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Will Upton

CBO Disproves Paul Davis’s Talking Points on Kansas Revenue Numbers


Posted by Will Upton on Monday, May 5th, 2014, 2:54 PM PERMALINK


Democrat gubernatorial candidate Paul Davis should probably stop letting reporters advise him on tax policy. Citing a Hutchinson News editorial, Davis – the Lawrence, Kansas Democrat – has dubbed Governor Brownback’s tax reform efforts, “A Kansas failure-tale.”

Why is it, in the eyes of Davis and Hutchinson News editorial board, a “failure-tale”? Because of a $92 million gap between April revenue estimates and what actually came in to the state. Hutchinson News pointed the finger at Brownback and Davis more than obliged by adopting their editorial as his own set of talking points – going so far as to post it on his campaign’s website, Facebook page, and Twitter account.

There’s only one problem with the claim that Gov. Brownback’s tax reform is responsible for the $92 million gap. The Congressional Budget office and Democrats in other states say otherwise. They point to the shift of capital gains income from 2013 to 2012 to avoid higher tax rates due to the Fiscal Cliff as the cause of state revenue shortfalls compared to estimates.

A quick glance at the CBO’s Monthly Budget Review would have provided some clarity for Davis and Hutchinson News. For instance, the January 2013 report notes: “Nonwithheld tax receipts for the first four months of the fiscal year rose by $15 billion (or 18 percent), mostly owing to the January boost brought about by taxpayers’ shifting of income from calendar year 2013 into late 2012 in anticipation of higher tax rates.

By April 2013, total nonwithheld receipts had risen by 30 percent – and the CBO’s reason for why?

Nonwithheld receipts rose by $80 billion (or 30 percent), primarily because of higher payments made during the tax-filing season (February through April). Those payments—largely representing final payments for the 2012 tax year—increased by $66 billion (or 36 percent). Income tax refunds declined by $6 billion, further boosting receipts. The large increase in payments accompanying people’s income tax returns probably reflects the fact that higher-income taxpayers, anticipating changes in tax law, realized more income in 2012.

Yes the Kansas revenue estimates were higher than what was actually taken in, but it was not Brownback’s tax reform that caused the gap. It was President Obama’s insistence against the extension of the Bush tax cuts and the Fiscal Cliff that caused taxpayers across America to shift their capital gains into 2012 to avoid the tax hikes in 2013. That shift of taxable dollars impacted states as well.

Paul Davis’s own party leaders acknowledge that the expiration of the Bush tax cuts caused gaps between collections and estimates. Connecticut’s The Day noted:

Gov. Dannel P. Malloy announced on Monday that the projected $505 million surplus would be down by several million dollars. His budget chief, Benjamin Barnes, said this was likely due to the expiration of George W. Bush-era tax cuts that encouraged people to claim capital gains in 2012 and likely discouraged them from claiming them in 2013 when taxes increased.

How bad is the shortfall in Connecticut? The Day notes: “Connecticut’s budget surplus this year, recently projected at $505 million, has dropped to $43.4 million, while next year’s revenues are projected to come up $282 million short.”

Other states are in a similar boat. Oklahoma’s collections in the month of February fell nearly 10 percent below state estimates. The Courier-Journal in Kentucky cites a report that estimates the state will fall $27.7 million short of budgeted expectations.

Paul Davis’s penchant for political gamesmanship over facts and his reliance on the expertise of the Hutchinson News editorial board when it comes to questions of tax policy should make Kansas voters wary of who would advise him if he ever managed to get elected governor.

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AJinMO

Oklahoma's revenue up 3% in April from April 13; Missouri up 4.5%; Kansas down 45%. Yep, that's all Obama's fault.

Obadiah

10 states are considered to be not pulling their weight and grabbing more dollars from the federal government than they put in. Interesting to note that other than New Mexico, they are all Red States!!

polymath156

Good analysis, very interesting.


