Caroline Anderegg

Legislature Succumbs to Pressure: California Assembly Kills Forfeiture Reform

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Posted by Caroline Anderegg on Thursday, September 17th, 2015, 5:24 PM PERMALINK

Last week, California legislators succumbed to pressure from state and local law enforcement officials by failing to pass SB 443, which would have drastically improved the state’s civil asset forfeiture law. Lawmakers in Sacramento will now have to explain their controversial vote to voters across the Golden State; voters who are hostile to forfeitures by a massive 76 percent to 14 percent.

The bill had overwhelming bipartisan support when it was introduced earlier this year, and would have required a conviction in either a state or federal court before property could be permanently forfeited to the government. However, seeing the new reforms as a threatening to their budgets, the California District Attorneys Association (CDAA), as well as other state law enforcement agencies, launched a pro-forfeiture campaign aimed at dissolving support for the bill.

Currently, California’s asset forfeiture law is sorely lacking in protections against asset forfeiture abuse. The state’s forfeiture requirements protect property owners more than some states by enforcing a “clear and convincing evidence” standard for cash forfeitures; requiring “beyond reasonable doubt” standard for real property forfeitures; and eliminating profit incentives for law enforcement. However, one loophole negates any protections the state forfeiture law provides Californians.

Like many other states with weak asset forfeiture laws, California allows state and local law enforcement to participate in equitable sharing programs with the federal government. Equitable sharing programs allow state law enforcement to skirt state law by using federal forfeiture rules to take a person’s assets. Through the practice of equitable sharing California was able to collect over $305 million in seized assets between 2000 and 2008—averaging nearly $34 million each year.

Law enforcement agencies and the CDAA rely heavily on the revenue from asset forfeiture to line their coffers, so these reforms pose a serious threat. Rather than reforming their budget practices, they used intimidation tactics and personal cell phone calls to legislators in order to kill the bill.

Similar fear-driven campaigns by local law enforcement agencies in other states have cropped up in response to asset forfeiture reforms. The Departments of Justice and Treasury threatened New Mexico with ending it equitable sharing program if reforms were passed. In response, New Mexico not only passed asset forfeiture reform, but abolished it entirely. In May of this year, Montana passed asset forfeiture reform that requires a criminal conviction prior to permanent forfeiture, as well as several other requirements that beef up protections for property owners. Other states making strides in asset forfeiture reform are Minnesota, North Carolina, and Michigan.

California should use the momentum of these states to revisit its weak asset forfeiture laws. Demanding a conviction is the only way to ensure due process is administered in forfeiture cases. Moreover, local law enforcement should not be able to skirt state law by using the lax federal rules to make an end-run around the legislature.

North Carolina Legislature Unveils Tax-Cutting Budget

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Posted by Caroline Anderegg on Monday, September 14th, 2015, 5:30 PM PERMALINK

North Carolina legislators unveiled a complete budget agreement this afternoon that includes further tax relief for North Carolinians. After months of negotiations, legislative leadership reached an agreement that they will hold votes on later this week, ahead of the Friday deadline by which they must either pass a continuing resolution or approve a final budget.

The budget deal announced by House and Senate leaders includes reforms that will allow individuals, families, and employers across North Carolina to keep more of their earnings. The budget agreement announced today, if approved by Gov. Pat McCrory (R), reduces the individual income tax rate from 5.75 percent to 5.49 percent in 2017. This income tax cut will result in $2.8 billion in taxpayer savings over the next five years.

“I applaud Senate President Phil Berger and Speaker Tim Moore for reaching a budget deal that allows taxpayers to keep more of their hard-earned income,” said Grover Norquist, president of Americans for Tax Reform. “The new budget deal unveiled in Raleigh today, if signed into law, will build upon the successful tax reform act of 2013 and will ensure the North Carolina remains a national leader in tax reform.”

Asheville Mayor Ignores Facts, Supports Airbnb Ban

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Posted by Caroline Anderegg on Friday, September 11th, 2015, 3:16 PM PERMALINK

In the debate surrounding regulation of the burgeoning sharing economy, ride-sharing services like Uber seem to dominate the discussion. However, several other growing businesses in this sector are under attack as well.

Airbnb, an online sharing service where people can list their home or apartment to host potential short- or long-term renters, is currently under attack in Asheville, North Carolina. The city recently added an employee exclusively dedicated to enforcing a short-term rental ban, those renting for a period of less than a month, and increased the penalty for short-term renters from $100 per night to $500 per night. Both the Mayor Esther Manheimer and Vice Mayor Marc Hunt were among the 5-2 majority that voted to increase these fines at a packed City Council meeting on Tuesday.

