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Arizona Republicans Committed to Preventing Unintended Tax Increase

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Posted by ATR on Friday, May 24th, 2019, 3:56 PM PERMALINK

Arizona Republicans are taking advantage of a unique opportunity to make their state a more attractive place to live and invest and, more importantly, protecting taxpayers across the Grand Canyon State from an income tax hike. 

As an unintended consequence of the federal Tax Cuts and Jobs Act (TCJA) – which significantly reduced individual and corporate income taxes and resulted in 90 percent of wage earners having higher take-home pay and the lowest unemployment in 50 years – Arizonans will be left facing a tax hike at the state level if no actions are taken to prevent it.

Due to the way Arizona’s tax code conforms to the federal tax code, simply conforming to the new federal code would result in a net income tax increase unless lawmakers include provisions to offset it. Fortunately for taxpayers, Republicans in both chambers have remained committed to following the lead of lawmakers in other states, such as Iowa, Georgia, and Michigan, and finding a way to return the conformity revenue back to the taxpayers.

Grover Norquist, president and founder of Americans for Tax Reform, sent lawmakers a letter in support of this efforts. The full text of the letter is pasted below:

May 24, 2019

To: Members of the Arizona Senate

From: Americans for Tax Reform

 

Re: Protect Arizona Taxpayers

Dear Senator,

On behalf of Americans for Tax Reform (ATR) and our supporters across Arizona, I urge you to keep taxpayers in mind as the 2019 legislative session comes to close. Legislation that would result in a net tax increase will be scored as a violation of the Taxpayer Protection Pledge.

As an unintended consequence of the federal Tax Cuts and Jobs Act (TCJA) – which significantly reduced individual and corporate income taxes and has resulted in 90 percent of wage earners having higher take-home pay and unemployment hitting a 50-year low – Arizonans will be left facing a tax increase at the state level if no actions are taken to prevent it.

Due to the way Arizona’s tax code conforms to the federal tax code, simply conforming the state code to the new federal code would result in a net tax increase unless rate reductions or other provisions are included to offset it. Fortunately, legislators in both chambers have remained committed to doing just that by following the lead of lawmakers in other states, such as Iowa and Georgia, and returning this portion of their constituents’ federal tax cut back to them in the form of pro-growth tax reform.

One proposal would both hold taxpayers harmless and make Arizona’s tax code more competitive by collapsing Arizona’s five individual income tax brackets into three, taking the rates from 2.59, 2.88, 3.36, 4.24, and 4.54 down to 2.85, 3.35, and 4.38. Importantly, this proposal would also increase the standard deduction from $5,300 to $12,000 for individual filers and $10,600 to $24,000 for those filing jointly.

The larger standard deduction would expand the zero bracket and ensure that most low-income earners still receive a tax cut.

In addition to preventing an income tax hike, this proposal would make Arizona more conducive to economic growth. A lesser-circulated fact is that many small businesses file under the individual tax code. As such, a lower top individual income tax rate would allow business owners to keep their resources invested in jobs, wages, and businesses operations rather than bloated government spending programs. 

This three-bracket proposal or similar proposals to offset the tax increase that would result from conforming to the federal tax code would be a step in the right direction for Arizona taxpayers and should be supported, so long as all of the tax changes in the bill score as revenue neutral on net at most.

ATR applauds your commitment to using pro-growth tax reform as a way to return the excess revenue that will be collected from conforming Arizona’s tax code to the federal tax code back to taxpayers. Legislation that would result in a net tax increase should be rejected on principle and will be scored as a violation of the Taxpayer Protection Pledge.

 

Sincerely,

Grover Norquist
President
Americans for Tax Reform

Photo Credit: Gage Skidmore/Flickr


Oklahoma Lawmakers Should Reject Protectionist Bill That Would Drive Up Health Care Costs

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Posted by ATR on Tuesday, May 14th, 2019, 4:37 PM PERMALINK

The Oklahoma Senate will be discussing a protectionist bill that would further curtail free market forces in health care. Despite its title, the Patient's Right to Pharmacy Choice Act, House Bill 2632 is actually intended to benefit independent pharmacists at the expense of Oklahoma patients and taxpayers.

