As Virginia’s gubernatorial race heats up, Americans for Tax Reform will be examining the policy proposals and records of both Republican Ed Gillespie and Democrat Ralph Northam. Northam, who currently serves as the state’s Lieutenant Governor and previously served in the legislature as a state Senator has a long record of supporting measures that harm taxpayers and businesses alike.

Included below is a list of some of the tax increases Ralph Northam supported during his time as a state Senator and Lt. Governor:

Transportation Tax Hikes

A Six Cent per gallon Tax Increase (SB 6009, 2008)

Increase in Gas Tax (HB 2313, 2013)

Increase Gas Tax in Hampton Roads region (SB 6009, 2008)

Sales Tax Hikes

Increase Sales Tax from Five Percent to 5.25% (SB 6009, 2008)

Increase in Sales Tax by Six Percent (HB 2313, 2013)

Increase sales tax Hampton Roads region (SB 6009, 2008)

Internet Sales Tax (SB 660, 2010)

20% Sales Tax Increase in Hampton Roads region (HB 2313, 2013)

Real Estate Taxes Hikes

Increased Grantors Tax Rate (SB 6009, 2008)

Institute a $5 per night Hotel Room Tax (SB 6009, 2008)

150% Increase in Real Estate Transfer Tax for Hampton Roads region (HB 2313, 2013)

3% Hotel Tax Increase in Hampton Roads region (HB 2313, 2013)

Automotive Tax Hikes

38% Increase in Car Sales Tax (HB 2313, 2013)

Increase Auto Sales Tax by .5% (SB 6009, 2008)

Scholarship Tax Credits

Opposed scholarship tax credits for individuals and corporations (SB 131, 2012)

Health Care

Affordable Care Act (Obamacare) (RGA, Northam for Governor)

List of Obamacare Tax Hikes

Individual Mandate Non-Compliance Tax

Medicine Cabinet Tax on HSAs and FSAs

Flexible Spending Account Tax

Chronic Care Tax

HSA Withdrawal Tax Hike

Ten Percent Excise Tax on Indoor Tanning

“Cadillac Tax” – Excise Tax on Comprehensive Health Insurance Plans

Health Insurance Tax

Employer Mandate Tax

Surtax on Investment Income

Payroll Tax Hike

Tax on Medical Device Manufacturers

Tax on Prescription Medicine

Codification of the “economic substance doctrine”

Elimination of Deduction for Retiree Prescription Drug Coverage

$500,000 Annual Executive Compensation Limit for Health Insurance Executives

In addition to tax increases, Ralph Northam has opposed codifying the protection of employees against forced unionization in the Virginia Constitution. During his time as Lt. Gov., Northam campaigned against a ballot measure that would add Right to Work to Virginia’s constitution through an amendment. Since Northam has touted his opposition to this legislation. While Virginia has been a “Right to Work” state since 1947, adding the measure to the state’s constitution would have further strengthened worker protections against forced unionization in the future.

Despite labeling himself as one throughout his political career, it is clear that Ralph Northam is anything but a fiscal conservative. Northam’s continued support for economically destructive tax hikes, expansion of government, and anti-small business measures makes him anything but conservative. Ralph Northam is not a friend of taxpayers, and Virginia voters should remember that this November on Election Day. 

Photo Credit: VCU CNS

Threatening to enter a third fiscal year without a budget, Illinois lawmakers appear no closer to reaching an agreement. Legislators are currently in the middle of a ten-day special session called by Governor Bruce Rauner (R) to break the budget impasse. While unpaid bills build up, currently over $14.7 billion and growing, the special session has shown zero signs of progress.

In the first eight days of the session, both legislative bodies have met for only 122 minutes combined. On Wednesday, the House adjourned after a grand total of five minutes and five seconds. In the midst of this serious crisis, Illinois lawmakers do not seem to be prioritizing taxpayers interests, as the financial backlog increases and major fiscal problems, such as the state’s $130 billion unfunded pension liability, go neglected. To show how messed up the state legislature’s priorities are, instead of working towards pro-growth reforms and balancing the budget, the House used those scarce minutes to pass a resolution to promote tourism in the Bahamas. The price of this “work” does not come cheap for taxpayers in the Land of Lincoln, as it costs almost $50,000 per day.

