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Will Upton

A Tax Hike Is Not A Spending Cut


Posted by Will Upton on Tuesday, April 24th, 2012, 4:23 PM PERMALINK


The Illinois Policy Institute has produced some excellent analysis of Governor Pat Quinn’s budget gimmick and the Illinois House budget resolution containing a massive $350 million tobacco tax hike, noting: “A tax hike is not a spending cut.” 

Below is the Illinois Policy Institute’s open letter to the Illinois General Assembly opposing the tobacco tax increase:

Dear Legislator:

Both Gov. Quinn’s budget proposal and the House budget resolution called for a $2.7 billion reduction in Medicaid liabilities. Similarly, the governor and the General Assembly have committed to reducing the tax burden for working families.

Yet Gov. Quinn’s recently released Medicaid plan does not meet either goal. The governor identified only $2 billion in Medicaid spending reductions, the bulk of which is steep provider cuts. Unbelievably, he then called for additional tax hikes to raise $700 million in new revenue ($350 million from a tobacco tax hike and a $350 million federal “match” to be added to the national debt). This is without a doubt a tax hike on Illinois’ working class – the average smoker’s household income is under $36,000 a year.

A tax hike is not a reduction in accrued obligations. It is not reform. It is more taxing and more spending, plain and simple.

Members of the General Assembly who reject the harmful “tax and spend” habits of the past have good reason to reject this plan. Falling short on spending reforms while hiking taxes on Illinois’ poor and disadvantaged is not a winning combination.

A budget framework that rests upon this toxic combination should be put aside in favor of a plan that finally treats taxpayers with the respect they deserve.

Sincerely,

Kristina Rasmussen
Executive Vice President

In addition to their open letter, the Illinois Policy Institute released two pages of analysis on the proposed tobacco tax increase:

In February, Gov. Quinn told lawmakers that in order to rescue Illinois’ Medicaid program, the state would need to “reduce expenditures in the program by $2.7 billion” for fiscal year 2013. But the plan he released in April does not reduce expenditures by $2.7 billion as promised.

Instead, his proposal reduces Medicaid spending by only $2 billion, the bulk of which comes from cuts to reimbursement rates for doctors and hospitals who serve Medicaid patients. In order to fill the gap between his plan and his target, he proposed hiking taxes on cigarettes to raise nearly $700 million in new revenues. Worse yet, these taxes are aimed primarily at the lower and working classes, with the average smoker’s household income falling below $36,000 per year.

The full report can be read here.

Click here to find your Illinois legislator and tell them that tax hikes are not spending cuts and to oppose any increase in the state’s tobacco taxes.    

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Baltimore City Council Considers a 150% Tax Increase on Soda


Posted by Will Upton on Tuesday, April 17th, 2012, 1:10 PM PERMALINK


Members of the City Council will hold a hearing on Wednesday to consider a new and unnecessary 150% soda tax increase.

Such a massive local tax increase on soda not only means higher costs for the consumer, but lost jobs as well. This tax hike, if passed, could very well result in layoffs at the Canada Dry bottling plant in Baltimore County and its distribution center in Glen Burnie at a time when the local economy desperately needs job creation and can ill-afford needless job destruction. A spokeswoman for Canada Dry recently told the Baltimore Business Journal that increasing the soda tax from two to five cents would cause an additional 10-percent decline in sales in Baltimore. 

Unfortunately, this has happened before. When the original 2-cent soda excise tax was enacted in 2010, Pepsi found that it was no longer cost-effective to make soda at their Baltimore facility and was forced to lay off 77 workers as a result.  In 2011 employers called on the city to repeal the tax to no avail. What’s that they say about the definition of insanity?  

Baltimore has an overspending problem, not a revenue problem. The tax code should not be used to pick winners and losers. Not only is raising the soda tax unsound policy, it is even more unwise in light of the fact that the largest federal tax increase in U.S. history will hit hard working Baltimore taxpayers in less than nine short months.   

ATR urges Baltimore residents to call their representative on Baltimore City Council and Mayor Stephanie Rawlings-Blake and tell them NO NEW TAXES ON SODA. 

