Americans for Tax Reform

The Democrat Party's War on Small Business

Share on Facebook
Tweet this Story
Pin this Image

Posted by Americans for Tax Reform on Thursday, April 22nd, 2021, 8:00 AM PERMALINK

PRO ACT

The PRO Act is a central component of the left's crusade against American workers and small businesses: 

The PRO Act Bans Right to Work Laws Nationwide

  • Right to Work laws prohibit employers from forcing their employees to join a union or pay union dues as a condition of employment. Existing Right to Work laws protect 166 million Americans in 27 states, more than half the U.S. population. 
     
  • Research shows that Right to Work states experience stronger growth in the number of people employed, growth in manufacturing employment, and growth in the private sector than states run by union bosses. 
     
  • According to the National Institute for Labor Relations Research, the percentage growth in the number of people employed between 2007-2017 in Right to Work states was 8.8% and 4.2% in forced-unionism states. Growth in manufacturing employment between 2012-2017 in Right to Work states was 5.5% and 1.7% in forced-unionism states. The percentage growth in the private sector from 2007-2017 in Right to Work states was 13.0% and 10.1% in forced-unionism states.
     

The PRO Act Limits Opportunities To Work With Freelancers and Independent Contractors

  • The PRO Act implements California’s disastrous “ABC” test for independent contractors, which forced the mass reclassification of California’s freelancers, causing them to flee the Golden State to chase their dreams and earn a living. The ABC test goes far beyond federal guidance for independent contractors. 
     
  • Under the ABC test, businesses must prove that a contractor is doing duties “outside the usual course of work of the hiring entity” and that “the worker customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.” This significantly limits the ability of businesses to retain contractors who may operate within the scope of work sometimes performed by employees in similar circumstances. It’s an unnecessary distinction that prohibits most businesses from working with independent contractors.
     
  • The ABC was widely unpopular among California’s independent contractors, over 90 percent of whom opposed Assembly Bill 5 before Governor Gavin Newsome signed it into law. ATR has compiled 655 personal testimonials from independent contractors who details the ways that AB5 has hurt them, which you can view here
     
  • If the PRO Act is passed into law, the livelihoods of more than 59 million independent contractors across the country will be at risk.
     

PRO Act Forces Employers to Hand Over Sensitive Employee Contact Information to Union Organizers

  • The PRO Act forces employers to turn over private employee contact information - such as home addresses, email addresses, and personal phone numbers - to union bosses during organization drives. This would open workers to union intimidation and harassment. 

ELIMINATION OF STEPPED UP BASIS: A SECOND DEATH TAX

President Biden and the Democrats vow to target small businesses and individuals with a new Death Tax: They will eliminate step-up in basis. This will impose a steep tax increase and paperwork nightmare for small businesses, farms, and families. It will also violate his own pledge against raising any tax on any American making less than $400,000. In this video, you can see a sample of the many times Biden has threatened to eliminate step-up in basis.

Elimination of stepped up basis would impose an automatic capital gains tax at death -- separate from, and in addition to -- the Death Tax.

In a Forbes piece titled "This Biden Tax Hike Hike Will Hit Mom & Pop Hard" tax lawyer Robert W. Wood writes:

Under current tax law, assets that pass directly to your heirs get a step-up in basis for income tax purposes. It doesn’t matter if you pay estate tax when you die or not. For generations, assets held at death get a stepped-up basis—to market value—when you die. Small businesses count on this.

Wood notes:

Biden's proposal would tax an asset's unrealized appreciation at transfer. You mean Junior gets taxed whether or not he sells the business? Essentially, yes. The idea that you could build up your small business and escape death tax and income tax to pass it to your kids is on the chopping block. Biden would levy a tax on unrealized appreciation of assets passed on at death. By taxing the unrealized gain at death, heirs would get hit at the transfer, regardless of whether they sell the asset.

As reported previously by CNBC:

“When someone dies and the asset transfers to an heir, that transfer itself will be a taxable event, and the estate is required to pay taxes on the gains as if they sold the asset,” said Howard Gleckman, senior fellow in the Urban-Brookings Tax Policy Center. 

In its analysis of Biden's tax plan, Tax Policy Center says the step-up in basis proposal mirrors a proposal described in an Obama-Biden 2016 Treasury Department document. This document confirms that Biden will force a capital gains tax payment immediately upon transfer of an asset after death of a loved one:

Under the proposal, transfers of appreciated property generally would be treated as a sale of the property. The donor or deceased owner of an appreciated asset would realize a capital gain at the time the asset is given or bequeathed to another.

The amount of the gain realized would be the excess of the asset's fair market value on the date of the transfer over the donor's basis in that asset. That gain would be taxable income to the donor in the year the transfer was made, and to the decedent either on the final individual return or on a separate capital gains return.

CONGRESS ELIMINATED STEPPED UP BASIS IN 1976 BUT IT WAS SUCH A DISASTER IT WAS REPEALED

In 1976 congress eliminated stepped-up basis but it was so complicated and unworkable it was repealed before it took effect because it was an impossible-to-overcome compliance burden.

As noted in a July 3, 1979 New York Times article, it was "impossibly unworkable":

Almost immediately, however, the new law touched off a flood of complaints as unfair and impossibly unworkable. So many, in fact, that last year Congress retroactively delayed the law's effective date until 1980 while it struggled again with the issue.

As noted by the NYT, intense voter blowback ensued:

Not only were there protests from people who expected the tax to fall on them -- family businesses and farms, in particular -- bankers and estate lawyers also complained that the rule was a nightmare of paperwork.

A DOUBLED CAPITAL GAINS TAX, HIGHEST SINCE JIMMY CARTER IN 1977

Biden vows to impose capital gains tax increases just as America digs out from the pandemic. He said "every single solitary person" will pay capital gains taxes at ordinary income tax rates. Biden wants to take the current capital gains tax rate of 20 percent and double it to 39.6 percent, highest since Jimmy Carter in 1977 when the highest possible capital gains rate was 39.875 percent.

Here is the documentation of Biden's threatened capital gains tax hike:

On Oct. 23, 2019 Biden said: “So every single solitary person, their capital gains are going to be treated like real income and they are going to pay 40 percent on their capital gains tax."

On Sept. 27, 2019 Biden said: “I’m gonna double the capital gains rate to 40 percent."

On Aug. 21, 2019 Biden said“The capital gains tax should be at what the highest minimum tax should be, we should raise the tax back to 39.6 percent instead of 20 percent."

Video documentation of the above statements can be found here: How High Will Biden Raise Your Capital Gains Taxes?

In 2012, Vice President Biden and President Obama succeeded in their push to let the capital gains tax rate rise to 20 percent (from the Bush-era rate of 15 percent.)