Manheimer and Hunt’s attack on innovation seems counterintuitive given Asheville’s reputation as a tourist haven. Airbnb, as well as other home-sharing services such as HomeAway and VRBO, have skyrocketed in popularity in direct response to a demand for these kinds of short-term rentals by visitors flocking to cities of all sizes—particularly tourist destinations like Asheville.

According to the Asheville Convention and Visitors Bureau (CVB) website, in 2014 alone Buncombe County hosted 9.8 million visitors, 3.3 million of which were overnight guests. Tourism is the third largest industry in the area, and visitors spend an average of $4.7 million in the city every day. In total, tourists generated $2.6 billion in economic impact by spending $1.7 billion at businesses that support nearly 25,000 jobs. The state and local tax revenue generated by the tourists’ economic investment saves each Asheville household $1,232. Calling the industry a “significant driver” of the city’s economy, the CVB projects that without tourism the unemployment rate would be a staggering 15.9 percent.

Furthermore, local online travel company sales quadrupled from May to June of this year according to the county tax department, which is when Airbnb began reporting its sales numbers to the department. The overall hotel and travel business only went up 8 percent during this time, so the boom cannot be attributed to a seasonal tourism boost.

Given the significant economic impact of Asheville’s thriving tourism industry, and Airbnb’s service being the clear number one choice for those visitors, it is a mystery why the City Council seems adamant about stifling short-term rentals.

During Tuesday’s meeting, the Mayor gave a weak argument for the increased fine that centered on the desire to resist potential changes in the community that she alleged would result from allowing short-term rentals.

"If we get it wrong it could be like when you rent a house at the beach,” she said. “Every single house is rental. Nobody knows each other, everybody is making a mint. But what is it? It's just a resort community. It's not a community. It's not a place you raise children."

Not only is performing this type of political engineering not a part of the Mayor’s job description, the facts do not support her argument. Buncombe County has benefitted from increasing in-migration over the last 30 years. The area gained over 26,000 new residents in that time period. While tourism offers Asheville significant economic support, the data show that tourists are not causing a deterioration of the “community” like Mayor Manheimer claims.

The city’s solution to punitively prevent residents and visitors from participating in short-term rental contracts is not the appropriate response to their fears about community development. Rather, the city’s leaders should be encouraging the growth of these businesses that complement their tourism industry. The Asheville City Council would best serve its residents by revisiting the issue free from unfounded economic logic.

Obama’s Tanning Tax Still Hurting Taxpayers and Small Businesses

Posted by Caroline Anderegg on Friday, September 4th, 2015, 2:38 PM PERMALINK

In its fifth year on the books, Obamacare’s indoor tanning tax continues to harm small business owners and taxpayers. It was the first of twenty new taxes in Obamacare.

At its inception, the Joint Committee on Taxation projected that the tax would raise $2.7 billion by 2019, and $1 billion from 2011 to 2014 alone. But as it turns out this was a gross overestimation.

Instead of hitting the billion dollar mark for its first four years, the burdensome 10 percent tax has only generated about $362 million in revenue in the first four years—barely a third of what was projected. 

New White House Office of Management and Budget (OMB) projections have produced revised estimates that the tax will generate $955.7 million by 2019. However, if the tax continues generating revenue at current rates—an average of $90.5 million a year—it will only raise $814.5 million. The OMB estimate seems particularly gratuitous considering tanning salons are going out of business left and right, due to the tax.

This Obamacare tax is actually a tax on women. The American Suntanning Association (ASA) reported that 70 percent of U.S. tanning salons are owned by women, and women comprise nearly 95 percent of staff at those salons. Since 2009, the number of people employed by the tanning industry has been cut in half, from 164,000 to 83,000 employees. That means that almost 77,000 women lost their jobs in large part because of this tax.

This damaging excise tax has not only proven to be an unreliable source of revenue, but it is  squashing an entire industry. In June, right-minded representative George Holding (R-N.C.) introduced the “Tanning Tax Repeal Act of 2015” in the House, which continues to receive overwhelming bipartisan support. The ASA lauded Rep. Holding’s efforts.

"Representative Holding has shown his commitment to America's small businesses by introducing this bill," said ASA President Bart Bonn. "The tan tax is an example of a misguided policy, implemented with little forethought, which has crippled an industry and cost tens of thousands of jobs in communities across America."

