Another Massachusetts Town Goes Rogue on “Tobacco” Products
Four months ago, the town of Westminster, Massachusetts considered an outright ban on all tobacco products. The Board of Health’s proposal was so absurd that the Boston Globe said, “There are radical proposals, and then there’s Westminster’s plan to ban tobacco sales within town limits.”
The Board also lumped non-tobacco products like electronic cigarettes into the proposal, putting on display their utter lack of common sense or concern for public health. Here is a copy of the letter that we sent to the Board at the time.
The public was outraged; tobacco and e-cigarettes are legal products after all. The Board of Health was met with the full fury of local citizens who wanted the nanny-staters to step off. They dropped the proposal. Common sense prevailed.
Now, less than an hour’s drive away in the town of Winchester, Massachusetts another Board of Health has gone rogue. After increasing the minimum age to purchase tobacco from 18 to 21 exactly one year ago, they’re looking to further control local citizens lives with restrictions on tobacco product sales and electronic cigarette use.
In their meeting tonight, the Board of Health will discuss proposals that include banning the sale of flavored tobacco and e-cigarettes, implementing a minimum cost on cigars of $2.15 and $5 for a two-pack, and banning smoking and vaping in public places and workplaces.
Welcome to the theater of the absurd.
If the Winchester Board of Public Health’s goal is to ensure that smokers continue smoking traditional tobacco cigarettes, all of these proposals make perfect sense. If, however, their goal is the overall improvement of public health, restricting the availability of options for e-cigarettes does not help accomplish this goal.
Adults prefer flavors to traditional tobacco and menthol. A recent survey indicates that more than 65 percent of non-smoking vapers (consumers of non-tobacco e-cigarettes and vapor products) consider flavors other than tobacco to have been important or very important in helping them quit. For women, that number is more than 70 percent.
Prohibiting flavors ensures that smokers have fewer options when it comes to quitting an unhealthy habit. Electronic cigarettes and vapor products are estimated to be 99% less hazardous than smoking.
Restricting the availability of options to adult consumers under the guise of “protecting children” puts at risk a publicly stated goal of the public health community for decades: getting people to quit smoking cigarettes.
We urge the Winchester, Massachusetts Board of Health to reject these proposals and to focus on education initiatives supported by facts instead.
ATR Joins ACLU and Institute for Justice in Support of Civil Asset Forfeiture Reform in Virginia
Today, Americans for Tax Reform joined the American Civil Liberties Union (ACLU) of Virginia and the The Institute for Justice in support of Virginia House Bill 1287, which would require a criminal conviction before law enforcement may seize and keep an individual’s private property. The legislation, sponsored by Delegate Mark Cole (R-Va.) passed the full House of Delegates by a vote of 92-6 two weeks ago and is up for a vote in the Senate Finance Committee today.
In a recent hearing of the U.S. House subcommittee on crime, terrorism, homeland security, and investigations, chairman Rep. F. James Sensenbrenner Jr. (R-Wis.) noted, “The government is seizing billions of dollars of cash and property from Americans, often without charging them with a crime.”
There is a bipartisan consensus on this problem. Rep. Sheila Jackson Lee (D-Texas) said, “The size of these amounts helps put into focus the tension between our property and due process rights on the one hand, and the government’s interest in maintaining this funding stream on the other, often relying on civil forfeiture procedures involving the low standard of proof…Unfortunately, it is increasingly apparent that our laws are not sufficient in this regard.”
The Virginia Beach Police Department seized $6 million in assets between 2008 and 2013. The city Commonwealth’s Attorney said, “it allows us to be able to afford equipment and training for officers and prosecutors.”
As we note in the letter to the legislature, “policing should be based on public safety, not supplementing local law enforcement department budgets.”
Virginia’s civil asset forfeiture laws are among the worst in the nation. The Institute for Justice gave Virginia a D- because of the low burden of proof in forfeiture cases. The state’s laws are ripe for abuse, with countless examples in Virginia of lives being ruined as a result of seize first and make the defendant prove their innocence next protocols.