Office of Mayor Stephanie Rawlings-Blake

410-396-3835

Baltimore City Council
Office of the President

410-396-4804

CouncilPresident@baltimorecity.gov

District 1

James B. Kraft

410-396-4821

James.Kraft@baltimorecity.gov

District 2

Brandon M. Scott

410-396-4804

Brandon.Scott@baltimorecity.gov

District 3

Robert Curran

410-396-4812

Robert.Curran@baltimorecity.gov

District 4

Bill Henry

410-396-4830

Bill.Henry@baltimorecity.gov

District 5

Rochelle “Rikki” Spector

410-396-4819

Rochelle.Spector@baltimorecity.gov

District 6

Sharon Green Middleton

410-396-4832

Sharon.Middleton@baltimorecity.gov

District 7

Nick Mosby

410-396-4810

Nick.Mosby@baltimorecity.gov

District 8

Helen Holton

410-396-4818

Helen.Holton@baltimorecity.gov

District 9

William “Pete” Welch

410-396-4815

William.Welch@baltimorecity.gov

District 10

Edward Reisinger

410-396-4822

Edward.Reisinger@baltimorecity.gov

District 11

William H. Cole IV

410-396-4816

William.Cole@baltimorecity.gov

District 12

Carl Stokes

410-396-4811

Carl.Stokes@baltimorecity.gov

District 13

Warren Branch

410-396-4829

Warren.Branch@baltimorecity.gov

District 14

Mary Pat Clarke

410-396-4814

MaryPat.Clarke@baltimorecity.gov

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Unintentional Fiscal Sanity in Maryland?


Posted by Will Upton on Tuesday, April 10th, 2012, 4:04 PM PERMALINK


The Maryland General Assembly wrapped up their 2012 legislative session in chaotic fashion last night. Democrat powerbrokers in the General Assembly and Governor Martin O’Malley had been pushing for a massive new spending proposal funded with tax increases on Marylanders’ income, smokeless tobacco and cigars. 

Fortunately for Maryland taxpayers, the Democrats in the General Assembly were unable to reconcile their differences over the budget.  Instead, Maryland's budget that actually cuts $500 million from state spending in 2013 in order to balance. 

While job-killing tax increases on income and tobacco were avoided, Democrats in the General Assembly did force through an increase in the state’s “flush tax” from $30 to $60. 

Though the new Maryland budget is a step in the right direction, Senate President Thomas V. Mike Miller, Jr. has already floated the prospect of a special session called by Gov. Martin O’Malley with the goal of finalizing a bloated spending package laden with the aforementioned tax increases on income, smokeless tobacco, and cigars – among other things.  

Click here to contact Governor O’Malley and ask him to let the Maryland General Assembly adjourn as planned and not call a special session.

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Virginia State Senator Richard Saslaw Wants Higher Taxes, Gets It Wrong on the Pledge


Posted by Will Upton on Wednesday, April 4th, 2012, 4:48 PM PERMALINK


Appearing on PBS affiliate WVPY in Harrisonburg, Va. Virginia State Senator and Democrat Minority Leader Richard Saslaw (D – Fairfax) blamed the Taxpayer Protection Pledge and it’s signers in the House of Delegates for Virginia’s transportation woes.  Senator Saslaw stated, “The no tax pledge in the House has prevented us from doing anything with roads. Pretty soon it's [The Taxpayer Protection Pledge] going to start to weigh on our ability to attract businesses to the Commonwealth.”  Saslaw added later in the interview, “I don't think any thinking person would sign that [The Taxpayer Protection Pledge].”

Senator Saslaw’s comments represent what is wrong with Virginia Democrats. They not only want their cake, they want to eat it too – and have hardworking Virginia taxpayers and businesses pay for it.  In his nearly thirty-two years in the Virginia State Senate, Richard Saslaw has been a vocal advocate of raising the gas tax, among other taxes, all-the-while voting for the state’s ballooning budget – especially spending on transportation and education. 

