ATR and AVA Oppose New E-Cigarette and Vapor Tax in Philadelphia
Today, Americans for Tax Reform President Grover Norquist and American Vaping Association President Gregory Conley sent a letter to the Philadelphia City Council in opposition to a proposal to raise taxes on e-cigarettes and vapor products. The bill, proposed by Councilwoman Blondell Reynolds Brown, would enact a new $2 tax on e-cigarettes and up to a $5 per purchase tax on e-liquids for vapor devices.
The letter reads as follows:
Dear Council Members,
We write today in opposition to all efforts to impose a new tax on e-cigarettes and vapor products in Philadelphia. These efforts come on the heels of a new $2-per-pack cigarette tax that went into effect just over two weeks ago.
A proposed bill by Councilwoman Blondell Reynolds Brown would enact a new $2 tax on e- cigarettes and up to a $5 per purchase tax on e-liquids for vapor devices. Hundreds of thousands of dollars in higher taxes will financially cripple new small businesses in Philadelphia. The small but growing segment of vapor specialty stores rely on the sale of these products as their sole source of revenue. To make the products sold in these stores uncompetitive will drive sales onto the Internet and outside of city limits.
That’s precisely why higher taxes don’t necessarily generate more revenue for the intended cause. Increasing public education's reliance on a volatile revenue source means that once businesses have been chased out of the city and sales go online, the city will be clamoring for even more revenue. This proposal is simply a placeholder for further tax hikes. This is particularly troubling in times of tepid economic growth and in light of the 20 new or higher taxes that have been imposed by Congress in the last few years.
Currently 44,000 students are on waiting lists for better performing charter schools. The problem lies not in lack of tax revenue for schools, but with the education system itself. Higher taxes will not rectify the achievement gap of Philadelphia students compared to those across the country and globe. Since the 2002-2003 school year, revenue for the school district has increased by over $1 billion to $2.97 billion. Meanwhile, there has been no improvement in testing scores since 2009, and a staggering 80 percent of students are not proficient in both math and reading.
The proposal to tax e-cigarettes would represent a massive step backwards for a city with the highest adult smoking rate among the U.S.’s ten major cities according to the CDC. A number of studies have shown that electronic cigarettes stand to improve health and prevent disease. This includes groundbreaking research by Dr. Igor Burstyn of the Drexel University School of Public Health on the chemistry of e-cigarette liquid and vapor.
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 almost all of the negative health effects of tobacco cigarettes. Studies indicate that more and more smokers are abandoning the thousands of chemicals in traditional cigarettes in favor of smoke-free and tobacco-free e-cigarettes. Indeed, a recent study out of the United Kingdom that tracked nearly 6,000 smokers looking to quit found that the largest share of successful respondents had done so using e-cigarettes (20 percent), beating those who quit without help (15 percent) and those who used nicotine-replacement therapy such as gum or a patch (10 percent).
For decades, lawmakers have tried to mitigate smoking and the harm it causes through excise taxes 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 studies show that almost all e-cigarette use is by smokers looking to significantly cut back or transition away entirely from their dependence on combustible cigarettes.
This e-cigarette tax hike is a shameless cash grab and should be rejected in favor of real reform.
Americans for Tax Reform (ATR) is a non-partisan coalition of taxpayers and taxpayer groups who oppose all tax increases.
The American Vaping Association (AVA) is a nonprofit organization that advocates for the rapidly growing vaping and electronic cigarette industry. The AVA's membership is comprised of small- and medium-sized vapor businesses and has no ties to tobacco companies. The AVA is dedicated to educating the public and government officials about the growing evidence that e-cigarettes – battery-powered devices that heat a liquid nicotine solution and create an inhalable vapor – are harm-reduction products that effectively help smokers quit.
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ATR Endorses Proposition 487, the Phoenix Pension Reform Act
Like many cities throughout the United States, Phoenix, Arizona has a broken pension system. Skyrocketing costs have driven the city to the brink of disaster. Fortunately, Proposition 487, also known as the Phoenix Pension Reform Act, is on the ballot this year and gives voters a say in the type of publicly-funded pension plans they pay for.