Without a budget, state road construction may come to a halt. Public school administrators say they face major layoffs and the potential of closing schools in the fall. Making matters worse, at the beginning of June, both Moody’s Investors Service and S&P Global Ratings downgraded the state’s credit rating to one level above junk. If state legislators cannot come to an agreement to fund the government before July 1st, both companies have stated they will further downgrade the state’s bond rating. If this occurs, Illinois will become the first state with non-investment quality bonds and state financing will become even more difficult and expensive.

Gov. Rauner, having capitulated to calls for higher taxes, is urging lawmakers to pass a budget that includes a four-year $5.4 billion tax hike and a property tax freeze for the same period. The hike would be funded by increasing income and corporate tax rates, expanding the sales tax base, a new cable and satellite TV tax, and the elimination of various credits and deductions. While Gov. Rauner views this proposal as a compromise, Democrats strongly disagree with the duration of the tax hikes—wanting permanent increases instead. Before the special session, Democrats who control the state Senate passed a budget with the same tax increase now supported by Gov. Rauner, but without an expiration date four years from now and without the property tax freeze.

Gov. Rauner’s “compromise,” if enacted, would be a major loss for Illinois taxpayers, especially considering Rauner campaigned on lowering the income tax. This bill contains no structural reforms to help solve Illinois’ gargantuan pension debt, which stands at $130 billion. Including all state health benefits and local pensions, Illinois taxpayers are on the hook for $267 billion. Even with tax increases and spending caps, it is still expected the state will have a $5 billion budget deficit in 2018. Without making these needed changes, Illinois will continue on its debt spiral.

The Illinois economy is in no condition sustain further tax increases. From the start of 2007 to the end of 2016, Illinois was tied with Nevada for the worst personal income growth in the U.S. at a rate of 0.8 percent. With incomes growing at slow pace, the imposition of further tax hikes from Springfield piled on top of the 20 federal tax hikes enacted during the Obama administration, would do great harm to Illinois taxpayers and the state economy. Enactment of more state tax hikes will no doubt motivate even more taxpayers to flee for a state with a less dysfunctional and burdensome government.

As evidenced by a 2016 poll from the Paul Simon Institute, the citizens of Illinois are also tired of high taxes and ineffective government. The poll found that 47 percent of citizens want to move to another state. Of these people, 27 percent cited taxes as their main reason to leave the state. The government was also a popular choice with 15 percent of responses, falling just behind weather for third. Not only do taxpayers want to leave Illinois, many of them already are. For the third straight year, Illinois lost more citizens than any other state. After 37,508 people left in 2016, Illinois’ population has dropped to a ten year low.

Illinois needs pro-growth reforms that lower taxes, cut spending, and reform the pension system. By looking to states like Indiana, North Carolina, Texas, Tennessee, and its friendly northern neighbor, Wisconsin, Illinois can find solutions that will begin to rectify the state’s financial problems and will help create an environment that encourages business development and is more conducive to economic growth.

Photo Credit: Jeff Sharp 

Obamacare’s Chronic Care Tax is an income tax hike that hits 10 million households that happen to have high out of pocket medical expenses in a given year – the average income of households paying this Obamacare tax is $53,000

Though rarely if ever mentioned by the mainstream media, Obamacare is loaded with tax hikes on the middle class. Today we look at just one of these taxes, the Obamacare Chronic Care Tax:

-The Obamacare Chronic Care Tax violated Obama’s middle class tax pledge. Obamacare imposed a $1 trillion tax hike on the American people, and violated President Obama’s own “firm pledge” not to raise any form of tax on any middle class American. One of the most widespread Obamacare tax hikes is the Chronic Care Tax.

-The Obamacare Chronic Care tax is an income tax hike. Before Obamacare, Americans facing high out of pocket medical expenses were allowed an income tax deduction to the extent that those expenses exceeded 7.5 percent of adjusted gross income (AGI). Obamacare now imposes a threshold of 10 percent of AGI. Therefore, Obamacare not only makes it more difficult to claim this income tax deduction, it widens the net of taxable income.

-The Obamacare Chronic Care Tax hits at least 10 million American households each year. According to IRS data, each year approximately 10 million households are hit with the Obamacare Chronic Care Tax, and nearly all were middle class. The average household income of those hit with this Obamacare tax: $53,000.

-The Obamacare Chronic Care Tax is a $36 Billion Tax Hike over 10 years. By raising the threshold that Americans can claim the chronic care tax deduction to 10 percent, ATR estimates that the income tax increase for the average family claiming this tax deduction is $200 - $400 per year. The latest CBO score shows that the Obamacare Chronic Care tax hits these families with $36 billion in higher taxes over ten years.

