Caroline Anderegg

New Jersey Senate Republican Proposes Much Needed Income Tax Cuts

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Posted by Caroline Anderegg on Friday, August 7th, 2015, 4:51 PM PERMALINK

Last month, New Jersey Senator Joseph Pennacchio (R-Morris) proposed a bill that would reduce the state’s top income tax rate by one percent. Despite criticism from Democrats, Pennacchio touts this move as a step toward improving New Jersey’s economic growth.

Since 2004, when Gov. McGreevey increased the top rate by 2.6 percent, New Jersey’s highest earners have been saddled with an 8.97 percent income tax burden. This has proven to be an insurmountable hurdle in keeping New Jersey’s economy competitive with its neighboring states. Among several contributing factors are the high tax rates, as Sen. Pennacchio points out, New Jersey has the highest income tax rate in the area and ninth highest nationally. Of its neighbors, New York is a close second at 8.82 percent, but the next highest is only 6.7 percent in Connecticut, 6.6 percent in Delaware, and 5.15 in Massachusetts. Pennsylvania, the state’s largest border-sharer, rounds out the bottom with a flat rate of 3.07 percent.

As a result, New Jersey currently has the worst business tax climate in the nation. In fact, New Jersey has been last or second to last in the ranking of all fifty states since 2012, due in large part to the number of small businesses in the state that are forced to pay the burdensome top income tax rate. For those businesses that do pay the corporate tax rate, they’re saddled with as high as 9 percent tax on earnings, which is the fifth highest top rate in the nation.

The unfavorable business climate has caused Garden Staters to pack up and move to neighboring states where they are able to keep more of their income. According to the most recent census data of state-to-state migration, tens of thousands of former New Jersey residents move to neighboring states each year. In the year 2013 alone, no less than 70,000 former New Jersey resident had moved to New York, Connecticut, Delaware, Massachusetts or Pennsylvania within the last year. New Jersey’s domestic outflow to any of the fifty states between 2000 and 2005 was 200,000. At the current rates, out-migration to its neighbors alone is on track to nearly double that total number over the next five year period.

Sen. Pennacchio is also the cosponsor of another piece of legislation that aims to lower gross income tax rates by ten percent over the next three years. As economic indicators have illustrated over the last several years, high taxes have driven businesses and residents out of New Jersey and caused stagnant growth. Democrats have tried to impose more tax hikes on the top earners in the state, but Governor Christie has successfully held the line and avoided even further detriment to the state’s economy. Pennacchio and other Republican senators are introducing pro-growth legislation that takes a step in the right direction to turn around New Jersey’s economy. 


Today in history: The birth of the federal income tax

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Posted by Caroline Anderegg on Wednesday, August 5th, 2015, 3:29 PM PERMALINK

On this day one hundred fifty four years ago Congress and Abraham Lincoln imposed the first ever federal income tax. He saw a growing need for new funds both to back the Union’s Civil War effort and to combat the federal deficit that resulted from the financial panic in 1857—the first world-wide economic crisis.

On August 5, 1861, Lincoln signed the Revenue Act, which placed a 3 percent flat tax on annual incomes over $800. According to the Bureau of Labor Statistics, that would be equivalent to $20,645.04 in 2014 dollars. The broadly worded legislation defined income as profits “derived from any kind of property, or from any professional trade, employment, or vocation carried on in the United States or elsewhere or from any source whatever.”

However, just one year later President Lincoln repealed the flat tax provision and replaced it with a progressive scale that placed a 3 percent tax on incomes between $600 and $10,000 and a 5 percent tax on all incomes higher than $10,000. In 1864, the legislation was amended again to add a third bracket to the graduated scale with the top earners’ incomes subject to a 10 percent tax. Over a decade after the war ended and the Reconstruction was nearly complete, the tax was repealed and found to be unconstitutional.

Though the federal income tax didn’t come back to stay until 1913, Lincoln’s first federal income tax laid the groundwork for taxing incomes in our nation’s future. The type of gradualism that was used to increase the federal tax burden in the 1860s is not unfamiliar to modern taxpayers. Throughout its 102-year history, the federal government has taken a mile for each inch taxpayers have given when it comes to the income tax. As a result we now have a needlessly complex tax code that is tens of thousands of pages long and dips deep into the pockets of every American. 



