expansion of the welfare state.

From the Wall Street Journal:

California expects to generate $500 million this year from auctioning off permits to emit carbon, and between $2 billion and $14 billion annually by 2015. This rich new vein of revenues was supposed to flow to green programs (e.g., solar subsidies), but Governor Jerry Brown cut a deal with Democrats in the legislature to seize this year's proceeds to finance more generous welfare and Medicaid benefits.

When push comes to shove, Democrats are far more interested in using higher revenues from tax hike schemes on spending increases, not tax cuts. Oregon taxpayers should be wary of any promises about future tax cuts in exchange for cap-and-trade schemes that have been rejected at the national level. 

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Florida Governor Rick Scott Plans to Roll Back Charlie Crist's 2009 Vehicle Registration Fee Hikes


Posted by Paul Blair on Monday, December 16th, 2013, 2:46 PM PERMALINK


Last week Florida Governor Rick Scott announced plans to make good on his promise of 500 million dollars in tax relief. His latest initiative will save Florida drivers over $400 million; plans for the other $100 million in savings will be announced in January. Scott aims to undo a 54 percent increase in automobile registration fees signed into law in 2009 by then Governor Charlie Crist.

The 2009 fee hike raised automobile registration fees from approximately $46 to $71, forcing Florida taxpayers to pay an additional $25 on average. Scott recognizes that taking money out of the pockets of Florida’s families is the wrong approach to expanding Florida’s economy.

Photo from Bright House Networks, News 13

Victimized by regret and now running for governor not surprisingly as a democratCrist says he’s glad that Governor Scott got on around to rolling back the fees, and that they were never meant to be permanent.

Governor Scott has been busy cleaning up the mess that Crist left behind. In the three years he’s been Florida’s chief executive, Scott has cut taxes over twenty times. Though he inherited a 3.6 billion dollar budget deficit, the Sunshine State now enjoys a 1.2 billion dollar surplus. On inauguration day in 2011, Florida’s unemployment rate was above the national average; today it’s below. Scott’s plan is working, and working well.

As a testament to Florida’s “open for business” tax climate, Hertz announced this year that they would be moving their global headquarters from the northeast to Florida. The $50 million headquarters complex will host at least 700 jobs paying more than $100,000 per year on top of countless additional service industry and information technology jobs in the state.

Despite Governor Scott’s proposed $500 million in tax relief for next year, there will still be a $700 million budget surplus. The legislature would be wise to join Governor Scott in looking at even more ways to provide tax relief to state residents, small businesses, and corporations asking “Who is open for business?”

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Tax Hiker Joe May Announces Bid for Virginia State Senate Seat


Posted by Paul Blair on Monday, December 2nd, 2013, 5:41 PM PERMALINK


Outgoing Virginia Delegate Joe May confirmed that he is running for the Republican nomination in the 33rd Senate District in Northern Virginia. A special election for that seat will take place if Democrat Mark Herring wins a recount in the Virginia Attorney General race against Republican Mark Obenshain. Herring, a state senator, recently was certified by the State Board of Elections as the next Attorney General with a 165 vote margin and a recount will take place in the coming weeks.

Joe May is the most recent candidate to announce that he’s jumping into the possible open senate race. The 20-year incumbent in the House of Delegates was defeated this past spring by conservative Taxpayer Protection Pledge signer Dave LaRock. May was one of the architects of Speaker Bill Howell and Governor Bob McDonnell’s $6 billion tax hike, which raised a myriad of taxes in the Commonwealth.

ATR President Grover Norquist noted at the time, “Make no mistake. House Transportation Committee Chair Joe May's defeat can be directly attributed to his vote for Speaker Bill Howell's misguided $6 billion tax hike”

As the Loudon Times-Mirror noted this spring, “LaRock received a boost from Americans for Tax Reform during his primary campaign. The group launched JoeMayLovesTaxes.com and funded roadside signs calling May a “serial tax hiker” in the weeks leading up to the election.”

LaRock, who won with 57% of the vote made May’s vote for higher taxes the key issue in the race. 

