ATR Statement on Virginia Transportation Plan
Virginia Governor Bob McDonnell’s latest transportation funding proposal gets some things right: it begins to prioritize transportation spending while eliminating the gasoline tax.
But the truth is that most Democrats and too many Republicans in the legislature do not share Gov. McDonnell’s prioritization of Virginia’s transportation needs. Surprisingly, many of those opposed to making transportation a real priority hail from Northern Virginia and the Tidewater region, where transportation problems are most acute. The pressure imposed by these intransigent legislators has so far prevented a plan that addresses Virginia’s transportation funding problems in a fiscally sustainable manner and does not grow the overall tax burden.
The plan as it stands now fails in its goal to prioritize transportation spending while avoiding tax increases. In the coming days, taxpayers expect legislators to work to protect Virginia families. To achieve a transportation funding bill that rejects tax increases, Americans for Tax Reform recommends the following:
- Lower the size of the new additional sales tax component intended to replace the gas tax to one that avoids tax increases on Virginians;
- Include the termination of the diesel tax along with the state gas tax;
- Either eliminate the $15 car registration “fee” increase or accurately include its new revenues as taxes and reduce taxes elsewhere;
- Further prioritize state spending by allocating a greater share of General Fund revenues toward Virginia’s infrastructure needs, as the Governor has repeatedly proposed, notwithstanding the obstinate refusal to date of a handful of anti-taxpayer Republicans in the senate to support this sustainable approach.
At the same time, there is the danger that this plan could become an even worse deal for Virginia taxpayers as it moves through the legislative process. In the past, particularly in the senate, anti-taxpayer Republicans like Sen. Maj. Leader Tommy Norment, Sen. Frank Wagner, and Sen. John Watkins have worked with Democrats to hijack sound, tax-neutral, pro-growth transportation funding proposals to turn them into tax hikes to fund their pet projects.
By their actions, this tax-increase cohort has repeatedly told Virginians that transportation funding is their lowest priority. By funding everything else the government does first, leaving no room left for basic transportation needs, these members’ actions reveal what their rhetoric obscures. They will only meet this core function of government after every spending interest in Richmond is served.
Since Mark Warner’s dishonesty some three governors ago (running against tax hikes and misstating Virginia revenues to promote them), these members have conspired to scuttle any real reform in transportation funding, instead raising taxes that somehow never reach their stated target. Meanwhile, years later, the structural hurdles that facilitate the raiding of Virginia’s revenues for other purposes continues unabated. More tax increases simply cannot solve Virginia’s transportation problems—only statutory (or constitutional) reform that allows proper allocation of its resources can keep Virginia moving without sacrificing its engine of economic growth.
This session, Americans for Tax Reform hopes that Senators Norment, Wagner, and Watkins will this time work with their Republican colleagues in the house and senate to craft a sustainable, plan which addresses Virginia’s transportation needs and is not a Trojan Horse for higher taxes.
The fact is Virginia does not have a revenue problem; it has a problem prioritizing spending.
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Tonight: Democrat National Convention to Showcase Tax Hiking Governors
On the opening day of their national convention, Democrats have chosen to showcase three governors who have a long history of pushing job-killing tax hikes on their respective states: Illinois Governor Pat Quinn, former Virginia Governor Tim Kaine, and Maryland Governor Martin O’Malley.
Illinois Governor Pat Quinn, who kicks off the evening of tax hikers, has had a long love affair with tax increases. In May of 2009, Gov. Quinn proposed a 50-percent income tax hike, increasing the income tax rate from 3-percent to 4.5-percent. The proposed tax hike would have taken about $4 billion from Illinois’s private economy near the peak of the state’s recession. Thankfully, the tax hike failed in the legislature.
In March of 2010, Gov. Quinn took another stab at hiking taxes, this time proposing a 33-percent, $3 billion tax hike. It also failed.
In July of 2010, the Illinois budget director David Vaught let slip a proposed “secret” 67-percent income tax hike being pushed by the Governor. Gov. Quinn scrambled to distance himself from the comment and denied the proposal.
Finally, in January of 2011, Gov. Quinn got his wish and signed into law a whopping 66-percent income tax hike, draining $6.8 billion out of the private economy. The tax hike tagged an extra $1,000 to the bill for a family of four earning $50,000 a year. Additionally, Gov. Quinn was able to hike the corporate income tax rate – driving more business and jobs from the state. This year, Gov. Quinn signed into law a 102-percent tax increase on cigarettes.
Gov. Quinn has repeatedly shown that he is more interested in hiking taxes on struggling Illinois families and businesses, rather than getting the state’s poor fiscal house in order. The state reportedly has the worst budget deficit in the nation, operating $43.8 billion in the red.