ATR Releases List of 2014 State Pledge Signers Ahead of Ohio Primary


Posted by Will Upton on Monday, May 5th, 2014, 1:28 PM PERMALINK


With the Ohio primary election taking place Tuesday, Americans for Tax Reform has released an updated list of incumbents and challengers for state legislative and state-wide office who have signed the Taxpayer Protection Pledge. These candidates have made a written commitment to their constituents to oppose any and all efforts to increase taxes. ATR strongly encourages taxpayers to consider those who have made this commitment when they vote on Tuesday, May 6. The list of incumbents and challengers who have signed the Taxpayer Protection Pledge and will be on the ballot Tuesday is as follows:

 

Incumbents:

  • Gov. John Kasich
  • Aud. Dave Yost
  • Shannon Jones (S-7)
  • Bob Peterson (S-17)
  • Peter A. Beck (H-54)
  • Terry Blair (H-42)
  • Andrew Brenner (H-67)
  • Jim Buchy (H-84)
  • Mike Dovilla (H-7)
  • Anne Gonzales (H-19)
  • Cheryl Grossman (H-23)
  • David Hall (H-70)
  • Ron Hood (H-78)
  • Ron Maag (H-62)
  • Jeff McClain (H-87)
  • Kristina D. Roegner (H-37)
  • Clifford Rosenberger (H-91)
  • Lynn Slaby (H-38)
  • Andy Thompson (H-95)
  • Ron Young (H-63)

 

Challengers:

  • Mark Auer (H-31)
  • Tom Brinkman, Jr. (H-27)
  • Joseph Ebbing (H-52)
  • Brett Eley (H-82)
  • Ron Ferguson (H-96)
  • John Insco (H-44)
  • Mary Jo Kubicki (H-54)
  • Dan Mefford (H-20)
  • Robert Sherwin (H-57)

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ATR Releases List of 2014 State Pledge Signers Ahead of Indiana Primary


Posted by Will Upton on Monday, May 5th, 2014, 1:26 PM PERMALINK


With the Indiana primary election taking place Tuesday, Americans for Tax Reform has released an updated list of incumbents and challengers for state legislative and state-wide office who have signed the Taxpayer Protection Pledge. These candidates have made a written commitment to their constituents to oppose any and all efforts to increase taxes. ATR strongly encourages taxpayers to consider those who have made this commitment when they vote on Tuesday, May 6. The list of incumbents and challengers who have signed the Taxpayer Protection Pledge and will be on the ballot Tuesday is as follows:

 

Incumbents:

  • Jim Banks (S-17)
  • James R. Buck (S-21)
  • Mike Delph (S-29)
  • Dennis K. Kruse (S-14)
  • Jim Tomes (S-49)
  • Greg Walker (S-41)
  • John Waterman (S-39)
  • Jim Baird (H-44)
  • Robert Behning (H-91)
  • Timothy Brown (H-41)
  • Woody Burton (H-58)
  • Martin Carbaugh (H-81)
  • Bob Cherry (H-53)
  • Wes Culver (H-49)
  • Steven Davisson (H-73)
  • David Frizzell (H-93)
  • Bob Heaton (H-46)
  • Todd Huston (H-37)
  • Eric Allan Koch (H-65)
  • Don Lehe (H-25)
  • Jud McMillin (H-68)
  • David Ober (H-82)
  • Rhonda Rhoads (H-70)
  • Jerry R. Torr (H-39)
  • P. Eric Turner (H-32)
  • Thomas Washburne (H-64)
  • Tim Wesco (H-21)
  • Cindy Ziemke (H-55)

 

Challengers:

  • Eric Bassler (S-39)
  • Chris Shepherd (S-6)
  • Jeffrey Snyder (S-15)
  • Jesse Bohannon (H-48)

 

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ATR Releases List of 2014 State Pledge Signers Ahead of North Carolina Primary


Posted by Will Upton on Monday, May 5th, 2014, 1:25 PM PERMALINK


With the North Carolina primary election taking place Tuesday, Americans for Tax Reform has released an updated list of incumbents and challengers for state legislative and state-wide office who have signed the Taxpayer Protection Pledge. These candidates have made a written commitment to their constituents to oppose any and all efforts to increase taxes. ATR strongly encourages taxpayers to consider those who have made this commitment when they vote on Tuesday, May 6. The list of incumbents and challengers who have signed the Taxpayer Protection Pledge and will be on the ballot Tuesday is as follows:

 

Incumbents:

  • Philip Berger (S-26)
  • Andrew Brock (S-34)
  • Peter S. Brunstetter (S-31)
  • Warren Daniel (S-46)
  • Kathy Harrington (S-43)
  • Fletcher L. Hartsell, Jr. (S-36)
  • Brent Jackson (S-10)
  • Wesley A. Meredith (S-19)
  • Louis M. Pate Jr. (S-7)
  • Ronald Rabin (S-12)
  • John Marshall Blust (H-62)
  • Robert Brawley (H-95)
  • Rayne Brown (H-81)
  • Dana Bumgardner (H-109)
  • Justin P. Burr (H-67)
  • George Cleveland (H-14)
  • Jeffrey L. Collins (H-25)
  • Jerry C. Dockham (H-80)
  • Nelson Dollar (H-36)
  • Kelly E. Hastings (H-110)
  • Julia Craven Howard (H-79)
  • Linda P. Johnson (H-83)
  • Tim Moore (H-111)
  • Michael Speciale (H-3)
  • Edgar V. Starnes (H-87)
  • Sarah Stevens (H-90)
  • Harry Warren (H-77)
  • Robert A. Rucho (S-39)
  • Daniel F. Soucek (S-45)
  • Jerry W. Tillman (S-29)
  • W. Tommy Tucker (S-35)
  • Dr. Trudy Wade (S-27)

 

Challengers:

  • Justin LaNasa (S-9)
  • Apryl Major (S-15)
  • Elretha Perkins (H-65)
  • Sidney Pierce, III (H-5)
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Missouri Shows Strength On Tax Reform


Posted by Will Upton on Thursday, April 17th, 2014, 11:19 AM PERMALINK


Yesterday, the Missouri House voted in favor of SB 509, a bill which cuts the income tax by $620 million annually. The legislation would cut Missouri's individual income tax rate for the first time in almost a century, by gradually lowering the state's highest income tax rate to 5.5% starting in 2017. The bill also includes a 25% tax break for small business owners.

''This is a broad-based tax reform that would make our state more competitive and cuts taxes for every Missourian that pays a tax,'' said Rep. Andrew Koening, R-Manchester. With this tax cut, Missouri joins the group of states such as Wisconsin and Kansas which have cut taxes since the recession. 

Last year, Missouri Governor Nixon vetoed a proposed tax cut and hinted he would do the same this year. SB 509 passed with 104 votes and 109 votes are needed to overturn a veto. ATR encourages you to call Gov. Nixon’s office (573-751-3222) and tell him to sign SB 509, much needed tax relief for Missouri.

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ATR Urges Missouri Lawmakers to Vote Yes on Right to Work


Posted by Will Upton on Monday, April 14th, 2014, 1:01 PM PERMALINK


Today, Americans for Tax Reform sent a letter to the Missouri House of Representatives urging lawmakers in Jefferson City to support HB 1770 - legislation that would place Right to Work on the ballot via initiative.

An excerpt from the letter:

Don’t give in to the scare tactics of out-of-state union lobbyists. What they don’t want you to know is that Right to Work is supported by the people of Missouri.

A survey by American Viewpoint found that 63-percent of Missouri voters support Right to Work. Nearly 50-percent strongly support Right to Work – for a significant number of Missouri voters, Right to Work is a signature issue. A poll by the Adam Smith Institute found that – again – 63-percent of Missouri voters would vote YES on a Right to Work ballot initiative. Wilson Perkins Allen found, in October of 2013, that 65-percent of voters support Right to Work – with 51-percent strong supporting.

You can read the entire letter here.

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ATR Urges Illinois Lawmakers to Oppose Income Tax Hike Proposals


Posted by Will Upton on Tuesday, March 25th, 2014, 1:04 PM PERMALINK


Americans for Tax Reform urges lawmakers in Springfield to oppose the efforts of Speaker Mike Madigan (D) and Gov. Pat Quinn (D) to impose a progressive income tax and a 3-percent additional tax on higher income earners.

Illinois is tied with Nevada for the second-worst state unemployment rate in the country. A progressive income tax aimed at the middle class and a so-called “millionaires tax” aimed at higher income earners would do nothing to alleviate the state’s economic woes. Lawmakers in Springfield should be looking to implement pro-growth tax reform and tackling wasteful spending, not looking to soak taxpayers for more of their hard-earned money. With a state pension system in crisis and twenty new or higher taxes hitting taxpayers through Obamacare – including five tax hikes targeting the middle class specifically – the last thing Illinois needs is higher taxes.

The So-Called Millionaires Tax

Speaker Mike Madigan is currently pushing what is billed as a “millionaires tax” – an additional 3-percent tax rate on high income earners. Illinois taxpayers should be weary of such a tax as it rarely remains a tax on high income earners and could easily be expanded to include more and more Illinois taxpayers. Maryland Governor Martin O’Malley enacted a millionaires tax in Maryland during the 2007 legislative session. The unpopular tax was repealed by Maryland Democrats in 2010. Gov. O’Malley doubled back and enacted a new millionaires’ tax that, in reality, targeted Maryland’s “thousandaires” – a tax that remains unpopular in the state.