In a letter, Grover Norquist, president and founder of Americans for Tax Reform, warned Oklahoma lawmakers of the serious negative consequences that would stem from HB 2632. The letter is pasted below:

 

May 13, 2019 

 

To: Members of the Oklahoma Senate

From: Americans for Tax Reform 

 

RE: Oppose House Bill 2632 

 

Dear Senator, 

 

On behalf of Americans for Tax Reform (ATR) and our supporters across Oklahoma, I urge you to oppose House Bill 2632, protectionist legislation that would increase regulations in healthcare and further curtail free market forces, along with the right of contract in a sector already suffering from overbearing government interference. 

Pharmacy Benefit Managers (PBMs) are private firms that negotiate the amount pharmacies get reimbursed for prescriptions. PBMs are under attack right now as our entire drug pricing system sustains fire. Though PBMs serve an important role in the free market, it is reasonable to scrutinize some of their practices (and the overall system as it currently stands) and some reform may be worth considering. 

However, HB 2632 fails to productively reform PBMs or provide for any useful advantages to drug pricing. Instead, it is a protectionist bill that would increase government meddling in health care markets in order to benefit small “community” pharmacists at the expense of patients, taxpayers, and the insurance system. 

For example, if implemented, HB 2632 would allow for government to set specific contract terms for PBMs and require “one-size-fits-all” reimbursements for different types of pharmacies. This government overreach would restrict practices and tools PBMs use to reach optimal deals and savings, and could raise the cost of health plans. 

Some proponents of this bill may claim that it is a free market solution, but that could not be further from the truth. In fact, the bill’s own fiscal note describes part of it as “the opposite of free market.” HB 2632 is one of many attempts by community pharmacists throughout the country to tamper with the market in a way that benefits them. In North Dakota, they have succeeded in banning their competitors altogether. 

The best way to lower the price of prescription medication is to embrace truly free market solutions. Heavy-handed regulations that insert government into private contracts will only result in more problems. As such, ATR urges lawmakers to vote NO on HB 2632.

 

Sincerely,

Grover Norquist

President

Americans for Tax Reform

Photo Credit: Roosevelt Institute


Louisiana HB 599 Would Provide Overdue Tax Relief

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Posted by ATR on Tuesday, May 14th, 2019, 4:31 PM PERMALINK

After promising Louisianans he would not raise taxes, in 2016, Governor John Bel Edwards (D) dealt taxpayers the largest tax hike in state history in the form of a 25 percent sales tax increase. That $1.5 billion tax hike, which raised the sales tax rate from 4 cents to 5 cents on the dollar, was sold as “temporary” and set to expire on June 30, 2018.

Of course, that claim was not true.

Governor Edwards called three special sessions last year until 0.45 percentage points of the “temporary” 1 percentage point sales tax hike was renewed. Under current law, this tax increase – which is accurately described as a tax increase since the entire penny was supposed to expire – is supposed to remain in place through June 30, 2025 unless lawmakers take actions to remove it sooner.

Fortunately, Representative Lance Harris’s House Bill 599 would do just that. If implemented, HB 599 would phase out the 0.45-cent sales tax increase by reducing it by 0.10 cents on July 1 in 2020, 2021, and 2022 before it is fully repealed and the sales tax rate is returned to 4 percent on July 1, 2023. Over 5 years, HB 599 would provide all hardworking taxpayers across Louisiana with $914 million in owed tax relief.

Grover Norquist, president and founder of Americans for Tax Reform, sent Louisiana lawmakers a letter in support of HB 599. The full text of the letter is pasted below:

May 14, 2019

To: Members of the Louisiana House of Representatives
From: Americans for Tax Reform

Re: Support House Bill 599

Dear Representative,

On behalf of Americans for Tax Reform (ATR) and our supporters across Louisiana, I urge you to support House Bill 599, legislation that would provide some of the much-needed tax relief that is owed to the hardworking taxpayers across the Pelican State.