Biden and Obama then piled on another 3.8 percent capital gains tax hike -- the Net Investment Income Tax -- one of the many tax increases in Obamacare. The 3.8 percent tax hike took effect Jan. 1, 2013, purposefully timed to kick in *after* the 2012 election.

Some taxpayers under Biden will face a capital gains tax rate over 50 percent, when combined with state capital gains taxes. California's 13.3 percent state capital gains rate means Golden State taxpayers will face a rate of 56.7 percent (39.6 + 3.8 + 13.3 = 56.7%).

So what ever happened to the high capital gains rate under President Carter? In 1978 he wanted to raise the rate even higher. But there was a backlash from middle class households around the country, from Democrats and Republicans alike. It was so fierce, Carter was forced to relent and ended up signing a capital gains tax cut.

As recounted by Mark Bloomfield in the Wall Street Journal:

But the year was 1978, the push for a tax hike came from President Jimmy Carter, and the tax in question was on capital gains. Mr. Carter wanted to tax capital gains at the same rate as ordinary income -- effectively doubling the rate for many taxpayers.

He didn't get his tax hike, but he did spark a pro-growth insurgency that reframed the tax debate.

The chief insurgent was Republican Rep. Bill Steiger of Wisconsin, who called for cutting the top capital gains tax rate almost in half. From its inception, the 1978 "Steiger amendment" won bipartisan support. In the Senate, Democrat Russell Long (then chairman of the tax-writing committee), Alan Cranston (the second-ranking Democrat) and Republican Clifford Hansen signed up 59 Democrats and Republicans to co-sponsor legislation to cut capital gains taxes.

Within weeks, political and popular support turned in favor of the tax cuts as more people acknowledged that lowering the rates would reward the middle class for saving and investing, not just "fill the pockets of fat cats."

What prompted this unexpectedly strong support for lower taxes on capital gains? The tax on capital gains may have been seen as a tax on the rich by some in Washington, but most Americans saw it differently. People believe in the American Dream, the old-fashioned Horatio Alger rags-to-riches story. A tax on capital gains is a tax on the hard work and risk-taking people undertake to build their own wealth.

Mainstream economists know that lower capital gains taxes result in lower capital costs, more saving and investment, and a stronger economy. And ordinary citizens understand that low taxes on capital gains can make it possible for them to buy a new lathe or the newest software, which will give them the chance to compete effectively in today's global economy. Retirement security is also at stake. Low taxes on capital gains allow Americans to build up larger nest eggs.

DEMOCRATS IMPOSED NEW 1099 PAPERWORK REQUIREMENTS

Democrats snuck through new reporting requirements that will increase tax complexity for independent contractors, small businesses, and freelancers. This was part of the recently-enacted "stimulus" bill as another attempt by the Left to exploit the pandemic by passing unrelated policy measures long desired by progressives.

The provision lowered the reporting threshold to $600 or more for 1099-K reporting and eliminated the transactions threshold. Previously, Americans were only required to report when there were more than $20,000 in sales and more than 200 transactions in a year. The provision also extends the 1099-K reporting to "specified electronic payment processors."

This will burden low- and middle-income contractors, small businesses, and freelancers, many of which have been devastated by the coronavirus pandemic. Implementing new, burdensome reporting rules will only do more damage.

Democrats last enacted burdensome new 1099 reporting requirements in Obamacare, when they required businesses to send 1099 forms for all purchases of goods and services over $600 annually.

Soon after this provision was signed into law, the National Taxpayer Advocate raised concerns that these reporting requirements would cause “disproportionate” harm to small businesses and do little to improve tax compliance.

This provision was so unpopular that it was quickly repealed in 2011 with a bipartisan vote of 87 to 12 in the Senate and 314 to 112 in the House. The Obama administration even hailed repeal of the provision a “big win” for small businesses in a press release:  

“Today, President Obama signed a law that removes the expanded ‘1099’ reporting requirement from the Affordable Care Act. This is a big win for small businesses.

The SBA and President Obama supported repealing this provision, which would have required businesses to send 1099 forms for all purchases of goods and services over $600 annually. With this bipartisan effort, we have removed a requirement that would have been an undue barrier to small business growth.”

Increasing compliance costs and the regulatory burden on already-struggling workers and small business owners is especially alarming given they have been disproportionately harmed by the pandemic.

CORPORATE TAX RATE HIKE WILL DIRECTLY RAISE UTILITY BILLS FOR SMALL BUSINESSES -- ELECTRIC, GAS, WATER BILLS

If Democrats increase the corporate income tax rate, they will have to explain why they just increased the utility bills of households and small businesses which typically operate on tight margins, with considerable heating, cooling, gas, and refrigeration costs.

Customers bear the cost of corporate income taxes imposed on utility companies. Corporate income tax cuts drive utility rates down, corporate income tax hikes drive utility rates up.

Electric, gas, and water companies must get their billing rates approved by the respective state utility commissions. When the 2017 Tax Cuts and Jobs Act cut the corporate income tax rate from 35% to 21%, utility companies worked with officials to pass along the tax savings to customers

Many Americans benefited from lower electric bills, lower gas bills, and lower water bills. ATR collected over 140 examples nationwide here and you may view a compilation of local television reports here.

Example 1:
 
“The tax law will result in lower bills for our customers and lower taxes for Pepco,” said Dave Velazquez, President and CEO, Pepco Holdings, which includes Pepco. – Jan. 5, 2018 Pepco press release


Example 2:

The legislation cuts the federal corporate income tax rate from 35% to 21% effective January 1, 2018. This tax cut, in turn, reduces the cost of service for many of Virginia’s major electric, gas and water utilities.  – January 8, 2018, Virginia SCC Press Release

Example 3:

The Arizona Corporation Commission is following through on its promise to pass savings created by the Tax Cuts and Jobs Act to Arizona utility ratepayers. As of August, the effort has totaled $189,088,437.- August 24, 2018 Arizona Corporation Commission press release

Example 4:
 
The Pennsylvania Public Utility Commission (PUC) today issued an Order, requiring a “negative surcharge” or monthly credit on customer bills for 17 major electric, natural gas, and water and wastewater utilities, totaling more than $320-million per year. The refunds to consumers are the result of the substantial decrease in federal corporate tax rates and other tax changes under the Tax Cuts and Jobs Act (TCJA) of 2017, which impacted the tax liability of many utilities. -- May 17, 2018 Pennsylvania Public Utilities Commission Press Release
 
Conversely, if Biden and the Democrats raise the corporate tax rate, Americans will see their utility rates increase. Democrats will get to explain why they imposed higher utility rates on their constituents as the country tries to dig out from the pandemic.
 

HIGHER CORPORATE RATE WILL HIT SMALL BUSINESSES ORGANIZED AS SCHEDULE C

According to the Congressional Research Service, "The majority of both corporations and pass-throughs in 2011 had fewer than five employees (55% of C corporations and 64% of pass-throughs). Nearly 99% of both corporations and pass-throughs had fewer than 500 employees, the most common employment-based threshold used by the Small Business Administration (SBA)." For reference, Amazon has one million employees and Walmart has 2.2 million employees.