If this bill passes, which is now sitting in committee, it could be the first step in chipping away at the costly provisions in Obamacare. It is imperative that Congress take action to disassemble Obamacare piece by piece in order to save taxpayers billions of dollars and thousands of jobs. 

New IRS Data: Florida Biggest Beneficiary of Wealth From Other States

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Posted by Caroline Anderegg on Tuesday, September 1st, 2015, 7:00 AM PERMALINK

Newly released IRS migration data from 2013 shows that Florida was the greatest recipient of new wealth of any other state in the nation. That year, more than 74,000 new residents brought with them $8.34 billion in adjusted gross income (AGI) to spend in the Sunshine State.

Between 1985 and 2013, nearly 1.8 million new residents brought with them more than $116.36 billion in annual AGI. Taxes likely have played a large role in this mass migration to the Sunshine State. Florida is one of nine states that do not tax earned income, and one of only seven that do not tax any form of personal income. On top of that, Republican Governor Rick Scott has worked with the Republican legislature to provide an additional $2.6 billion in tax relief since taking office in 2011.

In 2013, Florida had the largest population gains from the following states:

New York  20,465 ($1.35 billion)

New Jersey  12,457  ($945 million)

Pennsylvania  9,092 ($644 million)

Illinois  7,749  ($1.1 billion)

Connecticut  5,686  ($1.09 billion)

Not only has the Florida legislature worked with Gov. Scott to aggressively reduce the tax burden in Florida, Scott has worked to poach businesses like General Electric and Hertz from other high-tax states like Connecticut and New Jersey. Hertz, which relocated their world headquarters to Florida in 2013 planned to bring 700 jobs paying an average of $102,000 to Florida that year, data that will be reflected in the 2014 tax filings.

Corporate income taxes have also faced significant reductions, with the exemption increasing from $5,000 to $50,000 between 2011 and 2012.

This June, Gov. Scott signed a $427 million tax cut for the upcoming fiscal year. This most recent tax proposal cut cell phone and TV taxes, reduced business taxes, eliminated sales tax on textbooks for college students, and implemented a 10-day sales tax holiday for school supplies.

More from Americans for Tax Reform

These Taxes Will Leave a Bad Taste in Your Mouth

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Posted by Caroline Anderegg on Wednesday, August 19th, 2015, 5:10 PM PERMALINK

At the turn of the twentieth century the tax code was only 400 pages long—about the length of the third Harry Potter book. However, since then it has grown to be 187 times longer to a monstrous 74,608 pages. The majority of that growth has occurred in the last 30 years, and if it continues at this rate the tax code will exceed 100,000 pages by 2050. This not only illustrates the mounting weight of the federal tax burden, but the subsequent increase in control the nanny state IRS has over the economic behavior of all Americans.

On top of the complex and overreaching federal tax code, each state has its own unique set of tax laws. Many of these nuances force business owners to raise prices on confused, unhappy consumers.

Take the New York “bagel tax,” for example. The Empire State is known for its delicious bagels, but if bakery goers want it sliced, toasted or with toppings it will cost a little extra. Thanks to the fine print in New York’s tax code, those are the differences between a bakery item and a restaurant item. Only the latter is subject to the state’s 4 percent sales tax, as well as local taxes that can add up to almost 9 percent in some areas.

In a recent post, Stateline highlighted many of these unusual state taxes that perplex taxpayers across the country. Illinois offers a prime case of the discriminatory nature of these hair-splitting taxes. According to the Streamlined State and Use Tax Agreement that attempts to standardize sales taxes nationwide, the difference between candy and cookies or cakes is whether or not the product contains flour. So when Illinois raised the state candy tax from 1 percent to 6.25 percent in 2009, Kit-Kats, Milky Ways, and other flour-containing candy bars were exempt from the exorbitant candy tax hike while other products sold in the same aisle were not.

Beer-drinkers in Kansas encounter puzzling obstacles similar to those of candy-eaters in Illinois. The Sunflower State allows beer containing alcohol content of 3.2 percent or less to be sold in grocery stores. This beer, however, is subject to the state’s 6.5 percent sales tax as well as local tax, which averages a total of 8.4 percent combined tax. Regular beer with higher alcohol content, on the other hand, is exclusively sold in liquor stores and not subject to the same sales tax. An 8 percent liquor enforcement tax is imposed instead, which is on average a lower tax than that levied on these low alcohol content beers.

“There are many strange quirks in the tax system,” said Kansas Department of Revenue spokeswoman Jeannine Koranda in reference to this strange contradiction.