Happy Birthday, Milton Friedman

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Posted by Caroline Anderegg on Friday, July 31st, 2015, 4:50 PM PERMALINK

Today we celebrate the memory of Milton Friedman, a champion of free market economics. Friedman is widely regarded as one of the most revolutionary economists in modern history, and his book Capitalism and Freedom, which makes a case for free markets, was arguably the most influential book of the 1960s.

Friedman filled many roles during his lifetime—chief among them was teacher. He was the Senior Research Fellow at the Hoover Institution, Stanford University, for nearly forty years. He taught at the University of Chicago from 1946 to 1976, and was on the research staff of the National Bureau of Economic Research from 1937 to 1981.

Friedman was a pioneer for school choice, and was the first to recommend the voucher system. In 1996, he and his wife Rose founded the Friedman Foundation for Educational Choice to advance school choice nationwide.

Among his many achievements he won the Nobel Prize for Economic Sciences in 1976, and was awarded both the Presidential Medal of Freedom and the National Medal of Science in 1988.

Friedman served on President Reagan’s Policy Advisory Board in the 1980s as one of his most trusted advisors. Though notably libertarian in philosophy, he identified as a Republican for the sake of “expediency,” in his own words. Because of his influence as an advisor Friedman was the architect of many of Reagan’s economic policies that transformed the Republican Party.

 Milton Friedman passed away in 2006 at the age of 94, leaving behind a legacy that has had a lasting impact on free market economic policy. 

More from Americans for Tax Reform


ATR Releases List of 2015 State Pledge Signers Ahead of Mississippi Primary


Posted by Caroline Anderegg on Friday, July 31st, 2015, 2:23 PM PERMALINK

With the Mississippi primary election taking place Tuesday, Americans for Tax Reform has released an updated list of incumbents and challengers for state legislative and state-wide office who have signed the Taxpayer Protection Pledge. These candidates have made a written commitment to their constituents to oppose any and all efforts to increase taxes. ATR strongly encourages taxpayers to consider those who have made this commitment when they vote on Tuesday, August 4. The list of incumbents and challengers who have signed the Taxpayer Protection Pledge and will be on the ballot Tuesday is as follows:

 

Incumbents:

  • Gov. Phil Bryant
  • Nancy Adams Collins (S-6)
  • Josh Harkins (S-20)
  • Angela Burks Hill (S-40)
  • Billy Hudson (S-45)
  • Dean Kirby (S-30)
  • Richard Bennett (H-120)
  • Gary Chism (H-37)
  • Bill Denny Jr. (H-64)
  • Mark S. Formby (H-108)
  • Stephen Horne (H-81)
  • Bobby Moak (H-53)
  • Alex Monsour (H-54)
  • John Moore (H-60)
  • Bill Pigott (H-99)
  • Ray Rogers (H-61)
  • Jeff Smith (H-39)

 

Challengers:

  • Tony Smith (Public Service Commissioner, District 2)
  • Robert Foster (H-28)
  • Dennis Quinn (S-38)
  • Cliff Brown (S-35)
  • James D. Eubanks (S-1)
  • Randall Stephens (H-61)
  • Steve Hopkins (H-7)
  • Barney W. O’Neal (H-114)
  • Vance Cox (H-75)
  • Chris Caughman (S-35)
  • Brian Sims (H-35)
  • Jerrerico Chambers (H-33)
  • Dennis Debar (S-43)

Massachusetts Spends $224 Million to Break Workable ‘Romneycare’ Exchange

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Posted by Caroline Anderegg on Thursday, July 30th, 2015, 9:00 AM PERMALINK

When Obamacare was passed, Massachusetts served as the prototype for state exchanges, as it already had its own online insurance portal in place that had worked for years.  However, federal bureaucrats determined that the Romneycare exchange wasn’t up to par with the extensive requirements in place for the new Obamacare state exchanges, and officials began constructing a new site pitched as a massive upgrade for Bay Staters. But after $224 million in federal funds and years of development the new and “improved” exchange failed utterly and resulted in an estimated $1 billion in costs for the state.