Two other Republicans have already announced that they are running for the seat should it become open as well. Republican chairman of the 10th Congressional District and Leesburg attorney John Whitbeck announced on November 25th and Herndon resident Ron Meyer announced the following day.

Stay tuned regarding Americans for Tax Reform's plan to educate voters about Joe May's tax-hiking record. 

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New Braves, Falcons Stadiums Hand Local Taxpayers Major League Loss


Posted by Paul Blair on Friday, November 15th, 2013, 12:20 PM PERMALINK


Blumenfeld, now the Director of Advance for "How Money Walks" at Pelopidas, LLC, examines the cost to taxpayers for two new sports stadiums in the Atlanta area

Recently, the Atlanta Braves announced that they will not be renewing their lease with Turner Field, the home of major league baseball in Georgia for the past 17 years. Instead, the team will build a new stadium north of Atlanta in Cobb County.  While a new Braves stadium will provide needed upgrades from a facility and neighborhood attractiveness standpoint, there is one alarming factor being overlooked in talks over the estimated $672 million project. The Braves want $450 million in public funds from Cobb County – roughly 67 percent of the total cost – in order to build this grandiose baseball cathedral.

(Turner Field, Atlanta)

While it’s true that using public funds to finance extravagant stadium renovation and construction projects is the most popular trend among team owners, what is particularly interesting in this case is that the Atlanta Falcons are also requesting $300 million of hotel tax revenue from the city of Atlanta to fund their $1.2 billion dollar football stadium. Opening day for each stadium is tentatively set for the start of the 2017 season, yet taxpayers should refrain from celebrating that day, given the immense tab they are on the hook to pay.

Despite Georgia being announced as the number one place for business by Site Selectionmagazine, the men and women who live, work, and pay taxes in Cobb County and Atlanta were not consulted even once during the discussions to use public funds. In fact, no public vote was ever held. The officials overseeing these projects claim that the surrounding neighborhoods will see a boom in economic activity and revenue generated, but that is all reliant on attendance and tourism: volatile and inconsistent figures.

If the Falcons and Braves were really interested in keeping the fans who support these teams in mind, the proposals would incorporate a plan for the reimbursement of public funds used through ticket and concession sales over a designated period of time. Instead, the local governments are going to give money to privately owned and operated stadiums with teams that continue to profit, despite repeated promises to reduce government spending.  Rather than hitting a home run with the addition of the new Braves stadium, taxpayers will be on the receiving end of an economic tackle for significant loss.

To learn more visit howmoneywalks.com.

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ATR Releases 2013 List of State Taxpayer Protection Pledge Signers in New Jersey


Posted by Paul Blair on Monday, November 4th, 2013, 5:04 PM PERMALINK


With the New Jersey general election taking place Tuesday, Americans for Tax Reform has released an updated list of incumbents and challengers for state legislative and statewide office who have signed the Taxpayer Protection Pledge. These candidates have made a written commitment to their constituents to “oppose and vote against any and all efforts to increase taxes.”

ATR strongly encourages taxpayers to consider those who have made this commitment when they vote on Tuesday, November 5. The list of incumbents and challengers who have signed the Taxpayer Protection Pledge and will be on the ballot Tuesday is as follows:

Challengers:                                                           

Diane Bindler (A-12)

Patrick McKnight (A-16)

Dierdre G. Paul (A-37)

Michael Urciuoli (A-34)

Incumbents:

Diane Allen (S-7)

Anthony Bucco (S-25)

Gerald Cardinale (S-39)

Michael Doherty (S-23)

Tom Kean, Jr. (S-21)

Samuel D. Thompson (S-12)

Shirley Turner (S-15)

Joe Pennachio (S-26)

John Amodeo (A-2)

Mary Pat Angelini (A-11)

Anthony Bucco (A-25)

Jon Bramnick (A-21)

Michael Patrick Carroll (A-25)

Caroline Casagrande (A-11)

John DiMaio (A-23)

Louis Greenwald (A-6)

Amy Handlin (A-13)

Sean Kean (A-30)

Eric Munoz (A-21)

Declan O’Scanlon (A-13)

David Rible (A-30)

Scott Rudder (A-8)

Jay Webber (A-26)**

[PDF of Press Release]

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