As the Richmond Times-Dispatch’s A. Barton Hinkle points out, Mark Cole’s legislation “would have saved a lot of misery for people such as Mandrel Stuart, who couldn’t afford to keep his Staunton barbecue business going after police seized more than $17,000 from him in a minor traffic stop. Unlike many in such straits, Stuart did not agree to settle for half his money back and a promise not to sue. He won in court, but still lost his business."
The burden of proof should not be on private property owners to prove to law enforcement officials that their assets were obtained legally; it should be the other way around.
ATR joins the ACLU and Institute for Justice in urging the Virginia state Senate to pass House Bill 1287.
ATR Opposes House Bill 170's Massive Gas Tax Increase in Georgia
In the aftermath of a joint legislative study committee report on transportation, Georgia lawmakers have spent the last month figuring out how to extract more money from taxpayers to pay for transportation projects. The report called for at least $1-1.5 billion in additional spending annually. To address “the full universe of transportation needs, including establishment of passenger rail systems,” the report claimed the state would need between $3.9 and $5.4 billion annually, constituting a 20 percent increase in the total state budget.
Georgia House Bill 170, which is supported by Republican Gov. Nathan Deal and House Speaker David Ralston, would raise at least $1 billion per year by making a number of changes to the state gas tax. Gasoline in Georgia is subjected to an excise tax of 7.5 cents per gallon, a 4% sales tax and in most places another local sales tax of 3%-4%. Under H.B. 170, this mix of taxes would be converted to a 29.2 cents per gallon tax, indexed to inflation. This is a tax increase that rises year by year.
As Tom Crawford with the Gainesville Times noted, “the current mix of excise and sales taxes on gasoline totals roughly 27 cents per gallon.” By indexing the gas tax to inflation and increasing the tax by more than 2 cents per gallon, H.B. 170 is clearly a tax increase.
Drivers of hybrids aren’t forgotten. The bill imposes a car tax hike on alternative fuel vehicles of between $200-$300 per year, indexed to inflation. Virginia’s 2013 transportation tax hike did this as well until Democrat Governor Terry McAuliffe repealed the tax less than 6 months later.
H.B. 170 also engages in an inventive gimmick to generate $500 million in new revenue. By immediately absorbing local gasoline sales tax revenue, the state will now collect and spend money otherwise collected and spent by localities. Most localities spend this money on a bevy of non-transportation needs, like education. Absent the willpower to cut spending though, it is likely local governments will consider tax hikes in the future.
Upon the expiration of local sales taxes on gasoline, H.B. 170 permits localities to raise the local excise tax on gasoline by up to 3 cents per gallon before requiring that further gas tax hikes be approved by referendum for a maximum of 6 cents per gallon in local taxes. This sets in motion future tax hikes, not all of which even need voter approval.
While we take no position on the state absorbing local tax revenue streams, directing gas tax revenue to transportation projects instead of unrelated spending programs like education, should be applauded. In 2014, by a 80-20 margin Wisconsin voters passed a ballot initiative requiring gas tax revenue be spent on transportation. Consumers' expectations on gas tax revenue are clear: spend it on transportation and nothing else. Unfortunately, the definition of "transportation" is broad and encompasses a number of expensive projects, all of which may not actually alleviate traffic to improve anyone's commute to work.
So what would the total gas tax bite be if H.B. 170 passed in Georgia?
Total Tax Possible
7.2 cents/gallon + 4% sales tax
Chained to CPI
3%-4% sales tax
Up to 3 cents/gallon
Up to 6 cents/gallon
ATR urges the legislature to revisit its transportation spending priorities and reject all gas tax hikes on consumers.
Governor Paul LePage Calls for Elimination of Maine's Income Tax
In his 2015 State of the State Address, Gov. Paul LePage (R-Maine) called for an elimination of the state income tax "once and for all." A significant potion of LePage's speech was dedicated to a tax reform proposal that he announced last month. Here are some highlights:
"Maine is currently not competitive nationally or globally. Our tax system is antiquated. We must modernize it.
My fellow Mainers, you work hard for your paycheck. The government takes your earnings, and you have no control over how it is spent.