-The Senate’s Better Care Reconciliation Act abolishes the Chronic Care Tax, providing significant tax relief for low and middle income households. The Senate healthcare bill restores the pre-Obamacare 7.5 percent threshold, providing significant middle class income tax relief.

Photo Credit: Gage Skidmore

The Senate’s healthcare bill repeals Obamacare taxes by $701 billion over the next ten years,  according to an analysis by the Congressional Budget Office released Monday.

Obamacare imposed a massive tax increase on the American people. As a presidential candidate in 2008, Barack Obama promised repeatedly that he would not raise any form of tax on any American earning less than $250,000 per year. But he broke the promise when he signed Obamacare. Passage of the Senate’s Better Care Reconciliation Act means tens of millions of middle income Americans will get tax relief from Obamacare's long list of tax hikes.

The Senate bill abolishes the following taxes imposed by Obama and the Democrat party in 2010 as part of Obamacare:

• Abolishes the Obamacare Individual Mandate Tax which hits 8 million Americans each year. Combined with the Employer Mandate Tax listed immediately below, this is a $137 billion tax cut.
• Abolishes the Obamacare Employer Mandate Tax. Combined with the Individual Mandate Tax listed immediately above, this is a $137 billion tax cut.
• Abolishes Obamacare’s Medicine Cabinet Tax which hits 20 million Americans with Health Savings Accounts and 30 million Americans with Flexible Spending Accounts. This is a $5.6 billion tax cut.
• Abolishes Obamacare’s Flexible Spending Account tax on 30 million Americans. This is a $18.6 billion tax cut.
• Abolishes Obamacare’s Chronic Care Tax on 10 million Americans with high out of pocket medical expenses. This is a $36 billion tax cut.
• Abolishes Obamacare’s HSA withdrawal tax. This is a $100 million tax cut.
• Abolishes Obamacare’s 10% excise tax on small businesses with indoor tanning services. This is a $600 million tax cut.
• Abolishes the Obamacare health insurance tax. This is a $144.7 billion tax cut.
• Abolishes the Obamacare 3.8% surtax on investment income. This is a $172 billion tax cut.
• Abolishes the Obamacare medical device tax. This is a $19.6 billion tax cut.
• Abolishes the Obamacare tax on prescription medicine. This is a $25.7 billion tax cut.
• Abolishes the Obamacare 0.9 Medicare payroll tax increase. This is a $58.6 billion tax cut.
• Abolishes the Obamacare tax on retiree prescription drug coverage. This is a $1.8 billion tax cut.
• Abolishes the Obamacare remuneration tax increase on insurers. This is a $500 million tax cut.
• The bill also delays (until 2026) the “Cadillac” tax on employer-provided insurance. This saves taxpayers $66 billion over the next ten years.

Here is a more detailed list of the Obamacare taxes abolished in the Senate Bill:

Individual Mandate Tax and Employer Mandate Tax: Under Obamacare, anyone not buying “qualifying” health insurance – as defined by the Obama-era Department of Health and Human Services -- must pay an income surtax to the IRS. In 2015, eight million households paid this tax. Most make less than $250,000. The Obama administration creepily used the Orwellian phrase “shared responsibility payment” to describe this tax. The Senate health bill repeals this tax and the employer mandate tax, saving Americans $137 billion over the next ten years.

For tax year 2016, the tax is a minimum of $695 for individuals, while families of four have to pay a minimum of $2,085.

Medicine Cabinet Tax on HSAs and FSAs: Under Obamacare, the 20.2 million Americans with a Health Savings Account and the 30 - 35 million covered by a Flexible Spending Account are no longer able to purchase over-the-counter medicines using these pre-tax account funds. Examples include cold, cough, and flu medicine, menstrual cramp relief medication, allergy medicines, and dozens of other common medicine cabinet health items. The Senate health bill will abolish this tax, saving Americans $5.6 billion over the next ten years.

Flexible Spending Account Tax: Under Obamacare, the 30 - 35 million Americans who use a pre-tax Flexible Spending Account (FSA) at work to pay for their family’s basic medical needs face an Obamacare-imposed cap of $2,500. The Senate health bill will abolish this tax, saving Americans $18.6 billion over the next ten years.

Before Obamacare, the accounts were unlimited under federal law, though employers were allowed to set a cap. Now, parents looking to sock away extra money to pay for braces find themselves quickly hitting this new cap, meaning they have to pony up some or all of the cost with after-tax dollars. Needless to say, this tax especially impacts middle class families.