A number of factors have contributed to the immediate need for pension reform in Phoenix. “Pension spiking,” where employees inflate compensation immediately before retiring increases pension payouts upon retirement, will cost the city over $190 million if left unchecked. This occurs when a city employee close to retirement converts benefits like unused sick time or saved vacation pay to boost benefits.
A select group of retirees have been receiving six-figure pension payouts with this scheme, compliments of Phoenix taxpayers. One recent City manager received an annual pension of $246,813 and upon retiring received $270,174 in sick/vacation days payouts. Another city employee, an executive assistant to the fire chief, received a lump-sum payout of more than $900,000 at age 54. That was on top of his $149,420 annual pension for life.
The Arizona Republic estimates that pension spiking costs city taxpayers $12 million per year. Prop. 487 would prohibit this outrageous practice.
The city's current defined benefit pension system is underfunded by $1.5 billion dollars and annual pension costs have increased by over 40% since 2011 to $253 million. Prop. 487 would replace the defined benefit pension with a 401(k)-type plan for city employees. It would exempt police and firefighters.
The Arizona Republic Editorial Board had this to say: “These dramatic changes will give Phoenix control over skyrocketing pension costs that threaten to strangle the city's ability to provide the services Phoenix residents have come to expect.”
They ultimately endorsed the proposal. “Prop. 487 promises to stanch the financial bleeding that is costing Phoenix taxpayers and seriously threatening city services.The Arizona Republic recommends a 'yes' vote.”
Americans for Tax Reform agrees with the Arizona Republic and endorses Phoenix's Proposition 487.
If you live in Arizona and haven’t already voted, click here to find out where to vote in person.
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ATR Opposes Gas Tax Increase in New Jersey
Americans for Tax Reform president Grover Norquist sent a letter to the New Jersey legislature and Governor Chris Christie this week urging them to reject efforts to increase the gas tax. After years of reckless overspending, the Transportation Trust Fund has racked up $18 billion of debt and is close to running dry.
A second hearing will be held in New Brunswick on October 14 where a number of special interests are expected to reiterate their calls for a gas tax increase. The state should reject these calls because a gas tax hike would harm families struggling to make ends meet, families who have had to grapple with 20 new or higher federal taxes over the past several years. A vote for any transportation funding package that raises the gas tax without dollar for dollar tax cuts elsewhere would be a violation of the Taxpayer Protection Pledge.
New Jersey doesn’t have a revenue problem; it has a spending problem.
A large reason the Trust Fund is out of money is because capital costs for transportation projects are astronomically high. According to the Reason Foundation’s 21st Annual Report on the Performance of State Highway Systems, New Jersey spends $2.02 million per mile of highway, more than any other state in the nation. New York spends less than a quarter of what New Jersey does at $462,000 per mile on its transportation system. Project Labor Agreements and prevailing wage laws have greatly contributed to exorbitant costs and a bankrupt Transportation Trust Fund.
Transportation packages that do not contain solutions for reining in spending and addressing these cost-drivers will do little to solve New Jersey’s long-term problems. The legislature should commission an independent audit aimed at identifying waste and mismanagement of Trust Fund dollars. Otherwise, tax dollars actually spent on transportation projects will continue to benefit those who build roads far more than those who actually use them.
New Jersey is already among the highest taxed states in the nation. Residents pay the highest property taxes and some of the highest income and corporate taxes as well. The state comes in second to last for the Tax Foundation’s Annual State Business Tax Climate Index. Discussions revolving around raising the gas tax make it seem as if there is a race to the top on every tax that exists in the state.
Legislators should work to cut costs, rein in spending, and reject all efforts to increase the overall tax burden.
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Liberal Trial Lawyer Mike Woelfel Promises to Raise Taxes in Bid for West Virginia State Senate
In his bid to become the next state Senator from West Virginia’s 5th district, trial lawyer Mike Woelfel has promised voters that if elected, he will raise taxes.