Louisiana’s spending has been increasing well beyond the rate of population and inflation for years, and its state and local spending per capita is significantly greater than every other state in the Southeast. Yet, in 2016, Louisiana taxpayers were still dealt the largest tax increase in state history in the form of a 25 percent sales tax hike that took the rate from 4 to 5 cents on the dollar.

This massive $1.5 billion tax increase was supposed to expire on June 30th 2018, but predictably, that was not the case. Last year, Governor John Bel Edwards (D) called three special sessions until 0.45 cents of the expiring “clean penny” was renewed. This tax increase – which was indeed a tax increase since the entire penny was supposed to expire – will be in place through June 30, 2025.

Fortunately for Louisianans, if implemented, HB 599 would provide some of the relief that is owed to taxpayers by phasing out the 0.45 percentage point tax increase quicker than would be the case under current law. Under HB 599, the state sales tax rate would be reduced to 4.35 percent from 4.45 percent on July 1, 2020, then to 4.25 percent on July 1, 2021, then to 4.15 percent on July 1, 2022, and finally, to 4 percent on July 1, 2023.

There is simply no justification for voting against HB 599. In addition to sales tax relief being owed to Louisianans, there is a wealth of social science demonstrating the economic harm that results from higher levels of taxation. John Hood, chairman of the John Locke Foundation, a Raleigh, N.C.-based think tank, surveyed over 680 peer-reviewed academic journal articles on fiscal policy published over the past quarter century. According to Hood, “the preponderance of peer-reviewed research finds a negative relationship between state taxes and measures such as job creation and income growth.”

Tax Foundation economist William McBride reviewed academic literature going back three decades and found, “while there are a variety of methods and data sources, the results consistently point to significant negative effects of taxes on economic growth even after controlling for various other factors such as government spending, business cycle conditions and monetary policy.”

As such, ATR supports HB 599, which would provide $914,000,000 in owed tax relief to all taxpayers across the Pelican State over 5 years, and urges lawmakers to vote YES.

Sincerely,
Grover Norquist
President
Americans for Tax Reform

Photo Credit: FordAV


Traverse City's "Free" Public WiFi A Let Down

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Posted by ATR on Friday, May 10th, 2019, 5:29 PM PERMALINK

Surprise, surprise. Traverse City, Michigan’s “free” public WiFi has turned out to be a complete flop.

“The feedback I’ve had is it’s not working as well as it should,” said Jean Derenzy,

CEO of the Downtown Development Authority (DDA), at the entity’s April board meeting.

Traverse City’s “free” WiFi – which is intended to only work outside in the downtown area – was started through a partnership between Traverse City Light & Power (TCL&P) and the DDA back in 2014. TCL&P fronted $790,000 to build out the network and the DDA promised to pay the utility back in installments of $65,000 a year through 2024.

A May 2 article in The Ticker explains, based on DDA data, that around 1,000 uses logged on to the network in a one week period. According to the Traverse City website, its official population is14,572 and its daytime population is more than double that amount.

Adding insult to injury, instead of just cutting losses (which will continue to escalate), officials are wasting more time and resources on “improvements.” While the exact plan for the next phase of the “free” WiFi is TBD, they are considering expanding signal locals and bandwith, expanding the WiFi to be citywide, and using the WiFi for a security camera network.

Meanwhile, TCL&P is moving forward with an ill-advised broadband network. Much like Traverse City's “free” WiFi, government-owned networks (GONs) have a track record of disappointment and failure.