Voters in Washington State rejected a millionaires tax proposal resoundingly at the ballot box, despite backing from the father of billionaire Bill Gates.

The Progressive Income Tax

Moving Illinois from a flat rate to a series of graduated tax rates could prove disastrous for an already weak state economy. The Tax Foundation estimates that a progressive income tax would increase taxes on 61-percent of Illinois employers – costing the state even more jobs. This is the opposite strategy a state tied for the second worst unemployment rate in the nation should be pursuing.

Both Proposals are Violations of the Taxpayer Protection Pledge

Both HJRCA 33 and HJRCA 51 are clear violations of the Taxpayer Protection Pledge, a promise made by lawmakers to their constituents to “oppose any and all efforts to increase taxes.” Representative Jack Franks (D) has tried to argue that, since both proposals would require voter approval, they are not violations of the Taxpayer Protection Pledge. He is incorrect in this assumption. The Pledge clearly states the signer will “oppose any and all efforts.” HJRCA 33 and HJRCA 51 would constitute an effort to increase taxes as voters would not be given the choice to increase or lower their taxes by an equivalent amount – their choice is simply between higher taxes and the status quo. This is clearly an “effort” to increase taxes.

Americans for Tax Reform urges all Illinois lawmakers to stand against the liberal tax and spend philosophy of Speaker Mike Madigan and Gov. Pat Quinn and vote NO on HJRCA 33 and HJRCA 51. 

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Gov. Scott Walker Signs Historic Tax Cuts into Law


Posted by Will Upton on Monday, March 24th, 2014, 11:05 AM PERMALINK


Wisconsin Governor Scott Walker today signed Senate Bill 1, legislation that provides $504 million in tax relief over the next two years to hardworking Wisconsin taxpayers. SB 1 reduces income and property tax rates, and eliminates income tax rates for manufacturers in the Badger state.  Gov. Walker signed the bill at Horsens Homestead Farms in Cecil, Wisconsin.

SB 1 represents the third significant piece of tax relief enacted by the Walker administration, bringing the total amount of tax cuts to $2 billion. Workers, families and homeowners will now have more money in their pockets thanks to the efforts of Gov. Walker and the Republican majorities in the legislature.

"I want to congratulate Governor Walker for designing, promoting, and now signing Senate Bill 1 into law," said Grover Norquist, president of Americans for Tax Reform.

"Scott Walker inherited a state budget that falsely promised to spend more than Wisconsin citizens could afford.  He avoided the 'easy' and traditional path of yet again raising taxes and slashing budgets across the board.  Instead he reduced taxes to create more jobs and opportunities and therefore more tax revenue while reducing  spending by reforming government to perform better at lower costs: specifically Act 10.  Reducing the tax burden and reforming government to cost less is the path forward for Wisconsin and the nation."

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Governor Kasich's Tax Plan Less Than Inspiring


Posted by Will Upton on Wednesday, March 12th, 2014, 3:20 PM PERMALINK


Ohio Governor John Kasich has unveiled his Mid-Biennium Review (MBR) and the best that could be said about it is that it contains the good, the bad, and the ugly.

First, the good. Gov. Kasich’s proposal enacts another round of income tax cuts in the State of Ohio, building upon the across the board 10-percent cut that he signed into law last year. All in all, Gov. Kasich’s new income tax cut would reduce the tax burden on Ohio taxpayers by $461 million in FY2015, $816 million in FY2016, and $909 million in FY 2017; totaling nearly $2.2 billion in tax relief over three years.

While the new round of income tax rate reductions is laudable. Ohio will continue to have a staggering NINE income tax brackets and an equally confusing and convoluted municipal income tax regime remains unaltered. An attempt to streamline and consolidate the state’s municipal tax system via House Bill 5 was unfortunately hijacked by special interests and watered down into little more than a weak gesture towards any real reform. 

On their own, Gov. Kasich’s income tax cuts would grow the Ohio economy – unfortunately, however, Gov. Kasich has also proposed a round of tax increases; including higher taxes on tobacco products, e-cigarette/vapor products, higher oil and gas severance tax, and a hike in the Commercial Activity Tax (CAT). 

The MBR proposal would see a 15-percent increase in the state CAT tax. Essentially, the CAT tax is a penalty on doing business in the state of Ohio measured by a business’s gross receipts. By 2017, the increase in the CAT tax would amount to a $743 million tax increase.