These “quirks” are actually costly burdens on taxpayers that represent a larger problem plaguing the current tax system. Pedantic complications in both the federal and state tax codes have become so numerous that the laws are now used to steer consumption and limit choice. Be it bagels, candy or beer, anomalies in the tax code not only impose undue regulation but make compliance difficult for taxpayers and business owners. 

If You’re Running for President, Do You Really Want This Endorsement?

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Posted by Caroline Anderegg on Tuesday, August 18th, 2015, 9:47 AM PERMALINK

Yesterday morning, presidential hopeful John Kasich joined Alabama Governor Robert Bentley at the Alabama Sports Hall of Fame in Birmingham, where Gov. Bentley announced his endorsement of the Ohio governor’s presidential bid. In his statement following the announcement, Gov. Kasich touted the endorsement as an honor given Bentley’s “incredible record.”

“What’s also significant to me is that Gov. Bentley reached out to our campaign, unsolicited, to offer his support,” he went on to say.

This makes Gov. Bentley the third Republican governor to offer an endorsement to a presidential candidate—both Maryland Gov. Larry Hogan and Maine Gov. Paul LePage are throwing their support behind Chris Christie, who served as the chairman for the Republican Governors Association during their 2014 gubernatorial elections.

An endorsement of this nature, particularly so early in a primary campaign with such a wide field, is unusual. Kasich’s camp highlighted the handful of topics on which he and Bentley disagree in an effort to prove that this endorsement represents the governor’s leadership as a consensus builder.

However, the similarity that they conveniently glossed over is the governors’ weak fiscal records. Both Kasich and Bentley have been at odds with their Republican legislatures during budget negotiations over the last several months. Fortunately for Ohio taxpayers, the Republican House leadership was able to pass real tax relief that saved Ohioans over $3 billion more than would have been enacted by Kasich’s proposal. This contradiction has not stopped the governor from flaunting his fiscal record on the campaign trail as he attempts to win over the Republican base.

With this goal in mind, it begs the question why would Kasich want Gov. Bentley’s endorsement? Despite being a Taxpayer Protection Pledge signer, and subsequent pledge-breaker, Bentley’s fiscal record is abysmal. He reneged on his promise of “No New Taxes” and has called for a second special session in another attempt to strong arm the legislature into adding $300 million in new taxes. In a primary race where moderate candidates are vying for support from the conservative base, Gov. Kasich is hitching his horse to the wrong wagon.

Some early responders warned that Bentley’s endorsement is a blow to other governors, particularly fellow southerners such as Bobby Jindal or Jeb Bush, because Alabama is one of a handful of southern states holding an early primary—becoming known as the “SEC primary.” But Bentley’s endorsement will likely make no difference for Kasich in the early primaries. Not all endorsements are created equal, and when it comes to Gov. Bentley’s flagging reputation the unsolicited endorsement is irrelevant at best, and at worst an association Kasich’s team should be hesitant to embrace.

TBT: Reagan Changes the Course of Federal Taxation

Posted by Caroline Anderegg on Thursday, August 13th, 2015, 1:17 PM PERMALINK

On August 13, President Ronald Reagan signed the Economic Recovery Tax Act of 1981 (ERTA).  This multifaceted tax reform package is regarded as a watershed moment in the history federal taxation.

During his presidential campaign Reagan argued that providing incentives for individuals and businesses was the best way to revitalize and grow the economy. Signing the ERTA in his first year in office made good on that promise. 

The focal point of the original legislation proposed by the Administration was a 30 percent reduction in individual taxes over three years. The final piece of legislation, however, resulted in an across-the-board rate reduction and much more. The top tax rate was reduced to 50 percent on all income, and all income tax rates were reduced by approximately 25 percent over a three-year period. The ERTA also introduced the idea of indexing individual tax brackets to end the “bracket creep”; created a new cost recovery system for depreciating business assets; reduced the estate and gift taxes; and allowed a credit for incremental research and development expenses.  

According to a contemporary Tax Foundation memo, the annual cut was estimated to jump from $38 billion in fiscal year 1982, to $268 billion in fiscal year 1986.  The cumulative reduction was estimated to save taxpayers $749 billion in nominal terms.

From its inception, Reagan’s tax-cutting legacy was revolutionary and transformative. In just two years after the ERTA was passed it was referred to by tax analysts as the “most important piece of tax legislation of last quarter century,” and today is still recognized for its lasting impact on the Internal Revenue Code. The ERTA set the tone for his overall economic policy and created momentum that lead to economic growth carrying through his entire presidency. 