The most dire effects of a corporate tax hike would be felt by smaller businesses that Biden has claimed to be a champion for. It would also have severe consequences on workers' wages and the economy as a whole. 

Joe Biden’s tax hikes would eliminate one million jobs in the first two years, according to a new study by economists John W. Diamond and George R. Zodrow. The study, which was commissioned by the National Association of Manufacturers also found that the tax hikes would eliminate 600,000 jobs per year over the first decade and reduce GDP by $117 billion in the first two years. 

The study assumed several Biden tax hikes would go into effect include raising the corporate tax rate to 28 percent, reinstating the corporate alternative minimum tax, eliminating most expensing of depreciable assets, repealing the 20% deduction for pass-through businesses, doubling the tax rate on capital gains and dividends, taxing unrealized capital gains at death, and increasing the top individual tax rate to 39.6 percent.  

Biden’s tax hikes will reduce new investment and decrease capital in both the short and long term. As the study notes:

Investment in ordinary capital declines initially (two years after enactment) by 1.9 percent, by 1.3 percent ten years after enactment, and by 1.6 percent in the long run; this effect is only modestly affected by imports of ordinary capital into the United States, which increase in the long run by 0.2 percent. 

The increase in the statutory corporate income tax rate results in a reallocation abroad of FSK, which declines initially by 2.7 percent, by 3.5 percent 10 years after enactment, and by 2.9 percent in the long run. 

This reduction in investment and capital will not only have detrimental effects on the U.S. economy, it will also harm workers due to a decrease in household wages. As the study notes: 

The decline in the stocks of ordinary capital and FSK gradually reduce the productivity of labor over time and thus real wages, which fall by 0.6 percent in the long run, while labor compensation falls by 0.6 percent initially, by 0.3 percent ten years after enactment, and by 0.6 percent in the long run… 

These effects translate into a reduction of $638 in wage income per household… 

The study also notes that Biden’s tax hikes will cost jobs each and every year after enactment: 

The declines in hours worked would be equivalent to declines in employment of approximately just over 1.0 million FTE jobs two years and five years after enactment, and a decline of 0.1 million FTE jobs ten years after enactment. 

In terms of the duration of the reduction in employment over the first ten years after enactment, the average annual reduction in employment would be equivalent to a loss of roughly 600,000 jobs, or 5.7 million total “job years” lost over the ten-year interval. 

Other studies, on average, show that labor (or workers) bear an estimated 70 percent of the corporate income tax in the form of wages and employment, as ATR notes here.

There is abundant evidence that corporate tax hikes lead to lower investment and employment: 

  • A Treasury Department study estimated that “a country with a 1 percentage point lower tax rate than its competitors attracts 3 percent more capital.” This is because raising the corporate rate makes the United States a less attractive place to invest profits.
  • According to the Stephen Entin of the Tax Foundation, labor (or workers) bear an estimated 70 percent of the corporate income tax in the form of wages and employment. As Entin notes, 50 percent70 percent, or even 100 percent of the corporate tax is borne by workers.
  • A 2012 Harvard Business Review piece by Mihir A. Desai notes that raising the corporate tax lands “straight on the back” of the American worker and will see a decline in real wages. 
  • A 2012 paper at the University of Warwick and University of Oxford found that a $1 increase in the corporate tax reduces wages by 92 cents in the long term. This study was conducted by Wiji Arulampalam, Michael P. Devereux, and Giorgia Maffini and studied over 55,000 businesses located in nine European countries over the period 1996-2003.  
  • Even the left-of-center Tax Policy Center estimates that 20 percent of the burden of the corporate income tax is borne by labor. 

 

MARGINAL INCOME TAX RATE INCREASE WILL HURT PASS-THROUGH BUSINESSES

From the Tax Policy Center:

"In 2017, individuals reported about $1.03 trillion in net income from all types of pass-throughs accounting for 9.3 percent of total AGI reported on individual income tax returns."

According to the Congressional Research Service, "The majority of both corporations and pass-throughs in 2011 had fewer than five employees (55% of C corporations and 64% of pass-throughs). Nearly 99% of both corporations and pass-throughs had fewer than 500 employees, the most common employment-based threshold used by the Small Business Administration (SBA)." For reference, Amazon has one million employees and Walmart has 2.2 million employees.

Of the 26 million businesses in 2014, 95 percent were pass-throughs, while only 5 percent were C-corporations.

Businesses organized as pass-through firms don’t pay taxes themselves. Instead, the profits of the business “pass through” to the owners who pay individual taxes on their 1040 form. Sometimes, this means that pass-throughs pay a higher rate than corporations, exceeding 50 percent in some states.

For many small businesses or startups, a rise in the top marginal income tax rate could result in a significant competitive disadvantage that makes it harder to compete with businesses organized as corporations.

Joe Biden also wishes to repeal the 20% deduction for pass-through businesses that the TCJA implemented, which could mean even more hardship for small businesses organized as pass-throughs.

DEATH TAX IS BAD TAX POLICY, SHOULD BE REPEALED, HURTS JOB CREATION AND ECONOMIC GROWTH, IS EXTREMELY UNPOPULAR
 
The Death Tax is fundamentally unfair and its bad tax policy. It is levied on assets that have been taxed previously through income taxes, capital gains taxes, and the corporate income tax. 

It disproportionately impacts family-owned businesses like farmers and ranchers especially that tend to be asset rich but cash poor. On the other hand, the wealthy often evade the tax through loopholes and armies of lawyers and accountants. 

The Tax Cuts and Jobs Act of 2017 made key progress toward repealing the Death Tax by doubling exemption from $5.5 million to $11 million. Unfortunately, because of arcane senate rules, this tax cut expires in 2025.

Moving forward, the Death Tax should be permanently repealed. While conservatives in Congress support repeal of the Death Tax, Democrats want to dramatically increase the size and scope of the Death Tax.

For instance, Senator Bernie Sanders (I-Vt.) has proposed nearly doubling the death tax to 77 percent in his new Estate Tax Plan, returning the death tax to levels unseen since the 1970s. President Joe Biden has expressed interest in reducing the current exemption for individual’s eligibility of transfer from $11.7 million to $3.5 million for estates.

Repealing the death tax would stimulate job creation and grow the economy. Numerous studies have found that repealing the death tax would grow the economy. For instance, a 2017 study by the Tax Foundation found that the US could create over 150,000 jobs by rolling back the estate tax.

Similarly, a 2012 study by the Joint Economic Committee found that the death tax has destroyed over $1.1 trillion of capital in the US economy, which results in fewer jobs and lower wages. Much of this economic damage hits small businesses, which are the core of America’s economy and have been disproportionately harmed by the Coronavirus pandemic. The economic growth created by repealing the Death Tax would produce $221 billion in federal revenue because of increased wages and more jobs.