In Saslaw’s nearly thirty-two years in the State Senate, Virginia has overspent at an unsustainable rate.  Between 1981 and 2009, the Commonwealth of Virginia has spent 378.5 billion taxpayer dollars.  If spending had been capped by the rate of inflation and population growth, lawmakers in Richmond would have spent one-third less, saving Virginia taxpayers $113.7 billion.  In Saslaw’s nearly thirty-two years in the State Senate, Virginia has overspent at an unsustainable rate. 

This year alone, Senator Saslaw and his fellow Democrats in the State Senate refused to pass Governor Bob McDonnell’s budget.  Instead, they forced the Senate to restore what were responsible and badly needed spending reductions – kicking the can down the road for future generations to pay for the Commonwealth’s overspending problem.  

“Virginia Democrats are like a broken record, whether it is Senate Minority Leader Richard Saslaw or former-Governor Tim Kaine – tax and spend is all they know how to say,” stated Grover Norquist, President of Americans for Tax Reform, “Senator Saslaw’s latest tantrum is the result of him being unable to cobble together a tax increase on gasoline and soak the taxpayers of Virginia for more of their tax dollars.  While Governor Bob McDonnell is trying to promote economic growth in Virginia, Senator Saslaw is busy trying to drive businesses out of the Commonwealth with higher taxes.”

Norquist continued, “Senator Saslaw is not alone in his support for Left-wing tax and spending policies.  A few Senate Republicans have also bought into the higher taxes and higher spending ways of Senator Saslaw and former-Governor Tim Kaine.  Senate Majority Leader Tommy Norment, Senator John Watkins, Senator Harry Blevins, Senator Walter Stosch and Senator Frank Ruff voted for increasing the gas tax this year.  Senator Frank Wagner, a Republican, even sponsored the bill.” 

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OK House Committee Votes Against Preventing A Tax Increase


Posted by Will Upton on Thursday, March 1st, 2012, 1:47 PM PERMALINK


The Oklahoma House of Representatives’ Energy and Utility Regulation Committee turned its back on Oklahoma’s  wireless phone subscribers and the 30-percent of wireless only households by voting down 18 to 6 HB 2737.  The legislation would have capped the amount of money that goes to subsidize phone service in rural areas and prevented a tax increase on about 3.1 million Oklahomans.  

Oklahoma ranks 18th in national tax burden on wireless with a 15.79-percent combined local, state, and federal tax on cellphone service. 

Instead, the House Energy and Utility Regulation Committee sided against lower, less burdensome taxes by voting down HB 2737. 

What do you think, should Oklahoma's Universal Service Fund be capped, preventing new tax increases on wireless service?

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Washington State's Gimmick Budget


Posted by Will Upton on Thursday, February 23rd, 2012, 3:33 PM PERMALINK


Democrats in Washington State’s House of Representatives have unveiled their budget proposal – HB 2127 – which they claim closes a $1 billion budget shortfall without raising taxes or borrowing money.  In reality, the budget does raise taxes, and relies on accounting gimmicks to solve their $1 billion spending problem.  

The budget proposal, along with SB 2728, would allow counties in Washington State to add a 6-perent utility tax that in many instances would wind up on taxpayers’ cell phone bills.  Washington State already has the 2nd highest national tax burden on wireless, with a combined state and federal rate of 23-percent.  An added 6-percent utility tax would impact the 6 million wireless subscribers in the Evergreen State – it should also be noted that over a quarter of households in Washington are wireless only.  

In addition to opening the gates to burdensome county-level taxes, the Democrats’ budget defers certain payments to education until the next two-year budget cycle, kicking the can down the road and dodging the growing need to address the state’s out-of-control spending problems in an election year.  

What the House Democrats have proposes is not a budget, but a rather a placebo, getting them out of having to make tough decisions in an election year and setting them up to pass what will probably be a massive tax increase in the next budget cycle.  

What do you think? Are Washington State Democrats kicking the can down the road?

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OK Gov. Mary Fallin Releases Bold Tax Reform Plan


Posted by Will Upton on Tuesday, February 7th, 2012, 5:40 PM PERMALINK


Oklahoma Governor Mary Fallin, in her State of the State Address, outlined a bold plan for tax reform focused on reducing rates and consolidating Oklahoma’s seven tax brackets. 