“I’m the first politician that says I’ll raise your taxes.” -Mike Woelfel
Hold your wallets. Promising to raise taxes is far from a forward thinking plan for pulling West Virginia out of decades of fiscal decline. West Virginia University’s Bureau of Business and Economic Research estimates that by 2030, the state will lose another 20,000 residents. Raising taxes will expedite this process.
Liberal Democrat Mike Woelfel clearly doesn’t understand what’s going on in West Virginia. Hundreds of thousands of people have moved from high tax states to low-tax ones. For decades, the Democrat-run legislature has sat idly by as billions of dollars in investment and opportunities have leapt over the Mountain State. Even for a proud Progressive, this should be troubling.
The WVU study noted, “Positive changes to the state’s business or policy environment…could attract migration into the state.” Higher taxes aren’t the answer.
The Republican in the race for the 5th district is a businesswoman who understands this. Vicki Dunn-Marshall has created thousands of jobs and understands that too many people have left the state because of the kinds of policies that Mike Woelfel supports. Not only does Vicki Dunn-Marshall oppose higher taxes, she put it in writing to voters by signing the Taxpayer Protection Pledge.
By signing the Pledge, Vicki Dunn-Marshall has demonstrated that she is the only candidate in the 5th district that stands with taxpayers and against special spending interests in Charleston. Voters should remember that when they head to the ballot box on Election Day.
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Thanks to Mark Warner, Another 250,000 Virginians Lose the Health Care They Liked
If you thought you escaped Obamacare’s hammer on your health care plan, you might be wrong in Virginia. Another quarter of a million residents will have their private health insurance plans cancelled this fall, forcing them to find new plans, which may be more expensive. This is on top of the already 850,000 Virginians who received cancellation notices over the past year.
Lawmakers asked the Executive Director of the Virginia Association of Health Plans if these new plans would have higher co-pays. His response? “Absolutely.”
The timing couldn’t be worse for Democrat Senator Mark Warner, who is running for re-election this year against Republican Ed Gillespie. Not only did Mark Warner vote for Obamacare, he echoed the 2013 “Lie of the Year.”
“Let me be clear. I’m not going to support a health care reform plan that’s gonna take away health care that you’ve got right now OR a health care plan that you like.”
Unfortunately, because of Mark Warner’s vote for Obamacare, if you like your health care plan, you may be one of the hundreds of thousands of Virginians who can’t keep it.
These plans have been cancelled because private health insurers are not allowed to offer plans that don’t meet the requirements of the federal health care law. Some of those requirements for every person’s health insurance plan now include:
- Maternity and newborn care, regardless of age and gender
- Diet and obesity screening and counseling
- Contraception and vasectomies
A spokesman for Ed Gillespie responded, “Because Mark Warner worked to pass Obamacare, 250,000 Virginians are losing the health insurance they liked, with thousands getting hit with huge out of pocket cost increases while unable to see the doctors they trust." He’s absolutely right.
Imagine if 15,000 of those people (or their family members) were planning on voting for Mark Warner this fall, just as they receive a cancellation notice in the mail notifying them that Mark Warner’s vote for Obamacare cost them the insurance they like. This could be a game-changer in the Virginia US Senate race.
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Dramatic Coverage of E-Cigarettes Has Negative Policy and Public Health Implications
Pundits with little concern for public health have developed clickable narratives about e-cigarettes and vapor products that miss the fact that they are an innovation that should be celebrated. The fact that annually, more than 400,000 people die prematurely from smoking tobacco cigarettes is rarely a focal point for articles about e-cigarettes or vapor products. And unlike the latter, tobacco cigarettes can have negative health effects if used as directed.
Perhaps the stories about tobacco cigarettes have grown old since everyone knows they cause deadly diseases. Perhaps the “newness” of e-cigarettes, which have a similar appearance to tobacco ones, makes comparing them an easy task. But to neglect that not a single person has died to date from properly using an e-cigarette or vapor product is a disservice to our duty to celebrate technological innovation.