You earned it. You should keep it!
An income tax cut puts money back in your pocket. It is a pay raise for all working Mainers...
This plan is different from past plans. It is not a tax shift. It is a tax cut for all Mainers.
My vision is a Maine with no income tax. But I’m no magician. It takes time.
When I took office, Maine’s top income tax rate was 8.5 percent—one of the highest in the nation.
We reduced the rate to 7.95 percent—a baby step. This plan cuts it to 5.75 percent—a 40 percent decrease in the income tax since I took office. That’s one big step.
A young married couple, both teachers with one child, claiming a standard deduction, would get a $1,500 pay raise.
That’s a mortgage payment. That’s few tanks of heating oil. It’s several car payments or back-to-school clothes for the kids. It’s real money. It makes a real difference...
This plan reduces the tax burden on Maine families and small businesses by $300 million. That’s a real pay raise for the Maine people!..
There are 9 states with no income tax. 19 other states are working to reduce or eliminate the income tax. Maine is leading the nation with our bold plan. We’re the first out of the chute...
Maine’s corporate tax is a job killer. My plan cuts it. We also eliminate the Alternative Minimum Tax."
Gov. LePage's plan would reduce the top corporate tax rate from 8.93% to 6.75% and exempt the first $48,000 of income for a family of four from the state's income tax. He also eliminates the death tax and the tax on pensions. While his plan eliminates a number of exemptions and adds the sales tax to a number of services, this $219 million revenue increase is more than offset by his other tax reductions. LePage's plan reduces net taxes by $300 million annually when fully phased in.
This isn't Gov. LePage's first tax reform proposal. As he noted in his speech, in 2011, LePage successfully reduced the state income tax top rate from 8.5 percent to 7.95 percent. His most recent plan eliminates a range of credits and deductions and when fully phased in will result in $1.2 billion in income tax cuts over the 2018-2019 biennium.
Source: State of Maine Biennial Budget Briefing
LePage's plan also reduces the number of corporate income tax brackets and reduces the top rate from 8.93 percent to 6.75 percent by 2020, resulting in a $50 million tax cut by 2019.
While the long list of tax cuts and changes to the tax code are an important step in simplifying Maine's tax code to make it flatter, fairer, and lower, perhaps the most significant proposal came at the end of LePage's State of the State Address:
"We must make sure the income tax keeps going down every year until it is gone.
I ask for a constitutional amendment that will direct all growth in revenue to go toward eliminating the income tax—once and for all."
Americans for Tax Reform is a big proponent of revenue triggers, which pay for long term tax cuts through economic growth. Instead of immediate tax cuts that could require spending restraint or tax shifting, revenue triggers like the one Gov. LePage has called for set, as a matter of law, new revenue generated through economic growth aside for rate reductions. Instead of states squandering budget surpluses on long term spending programs, all new state revenue above an amount set by the state is calculated as a percentage of a tax cut (income in this case).
North Carolina established revenue triggers as a means for reducing the state's corporate rate and Kansas enacted revenue triggers for the income, corporate, and banking tax. In Kansas, it will take the House, Senate, and Governor to reverse the long term goal of eliminating each of these taxes. For more information on revenue triggers, read our brief here.
We applaud Governor Paul LePage's bold tax reform proposal and encourage the legislature to adopt both it and his plan to fully phase out the income tax.
ATR Opposes Cigarette and E-Cigarette Tax Hikes in North Dakota
With the rapid decline in oil prices over the past six months, states like Texas, Oklahoma, Alaska and North Dakota have seen adjusted revenue forecasts for 2015. While consumers saved $14 billion in 2014 due to lower gas prices, lower prices have also meant less tax revenue for a number of states.
In the case of North Dakota, however, House Majority Leader Rep. Al Carlson is correct in noting that "the sky is not falling." Despite lower prices, oil extraction will not end, even if it slows. As such, calls for higher taxes are extremely premature, especially when they hit those most affected by any sort of economic slowdown: low and middle income residents.