The plan would end Oklahoma’s complicated seven bracket income tax structure that begins taxing on the first penny any Oklahoman earns, instead replacing the structure with three brackets – Oklahoman’s making below $15,000 a year would pay a 0-percent rate, those making under $35,000 would pay a 2.25-percent rate, and those making $35,000 and above would pay a 3.5-percent rate. 

The Tax Foundation ranks Oklahoma as 38th in the nation in terms of the individual income tax rate.  Reducing the top statutory rate to 3.5-percent – reduced from 5.25-percent – would give Oklahoma the second lowest top statutory rate in the region.  Lower than Arkansas, Kansas, Louisiana, Nebraska, and New Mexico.  Only Texas would have a lower rate – the state does not have an income tax.  

The Governor’s plan calls for further reductions in the income tax after 2013, with reductions of a quarter point every year that Oklahoma hits a revenue growth trigger of 5-percent – the eventual goal being the reduction of all income tax rates to 0-percent. 

To read the Governor’s tax plan, click here

There is also talk in Oklahoma of a legislative proposal lowering the universal service fund tax rate on phones. The combined state and local tax for wireless services reaches above 10 percent, one of the highest in the nation, and is over twice as high as the sales tax rate of 4.5 percent. This would help create a low and flat tax structure for one of the higher taxed services in Oklahoma as well.

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Oklahoma and Kansas: Moving in the Right Direction on Tax Reform


Posted by Will Upton on Monday, January 30th, 2012, 5:08 PM PERMALINK


Oklahoma and Kansas are two states looking to tackle major tax reform this year. 

In Oklahoma, economist Art Laffer has teamed up with the Oklahoma Council on Public Affairs to push for pro-growth tax reform.  Their plan would replace the existing income tax brackets with a flat tax rate of 2.25-percent in 2013 and reduce the rate by 0.25-percent each year after until the rate hits zero.  Along with implementing a flat tax, the plan would eliminate current state credits and deductions. 

Phil Kerpen and Stuart Jolly of Americans for Prosperity note in National Review Online that moving to eliminate the state income tax is a smart move:

“Over the past decade, non-income-tax states have seen 59 percent economic growth, versus just 38 percent for high-income-tax states. Job growth has been 4.7 percent in the non-income-tax states, while high-income-tax states actually lost 2.9 percent of their jobs. Population growth is the same story, up 12.3 percent in the non-income-tax states and just 3.8 percent in the high-income-tax states. Perhaps most interestingly, non-income-tax states are seeing more rapid growth in state and local tax revenue, as the high-income-tax states are undermining economic performance and, as a consequence, depressing revenues.”

The story is much the same in Kansas where Governor Sam Brownback is pushing a plan to phase out the state’s income tax as well.  Brownback has cited Kansas’s overly complicated tax code that picks too many winners and losers, as well as private sector job loss and poor capital flow, as reasons for his plan.  

In the initial stages of the plan, the Kansas tax system would move from three income brackets to only two income brackets with rates set at 3-perent for income under $15,000 for individuals and 4.9-percent for income at or over $15,000.  Additionally, the plan would eliminate the income tax on non-wage business income.   Like Oklahoma, the Kansas plan would eliminate several credits and deductions.  

After the initial reforms in Kansas, Governor Brownback has proposed capping annual budget growth at 2-percent a year with excess revenues being applied to reductions in the individual and corporate income taxes – leading to an eventual phase out all-together. 

Americans for Tax Reform has sent letters to both the Kansas and Oklahoma legislatures reminding them that effective tax reform does not increase taxes on net.  You can read those letters here and here

What do you think, should more states move to phase out their income tax? 