New technology often hits small bumps in the road, especially when electricity is involved. Take Tesla, for example. This year the company recalled 29,000 wall adaptors for the Model S after a cord or wall outlet caught fire. The recalls occurred in the midst of a federal investigation into three of the cars bursting into flames after running over something on the road. After the investigation, Tesla made modifications to ensure the risk was minimized.
Fortunately for consumers, legislators and bureaucrats weren’t clamoring to tax the products out of existence as a result of the supposed risk of spontaneous combustion. E-cigarette and vapor product consumers aren’t as lucky.
More than 17 states in the past year have tried to impose onerous and unnecessary taxes on e-cigarettes and vapor products. Proposals ranged from adding a 95% wholesale tax in Washington to adding a 5-cent per mL of e-liquid tax in North Carolina. These taxes were on top of the sales tax, which the products are already subject to.
Like the Model S, a few of these products have had improper use issues. But, the dramatization of minor incidents has serious public policy implications. The public is still being introduced to the product, but is now bombarded by headlines at Mashable like “E-Cigarettes Liquid Nicotine: Toxic, Unregulated, and Overhyped” and “Deadly E-Cigarette Explosions Add to Health Hazards of Vaping.” Both headlines employ a common rationale used against market-disrupting products: until there are hundreds of scientific studies concluding the products are absolutely and unequivocally safe, scare tactics (and headlines) will be a popular press coverage tool, despite the negative policy or health consequences.
In Congressional hearings, proponents of more regulations, like Senator Jay Rockefeller (D-WVa.) have used the “fear of the unknown risk” argument to urge for Congressional and bureaucratic action to limit the industry’s growth. But while there isn’t much actually being accomplished in Washington, D.C., at the state level, countless legislators have jumped to action, to the detriment of those looking for an easier and healthier way to quit smoking.
If focus is going to be given to a few mishaps with overheated batteries, perhaps some context is necessary. After all, lithium ion batteries like the ones contained in many vapor products have a storied history that plays straight into the need for dramatization.
Less than 10 years ago, recalls from nearly every laptop manufacturer in the United States were issued when a small number of batteries overheated. No one called for an additional $1000 tax to be tacked onto Apple’s iBooks, or wrote about the toxic nature of computer usage. The failure of a select few products was fairly attributed to the need for technological tweaks in the batteries selected for use, not the utter failure of laptops to provide a safe environment for Internet cruising and gaming.
The same isn’t true for e-cigarettes and vapor products. Federal regulators and state legislators are pushing for massive tax hikes that will cripple the industry and stymie growth, to the detriment of public health. That is because vivid news headlines have an influence over public policy.
It’s time the press, pundits, and lawmakers give e-cigarettes a fair shot at helping cigarette smokers quit. To do this, the press needs to tone down the dramatization of product mishaps. Lawmakers should end the needless and illogical efforts to kill the industry with new tax hikes that treat these products as “other tobacco products.” Millions of lives are on the line.
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Why Haven’t More States Reformed Medicaid to Save Money? A Perverse Federal Relationship
Twenty-seven states including Washington, D.C. have expanded Medicaid under Obamacare over the past three years. New Hampshire was the most recent state to expand the matching-grant program, which is jointly funded by the federal and state governments. Missing from the debate in many states is how to save the safety net by reforming the program, which consumes nearly a quarter of all state budgets.
The Congressional Budget Office projects that under Obamacare, Medicaid enrollment will increase by 30 percent over the next decade at a cost of $574 billion annually by 2024. While reform at the federal level will take a new Administration and Republican majority in the House and Senate, at the state level, reform can be achieved far sooner. Unfortunately, a perverse incentive exists for states to find budget savings elsewhere (if anywhere), instead of through this program.
The federal medical assistance percentage (FMAP) for Medicaid services is the formula used to determine the federal government’s share of a state’s Medicaid costs. The rate ranges from 50% to 73%, meaning that for every dollar spent in a state on Medicaid services for an enrollee, the federal government picks up the tab for between 50-73 cents. FMAP is the formula that makes a legislator’s task of saving money on the state Medicaid program complicated.