After Gov. Quinn comes the former Governor of Virginia and current U.S. Senate candidate, Tim Kaine. As governor, Kaine picked up where his predecessor Mark Warner left off, pushing for higher taxes. He attempted to raise the maximum state income tax rate from 5.75-percent to 6.75-percent. The proposed hike would have hit Virginians making as little as $17,000 a year. Over his whole term as governor, Tim Kaine proposed roughly $4 billion in new taxes – thankfully the state legislature did not see eye-to-eye with Kaine on the tax hikes.
Capping off the night of tax hiking governors is current Maryland Governor Martin O’Malley. Gov. O’Malley has become especially fond of tax increases as opposed to spending restraints. A 2011 study by the National Governors Association and the National Association of State Budget Officers showed Maryland to have the fastest growing state budget in the Mid-Atlantic and the seventh highest budget growth in the nation. In 2012 Maryland’s budget was the fourth fastest growing in the nation. To pay for Maryland’s spending explosion, Gov. O’Malley has proposed and signed into law a bevy of tax hikes.
Since 2007, Gov. O’Malley has raised taxes by $2.2 billion, driving 232,000 taxpayers from the state of Maryland and roughly $13 billion in income with them.
During the Special “Tax Hike” Session in 2007, Gov. O’Malley signed into law a $603.4 million sales tax hike, a doubling of the state cigarette tax from $1 per pack to $2, a $191.3 million income tax hike with the new rates set at 4.75-percent and 5.5-percent, and a corporate income tax hike from 7-percent to 8.25-percent.
When the 2007 tax hikes failed to generate the desired revenue, Gov. O’Malley signed into law a special “Millionaires Tax” during the 2008 general session. This tax hike pushed the top marginal income tax rate from 5.5-percent to 6.25-percent – a $154 million tax hike.
With the state still operating with a structural deficit of over $1 billion, Gov. O’Malley signed into law a slew of a new tax hikes during a 2012 special session. A “Millionaires Tax” 2.0 was passed and signed, increasing income taxes on individuals making over $100,000 and couples making over $150,000. Additionally a $5 million tax hike on smokeless tobacco and “Little Cigars” was signed into law as well as the elimination of some personal exemptions to the income tax.
It’s no wonder that a state burdened with ever increasing taxes and out-of-control spending was found to be one of the worst places to retire.
Keep in mind tonight that these Governors are considered rising political stars and leaders in the Democrat Party. To most Americans, their tax hikes, both enacted and proposed, would have dire financial consequences. They have unleashed fiscal havoc on their states, yet we are told to believe that they are reasonable leaders. While Gov. Quinn looks to have hit his political ceiling as Governor of Illinois, Gov. Kaine is looking to bring his tax and spend liberalism to the U.S. Senate and Maryland Gov. Martin O’Malley has his eyes on a 2016 presidential run, hoping to turn the rest of the United States into the over-taxed and broke State of Maryland.
More from Americans for Tax Reform
Oklahoma's Intangible Property Tax Problem
Besides choosing their elected officials this November, Oklahoma voters will have to make an important decision on State Question 766, deciding whether or not intangible property will receive a tax exemption. A quick hint, if SQ 766 passes it could fuel further job growth and innovation in the state. If the ballot measure fails it could cost Oklahoma businesses precious resources in a stagnant economy and lead to new rounds of layoffs.
Until a 2009 State Supreme Court ruling, some Oklahoma businesses were “centrally assessed” by the State Board of Equalization while others were “locally assessed” by county assessors. Those that received local tax assessments were generally exempt from paying taxes on intangible property, while “centrally assessed” businesses had to pay taxes on intangible property. Now small and large businesses alike would be forced to pay property taxes on the value of their customer lists, contracts, philanthropy and goodwill, patents, and trademarks. They'd even pay property taxes on advertising.
AT&T sued the State of Oklahoma over taxes they paid on intangible property per their assessment from the State Board of Equalization. They lost the case when the Oklahoma Supreme Court ruled that “locally assessed” businesses were not exempt from the tax, effectively extending the tax on intangible property to all Oklahoma businesses. SQ 766, which stems from the Supreme Court ruling, seeks to remedy the new tax regime on intangible property – almost no other states tax intangible property.
The extension of a tax on intangible property to almost all Oklahoma businesses could cost employers hundreds of millions of dollars.
If SQ 766 passes, it would stave off a possible economic disaster for the state. With an uncertain tax regime and assessments on ideas and innovation, businesses would flee the state. Exempting taxes on intangible property is paramount to Oklahoma’s full economic recovery.
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Maryland Governor Martin O'Malley: Barack Obama, Jr.