The Death Tax is extremely unpopular. Numerous studies have found that majority of Americans oppose the Death Tax and support its repeal. For instance, a recent report by NPR found that 76 percent of Americans support full, permanent repeal of the Death Tax.  

Repeal of the Death Tax would spur economic growth, create jobs, and increase wages. It would end double taxation and help family-owned businesses across the country.

JOE BIDEN PROPOSES LAW REQUIRING BANKS TO REPORT PRIVATE ACCOUNT INFORMATION TO THE IRS

As part of an $80 billion expansion in IRS funding, Joe Biden has proposed greatly expanding the power of the agency, by allowing it access to the private bank account information of taxpayers. According to the Wall Street Journal

"The Treasury Department’s career staff estimates that more than half of the $700 billion in additional revenue would come from changes to how businesses’ and individuals’ income is reported to the government, the people said. Under the plan, banks and other payment providers would be required to tell the IRS how much money came into and out of individuals’ and businesses’ accounts each year, going far beyond the existing reporting of interest income.

That change wouldn’t require individuals and business owners to file any additional forms, and it wouldn’t provide the IRS with direct information about what someone’s tax liability should be. Business owners trying to hide income could still attempt to use cash or cryptocurrency, both areas that the IRS has struggled to police.

But the change to the information-reporting rules would give the IRS much more information about business income as it decides who to audit. It would also create an enormous flow of information that the IRS would have to learn how to manage and use."

This mandate puts private information of both individuals and businesses at risk. Given the IRS's history of mismanagement and abuse, this is particularly concerning. 

  

Photo Credit: Gage Skidmore


Rather Than Expand Medicaid, Tennessee Lawmakers Look To Insure More People Through A State-Based Exchange


Posted by Americans for Tax Reform on Tuesday, March 30th, 2021, 9:12 AM PERMALINK

The American Rescue Plan Act (ARPA), the $1.9 trillion spending bill recently enacted by President Joe Biden, with its provision blocking states from cutting taxes, is likely to be ruled by a judge to be an unconstitutional violation of state sovereignty. A number of state Attorneys General are now suing to overturn this unjust encroachment on states’ power to set their own fiscal policy.

At a time when politicians in Washington are pursuing a historic violation of state sovereignty, lawmakers in Tennessee and other states are looking to reassert state sovereignty when it comes to setting health care and other key policies within their borders. That is the goal of Tennessee House Bill 875, legislation introduced by Representative Bryan Terry (R) that would move Tennessee off of the federally-run health care exchange and set up a state-based exchange. Currently 14 states and the District of Columbia run their own health care exchanges.

The ARPA increases the financial incentive for states to expand Medicaid in accordance with Obamacare. This will escalate the near decade-long debate over whether impose Obamacare’s Medicaid expansion in Tennessee and the 11 other states that have yet to go along with the expansion. In this context, Rep. Terry’s bill is seen by some as alternative to expanding Medicaid, instead increasing coverage through private insurers via a state-based exchange.

Proponents of HB 875, which will get a subcommittee hearing this week, tout the greater flexibility that comes from having a state-based exchange versus relying on the federally operated exchange. State-based exchanges provide greater flexibility when it comes to setting open and special enrollment periods. State-based exchanges also provide for more funding and greater regulatory flexibility, permitting premium-cutting reinsurance pools and lighter requirements for small businesses.

Imposition of Obamacare’s Medicaid expansion would have disastrous consequences for Tennessee taxpayers, increasing the cost of state government by billions of dollars annually. The states that have implemented Obamacare’s Medicaid expansion have seen massive cost overruns, which taxpayers are on the hook for. In addition to putting more able-bodied adults in a taxpayer-supported entitlement program that was already crowding out other state spending priorities, Obamacare’s Medicaid expansion has also stoked a wave of fraud.

“Millions of people enrolled as a result of Medicaid expansion were almost certainly ineligible for the program—either because their incomes were too high or because they were not lawful residents,” writes Brian Blase, a senior fellow at the Galen Institute and former Trump administration health care advisor. “The Inspector General at HHS estimated that one- quarter of newly-eligible enrollees in California and New York did not meet eligibility requirements.”

It would behoove Tennessee lawmakers to reject calls to expand Medicaid in accordance with Obamacare. In contrast, seizing greater control of health care policy from the federal government through passage of HB 875 is a reform that deserves lawmakers’ consideration.


State Lawmakers Take Action To Protect Churches From Unwarranted Property Tax Assessments

Share on Facebook
Tweet this Story
Pin this Image

Posted by Americans for Tax Reform on Friday, January 22nd, 2021, 9:45 AM PERMALINK

In 2018, nearly 500 churches hosting homeschool groups in all 50 states, specifically those hosting Classical Conversations communities, received letters informing pastors that they were breaking the law. By accommodating these homeschool groups, the letter-writer accused the churches of violating the IRS’s 501(c)(3) income tax exemption, thereby jeopardizing not only their nonprofit status but also making them vulnerable to property tax liability.

In response to this threat, many churches no longer permit any outside groups to utilize their facilities. However, some state lawmakers are beginning to take action in response, passing legislation to clarify that churches can host homeschool groups without jeopardizing their tax exempt status. That’s what lawmakers in Oklahoma did in 2020. Their counterparts in other state legislatures should follow suit in 2021.

The issue at hand is not whether a group using the property is a for-profit or nonprofit organization. The issue is whether the use of the property by the group is an exempt or nonexempt purpose.

In order to avoid unnecessary restrictions on facilities that can be used by homeschooling groups, state lawmakers should amend their tax codes to clarify that the use of exempt church property may be utilized by for-profit organizations for educational purposes. Existing state laws generally support such usage, but some laws have more ambiguous language that could cause tax assessors to make inconsistent or incorrect evaluations.

Clarification legislation here would provide property tax assessors more guidance as they do their work and significantly reduce the possibility that a church could lose its property tax exempt status under state law for allowing a homeschool group to use its property.

State lawmakers in Oklahoma have already successfully amended their tax codes with such clarifying language. The clarification bill in Oklahoma, HB 2504, was enacted in May 2020. This clarification has brought peace of mind and confidence to several Oklahoma church leaders who now allow homeschool groups to use their church buildings again.

Americans for Tax Reform encourages governors and lawmakers in other states to follow Oklahoma’s lead by enacting similar clarification legislation protecting churches and other places of worship from unjust and incorrect property tax assessments.


2021 Map: Republicans to Have Full Control of 23 States, Democrats 15


Posted by Americans for Tax Reform on Monday, November 9th, 2020, 11:35 AM PERMALINK

In 2021, Republicans will have full control of the legislative and executive branch in 23 states. Democrats will have full control of the legislative and executive branch in 15 states.