Because the federal government picks up part of the Medicaid tab, they also get their cut of any dollar saved. A state like Virginia receives 50% from Uncle Sam. In order to save one million dollars for state coffers, they would have to cut/save two million on the program. Mississippi, which receives a 73.4 percent match would have to find $3.8 million in savings in order to save $1 million in state dollars because the federal government gets their match as a percentage of all savings.
There is a perverse incentive to cut any money from state Medicaid programs. As the Mercatus Center’s “The Economics of Medicaid” concluded, “The financial terms facing a state seeking to cut its Medicaid spending are unfavorable. In most cases, a state reducing its spending will cut other programs that are paid for by funds covered entirely by the state rather than Medicaid.”
Stay tuned to our website for more components of the Medicaid expansion and reform debate in the coming days and weeks.
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Minnesota Republican Jeff Johnson’s ‘Read My Lips’ Problem on Taxes
Minnesota gubernatorial candidate Jeff Johnson seems to think that run-of-the-mill politician promises are enough to prove his bona fides for November’s election. In his bid to secure the Republican nomination he has refused to sign the Taxpayer Protection Pledge to Minnesota voters. The Hennepin County Commissioner stated, “I’ve never voted for a tax increase… As governor, my philosophy will not change.”
Here lies the “Read My Lips” problem. He isn’t the first person claiming to reject higher taxes while refusing to put it in writing for voters. Take Virginia’s disgraced ex-governor Bob McDonnell. When he ran for governor in 2009, he said, “I’ve been a firm believer that I’m gonna tell you exactly what I think… that I’m going to stick to my word.” He went on to say, “I have no plans to raise taxes” after refusing to sign the Taxpayer Protection Pledge. The Washington Times questioned this approach. He went on to make a tax deal with Democrats and ended up being taken to the cleaners. He signed the largest tax increase in Virginia history into law during his final year in office.
Should voters really be concerned about Mr. Johnson though? In a recent interview with the Minnesota Post Johnson claimed that “[He] do[es] believe that we need to broaden the sales tax base and lower the sales tax rate.” Will it be revenue neutral? Or will taxpayers get sacked? Taking Jeff Johnson at his word isn’t something voters are likely going to do in this political environment. He should be careful that this does not become his “Read my lips moment.” It would be easier to believe that his reforms would be revenue neutral if he allowed taxpayers to have it in writing.
Sadly, it seems Mr. Johnson is unacquainted with the political realities of tax hikes.
And the father of all politicians who thought they could play fast and loose with their campaign promises, George Bush Sr. Not even a president is exempt from keeping his word. Though he was Reagan’s chosen successor, as well as the president who oversaw the downfall of the Soviet Union and the president during a popular war, it was his tax policy which doomed him. After foolishly signing on to a deal granting congressional Democrats their tax hikes in exchange for spending cuts which never materialized, Bush lost reelection to the charismatic Bill Clinton.
There is a pattern of failure for politicians who fail to act as responsible stewards of the taxpayers. Mr. Johnson should veer away from this tax tendency and pledge his support for Minnesota’s taxpayers. This will allow him to demonstrate his willingness to be held accountable for his actions.
Call Jeff Johnson at 763-703-5154 and tell him to sign the Taxpayer Protection Pledge today.
Photo Credit: Beverly & Pack
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Kurt Zellers: The Only Republican Gov Candidate in Minnesota Willing to Take Tax Hikes off Table
In the race to face off against Democrat Governor Mark Dayton in Minnesota, there is only one Republican candidate willing to take tax hikes off the table: former speaker of the Minnesota House Kurt Zellers. By signing the Taxpayer Protection Pledge, Zellers and his running mate Dean Simpson have made personal written commitments to Minnesota voters to oppose tax hikes. Their opponents have refused to make that same promise.
Here is what the other Republicans in the race had to say:
Hennepin County Commissioner Jeff Johnson, "I've never voted for a tax increase…As governor, my philosophy will not change."