Governor Martin O’Malley has transformed Maryland into one of the most hostile places for taxpayers to live. With new taxes on income and smokeless tobacco passed into law after the May, 2012 special session, Maryland is quickly becoming the most taxed state in the country.
During O’Malley’s current term in office (2007 to 2010*) 232,000 taxpayers have fled Maryland taking $13 billion in income with them.
Americans for Tax Reform believes that Gov. O’Malley’s left-wing, tax-and-spend policies in Maryland give the American people an inside look into how Barack Obama will act if he is re-elected to a second term.
During the 2008 Presidential election, then candidate Obama promised not to raise taxes on any family making less than $250,000 a year. Without a word of resistance from the President or Maryland’s Congressional Democrats, Gov. O’Malley has moved the goal posts and redefined “rich” as any individual making more than $100,000 – or couples who are making more than $150,000 – a year.
Below, ATR has compiled a comprehensive list of tax hikes Gov. O’Malley has enacted as Governor of Maryland:
History of Tax Hikes
2012 Special “Tax Hike” Session:
• Tax hike on smokeless tobacco and “Little Cigars”: $5 million
• Elimination of Telecom Property Tax Credits (Corporate Income Tax): $7.4 million
• Elimination of personal exemptions (Individual Income Tax): $51.7 million
• Income tax hikes on individuals making over $100,000 and couples over $150,000: $195.6 million
2012 Regular Legislative Session:
• Flush tax hike: $53 million
2011 Regular Legislative Session:
• Highway and Bridge toll increases: $90 million
• Vehicle titling tax hike from $50 to $100: $52.4 million
• Hospital provider tax: $390 million
• Alcohol sales tax hike from 6-percent to 9-percent: $84.8 million
2008 Regular Legislative Session:
• The Millionaires Tax pushes top marginal rate from 5.5-percent to 6.25-perent: $154.6 million
2007 Special “Tax Hike” Session:
• Senate Bill 2 - Real property transfer tax hike: $14.1 million.
• House Bill 5 – “Tip Jar” tax hike, 20-percent “Admissions and Amusement” tax: $8 million
• Tobacco tax hike from $1 per pack to $2 per pack: $133 million
• Vehicle excise tax hike: $36.9 million
• Vehicle titling tax hike (bumped from $23 to $50): $23 million
• Sales tax hike from 5-percent to 6-percent: $603.4 million
• Income tax hike with new rates between 4.75-percent and 5.5-percent: $191.3 million
• State corporate income tax hike from 7-percent to 8.25-percent: $118.6 million
2007 Regular Legislative Session:
• Eliminated use of captive real estate investment trusts for income tax purposes: $10 million
• Since taking office in 2007, Maryland Governor Martin O’Malley has enacted 19 major tax hikes amounting to a total of $2.2 billion in tax increases.
• In that same period of time, Governor O’Malley has increased spending by over $1 billion each fiscal year.
• The National Governors Association and National Associations of State Budget Officers’ 2011 fiscal study of the states shows Maryland to have the highest rate of budget growth in the mid-Atlantic region and 7th overall nationally.
• In the past year Governor O’Malley has tackled social issues that are important to liberal Democrat voters, including Gay Marriage and the DREAM Act – checking off the requirements for his own presidential ambitions in 2016.
• Governor O’Malley continues to push for a multi-billion dollar wind farm project off the coast of Maryland that would cause higher costs for utility providers and consumers alike.
*The IRS has not released tax migration data for 2010-2011. Governor Martin O’Malley is ineligible to run for reelection in 2014 due to term limits.
More from Americans for Tax Reform
The Post Mortem on Maryland's Special Tax Hike Session
The Maryland House of Delegates passed the Budget Reconciliation and Financing Act (BRFA) on Wednesday by a 77 to 60 vote – resulting in a $300 million tax increase on Marylanders. Governor Martin O’Malley will surely sign the bill, checking off another item to impress union bosses and big government liberals with, in a lead up to his 2016 presidential campaign.
The BRFA extends the concept of the infamous Maryland millionaires tax to single filers making over $100,000 a year and joint filers making over $150,000 a year. Then candidate Barack Obama promised as President that he would not raise taxes on anyone making under $250,000 a year. Maryland Democrats have decided to move the goal posts and redefine “rich” as being anyone who makes over $100,000 a year – including many of Maryland’s small businesses and employers.
Besides increasing tax rates; the BRFA phases out many exemptions at an accelerated pace. Low tax states like Virginia, Florida, and Texas must be looking very appealing to Maryland taxpayers and employers right about now.
In addition to job killing and population draining income tax hikes, Maryland Democrats managed to insert two tax increases on tobacco. The tax on “little cigars” will jump from 15-percent to 70-percent of wholesale, and the rate on smokeless tobacco will rise from 15-percent to 30-percent.