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Maryland Governor Doubles Down on Taxes in New Budget


Posted by Will Upton on Wednesday, January 25th, 2012, 3:22 PM PERMALINK


Today, Americans for Tax Reform sent a letter to the Maryland General Assembly in opposition to Governor Martin O’Malley’s budget.  You can read the letter here

Gov. O’Malley’s budget would increase income taxes by capping deductions on single earners making more than $100,000 annually and on couples making more than $150,000.  Estimates show that capping deductions for singles and couples at these respective levels would impact not just the top 1-percent or even 10-percent, but the top 20-percent of wage earners in the state

Not satisfied by soaking Maryland’s middle class, Gov. O’Malley has proposed almost every other tax increase in the book, throwing them all into the budget – even the kitchen sink, literally. Gov. O’Malley’s budget includes a “flush tax” increase on Marylanders’ water and sewage usage – better fix those leaky faucets and think twice about needing to use the toilet. 

Determined to put the final nail in the coffin of Maryland businesses and employers, Gov. O’Malley’s budget includes tax increases on the coal and telecommunications industries, and a tax on cigars and smokeless tobacco.  Increasing taxes on major employers in the state and on products sold by small business retailers are not ingredients for economic recovery in Maryland, they’re indicators of the economic and fiscal disaster that looms over the state. 

The proposed budget would increase taxes on cigars and other tobacco products by 70-percent at the wholesale level.  This tax increase would hammer already struggling small businesses and retailers in Maryland, especially those near the border.  Why purchase a product in Maryland when it is cheaper to buy in the state next door?  Higher taxes on tobacco products doesn’t cause people to use them less, it just drives business across state lines – hurting Maryland retailers in the process. 

Don’t just take ATR’s word for it though. Excise taxes do drive business across state lines, the Atlanta Journal Constitution’s PolitiFact points out, “ATR told us that Chicagoans flocked to neighboring Indiana when Cook County, which encompasses the Windy City, raised its cigarette tax by $1 in 2006. After the 2006 changes in Cook County, Chicagoans paid among the highest prices for cigarettes in the country. A team of University of Illinois-Chicago researchers found in a sample survey of discarded cigarette packs that 75 percent of them came from outside Cook County, The Huffington Post reported. The taxes on a pack of cigarettes in Chicago in 2007 was $4.05. The taxes were $1.37 outside city limits.”

Even worse, Gov. O’Malley has been more than coy about the total cost of his budget. The Maryland Reporter calculated that Gov. O’Malley’s budget approximately costs $35.5 billion, over a 2-percent increase from last year – though Gov. O’Malley seems to think that his budget cuts spending.  

Maryland House Minority Leader Tony O’Donnell called the budget, “…an outrageous kick in the stomach to small businesses and families struggling to make ends meet.”

Gov. O’Malley calls his budget a “balanced” approach.  It would appear that he intends to “balance” his budget on the backs of hard working Marylanders and their families. 

To read ATR’s letter in opposition to Gov. O’Malley’s budget, click here

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Elgin, Illinois City Council and Mayor Declare War on Christmas and Spirited Joy


Posted by Will Upton on Tuesday, December 20th, 2011, 11:07 AM PERMALINK


Elgin Mayor David Kaptain may not want be viewed as the Grinch, but he’s certainly doing a good job of playing the part this Christmas. 

The Elgin City Council and Kaptain will vote on a city sales tax increase and a 3-percent tax on alcohol this week as a part of the city budget.  Residents of Elgin are already hurting after Gov. Pat Quinn signed into law a massive 66-percent increase in the state income tax earlier this year. 

For some Elgin residents taxes on alcohol have already been hiked.  Elgin is split between Cook and Kane Counties.  Cook County has already levied a heavy tax hike on distilled spirits, now those Elgin residents who live in Cook County could be taxed even more for a drink this holiday season. 

“While he’s not sweeping to steal all of the presents from the Who’s down in Whoville, what Mayor Kaptain, along with the Elgin City Council are set to do this week is just as out of sync with the Christmas spirit,” said ATR president Grover Norquist. “With just a few shopping days left, Kaptain and company want to raise taxes on Christmas presents and holiday cheer.”

Norquist continued, “Making this move more egregious is the fact that it goes directly against the recommendations of the citizen task force that was appointed to direct Kaptain and council members. Their instructions were simple: cut spending and have the city government live within its means, just as the families and employers of Elgin must do.”

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