Population of the 24 fully R-controlled states: 134,035,267
Population of the 15 fully D-controlled states: 120,326,393

Republicans have full control of the legislative branch in 30 states. Democrats have full control of the legislative branch in 18 states.

Population of the 30 fully R-controlled legislature states: 185,164,412
Population of the 18 fully D-controlled legislature states: 133,888,565

Click here for full-size versions of the map below.


Weathering The Storm: ATR’s Post-Pandemic State Policy Guide

Share on Facebook
Tweet this Story
Pin this Image

Posted by Americans for Tax Reform on Thursday, June 25th, 2020, 4:37 PM PERMALINK

State legislatures across the country are either in session or will be convening sessions in the coming weeks and months - some of them special sessions and others the resumption of those suspended earlier this year. As governors and legislators return to work facing new challenges in the aftermath of the pandemic, Americans for Tax Reform is offering a list of policy recommendations for elected officials to consider.  

ATR’s recommendations fall into two main categories: 

1) Balancing budgets without raising taxes & reforms that stimulate economic growth.  

2) The codification of deregulatory reforms enacted by executive order in response to the pandemic that should be continued in perpetuity. 

Step 1: First Do No Harm, Balance Budgets Without Tax Hikes

It is certain that some governors, lawmakers, and interest groups, in both blue and red states, will call for various tax hikes in response to the pandemic-driven drop in state and local tax collections. A number of such proposals have already been put forth and are being debated, such as the progressive income tax hike that will be on the Illinois ballot this fall, the $12 billion property tax hike in California that Joe Biden has endorsed, the income tax hike the Colorado progressives are pushing on the November ballot, and the additional $4 billion in annual tax hikes on businesses proposed by Golden State Governor Gavin Newsom (D) as part of his revised budget plan, just to name a few examples. 

More than 20 million Americans are now unemployed amid the pandemic-driven recession. Thousands of businesses have closed down entirely. The last thing individuals, families, and employers can afford right now is a mid-recession tax hike that would reduce household income and diminish the job-sustaining capacity of employers at a time when many businesses are struggling to keep their doors open. 

Aside from the economic harm a mid-recession tax hike would inflict, raising taxes would also be a politically perilous move amid the current downturn. A recent poll out of California, no bastion of conservatism, found 80% of those surveyed oppose raising taxes as a way to shore up state government revenues. 

Aside from the fact that raising taxes would depress economic growth at a time when reforms that instead accelerate growth are what’s desperately needed right now, the data make clear that a downward adjustment in the trajectory of state spending was needed even before the pandemic-driven downturn arrived. 

Total state government spending data for all 50 states shows that spending spending as been growing at an unsustainable clip for years, well in excess of the rate of population and inflation. Since 2000, total state spending has increased by 118%. Had all 50 states grown government spending in line with population and inflation during that period, total state spending in 2018 would’ve been nearly half a trillion dollars less than was the case that year. 

In addition to first doing no harm by stopping efforts to raise taxes, ATR recommends that state lawmakers consider the following policy proposals and proactive reforms as way to stoke economic growth. In addition to stimulating economic growth, ATR’s post-pandemic policy recommendations, if adopted, would help businesses and workers recover following the lifting of state lockdown orders.   

Proactive, Pro-Growth Post-Pandemic Policy Recommendations

1) Exempt forgiven PPP loans from state taxation. 

2) Defer or extend deferral of property and excises tax payments, particularly for businesses in the hardest hit sectors. 

3) Bag taxes and bans should be repealed. Grocery store employees have been on the front lines in the fight against the spread of the novel coronavirus. These critical and vulnerable workers shouldn’t be forced to handle reusable shopping bags that scientific researchers have found can act as Petri dishes for bacteria and carriers of harmful pathogens. Yet that is the result of well-meaning but misguided laws on the books in states and localities across the U.S. 

The eight states where lawmakers have imposed plastic bag prohibitions are California, Connecticut, Delaware, Hawaii, Maine, New York, Oregon and Vermont, according the National Conference of State Legislatures. Six of those statewide bag bans were enacted as recently as 2019. Hundreds of cities, towns, and counties have also imposed a bag ban or tax. All of these laws seek to force or encourage the use of reusable shopping bags, which pose a public health risk at any time and especially during the current pandemic. 

Many bag taxes and bans have been suspended during the pandemic, even in blue states. Even after the pandemic is passed, legislators should move to permanently repeal statewide bag taxes and bans where they exist, in addition to preempting local bag taxes and bans. 

4) Consider tax limitation measures like Texas’s 3.5% property tax rollback rate, which prevents property tax revenues from growing in excess of 3.5% annually. Just this week this taxpayer protection measure put a stop to an effort in Dallas to raise property tax revenue by more than 8%. 

  • In addition to the Texas property tax rollback rate, which was lowered last year from 8% to 3.5%, California’s Prop. 13 property tax cap is another effective way to protect taxpayers from unaffordable increases in property tax bills. In addition to subjecting all tax hikes to a 2/3rds legislative supermajority vote, Prop. 13, approved by California voters 1978, also limits annual increases in the taxable value of a property, both personal and commercial, to the inflation rate or 2%, whichever is less. Transferred properties are reassessed at 1% of their sale price.
  • Colorado’s Taxpayer Bill of Right (TABOR) is another tax and spending limitation measure that other states should considering adopting. TABOR caps the growth in state spending at the combined rate of population growth and inflation. TABOR also subjects all tax hikes to voter approval, protecting taxpayers against not just property tax hikes, but all tax increases. In addition to raising the bar to enact a tax increase, any state that enacts TABOR will be in a better position to weather any future recession or depression.

 

5) Another reform for lawmakers to consider is Truth in Taxation, which has proven effective at keeping property tax rates down, largely through public accountability. One of the great challenges of property tax reform is that local officials will still raise taxes following reform, and voters often are not aware. 

  • Truth in Taxation ensures that citizens know when votes to increase property taxes are happening through multiple notifications. 
  • The policy accomplishes a very challenging goal: getting the public engaged. Since tax hikes are not popular, few are approved when the public is engaged. Utah’s Truth in Taxation also automatically reduces rates to compensate for rising valuations, so the tax burden does not automatically increase without government action. It’s never a good idea to have a tax hike on auto-pilot. 

 

6) Enact tort reform limiting the legal liability of businesses when it comes to COVID-19-related lawsuits. It will be impossible for the economy to fully recover if businesses have to worry about being sued by trial lawyers over COVID-19-related accusations. 

State legislators can also expand access to health care and reduce consumer inconvenience through expansion of vaccine and testing administration authority. As pharmacists and dental care providers work to rebuild their businesses following the lifting of emergency state restrictions, expect more governors and state lawmakers to consider a reform recently enacted in one state that empowers dental providers to administer COVID-19 diagnostic and antibody testing.  