ATR urges North Carolina Legislators to pass Taxpayer Bill of Rights

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Posted by Caroline Anderegg on Tuesday, August 11th, 2015, 11:25 AM PERMALINK

The North Carolina Senate Finance Committee signed off on Senate Bill 607 last week, legislation that would refer three constitutional amendments to the March primary ballot. The proposed amendments would implement a spending cap, referred to as the Taxpayer Bill of Rights (TABOR) preventing government spending from increasing faster than the rate of growth in population and inflation; establish a reserve fund for emergencies; and cap the state personal and corporate income tax rates at five percent. Americans for Tax Reform (ATR) supports these proposed amendments and is urging North Carolina legislators to give voters the opportunity to decide on these commonsense reforms that will make the state more economically competitive by supporting SB 607.

If approved by voters, TABOR would cap the state budget this year at the $21.65 billion spending target already proposed by the Senate. This smart spending cap would ensure that state government lives within its means and grows at sustainable rates. TABOR would also reduce pressure to raise taxes on North Carolinians moving forward. SB 607 includes a provision that would allow the General Assembly to exceed the spending limit with a two-thirds vote.

Another Senate proposal would create a rainy day savings fund for financial emergencies and natural disasters. Due to a last minute amendment passed on Monday night, the language of the bill now guarantees annual deposits to the fund equaling two percent of the prior year’s appropriated budget. These deposits would continue until the fund reaches 12.5 percent of the budget or $2.6 billion. Access to emergency savings would require bipartisan support through a supermajority vote. Like TABOR, this proposal would add an additional layer of protection from overspending should North Carolina encounter economic or natural disasters.

The third proposed amendment would cap the corporate and personal income tax rates at five percent by 2020. Allowing North Carolinians to keep more of their paychecks is not only good for Tar Heels, but benefits the state as a whole by maintaining a favorable economic climate that attracts employers and investment.

“It has been the intent and the desire of this legislature to do our level best to lower the most onerous tax we have – personal income,” said bill sponsor Sen. Bill Rabon (R-Brunswick).

North Carolina legislators are currently in negotiations to finalize the new budget. The state made great progress with the pro-growth tax reforms enacted in 2013 that significantly reduced the personal and corporate income tax rates. The spending and tax caps proposed in the Senate last week will complement those reforms, make the state more economically competitive, and allow North Carolina legislators to pass further tax relief in the future.

Alabama Lawmakers Balk at Tax Hikes, Set to Cut State Spending

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Posted by Caroline Anderegg on Monday, August 10th, 2015, 4:07 PM PERMALINK

In a meeting this past Friday, the Alabama Senate Ways and Means-General Fund Committee scrapped a House-passed budget that cut $156 million from Medicaid.  Instead, the Committee opted for essentially the exact same budget that was passed and subsequently vetoed by Governor Bentley in Regular Session earlier this year.  The current budget spreads cuts throughout various agencies funded by the General Fund, teeing up the legislature to pass a budget that would save taxpayers from hundreds of millions of dollars in tax hikes.

“There’s been very little impact with legislators during the course of the summer, from what I can tell, as to real concern over the budget and implications from cuts to the divisions of the government that are funded by the General Fund,” said Committee chairman Senator Arthur Orr (R-Decatur).

Gov. Bentley has indicated that he will yet again veto the budget, leaving no time for the legislature to override his veto and forcing them to go into a second special session.  

Bentley, who has signed ATR’s Taxpayer Protection Pledge and ran on the campaign slogan “No New Taxes,” continues a proverbial assault on taxpayers with his unabashed push for tax hikes.

“We have to have some taxes, and we have to have some funding for the services people expect,” Bentley said.

In an effort to strong-arm the legislature, the governor said he wants written promises from the lawmakers who have said that they will vote for his proposed FICA deduction bill, as well as a promise to support an increase in the franchise tax, before calling them back to a second special session. Specifically, he is seeking a commitment from House Speaker Mike Hubbard that the House will not override Bentley’s third veto should the Senate fail to pass the FICA change and franchise tax in the next session.

Gov. Bentley is holding the budget hostage and risking a potential budget crisis, all for the sake of breaking promises and burdening taxpayers. If enough lawmakers cave to his demands the maximum franchise tax would be increased from $15,000 to $22,000, costing taxpayers an additional $39 million annually among various other increases totaling at least $300 million in new taxes.

ATR encourages the Alabama legislature to move forward with necessary spending cuts, and continue to oppose Gov. Bentley’s proposed tax hikes, which would be detrimental to both the state’s taxpayers and economy.