In an op-ed to the Daily Caller, ATR’s Paul Blair describes a troubling new phenomenon - Republican lawmakers targeting conservative groups for speaking out against tax hikes. Several Georgia Republicans including Gov. Nathan Deal, Speaker David Ralston, and House Transportation Committee Chair Jay Roberts have proposed raising the gas tax to fund their pet projects.

In order to push their proposals down the throat of Georgia Taxpayers, elected officials have attacked conservative groups that have spoken out. As the op-ed explains, ATR released a blog post criticizing this proposal for violating the Taxpayer Protection Pledge, a written commitment that many Georgia legislators made to their constituents:

“As we regularly do, and in the course of exercising our First Amendment rights, we explained in a blog post on our website that raising the gas tax was in fact a tax hike in violation of the Pledge, which many legislators in Georgia have signed.

However, Speaker Ralston and his allies moved to quickly threaten anyone who spoke out against the demand that taxpayers hand over more of their hard earned income to out-of-touch politicians. As Paul Blair explains:

“Soon after, we received an email, fax, and overnighted letter by one of the founders of GeorgiaLink Public Affairs Group, accusing us of violating the law. We did not release this letter. The following day, however, the Speaker of the House accused us of illegally lobbying in Georgia. It is reasonable to assume the lobbyist and Speaker had discussed this tactic.”

Perhaps most concerning, this tactic is straight out of the liberal play book:

“This is how the left operates. When their message and policy proposals fail, they employ scare tactics to bully opponents of their big government agenda.”

Georgia Republicans need to realize that they are accountable to taxpayers, and that using the left’s strategy to stifle speech will not work. As Paul Blair explains:

“Taxpayers will not be silenced or threatened into submission. Tax hikes are what politicians do instead of reforming government. It is sad and unfortunate that some Republicans in Georgia are employing the tactics of left to use the government to stifle speech. They will not succeed.”

Senators Marco Rubio (R-Fla.) and Mike Lee (R-Utah) have introduced a tax reform plan which aims to be simultaneously pro-growth, pro-family, and much more simple than the current tax mess.  Here are the major components:

Business tax rate of 25 percent.  The corporate income tax rate is reduced from 35 to 25 percent.  The top income tax rate for “pass through” or “flow through” firms like Subchapter-S corporations, partnerships, LLCs and sole proprietorships would fall from 39.6 percent to 25 percent.  All businesses face the same income tax rate.

Zero percent tax rate on capital gains, dividends, and interest.  The plan reduces the regular tax rate on capital gains and dividends from 20 percent today to 0 percent.  Interest would also face a 0 percent tax rate (though interest is no longer deductible for businesses), meaning that all savings—even in taxable brokerage accounts and deposit accounts—would benefit from tax free growth.  All savings would work much like Roth IRAs do today.

Top personal rate cut to pre-Obama levels.  The top personal income tax rate would be reduced from 39.6 percent to 35 percent.  Exceptions obviously apply for business income (25 percent) and savings income (0 percent).
Simple two-bracket tax system.  The first $150,000 of taxable income for married couples (half this for singles) would face tax at a 15 percent rate.  All income earned above these levels face tax at a 35 percent rate.  But see the business/investment exception rates above.

Full business expensing.  All business capital investments—including equipment, building, inventories, and land—would be immediately and fully deductible from taxable income.  This would replace our current slow, multi-year deduction regime known as “depreciation.”  All investments are deducted the year the cash is actually spent.

Moving from worldwide to territorial taxation.  Any money repatriated from overseas (where it has already faced local taxation) would see no additional tax from the IRS.  To help finance this, a special 6 percent one-time tax (paid over a decade) is assessed on current overseas profits.

Pro-family tax reforms.  Creates a new $2500 child tax credit (on top of the current $1000 one) creditable to both income tax and payroll tax liability.  No more marriage penalty.

