Americans for Tax Reform Responds to Ohio Gov. Kasich’s Income Tax Plan
Grover Norquist, president of Americans for Tax Reform has released the following statement in response to Gov. John Kasich’s income tax cut plan in Ohio:
In last night’s State of the State Address, Governor Kasich unveiled a plan to lower income tax rates for Ohioans by $2 billion. While this is a laudable goal, the proposal also contains nearly $1.5 billion in tax hikes – primarily on job creators.
The recent drop in energy prices has already triggered layoffs in some Ohio steel plants as the demand for pipeline manufacturing has declined. Increasing taxes on Ohio’s energy producers and small businesses could lead to more layoffs and set Ohio back in its economic recovery.
Additionally, the proposed increase on tobacco products leaves open the door to future income tax hikes as tobacco has proven consistently to be a declining source of revenue. And increasing taxes on e-cigarettes and vapor products, devices many people use to quit smoking and improve their health, is counter-productive to the goal of a healthier Ohio.
Between the year 2000 and 2009, Ohio’s spending exceeded the rate of inflation and population growth by $73.6 billion. There is room to cut in the state budget. The legislature would better serve Ohio taxpayers by reducing state spending and reducing income taxes rather than cutting taxes on the backs of job creators.
Gov. Kasich’s plan to reduce state income taxes is a step in the right the direction for Ohio taxpayers, but doing so on the backs of job creators leaves the plan less than inspiring.
Alabama Gov. Bentley Breaks “No New Taxes” Promise, Pushes for Higher Taxes
Governor Robert Bentley has made it clear that he intends to break his WRITTEN pledge to voters to oppose and veto “any and all efforts to increase taxes.” Shortly after his re-election this past November, Gov. Bentley began making a push to increase taxes. Americans for Tax Reform pushed back, noting:
According to the Cotton State’s governor, eliminating tax deductions is not the same as raising taxes.
"I am not for raising taxes and this actually would not be raising taxes," Bentley said. "It would be taking away some deductions. That is certainly one of the things we'll be looking at."
Bentley is wrong. By signing the Taxpayer Protection Pledge, the governor has committed to “oppos[ing] changes in tax deductions or credits that increase the net tax burden on Americans.”
Enacting legislation that burdens taxpayers with higher taxes and fees to fuel exorbitant state spending, goes against his written promise to the people of Alabama to "oppose and veto any and all efforts to increase taxes." Americans for Tax Reform encourages Gov. Bentley to pursue revenue neutral, pro-growth tax reform and enact spending restraint instead of raising taxes on Alabama families.
Now Gov. Bentley is floating a plan which would raise taxes in Alabama by roughly $700 million, according to Yellowhammer News, despite having previously opposed tax increases:
“When you hurt businesses and you tax businesses, you’re going to lose jobs and we need to be creating jobs,” he said. He went a step further and signed Americans for Tax Reform’s “Taxpayer Protection Pledge,” committing himself in writing to opposing all tax increases. During his most recent campaign, Gov. Bentley’s re-election ads also prominently displayed the words “No New Taxes.”
That’s right. Despite having won two gubernatorial races by campaigning against higher taxes, featuring his promise to not raise taxes on his website, and making a written promise to the people of Alabama to not raise their taxes, Gov. Bentley is now pushing for just that. Higher taxes.
The American people have historically reacted poorly to politicians who promise not to raise taxes and then do. Broken promises on taxes cost George H.W. Bush a second term as President and Tom Corbett a second term as Governor of Pennsylvania. When you make a promise, people expect you to keep it. This might explain why Gov. Bentley waiting to announce his intention to break his promise against higher taxes until after he won re-election.
The Alabama Republican Party has already responded to Gov. Bentley’s plan, passing a resolution in opposition to any proposed tax hikes. Yellowhammer News reported that the resolution read:
“Alabama is still in a state of recovery from the recent and extended recession that has gripped this state and the entire nation for the past several years,” the resolution said. “Be it therefore resolved that we, the members of the Alabama Republican Party State Executive Committee call upon Governor Bentley and legislative leaders to consider options other than an increased tax burden on Alabama citizens as a solution to the state’s fiscal problems.”