There is one group of FSA owners for whom this new cap is particularly cruel and onerous: parents of special needs children.  Families with special needs children often use FSAs to pay for special needs education. Tuition rates at special needs schools can run thousands of dollars per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. This Obamacare tax increase limits the options available to these families.

Chronic Care Tax: Under Obamacare, this income tax increase directly targets middle class Americans with high medical bills. The tax hits 10 million households every year. Before Obamacare, Americans facing high medical expenses were allowed an income tax deduction to the extent that those expenses exceeded 7.5 percent of adjusted gross income (AGI). Obamacare now imposes a threshold of 10 percent of AGI. Therefore, Obamacare not only makes it more difficult to claim this deduction, it widens the net of taxable income.

According to the IRS, approximately 10 million families took advantage of this tax deduction each year before Obamacare. Almost all were middle class: The average taxpayer claiming this deduction earned just over $53,000 annually in 2010. ATR estimates that the average income tax increase for the average family claiming this tax benefit is about $200 - $400 per year.

The Senate health bill will abolish this tax, saving Americans $36 billion over the next ten years.

HSA Withdrawal Tax Hike: Under Obamacare, this provision increases the tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent. The Senate health bill will abolish this tax, saving Americans $100 million over the next ten years.

Ten Percent Excise Tax on Indoor Tanning: The Obamacare 10 percent tanning tax has wiped out an estimated 10,000 tanning salons, many owned by women. This Obamacare tax increase was the first to go into effect (July 2010). This petty, burdensome, nanny-state tax affects both the business owner and the end user. Industry estimates show that 30 million Americans visit an indoor tanning facility in a given year, and over 50 percent of salon owners are women. The Senate health bill will abolish this tax, saving Americans $600 million over the next ten years.

Health Insurance Tax: In addition to mandating the purchase of health insurance through the individual mandate tax, Obamacare directly increases the cost of insurance through the health insurance tax.

The total revenue this tax collects is set annually by Treasury and is then divided amongst insurers relative to the premiums they collect each year. While it is directly levied on the industry, the costs of the health insurance tax are inevitably passed on to small businesses that provide healthcare to their employees, middle class families through higher premiums, seniors who purchase Medicare advantage coverage, and the poor who rely on Medicaid managed care.

According to the American Action Forum, the Obamacare health insurance tax will increase premiums by up to $5,000 over a decade and will directly impact 1.7 million small businesses, 11 million households that purchase through the individual insurance market and 23 million households covered through their jobs. The tax is also economically destructive – the National Federation for Independent Businesses estimates the tax could cost up to 286,000 in new jobs and cost small businesses $33 billion in lost sales by 2023.

The Senate health bill will abolish this tax, saving Americans $144.7 billion over the next ten years.

Surtax on Investment Income: Obamacare created a new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 for singles). This created a new top capital gains tax rate of 23.8%.

The capital gains tax hits income that has already been subjected to individual income taxes and is then reinvested in assets that spur new jobs, higher wages, and increased economic growth. Much of the “gains” associated with the capital gains tax is due to inflation and studies have shown that even supposedly modest increases in the capital gains tax have strong negative economic effects.

The Senate health bill will abolish this tax, saving Americans $172 billion over the next ten years.

Payroll Tax Hike: Obamacare imposes an additional 0.9 percent payroll tax on individuals making $200,000 or couples making more than $250,000. The Senate health bill will abolish this tax, saving Americans $58.6 billion over the next ten years.

Tax on Medical Device Manufacturers: Under Obamacare, this law imposes a new 2.3% excise tax on all sales of medical devices. The tax applies even if the company has no profits in a given year. The Senate health bill will abolish this tax, saving Americans $19.6 billion over the next ten years.

Tax on Prescription Medicine: Obamacare imposed a tax on the producers of prescription medicine based on relative share of sales. The Senate health bill will abolish this tax, saving Americans $25.7 billion over the next ten years.

Elimination of Deduction for Retiree Prescription Drug Coverage: The Senate health bill will abolish this tax, saving Americans $1.8 billion over the next ten years.

“Obamacare promised to reduce individual insurance premiums – a lot. Premiums rose – a lot,” said Grover Norquist, president of Americans for Tax Reform. Obama promised no tax hikes on anyone earning less than $250,000 – that was a lie. Taxes increased. Healthcare costs increased. Obamacare failed. By its own promised goals, it failed. It is time to repeal failure and reform healthcare to protect consumers, not bureaucracy.”

Photo by Marc Nozell used under a Creative Commons license