Grover Norquist, president and founder of Americans for Tax Reform, sent members of the TCL&P board a letter last month, urging them to call off the GON before it soaks up more public resources. The full text of the letter is below:

April 1, 2019 

To: Members of the Traverse City Light & Power Board 

From: Americans for Tax Reform 

Re: Don’t be fooled by GON proponents 

Dear Board Member, 

On behalf of Americans for Tax Reform (ATR) and supporters across Traverse City, I write to urge you not to be fooled by proponents of the Government-Owned Network (GON) plan pending before you. As has been demonstrated by the GON disasters throughout the country, where GONs have either failed outright or are being propped up by taxpayers, government entities are not capable of successfully playing in the broadband space. 

Even in its early phases, Traverse City Light & Power’s GON experiment seems on track to end in tragedy. Its partner, Fujitsu, which was selected to create a “business, design and operational plan,” has a less than stellar track record when it comes to GONs. Just take a look at KentuckyWired, for example.

Kentucky officials selected to work with Fujitsu for its statewide GON, KentuckyWired, which was sold to taxpayers as a $350 million project that would be complete by the spring of 2016. Now, around three years past its intended date of completion, less than a third of the network has been installed, none of it is usable, and a recent report from the state auditor concludes that taxpayers will end up wasting around $1.5 billion on this redundant network over its 30-year life. 

In addition, city officials should also note that proponents of Traverse City Light & Power’s GON plan cannot help but see the outcome through rose-colored glasses. It is in the best interest of Fujitsu – which has been chosen to determine the extent to which there is a business case for the network – if the city moves forward with a plan, as it would also be the equipment provider and eventual operator. 

Fujitsu aside, a GON in Traverse City would be a huge mistake. As has been demonstrated by dozens of GON failures throughout the country, the construction and maintenance of broadband networks are not functions that government entities are well suited to take on, as they require ongoing and expensive maintenance and upgrades in order to function properly. Too late in the game, government officials realize the costs for such undertakings were grossly underestimated, and that they lack the necessary financial resources and expertise to remain up-to-date in such a rapidly changing industry. 

Along with underestimated costs, demand for GONs is often significantly overestimated. Despite having access to a GON, consumers often choose to remain with their trusted private sector providers. Underestimated costs and overestimated demand is a recipe for a financial gap that the city’s taxpayers and utility ratepayers will be forced to fill.  

Rather than moving forward with this GON project, Traverse City officials should follow the lead of those in Solon, Ohio, who recently rejected a proposal that would have given Fujitsu $45,000 for a feasibility study for a potential GON. ATR opposes Traverse City Light & Power’s GON plan and urges officials to pull the plug before its too late, and city’s taxpayers and utility ratepayers are left on the hook with nothing to show for it. 

Sincerely, 

Grover Norquist 

President 

Americans for Tax Reform

Photo Credit: flickr Marco Verch


Kelli Ward Arizona GOP Chairwoman Supports Massive Tax Hike

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Posted by ATR on Tuesday, April 30th, 2019, 12:39 PM PERMALINK

Arizonans face a steep tax increase under a plan being pushed by so-called conservative Kelli Ward, the chairwoman of the Arizona Republican Party.

Senate Concurrent Resolution 1001 and House Concurrent Resolution 2024, if approved by the legislature, would ask voters to approve a permanent one cent sales tax increase. This would result in Arizona taxpayers permanently paying a sales tax rate that is about 7 percent higher than what is paid today.

“Kelli Ward promised the people of Arizona in writing that she would oppose any and all tax increases. She just called for a sales tax hike that would damage every citizen of Arizona,” said Grover Norquist, President of Americans for Tax Reform.

Kelli Ward signed the Taxpayer Protection Pledge in her primary challenge to Senator John McCain, making a written commitment Arizonans that she would oppose tax increases.

Why is she now taking the opposite position as Chairwoman and supporting a massive tax increase that would inflict a great deal of harm on the individual taxpayers, families, and employers across the Grand Canyon State?