The tax hike on smokeless tobacco – defended by Democrat lawmakers because of tobacco’s health implications – flies in the face of actual science. If Maryland’s lawmakers were really concerned about Marylanders’ health and not finding new sources of revenue, they would not be seeking to create tax parity between smokeless tobacco and cigarettes. Rather, they would be trying to adopt a policy of Tobacco Harm Reduction. By increasing the tax on smokeless tobacco, Maryland Democrats are perpetuating the unfortunate and detrimental misconception that the use of smokeless tobacco is as harmful as smoking – and as a result may be encouraging more Marylanders to continue to smoke instead of switching to far less harmful products.
The fact is, every year under Governor Martin O’Malley, state spending has increased by $1 billion or more. The supposed “Doomsday Budget” passed at the end of this year’s regular legislative session was anything but “doomsday.” It was a $700 million increase from the previous year’s budget and left intact all of Maryland’s social programs, education, and government services.
With the tax increases now in place, the Tax Foundation has calculated that a two child family with a $250,000 income would be paying nearly $18,000 a year in taxes. That’s almost $1,500 more than in Washington, DC, and $6,500 more than in Virginia.
If anything, Maryland’s “Doomsday Budget” was actually the BRFA and its bevy of job killing tax hikes.
More from Americans for Tax Reform
Maryland's Special Tax Hike Session Kicks Off Today
Evidently a spending increase just shy of $1 billion is not enough for Governor Martin O’Malley and the Democrat leadership in Maryland’s General Assembly. Today, May 14, lawmakers will return to Annapolis to pass the Governor’s tax hike proposal, allowing Gov. O’Malley to increase spending by over $1 billion from last year’s budget.
Under Gov. O’Malley’s proposal, about one in five Marylanders will see their taxes rise. WBAL is reporting that the proposal will set new income tax rates on Marylanders making over $100,000 a year. However, there is a potential House-Senate compromise that could lower the threshold to just $75,000 a year.
Maryland taxpayers, small businesses, and consumers should also be wary of the possibility of a 70-percent tax increase on smokeless tobacco and cigars. These hikes will hurt consumers and employers; driving jobs and small businesses from the Chesapeake Bay State.
When Governor O’Malley signed a new millionaires’ tax into law in 2008, Maryland’s millionaires fled the state – tax returns indicate that one-third of those making over a million dollars left Maryland between 2008 and 2009. Following the millionaire’s tax catastrophe, O’Malley promised to end the state’s $1 billion structural deficit through spending cuts alone, yet he’s back at the tax hiking game.
Maryland’s budget is a mess. Spending has grown by $1 billion or more each year that Governor O’Malley has been in office. If the state had capped spending to the rate of inflation and population growth between the years 1999 and 2009, the state would have spent $34.2 billion less, more than enough to wipe out the structural deficit and cut the state’s burdensome tax regime. Instead, Governor O’Malley hiked taxes by more than $1 billion in 2007, instituted the millionaires’ tax in 2008, and now wants to raise taxes again by over $300 million. It is self-evident; Maryland has a spending problem, not a revenue problem.
Eileen Norcross of George Mason University’s Mercatus Center has released an excellent report, “The Appearance of Fiscal Prudence,” explaining how Maryland’s budget process has only exacerbated out of control spending. The Spending Affordability Committee, a special committee within Maryland’s General Assembly, draws up the budget each year. The committee’s rules have been cast aside, causing what was supposed to be guidelines instituting a spending cap to now be considered the state’s spending target.
Additionally, Governor O’Malley has claimed that this budgeting process has created $7.5 billion in spending cuts, but that is just not true. Again, each year that Governor O’Malley has been in office, the budget has ballooned by $1 billion or more. A study released by the National Governors Association and the National Association of State Budget Officers shows that Maryland has the highest general fund budget growth among the Mid-Atlantic region, and it ranks 7th overall nationally.
Americans for Tax Reform encourages Maryland residents and taxpayers to contact their state lawmakers and Governor O’Malley and voice their opposition to ALL the new proposed tax increases. You can find your legislator here.
More from Americans for Tax Reform
A Tax Hike Is Not A Spending Cut
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:
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.
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.
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.
More from Americans for Tax Reform
Baltimore City Council Considers a 150% Tax Increase on Soda
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
Baltimore City Council
Office of the President
James B. Kraft
Brandon M. Scott
Rochelle “Rikki” Spector
Sharon Green Middleton
William “Pete” Welch
William H. Cole IV
Mary Pat Clarke
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Unintentional Fiscal Sanity in Maryland?
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.