A pandemic relief bill approved with bipartisan support in the North Carolina General Assembly in early May includes a novel provision, one that allows dentists to administer COVID-19 diagnostic and antibody testing. This, along with legislation that permit pharmacists to administer more vaccines, are reforms that help not only with response to the current pandemic, but are good ideas that will expand access to and reduce the cost of care moving forward. 

Permanent Codification of Certain Emergency Deregulatory Actions

In response to the pandemic and the unique challenges it presents, nearly 600 deregulatory actions have been implemented at the federal and state levels.Many of these deregulatory actions are beneficial even beyond the pandemic and should be continued in perpetuity. 

Congressman Chip Roy (R-Texas) has introduced federal legislation that would continue the deregulatory actions ordered by the Trump administration in response to the pandemic. Likewise, legislative codification of many emergency actions issued by governors in response to the pandemic is something state legislators should pursue as they return to state capitols in the coming weeks and months. 

It’s clear that many of these regulations that have been suspended by emergency order were never needed to begin with and often served predominantly protectionist, anti-consumer purposes. The following is a rundown of deregulatory actions ordered by governors since March that state legislators should look to enshrine into law moving forward: 

There is great need for lawmakers to repeal Certificate of Need laws. 35 states impose Certificate of Need (CON) regulations, many of which have been temporarily suspended by gubernatorial executive order, by governors from both parties. 

Thanks to an executive order issued by Governor Andrew Cuomo (D-N.Y.) to waive the Empire State’s CON regulations, for example, hospitals no longer need to request the state’s approval before changing their physical plants in various ways, such as temporarily increasing their bed capacity. Similar orders have been issued by governors in ConnecticutMichiganVirginia, and more than a dozen other states. State legislator would do well to codify the permanent repeal of these CON laws. Doing so will help expand access to health care and reduce patient costs.  

7) Expand access to and utilization of telemedicine. At least 10 governors, including Govs. Chris Sununu (R-N.H.) and John Bel Edwards (D-La.), have issued orders expanding the use of telemedicine during COVID-19. Expansion of telemedicine has alleviated the burden on hospital and other medical facilities, while also reducing the number of coronavirus cases that would have otherwise been contracted or spread in a doctor’s office or hospital.

Telemedicine is also making health care more accessible to patients, particularly for those in rural areas or who need specialists, as the nearest provider may be several hours away. Decades after the invention of the phone and the internet, one should not have to trudge down to the doctor’s office to ask a question. Legislators should consider lasting codification of emergency actions that temporary expanded access to telemedicine. 

8) Allow medical professionals to practice across state lines. Despite the fact that those licensed to practice in one state are just as capable as those licensed to practice in another, state laws make it very difficult for them to help out in areas that may be more overwhelmed by COVID-19. To address this problem, a number of governors have called for some form of licensing reciprocity.

Govs. Ron DeSantis (R-Fla.) & Jared Polis (D-Colo.), for example, are letting certain health-care professionals, those who are in good standing in other states where they are licensed, temporarily practice in Florida and Colorado. This approach is slightly different from legislation that was approved by the Florida legislature last year, which allows medical professionals licensed to practice in other states to provide telemedicine services in Florida without a Florida license.

A driver’s license is good in all states. Professional sports players do not need to prove in every state that they can play baseball or football or basketball. Why do medical professionals need a license in every state?

The time is ripe for Occupational Licensing Reform. The pandemic has shined a bright light on occupational licensing rules that restrict peoples’ ability to work and to do so across state lines. Hard hit states have waived rules so out-of-state health care workers can cross state lines to treat patients. Some states have also relaxed hour and testing requirements so retired physicians can pitch in and nursing students can more easily obtain their initial license. These pandemic-driven deregulatory actions show the questionable necessity of many state licensing restrictions, and will spark permanent reform in some places.

9) Universal occupational license recognition (or reciprocity), an example of such a reform, is a policy that allows someone who has earned a license in one state, and has kept it in good standing, to work in another state without having to go through training and certification all over again. If nurses can safely go from one state to another, surely barbers, and landscapers can as well. Arizona and a handful of other states have passed legislation along these lines. Others states are now looking to follow suit, and Iowa just became the most recent to do so. 

In mid-June the Iowa legislature passed Representative Shannon Lundgren’s (R) House File 2627 sending it to Governor Kim Reynolds (R) to sign. This makes Iowa the seventh state to pass a universal license recognition bill. Once implemented, HF 2627 will allow new Iowans to use the training and skills they already have without additional red tape. 

Iowa’s bill also waives initial licensing fees for any first-time applicants from families that earn less than 200 percent of the federal poverty level and applies criminal justice reforms to the licensure process, creating a uniform standard of review for those who have their licensed denied based on conviction history. These important provisions will make it easier for low-income households and the formerly incarcerated to get jobs and provide for their families. 

“We all know heavy regulations serve as a red tape tax that impacts Iowa’s working class,” said Chris Ingstad, president of Iowans for Tax Relief. “Occupational licensing laws make it more difficult and more expensive for Iowans to earn a living and fill high-demand jobs. The changes passed by the legislature in House File 2627 put Iowans ahead of the special interests.”

Arizona, Montana, Pennsylvania, Utah, and Idaho have also enacted a version of universal license recognition. Earlier this year Missouri legislature sent Representative Derek Grier’s (R) univeral recognition bill, House Bill 2046, to Governor Mike Parson (R), who is expected to sign it into law. 

10) A sunset review process is a great way to shift the burden of proof from workers, who are trying to earn a living, to the licensing boards. State lawmakers and governors should take a hard look at all of their existing licenses and question whether the training requirements, and the license itself is truly necessary to protect public safety. A policy like Ohio’s recently-enacted sunset review process requires boards to show their licenses are needed to protect public safety. The legislature is proactively reviewing all of the state’s licenses, about one-third are considered at a time. Even better, state licensing boards sunset if not renewed by the legislature within six years.

11) Remove pointless, counterproductive “Scope of Practice” restrictions. “Scope of practice” refers to the activities a practitioner is legally authorized to engage in. These laws often are nothing more than a way to shut out competition in the medical field by preventing certain providers from practicing at their full capacity.

Advanced Practice Registered Nurses (APRNs) and Physician’s Assistants (PAs), for example, are often restricted in their ability to practice by state laws that require them to have collaborative agreements in place with physicians.

APRNs and PAs are highly educated, thoroughly trained medical professionals who can examine, diagnose, and treat injuries and illnesses. They can also prescribe medication and be primary care providers. Yet, in many states, unless they have a collaborative agreement – a permission slip from a doctor, APRNs and PAs are not allowed to practice or have limited ability to practice. This ultimately hurts patients, who are left with fewer options, less access to care, and higher costs.States should remove these pointless barriers and allow APRNs and PAs to utilize the full scope of their education and training.  