Simplicity.  Two brackets for individuals. The AMT is repealed.  The standard deduction is repealed and replaced by a $4000 tax credit for couples (half that for singles).  Only mortgage interest and charitable contribution deductions remain (these can be taken in addition to the personal credit).  Most returns would be postcard-sized.

Robert Bentley, entering his second term as Alabama’s governor, has announced a proposal that would increase taxes by $541 million in an effort to plug what he says is a $700 million budget shortfall. Bentley’s move for higher taxes clearly violates his written promise to Alabama taxpayers to: “…oppose any and all efforts to increase taxes” — a promise he was more than happy to campaign on for re-election. 

Gov. Bentley’s proposal would increase taxes on cigarettes in Alabama by 82.5-cents per pack — estimated to generate $205 million. Additionally, the plan would double the sales tax on automobiles, from 2 to 4 percent, generating roughly $200 million. The $136 million remaining in tax hikes, according to AL.com, includes $47 million from ending the municipal exemption for the public utilities license tax, increasing the rental-car tax from 1.5 percent to 4 percent, an insurance premium tax, and requiring “… combined income reporting for corporations that do business in other states.” 

Relying on cigarette taxes — often a declining source of revenue as more and more Americans either reduce how much they smoke or quit — seems like a foolish way to plug Alabama’s revenue shortfall. The Washington Policy Center’s John Barnes detailed the disastrous decision in Washington state of relying on cigarette taxes to fund a 12% increase in state spending: “But actual collections under I-773 have been $2.5 million less than expected. Cigarette sales decline about 1% or 2% each year. Raising the tax pushes consumers to seek cigarettes out of state or from Indian reservations, or it cuts how much they buy. The state Department of Revenue estimated $220 million in lost revenue in 2003 due to people buying cigarettes via semi-illicit or downright illegal means.” In addition to people quitting or reducing their consumption of cigarettes, higher prices means an increase in smuggling. 

The Tax Foundation has uncovered that nearly 60 percent of the cigarette market in New York is comprised of smuggled cigarettes — New York also happens to have the highest cigarette tax in the nation. The Tax Foundation study reveals that Alabama does not currently have a severe smuggling problem but with low cigarette tax states like Georgia, South Carolina, and Tennessee well within driving distance, higher prices could cause a spike in smuggling activity in Alabama. 

Cliff Sims, writing at Yellowhammer News, has raised concerns about the declining consumption of cigarettes and what that means for the Alabama budget as well: 

And outside of the obvious fairness issue, those who think a hike on cigarette taxes could be a longterm cure for Alabama’s budget woes should also consider the precipitous decline in cigarette sales over the years.

As a result of the tax hikes, laws banning smoking, aggressive anti-smoking ad campaigns and polling that indicates Americans no longer consider smoking “normal behavior,” the U.S. Surgeon General published a 980-page report last year actually predicting an eventual end to smoking in the United States.

 …Alabama hit its peak in 1979, when there were 123 packs of cigarettes sold       for every person living in the state. By 2012, Alabama’s yearly cigarette sales       per capita had plummeted to 67.

While the governor has claimed that he wants people to pay their fair share, the two largest components of his tax plan are targeted tax increases on two consumer markets — one that is a declining source of revenue and the other, automobiles, is a captured market that people have little ability to avoid (for every 1,000 people, there are 1030 cars in Alabama.)

Couple the cigarette and automobile tax increases with a slew of other discriminatory and volatile (the proposed rental-car tax to name one) tax increases in the governor’s plan and it becomes apparent that Bentley is less concerned with governing than with attacking industries and products he finds to be politically expedient. This is not the way in which Alabama should tackle its budget issues. The fact is, between 2000 and 2009, state spending in Alabama has exceeded the rate of inflation and population growth by just over $20 billion. There is room for spending restraint. A long term plan to reduce the state’s out-of-control spending would go a long way to solve the current budget mess and ensure predictable and sound budgets in the future. 

Help Americans for Tax Reform stop Gov. Bentley’s 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.

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.