Ohio’s oil and gas industry does not escape Gov. Kasich’s tax increases either. The MBR proposes to increase the severance tax rate to 2.75-percent of a producer’s gross receipts – a primary pay-for for the proposed income tax cuts. One of the most startling components of the oil and gas tax increase, however, is the divergence of 20-percent of severance tax revenue to local governments in shale oil and gas producing regions. The state monies would be overseen by a new government bureaucracy called the Ohio Shale Gas Regional Commission (a nine member board appointed by the Governor). On the positive side, Gov. Kasich is pushing for the elimination of severance taxes on small convention gas producers – less than 910,000 cu.ft/quarter). All-in-all, the severance tax increase would amount to an $874 million tax hike by 2017. 

Another troubling component of Gov. Kasich’s MBR is the regressive tax hike placed on tobacco consumers. Over a two year period Ohio’s tax on cigarettes would increase from $1.25 to $1.85 a pack. This tax increase will be borne primarily by lower-income earners. Even more important, tobacco taxes have repeatedly proven to be a declining source of revenue and an inadequate pay-for for permanent income tax reductions.

Along the same lines of the proposed tobacco tax increase, Gov. Kasich has proposed an equivalent tax on e-cigarette and vapor products.  Currently, under Ohio law, these products are not taxed in the same manner as tobacco products. The fact is, e-cigarettes and vapor products are not equivalent to tobacco products and are often used as a means to quit harmful combustible tobacco products.

In total, the Governor's MBR tax plan amounts to a $174 million tax cut for Ohioans over three years. Gov. Kasich should work with lawmakers in Columbus to craft a pro-growth tax reform measure, consolidating income tax brackets while reducing the tax burden and simplifying the mess that is the municipal income tax regime. Avoiding any “rob Peter to pay Paul” schemes would be key in this process. Yes, Ohio needs to continue its efforts to reform the tax code, but doing so on the backs of the oil and gas industry, Ohio businesses, tobacco consumers, and vapor product consumers is not the way to achieve this.

UPDATE: This post has been updated to reflect that Ohio's Earned Income Tax Credit is non-refundable and therefore is a tax cut and not government spending. In total, the MBR amounts to a $174 million tax cut over three years.

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Arkansas Private Option Funding Vote Fails Again


Posted by Will Upton on Friday, February 21st, 2014, 2:39 PM PERMALINK


Day four of the legislative fight over funding Medicaid Expansion via the “Private Option” in Arkansas saw House Speaker Davy Carter call another vote – and for the fourth time in a row, the House of Representatives failed to gain the 75 votes it needs to pass the appropriation. 

Armed with a flawed and biased study from the Arkansas Chamber of Commerce and tax preparation firm Jackson-Hewitt, Speaker Carter and Private Option proponents have repeatedly forced votes in an attempt to badger legislators into accepting a massive and unaffordable expansion of the entitlement program.  Writing in the Arkansas Democrat-Gazette and The Federalist, I have repeatedly pointed out serious issues with the metrics of the Jackson-Hewitt study – including the base assumption that without Medicaid Expansion, no Arkansas businesses will cover employees falling into Obamacare’s Medicaid gap:

In defense of the Private Option, the Arkansas Chamber of Commerce released a study by the tax-prep firm Jackson-Hewitt claiming that without Medicaid Expansion, Arkansas businesses would see a tax increase between $27 and $40 million. Already, the study has been exposed as little more than fear mongering.

First, the base assumption of the study is that no employer in the state would provide insurance coverage to an employee who would qualify for Medicaid if expansion were to occur – yes, it assumes zero, zilch, none. That is a wildly irresponsible assumption. Why not assume that businesses would cover 100 percent of qualifying employees?

Even more troubling is this post from the Advance Arkansas Institute noting the detrimental impact the Private Option will have on Arkansas hospitals.

During today’s vote, a legislator fled the House floor, prompting Speaker Carter to call on the State Police to find and return the lawmaker to the legislative chamber – the move prompted some observers to note that the move was akin to Kevin Spacey’s character, Frank Underwood, on the television show House of Cards. Perhaps the better comparison is with a Dread Pirate. It has become apparent that Speaker Carter will continue to force votes until the 75 “yea” votes needed materialize – a strategy akin to saying, “The floggings will continue until morale improves.” Dread Pirate Davy Carter, maybe that moniker will stick. When “no” vote lawmakers are summoned to the Speakers Office they may feel like they are being summoned to Dread Pirate Davy Carter’s “locker.”

At this juncture, the battle over the Arkansas Private Option continues and it appears that tomorrow there will be yet again another vote (number 5 in the House) on funding the unaffordable entitlement expansion.

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