 

Americans for Tax Reform warned Arizona lawmakers of these negative consequences in the following letter: 

 

Dear Representative,

On behalf of Americans for Tax Reform (ATR) and our supporters across Arizona, I urge you to reject Senate Concurrent Resolution 1001 and its companion, House Concurrent Resolution 2024, which would ask voters to approve a permanent $1.2 billion sales tax increase. If implemented, this massive tax hike would inflict a great deal of harm on hardworking individual taxpayers, families, and employers across the Grand Canyon State.

There is a wealth of social science demonstrating the economic harm that results from raising taxes. John Hood, chairman of the John Locke Foundation, a Raleigh, N.C.-based think tank, surveyed over 680 peer-reviewed academic journal articles on fiscal policy published over the past quarter century. According to Hood, “the preponderance of peer-reviewed research finds a negative relationship between state taxes and measures such as job creation and income growth.”

Tax Foundation economist William McBride reviewed academic literature going back three decades and found, “while there are a variety of methods and data sources, the results consistently point to significant negative effects of taxes on economic growth even after controlling for various other factors such as government spending, business cycle conditions and monetary policy.”

In addition to being bad policy, tax increases are also bad politics. An ATR analysis of recent election results finds that voters in both red and blue states overwhelmingly rejected tax increases at the ballot. Election outcomes are the most accurate polls available, and they show that the public is opposed to tax increases. 

Arizona is currently experiencing a $1 billion surplus. Rather than searching for new ways separate your constituents from more of their income, lawmakers should use existing revenue more efficiently.

ATR opposes SCR 1001 and HCR 2024 and urges lawmakers to vote NO. Voting YES would be scored as a violation of the Taxpayer Protection Pledge. 

Sincerely,

Grover Norquist

President

Americans for Tax Reform

Photo Credit: David Grant


WSJ Criticizes Florida Importation Proposals

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Posted by ATR on Wednesday, April 17th, 2019, 3:03 PM PERMALINK

In a new editorial, Importing Bad Ideas on Drug Prices, The Wall Street Journal criticizes legislation in Florida that would require the state to set up a program to import drugs from Canada.  

The importation of drugs from countries with socialized medicine is a policy that has long been supported by U.S. Senator Bernie Sanders and opposed by proponents of free markets and limited government. Yet in Florida, importation has been advancing with Republican support. The WSJ editorial concludes: 

“Democrats once pushed importation as disguised price controls, but Republicans who understand markets helped to stop it. With Republicans now aping Democrats, this is a dangerous moment for the world’s most productive and dynamic market for medicine.”

Indeed, the importation of drugs from Canada is a highly misguided idea. While importation may sound like a reasonable free market solution, it is actually a clever ploy to trick proponents of limited government into supporting socialist policies that would jeopardize the development of the next generation of life-saving, life-improving medicines.

Despite the lengthy, complex, and costly process for developing prescription medication in the United States, it is still the world’s freest market for medicine, as all other countries have price controls and other regulations in place that are designed to forcefully reduce drug costs. Since those pricing policies make it hard for manufacturers to recover the cost of making medication, they ultimately suppress innovation and result in the rest of the world freeloading off of U.S. investment in research and development.

The importation of price-controlled medication from other countries would come with the importation of foreign price controls into the U.S. In the end, the importation of foreign price controls would result in the same negative consequences as outright price controls – fewer resources available to invest in the research and development needed for future medications. 

Adding insult to injury, it is also highly unlikely that importation would actually lower costs for patients. In their editorial, the WSJ raises skepticism about the practicality of importation and whether or not it would actually result in savings:

“One question is why Canada would allow the U.S. to siphon its drug stocks. Canada’s drug supply for 37 million residents isn’t brimming with extra products to sell to 21 million Floridians, even on a limited scale.

U.S. manufacturers sell drugs for Canadians to Canadian wholesalers. Companies are not going to sell Canadians more drugs so the product can be exported to the U.S. via price arbitrage, and such secondary sales can be prohibited in contracts. Canada could also ban such sales lest it risk losing deals on drugs for their own people.