Removing unnecessary barriers to the sale of alcohol is a great way to raise revenue without raising taxes. State and local governments across the nation impose a number of regulations on the sale of spirits, wine, and beer. Unfortunately, many of the restrictions in place have nothing to do with public safety concerns but instead have everything to do with protecting politically well-connected entities from competition. As a result of these protectionist regulations, several states have knee-capped industry expansion and economic growth.

However, in response to the Covid-19 pandemic, state lawmakers and governors have temporarily lifted these restrictions in order to mitigate the economic hardship that has befallen restaurants, breweries, distillers, etc. Not only will these de-regulatory efforts help soften the economic blow on businesses, but they will also enable states to reap additional revenue through expansion of commerce and economic growth, not by raising taxes.

Rather than pile a new round of state level tax increases in response to the pandemic-driven drop in state and local tax collections, state lawmakers should instead generate revenue by making the following de-regulatory actions permanent:

12) Legalize the direct shipment of alcohol to consumers.

  • Lawmakers should consider enacting legislation that allows spirits, beer, and wine producers to ship directly to consumers like Kentucky House Bill 415, which started out as a temporary deregulatory effort but has since become law. This deregulatory action will help the Bluegrass State’s bourbon industry keep humming as well as, prove to be an economic boon for the state in the future.
  • As of the start of 2020, the District of Columbia, Arizona, Florida, Hawaii, Nebraska and New Hampshire, permit the direct shipment of spirits. Eight states permit the direct shipment of beer and wine: Delaware, Massachusetts, Montana, North Dakota, Ohio, Oregon, Vermont and Virginia. The rest of the states only allow direct shipments of wine.

 

13) Permit restaurants and distillers to sell beer, cocktails, wine, and spirits to-go and for delivery.

  • Lawmakers should consider allowing the delivery and sale of alcohol to-go like Gov. Gregg Abbott’s (R- Texas) waiver permits in the Lone Star State. Governor Abbott’s order, and similar orders issued by other governors, allow restaurants to sell beer, wine, or mixed drinks for delivery and pick-up orders as long as the order is accompanied by food purchased from the restaurant. As Texas reopens, Gov. Abbott is allowing alcohol-to-go sales to continue and said in a tweet that, Texas may just let this keep on going forever. Other states should consider that approach.
  • Virginia, New York, Maryland, California, Illinois, Colorado, Colorado, Atlanta, Kentucky, and Washington, D.C. are a few other states that have also eased restrictions to expand access to alcohol via restaurant delivery and to-go orders. Legislators should pass legislation to codify this new liberty on an ongoing basis. The food and beverage industry has been hit hard in the recent pandemic.
  • Permitting to-go and delivery sales of alcohol is a great way for lawmakers to help businesses by getting government out of their way.

 

14) Modernize prohibition-era liquor laws by allowing grocery stores, convenience stores, and big-box retailers to acquire liquor licenses. 

  • Voters have consistently supported expanding liquor licensing laws. Take for instance, voter-approved Oklahoma’s state question 792, which allows convenience, grocery, and drug stores to sell and refrigerate beer up to 8.99 percent alcohol and wine up to 14.99 percent alcohol. SQ 792 passed by a 30 point margin. Allowing more businesses to sell beer, wine, and spirits is a fantastic way to increase tax collections without raising taxes, all while making life more convenient for constituents.

Photo Credit: John Rogers


Proven Tax Hiker Luke Rankin Faces Challenger For South Carolina Senate Seat

Share on Facebook
Tweet this Story
Pin this Image

Posted by Americans for Tax Reform on Friday, June 19th, 2020, 6:15 PM PERMALINK

There is a reason why South Carolina, despite being considered a solid red Republican-dominated state, is home to the highest income tax rates in the southeast. It’s because too many of the Republicans in positions of power in the state legislature in Columbia, some of them former Democrats, are simply not conservative.

One of the liberal Republican senators who works to keep South Carolina’s business tax climate uncompetitive, Senator Luke Rankin (R), is now fighting for his political life in a hotly contested primary runoff. Rankin’s loss would remove one of the impediments to pro-growth, conservative reform in the Palmetto State.

Republicans in South Carolina’s 33rd Senate District, home to Myrtle Beach, will head to the polls this coming Tuesday, June 23rd to decide the fate of longtime incumbent Senator Luke Rankin. Rankin received only 41.37 percent of the vote in the June 9 primary, forcing a runoff with challenger John Gallman, a financial advisor running to improve the composition of the South Carolina Senate.

Senator Rankin has been in power for almost 30 years and is attempting to run on his record. But his record is precisely what drew challengers in the first place. In particular, Rankin voted to impose a sizable gas tax hike three years ago by overriding Governor Henry McMaster’s veto.

When all is said and done, this Rankin-approved tax hike will have deprived taxpayers of roughly $1.8 billion over the first five years of its implementation, and will drain the economy of hundreds of millions more each year after that.

Rankin faced two challengers in the June 9th primary who collectively received nearly 60 percent of the vote. It appears that voters in this heavily Republican district want an alternative to the tax-hiking incumbent.

Rankin’s poor performance in the June 9 primary marked a significant drop-off in support compared to previous elections. In the 2016 primary, Rankin handily won the GOP nomination with 55.88 percent of the vote. In 2012, he didn’t even draw a primary challenger. What’s changed since previous elections is that Senator Rankin has imposed a regressive tax hike that’s costing South Carolinians at a time when many can least afford it.

John Gallman has understandably criticized Rankin for supporting the 2017 gas tax hike. “Luke Rankin was behind the gas tax, which is the largest tax increase we’ve ever had,” Gallman said. Gallman has joined Governor Henry McMaster in signing the Taxpayer Protection Pledge, a written commitment to South Carolina taxpayers that he will oppose any and all efforts to raise taxes.

Senator Rankin’s campaign website says he works “to build consensus to fund the highest priorities for our State – without raising taxes,” yet his record makes clear that’s not true.

On Tuesday, June 23 voters in South Carolina’s 33rd state senate district will choose between a proven tax hiker in Senator Luke Rankin, or John Gallman, a fiscal conservative who has joined Governor Henry McMaster in pledging to protect South Carolina taxpayers.

Photo Credit: Jimmy Emmerson


California Governor Gavin Newsom Proposes Multi-Billion Dollar, Mid-Recession Tax Hike

Share on Facebook
Tweet this Story
Pin this Image

Posted by Americans for Tax Reform on Monday, May 18th, 2020, 8:13 PM PERMALINK

In a new article published in Forbes today, ATR’s Patrick Gleason writes about how across the U.S. there “are many examples of companies that have volunteered their expertise and capabilities to help the country get through the pandemic.”
 
Gleason’s article reports on the various ways companies have helped with the pandemic response. Some have done so by stepping outside of their commercial comfort zone, redirecting operations to the production of goods and services they previously did not make or provide, such as face masks and other personal protective equipment. Other businesses are helping society weather the pandemic by focusing on their core business functions and competencies, be that the researching of vaccines or the provision of data.
 