Between 2000 and 2009, state spending in Alabama has exceeded the rate of inflation in population growth by just over $20 billion. Gov. Bentley should take the lead and work with legislative leadership to pursue reductions in state spending and truly pro-growth tax reform like that enacted in North Carolina and Wisconsin.
Help Americans for Tax Reform stop Gov. Bentley’s $700 million tax hike. Call Gov. Bentley’s office at (334) 242-7100 or click here to email and tell him stand by his promise to Alabama taxpayers to oppose any and all efforts to increase taxes.
Illinois Gov. Rauner Ends the Forced Unionization of Public Employees
Americans for Tax Reform and the Center for Worker Freedom applaud Illinois Gov. Bruce Rauner for ending the practice of forced unionization for state employees. Enacted by executive order, the Washington Free Beacon notes that Gov. Rauner’s action means: “…public sector workers will no longer be forced to join government unions, such as the politically powerful American Federation of State, County and Municipal Employees (AFSCME) and Service Employees International Union (SEIU), as a condition of employment.”
Matt Patterson, the Executive Director at the Center for Worker Freedom, stated:
Politicians in both red and blue states are at last coming to a consensus that workers deserve free labor markets.
In the United States, no one should be forced to join or pay dues to any organization, including a labor union. Gov. Rauner's actions are at odds with labor bosses, who rely on government power to force workers into their ranks. Fortunately for the rest of us, the Governor's actions are entirely constituent with the U.S. Constitution and freedom of assembly.
The move against forced unionization in Illinois government comes on the heels of a major effort in Kentucky to enact local Right to Work laws. As a state with strong home rule laws, county governments in Kentucky have tremendous power in how local government is run. While the state government remains divided over Right to Work, several counties have undertaken the enactment of local versions of the law – a law that has been passed in 24 states. Writing in Forbes, the Center for Worker Freedom’s Matt Patterson points out:
In a stroke of genius and bravery, county leaders in Kentucky have decided that right-to-work absolutely falls under the “economic development” rubric, because right-to-work attracts businesses and boosts job growth; according to Bureau of Labor Statistics (BLS) data, between 1990 and 2014 jobs grew more than twice as fast in right-to-work states compared to their less-free brethren.
So Kentucky county officials figure they can and should pass right-to-work at the county level. And as of this writing, five have done so, a pro-worker blitzkrieg that advanced through Todd, Fulton, Warren, Simpson and Hardin counties in barely one month as last year gave way to this.
Most importantly, Gov. Rauner has extended the freedom of association to Illinois state employees, giving them the freedom to choose whether or not they wish to be a part of a public employee union. A right that is all-the-more important when one realizes most Illinois unions fail to meet typical non-profit standards for spending. The Illinois Policy Institute points out:
Nonprofits in Illinois typically spend around 90 percent of their budget on their missions, with the remainder going to overhead and administration.
Meanwhile, all but one of Illinois’ major government unions fail to reach the Better Business Bureau’s standard, by the unions’ own accounting.
For instance, the Illinois Education Association, or IEA, the state’s biggest teachers union, devoted just 26 percent of its budget to representation in 2014. Nearly 70 percent went to administration and overhead and 3 percent went to political activities, according to LM-2 reports filed with the U.S. Department of Labor in 2013.
Americans for Tax Reform encourages more governors across the country to follow Gov. Rauner’s lead and end the forced unionization of public employees.
Super Bowl Stadium Drives Glendale Broke, Despite Outrageous Taxes
The 2015 Super Bowl will be played at the University of Phoenix Stadium in sunny Glendale, Arizona. At first glance, it is a nearly perfect location for what is arguably the biggest event in American professional sports (my apologies to the World Series). But in an odd twist, considering the sports world’s current obsession with the Super Bowl bound New England Patriots and #DeflateGate, the financing scheme behind the University of Phoenix Stadium has left the City of Glendale’s finances… deflated.
Financing sports arenas and stadiums through taxes and public debt is never a good idea. Americans for Tax Reform has addressed this before. But the University of Phoenix Stadium in Glendale really takes the cake. The City of Glendale itself has a bit of a reputation, according to the New York Times, of throwing money at sports facilities in efforts to lure sports team there. The NYT notes: “But the scale of spending in the city of 230,000 residents is unique. According to Moody’s Investors Service, Glendale’s debt is equal to 4.9 percent of its tax base, nearly four times the national median and twice the average rate for cities in Arizona. More than 40 percent of the city’s debt is dedicated to paying off sports complexes.”