If that's true, he should put it in writing. Obama made the same verbal commitment as a candidate in 2008, only to violate it a month after being inaugurated. Johnson's refusal to do so should leave voters asking, why not? A 2011 study by Stanford’s Michael Tomz and Berkeley’s Robert Van Houweling may provide the answer. They found that voters found people who broke the pledge to be “dishonest, immoral … spineless.” That is, even the putative Democrats in the survey saw breaking the pledge as a “character issue.” Might his openness to higher tax rates be the reason he won't sign the Pledge?
Credit: How Money Walks
Hennepin County, where Johnson is an elected Commissioner, has last more net annual adjusted gross income (AGI) than any other county in the state. Between 1992 and 2011, the county lost $5.82 billion in AGI. As a resident and an elected official from this part of the state, it's unfortunate that he isn't willing to take tax hikes off the table as a way to make it clear that Minnesota is open for business.
Former state Representative Marty Seifert: "Voters tend to be cynical of pledges like this." That's ironic because when he ran for governor in 2010, Seifert signed the Pledge. Here's what his campaign had to say at the time:
"For too long, politicians from both parties have said one thing on the campaign trail and acted differently once in office. Republicans lost their way in Washington, DC, and joined the Democrats in out-of-control spending. Republicans then got their just reward: defeat at the polls. Democrats now control all levers of government in Washington and in both the House and Senate in Minnesota.
Marty Seifert signed the pledge that he will not raise taxes as governor to send an unmistakable message: that the state government spending binge must end and we Republicans must not be accomplices to increasing the already-too-high tax burden on Minnesota families and employers."
I couldn't have said it better. And voters aren't cynical of a politician putting their opposition to higher taxes in writing. They're cynical of politicians who flip-flop, which is clearly what has happened in the case of Marty Seifert, who has raised taxes before. He supported the "health impact fee" which amounted to a massive $380 million cigarette tax increase back in 2005.
Scott Honour's campaign: "Typical politicians need to sign pledges because the public has no faith in them." The public has no faith in politicians because they say one thing and do another. The Pledge is a powerful tool in preventing that from happening.
The primary is August 12. Only one gubernatorial candidate has made a written commitment to oppose higher taxes, ensuring that there might be some check on the runaway spending that has taken root in Saint Paul. That candidate is Kurt Zellers.
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Kurt Zellers and Dean Simpson Sign the Taxpayer Protection Pledge
Former speaker of the Minnesota House Kurt Zellers has signed the Taxpayer Protection Pledge in his bid for the Republican nomination as Governor of Minnesota. His running mate, former state Representative Dean Simpson, has also signed the Pledge. The Pledge, sponsored by Americans for Tax Reform, commits signers to oppose any and all efforts to increase taxes.
Americans for Tax Reform offers the Pledge to all candidates for state and federal office. Fourteen governors and over 1,000 state legislators have signed the Pledge. The Zellers/Simpson ticket is the first to sign the Pledge in their bid to secure the Republican nomination and defeat incumbent Governor Mark Dayton.
The Zellers campaign just released an ad highlighting his record of fighting against higher taxes and his personal written commitment to continue to do it as governor.
“I want to congratulate Kurt Zellers and Dean Simpson for taking the Taxpayer Protection Pledge. Minnesotans deserve better than tax-and-spend policies that fall hard on the backs of hardworking families and small businesses. They want real solutions that create jobs, cut government spending, and incentivize more economic growth,” said Grover Norquist, president of ATR.
“By signing the Pledge, Zellers and Simpson have demonstrated that they understand the problems of hard-working taxpayers in Minnesota.”
“Democrat Mark Dayton raised taxes by more than $2 billion just one year ago. Two years before that he shut the government down over his demand that the legislature raise taxes. With Speaker Zellers presiding over the House during that time, he stopped Dayton from getting his way.”
"I challenge all candidates and their running mates in the Minnesota gubernatorial race to make the same commitment to taxpayers by signing the Taxpayer Protection Pledge today,” Norquist continued.
To view a PDF copy of the press release, click here.