Savings may also be elusive. When federal importation was floated in the early 2000s, an FDA analysis found that five of seven of America’s best-selling generic drugs for chronic conditions were cheaper than Canadian generics. One product didn’t have a generic available in Canada. This analysis is outdated but the basics are still relevant: Nine in 10 prescriptions in the U.S. are generic, versus roughly 70% in Canada, which means the U.S. enjoys much higher savings from generics.”

Despite the good intentions behind the importation proposals in Florida, they are still bad policy. The house importation bill -- House Bill 19 -- passed the full house last week, and the senate version -- Senate Bill 1528 -- which is different than what was approved by the house, will be considered by the Appropriations Committee on Thursday. 

Photo Credit: Matt Browne


Traverse City Should Call off GON

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Posted by ATR on Thursday, April 4th, 2019, 3:44 PM PERMALINK

The Traverse City Light & Power Board is moving forward with an ill-advised Government-Owned Network (GON). Earlier this week, Grover Norquist sent letters to members of the Traverse City Light & Power Board, urging them to call off this project before it ends in tragedy for taxpayers and utility ratepayers. The full text of the letter is pasted below.

 

April 1, 2019 

To: Members of the Traverse City Light & Power Board 

From: Americans for Tax Reform 

Re: Don’t be fooled by GON proponents 

 

Dear Board Member, 

 

On behalf of Americans for Tax Reform (ATR) and supporters across Traverse City, I write to urge you not to be fooled by proponents of the Government-Owned Network (GON) plan pending before you. As has been demonstrated by the GON disasters throughout the country, where GONs have either failed outright or are being propped up by taxpayers, government entities are not capable of successfully playing in the broadband space. 

Even in its early phases, Traverse City Light & Power’s GON experiment seems on track to end in tragedy. Its partner, Fujitsu, which was selected to create a “business, design and operational plan,” has a less than stellar track record when it comes to GONs. Just take a look at KentuckyWired, for example.

Kentucky officials selected to work with Fujitsu for its statewide GON, KentuckyWired, which was sold to taxpayers as a $350 million project that would be complete by the spring of 2016. Now, around three years past its intended date of completion, less than a third of the network has been installed, none of it is usable, and a recent report from the state auditor concludes that taxpayers will end up wasting around $1.5 billion on this redundant network over its 30-year life. 

In addition, city officials should also note that proponents of Traverse City Light & Power’s GON plan cannot help but see the outcome through rose-colored glasses. It is in the best interest of Fujitsu – which has been chosen to determine the extent to which there is a business case for the network – if the city moves forward with a plan, as it would also be the equipment provider and eventual operator. 

Fujitsu aside, a GON in Traverse City would be a huge mistake. As has been demonstrated by dozens of GON failures throughout the country, the construction and maintenance of broadband networks are not functions that government entities are well suited to take on, as they require ongoing and expensive maintenance and upgrades in order to function properly. Too late in the game, government officials realize the costs for such undertakings were grossly underestimated, and that they lack the necessary financial resources and expertise to remain up-to-date in such a rapidly changing industry. 

Along with underestimated costs, demand for GONs is often significantly overestimated. Despite having access to a GON, consumers often choose to remain with their trusted private sector providers. Underestimated costs and overestimated demand is a recipe for a financial gap that the city’s taxpayers and utility ratepayers will be forced to fill.  

Rather than moving forward with this GON project, Traverse City officials should follow the lead of those in Solon, Ohio, who recently rejected a proposal that would have given Fujitsu $45,000 for a feasibility study for a potential GON. ATR opposes Traverse City Light & Power’s GON plan and urges officials to pull the plug before its too late, and city’s taxpayers and utility ratepayers are left on the hook with nothing to show for it. 