Two bills up for debate this week in the North Dakota House and Senate call for raising taxes on cigarettes and other tobacco products (OTPs). Americans for Tax Reform president Grover Norquist sent a letter to the House and Senate Finance and Taxation Committees outlining ATR's opposition:
Extensive research suggests that regressive cigarette taxes unnecessarily punish the poor without reducing smoking. Smokers often minimize the impact of tax increases like those proposed in HB1421 and SB 2322 by switching to lower price discount cigarettes, smoking fewer cigarettes more intensively, and seeking out low-or untaxed cigarettes, such as those available on Indian reservations. Even if use did decline, the state would not see the revenue anticipated by these tax hikes.
Targeted excise taxes have proven to be unstable sources of revenue, and ultimately can cause a reduction in tax receipts. Increasing the state's reliance on tobacco taxes by increasing them by as much as $1.56 per pack, as SB 2322 does, will not necessarily generate more revenue in the long term. In 2006, Chicago collected $32.9 million in cigarette taxes. After two consecutive tax hikes, revenue fell to $16.5 in 2013. When Illinois raised the cigarette tax by $1-per-pack in 2012, nearly doubling the state's tax rate to $1.98 per pack, the tax delivered $138 million less than expected. A reduction in tax receipts is a common occurrence amongst cities and states that attempt to discourage consumption with higher costs.
While the House and Senate bills do not single out electronic cigarettes, it is likely that amendments will be made that could subject these tobacco-free technology products to the OTP taxes imposed on products like snus. The letter notes:
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 tax hikes on innovative products that reduce smoking and people's dependence on tobacco cigarettes is misguided and will impede proven harm reduction methods.
Efforts to further reduce the income tax should continue to be the core focus of the North Dakota legislature. In the aftermath of the 1980's oil price collapse, Texas sought to aggressively diversify the state economy. The absence of an income tax lured thousands of businesses and taxpayers to the state from all over the nation. North Dakota should follow Texas, South Dakota, Wyoming, and the six other states that do not tax income so that it, too, can lure taxpayers and non-energy businesses fleeing from states like Illinois, California, and New York.
Proposals that seek to raise taxes should be rejected as unnecessary side shows, no matter their intended purpose.
Governor Brian Sandoval Flip-Flops on Nevada Margins Tax
In his 2015 State of the State Address, Gov. Brian Sandoval (R-Nev.) called for the largest tax increase in Nevada history. At more than $1 billion over the next two years, Sandoval’s tax hike will fuel massive budget growth, increasing the budget from $6.6 billion to $7.3 billion. This is a significant departure from his rhetoric over last year’s massive margins tax hike ballot initiative.
Last year, Sandoval had this to say: “All things being equal, we prefer to keep more of our earnings. That fact makes new taxes a tough sell. As such, the proponents of new taxes, like any good marketer, ignore what’s unpopular about the product. Instead, they point to the alleged benefits of the tax, rarely mentioning the costs.”
His 2015 State of the State Address: “Improving our public education system must therefore begin with modernization, and modernization requires investment.
…I am therefore proposing a broad-based solution that asks Nevada business to invest in our education system.
…It's time we are honest with ourselves — these revenues are now a part of our comprehensive budget. I know this approach will cause debate. You will all find that there is no perfect solution."
Governor Sandoval’s 2015 budget includes the following tax increases:
- Cigarette tax hike from 80 cents to $1.20 per pack
- Slot machine tax hike
- Mining industry payroll tax hike to 2 percent, above the traditional 1.17%
- Business license tax imposed based on gross revenue; the margins tax
- Making permanent $580 million in “temporary” tax hikes including:
- Payroll taxes
- A .35% sales tax hike
- A $100 increase in the business license tax
- Payroll taxes
We rate this a full flip-flop.
Why was Sandoval opposed to tax increases in 2014 and in 2015 pushing the largest tax hike in state history? Was it because 2014 was a gubernatorial and legislative election year? Why is he doing what he accused proponents of tax increases in 2014 of doing, focusing on the alleged benefits, instead of the costs to businesses?
$882 million of Sandoval’s proposed spending increases are aimed at education, the same supposed target of the “Education Initiative” tax hike that voters rejected by a margin of 79%-21% last year.