In the case of the University of Phoenix Stadium, advocates attempted to fund its construction via rental car taxes – specifically a 3.25-percent tax on rentals. They claimed that out-of-state tourists would pay the brunt of the tax on rental cars and thus finance the stadium – though, again, Americans for Tax Reform has detailed how rental car taxes actually disproportionately hit local taxpayers hardest. Instead, an Arizona judge ruled last year that rental car taxes are vehicle taxes and are thus required, by the Arizona constitution, to be spent on projects such as road and highway construction – not sports stadiums. According to The Republic, this ruling could leave Arizona on the hook for roughly $150 million.
Even without the legal ruling against the stadium financing, it is clear that taxes such as rental car taxes are discriminatory, reduce local accountability as to how revenue is appropriated, and play into the misguided notion that if you tax it, they will still come.
The Associated Press notes that most Super Bowl revelers aren’t even staying in Glendale, opting to stay and enjoy the nightlife in nearby Phoenix and Scottsdale instead. Glendale, and Maricopa County as a whole, relies on a 1-percent tax on hotel occupancy for, you guessed it, repaying $1.2 billion in bonds to finance stadium construction. Glendale’s predicted boost in tax revenue appears to be up in smoke, leaving the city’s taxpayers on the hook with even more debt.
Proposed Tax Hikes in Kansas Won't Solve Overspending Problem; Will Hurt Small Businesses
As a part of his 2015 Kansas budget, Gov. Sam Brownback has proposed tax increases on alcohol and tobacco products. These tax increases would have a detrimental impact on working class consumers and small businesses alike. In a letter to the Kansas legislature, Americans for Tax Reform president Grover Norquist noted:
Increasing the sate cigarette tax from 79-cents to $2.29 per pack represents a 190% increase in the tax rate on mostly middle and lower class consumers. Increasing the state tax on liquor from 8% to 12% would have a detrimental impact on many of Kansas’s small businesses who are reliant on liquor revenue – small businesses that the 2012 and 2013 tax reform legislation was designed to help and grow... A pack-a-day smoker would end up paying an extra $547.50 in taxes a year. Kansans living along the Missouri border may opt to avoid the tax altogether by purchasing their tobacco products in Missouri – where the tax would be lower. If consumers flock to businesses across state lines, they may make other purchases while shopping for tobacco – hurting the bottom lines of Kansas retailers.
In addition to the burdensome costs to retailers and consumers, sin taxes such as those proposed by Gov. Brownback are traditionally a declining source of revenue. Kansas has an overspending problem and it can be solved not by hiking taxes but by eliminating government waste and reducing spending. The ATR letter to the Kansas legislature notes:
States should aim to increase spending at the rate of inflation and population growth. Using those metrics Kansas has over-spent by about $12 billion between 2000 and 2009. That’s an over one-billion-dollars-per-year overspending problem. That data point alone should put to rest any claims that there is no room to cut from the state budget.
To read the full letter, click here.
Where Have You Gone Congressman Kasich?
Speaking today at the Ohio Chamber of Commerce, Gov. John Kasich has once again left political observers asking the question: Where have you gone Congressman Kasich? The differences between Congressman John Kasich – a firebrand anti-tax, anti-regulation conservative in the 1990’s – and John Kasich, Governor of Ohio, are stark.
In today’s address, Gov. Kasich has resurrected the decrepit corpse of last year’s Mid-Biennium Review (MBR) – a plan that would have seen a drop in personal income taxes but at the cost of higher energy costs, an increase in the regressive state cigarette tax, taxes on tobacco harm reduction products like e-cigarettes and vapor products, and an increase in taxes on small businesses. The MBR called for a 15-percent increase in the state CAT tax, a tax on doing business in the State of Ohio measured by a business’s gross receipts. The CAT tax changes, at the time, would have amounted to a $743 million tax increase by 2017.
Ohio’s oil and gas industry, under the prior MBR proposal, would have seen the oil and gas severance tax rate increase to 2.75-percent of a producer’s gross receipts. Americans for Tax Reform noted at the time: “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.