 

Sincerely, 

 

Grover Norquist 

President 

Americans for Tax Reform

 

Photo Credit: Tony Webster


Mississippi Lawmakers Should Avoid Wasting Money on Pointless Train

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Posted by ATR on Monday, February 25th, 2019, 1:59 PM PERMALINK

Last week, Americans for Tax Reform, Americans for Prosperity, and the Mississippi Center for Public Policy sent a coalition letter to the Mississippi legislature urging them to vote NO on Senate Bills 2542 and 2982. If implemented, these bills would waste scarce public resources on the Gulf Coast Rail Project, a pointless undertaking that will surely turn into a massive taxpayer boondoggle. The full text of the letter is pasted below:

 

To: Members of the Mississippi Senate

Re: Oppose Senate Bills 2542 and 2982

 

Dear Senator,

 

We, the undersigned organizations dedicated to lower taxes and limited government, urge you to reject Senate Bills 2542 and 2982, legislation that would waste scarce public resources on the Gulf Coast Rail Project. As has been the case with comparable undertakings in the past, the Gulf Coast Rail Project will surely turn into a massive boondoggle.

 

The Gulf Coast Rail Project is a proposal to have two new daily passenger trains – four individual trains – run between New Orleans, Louisiana and Mobile, Alabama. In addition to the infrastructure enhancements that will be necessary to accommodate this service, Mississippi taxpayers will also be on the hook for long-term operational and maintenance costs that will occur on an annual basis. 

 

While the total cost of this proposal is currently unknown, it is estimated that a one-way rail trip, which would take around 4 hours, would require a state subsidy of $180 per passenger. To put this cost in perspective, a person wanting to travel between New Orleans and Mobile today can get a ticket on Megabus, a 2.5 hour trip, for $14. For the $180 subsidy, the state could give 12 free bus tickets per passenger. In fact, hiring an Uber, a 2-2.5 hour trip, would often be less expensive than $180.

 

Recognizing the longer length and higher estimated costs of the train trip, it is reasonable to assume that it would be the least popular choice of commuters. The rail carrier’s own analysis projects the Gulf Coast Rail Project would attract just 26 riders per train.

 

Making matters worse, the Gulf Coast Rail Project could put existing jobs and potential new jobs at risk. There have been no studies on the impact the Gulf Coast Rail Project would have on Mississippi’s rail-served industries along the Coast. But, given that passenger trains get priority over freight and the line is mainly single tracked, negative impacts are expected unless additional state capital is expended.

 

Similar state-supported trains running between New Orleans and Mobile have been attempted in the past, and were discontinued because they were slower, less reliable, and more expensive than other existing modes of transportation. There is no justification for pouring millions of limited public resources into a pointless infrastructure project that will likely face the same fate.

 

The Gulf Coast Rail Project is a non-solution in search of a problem. If pursued, it will soak up millions of hard-earned taxpayer dollars now and will also leave taxpayers on the hook for years to come. As such, we strongly urge you to vote NO on SBs 2542 and 2982.

 

Sincerely,

 

Grover Norquist

President

Americans for Tax Reform

 

Trey Dellinger

State Director

Americans for Prosperity

 

Jameson Taylor

Vice President for Policy

Mississippi Center for Public Policy

Photo Credit: Ben Sutton

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Scott Gottlieb's Unprecedented Menthol Ban Will Lead to New Illicit Trade Markets

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Posted by ATR on Monday, February 11th, 2019, 8:00 AM PERMALINK

In an effort to reduce cigarette use, Food and Drug Administration Commissioner Scott Gottlieb is considering an outright ban of menthol cigarettes. This strong-armed approach to public health policy would put the United States at the forefront of an untested global social experiment with little precedent for success elsewhere.

Decades of history around illicit trade suggests that Commissioner Gottlieb’s potential menthol ban could pave the way for further criminal enterprise in the cigarette market, where a robust black market already exists. The National Academies Press estimates that up to 21 percent of all cigarettes are sold illicitly in the United States. In New York, which has some of the highest taxes on cigarettes in the United States, more than 55 percent of all cigarettes sold in the state are smuggled in from other places. A ban on menthols is only predicted to aggravate the issue, without necessarily altering demand for the products.