Businesses and labor unions opposed the tax and for good reason. Gross receipts taxes hit thousands of small businesses and major employers without regard for their ability to pay, as the taxes are based on revenue, not profits.
That’s precisely why only five states have gross receipts-esque taxes and one of them, Texas, may eliminate it this year. These taxes are extremely damaging to the economy. By creating complicated tax calculations, the administrative and compliance costs are massive. The governor’s proposal includes 30 such categories.
Republicans shouldn’t be in the business of complicating the tax code in order to placate teachers unions. This is especially true in the aftermath of a crushing defeat of the Education Initiative and in light of Republicans being swept into power for the first time in over 80 years.
Nevadans should contact Governor Brian Sandoval at 775-684-5670 and ask him why he flip-flopped on the massive margins tax. This is a tax hike that Nevadans can’t afford.
Chris Christie: “I will veto any more income tax increases that come before me.”
In his 2015 State of State Address, Governor Chris Christie (R-N.J.) reiterated his strong opposition to tax hikes in New Jersey. Since taking office 5 years ago, Democrats have passed income and business tax hikes that Gov. Christie has vetoed five times. Despite the state’s massive overspending problem and bloated pension liabilities, Christie has remained steadfast in rejecting Democrat efforts to raise taxes as a Band-Aid for those issues.
In his Address before the legislature last week, Christie mentioned taxes 22 times. Here are a number of excerpts:
"Now, I know that many of you in this room believe that income tax increases are the way to go. So yes, sometimes we will simply have to disagree.
I have vetoed four income tax increases passed by this body. And make no mistake… I will veto any more income tax increases that come before me.”
He continued, “And I will do it for one simple reason — the higher our taxes are, the fewer people and businesses will come to New Jersey and the more who will consider leaving. Raising taxes is the old Trenton way, and it didn’t work.”
…“We will not win the fight to keep and create good paying jobs for our middle class families in New Jersey unless we lower taxes.”
…“And we know that the policies of lower taxes and less intrusive government have created higher economic growth and better paying jobs for our middle class.”
Governor Chris Christie’s rejection of tax increases forced the legislature to work with him to reform the government in a number of ways. In 2011, Christie signed bipartisan pension reform that reduced costs by more than $120 billion over the next thirty years. Unfortunately, New Jersey’s pension crisis is a long-term problem that is still underfunded by $90 billion. 94 percent of the year-over-year growth of the 2014-2015 budgets went to public employee pensions, health benefits, and debt service payments.
Christie made mention of pensions 10 times in his State of the State Address.
"Now, of all the long-term challenges we face, one of the largest and most immediate is our obligation to provide pension and health benefits for state and local employees.
This is not just a New Jersey problem. This is a national problem.
States across the country are struggling to fund critical programs because pension and health costs are eating up taxpayer dollars.”
Governor Christie is absolutely right. The state’s largest two problems remain a bloated pension system and an uncompetitive tax code that is forcing thousands of families and businesses to flee to other states. In calling on the legislature to work with him to address both, Governor Christie has demonstrated that he understands issues not only important to New Jersey, but to states and localities nationally.
The Grover Norquist Show: Leave Vapers Alone!
As I've written before, the top target for tax increases at the state level in 2014 was electronic cigarettes and vapor products. Politicians, looking to protect their monopoly on cigarette sales and compensate for declining tobacco revenues again have e-cigarettes in their sights in 2015.
Raising the cost of products that will unquestionably save lives makes little sense at face value. To do so in the name of filling budget holes, "protecting children," or simply expanding the definition of tobacco products is even worse.
Today, I sat down with Grover Norquist to discuss these new innovative products and some of the states where politicians will try to raise taxes on e-cigarettes in 2015.
What do you think? Should states raise taxes on electronic cigarettes?
Georgia Transportation Report Recommends Massive New Tax Hikes
A newly released joint study from the Georgia state House and Senate claims that the state doesn’t spend close to enough money on transportation maintenance and infrastructure and that more revenue is needed in both the short and long term. The Georgia Department of Transportation’s strategic 20-year plan calls for $160 billion in spending, compared to a projected $86 billion in transportation revenue projections and commitments. Essentially, the report concludes that “the state has a funding gap of $1.0 billion to $1.5 billion annually.”