The final tax increase component of last year’s MBR was an increase in taxes on tobacco products and e-cigarette and vapor products. Americans for Tax Reform noted at the time: 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.”
Gov. Kasich’s announcement today means that the major components of the MBR will once again dominate his legislative agenda, along with increased regulations on fracking and charter schools. According to The Columbus Dispatch, Kasich stated: “We are going to fix the lack of regulation on charter schools.” He went on to call for more regulation of the fracking method of oil and gas extraction that is fueling the state’s energy renaissance and providing new jobs. Last year – when Gov. Kasich proposed his MBR – Americans for Tax Reform was clear, the plan was less than inspiring. It remains so.
Today’s Gov. John Kasich pales in comparison to the John Kasich of two-decades ago – a tax cutting, budget balancing Reagan conservative. After leaving the halls of Congress in Washington, D.C., John Kasich said: “When I left Washington, we actually had a balanced budget and we paid down the most amount of the national debt in modern history and cut taxes and created jobs. And I was the chief architect of that plan in '97.” What happened to that John Kasich?
Gov. Brownback Proposes Efficiencies, Spending Restraint in New Budget Plan
Kansas Governor Sam Brownback continues efforts to reform the Kansas state government, this time with a rollback in state spending and enacting efficiencies to state programs. The general fund allotment plan would address the state’s projected $280 million overspending problem in FY 2015.
The plan would enact a four percent reduction in spending to “Cabinet Level and Other SGF [State General Fund] Funded Agencies.” The Kansas Legislature would also be asked to vote on a four percent reduction in their spending as well. In addition to enacting spending restrain regarding state general funds, Gov. Brownback has proposed using efficiencies to find savings in non-general fund accounts including the Highway Fund.
Americans for Tax Reform applauds Gov. Brownback for continuing to engage in much needed fiscal reforms in Kansas and building on historic tax cuts. Additional reforms that could be pursued to reduce the state’s overspending problem include moving to a defined contribution pension plan, pushing for the adoption of zero-based budgeting, and the adoption of reforms recommended in the Kansas Policy Institutes model budget plan.
Taxpayers Sweep Top Five Ballot Measures
74% – 26% in Georgia – Amendment A: Voters enshrined in the state constitution a cap on the state income tax at the effective rate on January 1, 2015. Therefore the state legislature is now constitutionally prohibited from increasing the state income tax rate any higher.
Brownback Win A Victory for Kansas Taxpayers
Americans for Tax Reform would like to applaud the victory of Kansas Governor Sam Brownback over Democrat challenger Paul Davis. Gov. Brownback’s win is a boon to Kansas taxpayers who will continue to see more money in their wallets and better job growth in the state.
Called one of the most important races in the country, the Kansas governor’s race became the epicenter of the low-tax fight. The Democrat Party and their spending-interest allies ran a misleading smear campaign against the governor and his efforts to reform the Kansas tax code to the state more competitive with its neighbors.
“Tonight the voters of Kansas returned a champion of the taxpayer to the Kansas governor’s office. Gov. Sam Brownback ignited the Mid-West tax rebellion and began and led the great 50 state race to a zero-percent income tax,” said Grover Norquist, president of Americans for Tax Reform. “With Gov. Brownback’s re-election, other governors have seen that the Kansas model is both politically practical and exportable. By 2050, all 50 states should be able reduce their state income taxes to zero.”
UPDATE: Bill Walker Campaign Disputes Authorship of Pro-Income Tax Letter
Alaska gubernatorial candidate Bill Walker’s campaign has disputed the authorship of a 2004 letter to the editor calling for a state income tax in Alaska. A man claiming to be another Bill Walker (identified by the Walker for Governor campaign as William C. Walker) has come forward on a Blogspot blog with the username “Mo ‘Poxy”, taking credit for the 2004 letter – though the user’s identity is unclear.
Ultimately it is up to the voters of Alaska to decide if candidate Bill Walker actually wrote the letter to the editor. They should be reminded, though, that Bill Walker, unlike Sean Parnell, has not ruled out higher taxes by signing the Taxpayer Protection Pledge.
You can read the original post with the full letter to the editor here.