The Alabama State Troopers Association, the National Organization of Black Law Enforcement Executives, The National Troopers Coalition and many other law enforcement groups warn that banning menthols would open a gate for criminal enterprise. In a recent survey, 25 percent of menthol smokers implied that they would turn to the black market to purchase their desired cigarette. That is consistent with the real impact of what some call “price prohibition” throughout states with high excise taxes.

Employing an incredibly conservative model, researchers at the Center for Regulatory Effectiveness projected that such a ban would balloon the illicit trade of menthol cigarettes by 45 percent. Not only would a black-market fulfill current demand, but it would make mentholated cigarettes more accessible, CRE warns. Absent regulatory oversight, restrictions on underage smoking would be eliminated, and prices would fall, as the cigarettes would go untaxed, making illicit cigarettes more attractive. Considering the already burgeoning illicit market for cigarettes, this idea is not an unimaginable consequence.

The illicit trade for cigarettes exists outside of government purview, making them neither taxed nor regulated by the intended party. New York, where the issue is most pertinent, is estimated to lose $1.5 billion in excise tax revenue in the illegal cigarette trade.

Collectively, each state and the District of Columbia, collect over $17 billion in cigarette excise tax revenue. Based on 2015 data from the FDA, 33 percent of these sales are from menthol cigarettes, which represent a growing segment of the overall market. While it cannot be assumed that all menthol smokers would turn to the black market, and many would simply turn to traditional tobacco cigarettes, state excise tax revenues are sure to take a hit with this regulation.

According to an analysis conducted by the Americans for Tax Reform, states like Florida and Pennsylvania could take billion-dollar hits with Gottlieb’s suggested regulation, amassing $370 million and $445 million losses annually, based on the direct excise taxes collected on menthol cigarettes alone in 2017. This is no less true for smaller states. Delaware for example collected over $100 million from the excise tax on menthol cigarettes. These figures are based on the FDA’s estimate for the size of the menthol market compared to cigarettes overall. Pushing menthols outside of the legal market only detracts from state revenue streams, while boosting illicit activity. The fiscal exhaustion would only be amplified by the spending required to enforce this ineffective mandate.

Commissioner Gottlieb ought to consider the externalities of a ban, before continuing with his tried-and-failed prohibition style approach. If his objective is to reduce the use of cigarettes, he should look to tackle the issue head through an embrace of less harmful alternatives, rather than pushing it outside of the control of the legal market.

Photo Credit: The U.S. Food and Drug Administration

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HB2223 Could Result in Higher Insurance Rates for Medicines

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Posted by ATR on Friday, February 8th, 2019, 10:33 AM PERMALINK

Next week, the Virginia Senate Education and Health committee will be voting on a bill that would inappropriately insert government into the business operations of Pharmacy Benefits Managers (PBMs). Despite the good intentions behind House Bill 2223, if implemented, it could result in unintended negative consequences for Virginians.

PBMs are private firms used to negotiate the amount pharmacies get reimbursed for prescriptions. While it is reasonable to scrutinize some of their practices (and the overall system as it currently stands) and some reform may be worth considering, it is of the utmost importance that lawmakers work to preserve the right of private contract.

HB 2223 fails to do this, allowing for government to set specific contract terms for PBMs and requiring “one-size-fits-all” reimbursements for different types of pharmacies. Unfortunately for Virginians, such government overreach would restrict some of the practices and tools PBMs use to reach optimal deals, potentially resulting in higher insurance premiums. 

In light of our serious concerns with HB 2223, Americans for Tax Reform is contacting supporters in Virginia to call their legislators and ask them to vote NO on HB 2223.

The best way to lower the price of healthcare is to embrace free market solutions, which allow for competition that improves quality, increases the number of choices available, and naturally lowers prices. Heavy-handed regulations, such as HB 2223, will only result in new problems.

Photo Credit: Dave Clark

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