An infrastructure consultant went even further, nothing that in order to address “the full universe of transportation needs, including establishment of passenger rail systems,” the state would need between $3.9 and $5.4 billion annually.
For comparison, Georgia’s entire 2015 budget is $20.8 billion.
At least they admit that these figures represent “significant new costs for the state” and taxpayers.
The reports recommendations are as follows:
Dedicate the final 25% of the sales tax on gasoline to transportation projects. The fact that this hasn’t always been the law is baffling. The report projects this will yield between $180-185 million annually for transportation spending.
Convert the sales tax of 4% on gasoline to an equivalent, stable, per gallon tax. Though the report notes that should be about 22-25 cents per gallon, someone making that calculation miscalculated. That recommendation would constitute a tax increase (as it is above 4%). 4% at present prices would actually be roughly 9 cents per gallon in Georgia. Regardless, this idea makes little sense if the state hopes to have gas tax revenue keep pace with gas prices and inflation (which a sales tax on gasoline permits).
Index the gas tax to inflation with automatic tax increases unless the price of gasoline falls. The report projects this would yield about $60 million annually.
Raise the state sales tax by 1%. This would equate to a $1.4 billion tax hike annually, fhitting low and middle-income consumers hardest.
Raise the gas tax by 10 cents per gallon. This would equate to a $600 million tax hike annually.
Establish a hybrid car tax increase. While punishing people for driving hybrids may be amusing, in the case of the report’s suggestion it still results in a tax increase of $200-$300 per year for alternative fuel vehicles.
The report also includes vague calls for more spending on light rail and transit, $3.6 billion in new bonds, and new tolls.
This laundry list of mostly bad ideas and tax increases should concern taxpayers, especially three years after voters rejected one of the largest components of these suggestions: the T-SPLOST sales tax hike of 2012.
Indiana Attorney General Greg Zoeller Pushing Tax Hike on Electronic Cigarettes
State Representatives Ed Clere (R-Ind.) and Charlie Brown (R-Ind.) are cosponsoring a bill in the legislative session that begins Tuesday that would raise taxes on electronic cigarettes. These efforts coincide with Indiana Attorney General Greg Zoeller’s campaign to tax and regulate the products as well.
According to Rep. Clere, the tax “would be 24 percent of whatever the wholesale price is,”which would mean electronic cigarettes and vapor products would be subjected to the same taxes as smokeless tobacco and other tobacco products.
As we’ve noted before, electronic cigarettes should not be taxed the same as traditional tobacco. These products do not contain tobacco and should not be treated as such.
Attorney General Zoeller is spearheading efforts in the state to regulate and tax the products. In his attempt to “save the kids” from electronic cigarettes, Zoeller (and legislators who support the Clere-Brown legislation) are using the heavy hand of government to pick winners and losers. By raising the cost of these products, the legislature would create an incentive for people to continue smoking traditional tobacco.
An NBC affiliate in NBC pointed out, “The hope is the price increase will make the product less appealing to price-conscious youth.” Unfortunately, this narrow-minded approach neglects that adult smokers are overwhelmingly low and middle-income consumers, many of which spend a quarter of their income on cigarettes. Despite the fact that four out of five people who smoke want to quit, not all are able to and price increases on effective smoking cessation devices like electronic cigarettes make little sense.
It’s not just kids who may decide to opt for cigarettes instead; it’s also all of the smokers in Indiana who may want to finally quit their unhealthy habit. This is bad tax policy and will hurt decades of efforts to curb smoking.
The free market has provided a solution to decades of failures by public health advocates to get people to quit smoking; electronic cigarettes and vapor products are working, unlike tax hikes and public service announcements. Using the heavy hand of the government to keep smokers smoking cigarettes is a distasteful approach to tax policy, especially in an overwhelmingly Republican-run state like Indiana.
We urge the legislature to reject tax hikes on electronic cigarettes.