These businesses are stepping up to help the country get through the pandemic at the same time they are seeing their bottom line’s take huge hits and are subsequently forced to trim payroll (something government officials refuse to do themselves). It is in this context that some governors and mayors are seeking to saddle employers with tax increases that will further reduce their job sustaining capacity.
 
California Governor Gavin Newsom (D), for example, recently released a revised budget proposal for the coming fiscal year that starts in July. Newsom’s new budget proposal raises taxes on employers by $4.5 billion annually through a “temporary” suspension of net operating loss deductions, along with a prohibition of research and development tax credits.
 
In addition to this new multi-billion dollar tax hike that would hit employers at a time when many can least afford it, Governor Newsom’s revised budget maintains his previous proposal for a new tax on vaping products projected to generate about $33 million annually.
 
“Lawmakers will debate the plan over the next few weeks and must enact a budget by June 15,” Bloomberg Tax reported last week. “Newsom must sign it by the start of the fiscal year July 1.”
 
Governor Newsom’s proposals aren’t the only major tax threats facing California employers. This November Golden State voters will decide the fate of a government union and Democrat Party-backed ballot measure that, if approved, would raise property taxes on businesses by approximately $12 billion annually. This massive tax hike, which has been endorsed by presumed Democrat presidential nominee Joe Biden, would remove Prop. 13’s constitutional property tax cap for commercial businesses.
 
This is the first installment in a new series examining the most economically-damaging tax hikes that have been proposed in the middle of this pandemic-driven recession.
 

Photo Credit: Gage Skidmore


New York Governor Andrew Cuomo Is Sending A Tax Bill To Out-Of-State Emergency Health Workers.

Share on Facebook
Tweet this Story
Pin this Image

Posted by Americans for Tax Reform on Friday, May 8th, 2020, 12:25 PM PERMALINK

In Forbes today, ATR’s Patrick Gleason has a new article that covers the way in which New York Governor Andrew Cuomo (D) is holding out-of-state volunteer workers financially hostage in and attempt to get more money from the federal government.

“Governor Cuomo’s remarks, in which he referred to the prospect of not taxing out-of-state volunteer health workers as a ‘subsidy,’ indicate that he would reconsider this approach only if the federal government sends more money to New York,” Gleason writes.

This latest ploy - in which Cuomo is using emergency volunteer health workers as a bargaining chip to get more federal aid on top of the more than $7 billion New York received through the CARES Act - is consistent with the Cuomo administration’s long history of corruption and malfeasance with taxpayer dollars.

To read the article in its entirety, click here.

Photo Credit: Zack Seward


ATR Applauds Governor Larry Hogan For Defending Maryland Taxpayers

Share on Facebook
Tweet this Story
Pin this Image

Posted by Americans for Tax Reform on Thursday, May 7th, 2020, 4:23 PM PERMALINK

Americans for Tax Reform applauds Maryland Governor Larry Hogan (R) for his vetoes today of two job-killing, business-harming tax hikes that were approved in March by the Democrat-controlled Maryland General Assembly.

The tax increases vetoed by Governor Hogan today include House Bill 732, legislation that imposes a new tax on digital advertising similar to what a number of European nations are calling for, along with a tax hike on tobacco and vaping products. Governor Hogan also vetoed House Bill 932, which applies the state sales tax to digital goods and services such as e-books, streamed movies and music. 

“Governor Larry Hogan has wisely used his veto power to protect individuals, families, and employers across Maryland from a misguided tax increase that, in addition to burdening businesses with added costs at a time when many simply cannot afford it, would’ve triggered a costly legal challenge that would’ve unnecessarily squandered scarce taxpayer resources at a time when state government is facing unprecedented demands,” said Grover Norquist, president of Americans for Tax.

Many were surprised in March when Democrats who control the Maryland General Assembly passed these controversial tax hikes at a time when it was already clear that the pandemic-driven downturn was pushing many businesses to the brink.

“The fact that the Maryland legislature is dumping these tax proposals on them at this time of crisis is really something to be upset about,” Jeff Friedman, a partner at Eversheds Sutherland’s Washington D.C. office, told Bloomberg Tax shortly after Maryland lawmakers approved the digital ad tax last month.

Maryland state lawmakers recently announced that they will not return to Annapolis in May for a veto session, so Governor Hogan's vetoes today will protect Maryland employers and families from these tax threats for the time being. 


Toledo Voters Resoundingly Reject Income Tax Hike

Share on Facebook
Tweet this Story
Pin this Image

Posted by Americans for Tax Reform on Wednesday, April 29th, 2020, 12:45 PM PERMALINK

On Tuesday April 28, during an Ohio primary election that was delayed on account of the pandemic, voters in Toledo, the Buckeye State’s fourth most populous city, rejected Issue 1, a 22% local income tax hike supported by Toledo Mayor Wade Kapszukiewicz. More than 55% of the electorate ended up voting No on Issue 1.

Issue 1, had it passed, would’ve raised the local income tax rate from 2.25% to 2.75%. This half a percentage point, 22% rate hike would’ve hit individuals, families, and small businesses at a time when many are struggling to weather the coronavirus-driven downturn.

The Toledo Mayor’s proposed income tax hike was defeated despite the fact that the Yes campaign heavily outspent the tax hike’s opposition. Approximately $165,000 was spent in support of Issue 1, versus $3,000 spent in opposition, most of it by the Lucas County Young Republicans. Americans for Tax Reform also contributed to voter education efforts.

“Toledoans have spoken loudly and clearly: They’re paying close attention to city government, and they are not buying what this administration is selling,” the Lucas County Young Republicans noted in a statement released on election night. “An income tax increase that was sold as a plan to fix the roads was instead a method of enriching special interests with no oversight.”

Some see this outcome in Toledo, located in a county where most voters cast ballots for Hillary Clinton in 2016, as a bellwether for what to expect from voters later this year. If so, that could be cause for Democrat concern.

That’s because the presumptive Democrat nominee for president, Joe Biden, is running on a proposal entailing trillions of dollars in higher federal taxes, including much higher income tax rates. There are many candidates and officeholders for state and local office who, like Biden, are campaigning on proposals that call for a much higher overall tax burden.

If voters in other cities and states are as disinterested in tax hikes as are voters in Toledo, that spells trouble for Democrats up and down the ballot.

“Taxpayers in Toledo spoke loud and clear on April 28. A tax hike is the last thing that taxpayers and the economy need right now,” said Grover Norquist, president of Americans for Tax Reform.

“Issue 1 would’ve reduced the job creating capacity of small businesses at a time when most are struggling to stay in existence,” Norquist added. “Toledo voters saved more than their own hard-earned income by rejecting Issue 1. They saved jobs.”

Photo Credit: David Grant


Pages

×