Massachusetts contracted CGI Corp. to design the revamped site—the same major information technology consultant that was used to set up the federal health care exchange. Just like the federal exchange, Massachusetts was an abject failure.

The health connector was nearly inoperable during the first open enrollment period, and in its first three months enrolled just five percent of its target. CGI was fired from the project and a new team was brought in to start from the ground up for a second time, but CGI was still paid $52 million of its $89 million contract with the state.

Not only did the Commonwealth Connector Authority (CCA), the state agency tasked with overseeing the project, utterly fail in its first three months, they actively sought to conceal the site’s shortcomings from the Centers for Medicare and Medicaid Services, the Health Connector board of directors, the media and the public. Furthermore, they urged state workers to approve subpar work and attempted to cover up the site’s stagnant progress by skirting testing requirements.  When they did test a portion of the website prior to the launch, there was a 90 percent failure rate.

A new contractor was not the fresh start the CCA was hoping for, and the health connector was proven a disaster almost beyond repair.  At a board meeting in February 2014, Massachusetts Health Connector executive director Jean Yang was brought to tears at the abysmal performance of the exchange, as over 50,000 applications were piled up waiting to be manually entered into the computer system. With each application taking close to two hours to process, it would take 50 employees nearly a year to complete the backlog of applications. In the meantime, those applicants were placed on inadequate, temporary coverage in order for them to remain insured.

Massachusetts had hoped to enroll 250,000 applicants, yet their actual enrollment for the year was 31,695—a measly 13 percent of their goal. The Massachusetts disaster did not just prevent individuals form signing up to Obamacare. It also displaced over 300,000 individuals from Medicaid. In all the debacle cost an estimated $1 billion, according to the Pioneer Institute. At present the exchange has a total enrollment of 124,010, far below what officials had hoped at the outset of the project.

Unfortunately, Massachusetts is no isolated, extreme case. Oregon has also come under fire for wasting $305 million in federal grants with nothing to show for it, and countless other state exchanges remain teetering on the brink of financial collapse.

On the surface, the failure of the Massachusetts Health Connector represents willful incompetence on behalf of CCA.  But under even the slightest scrutiny the state’s execution of the exchange reeks of fraud, evidenced by their lies to both federal officials and the public about the “upgraded” site.  


#TBT: Grover and Newt Celebrate the 100th day of Contract with America

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Posted by Caroline Anderegg on Thursday, July 23rd, 2015, 3:45 PM PERMALINK

Americans for Tax Reform president, Grover Norquist, and Speaker of the House Newt Gingrich celebrated the 100th day of the Contract with America.  Going into the 1994 elections no one believed the Republicans had a shot at overthrowing the 40-year Democratic reign in the House. 

Gingrich’s vision to run on the Contract’s ten pillar promise revolutionized the approach to effective governance and proved that, when effectively communicated, voters will choose the candidates that run on free market principles.

The Contract contained commonsense proposals reinforcing ideals of the American Dream including personal responsibility, national security, and economic growth.  Among the ten planks was the Fiscal Responsibility Act.  If passed, the Act would have amended the Constitution to require a balanced budget, but unfortunately the Senate defeated the amendment by one vote. However, the legislation’s commitment to fiscal responsibility helped solidify the Contract’s legacy as a revolutionary approach to transparent governance.

On the 100th day Congress voted on term limits, the final item of the Contract. Though the amendment was rejected, the day was celebrated as Republicans made good on their promise to vote on every piece of legislation in the Contract within the first 100 days.


Ohio Lawmakers Enact Tax Cutting Budget

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Posted by Caroline Anderegg on Monday, July 6th, 2015, 2:02 PM PERMALINK

Governor John Kasich (R-Ohio) signed a two-year, $71 billion budget last Tuesday.  Though the House gave his budget a much needed makeover, he used his line-item veto power 44 times before allowing HB64 to become law.

The budget Kasich initially introduced would have implemented $5.7 billion in tax cuts.  The primary beneficiary was the income tax with a 23 percent, across-the-board cut and small business exemption from personal income tax for those with $2 million or less in annual gross receipts.

Hold your applause.  Gov. Kasich’s budget also included $5.2 billion in tax hikes.  The biggest losers in Kasich’s budget would have been the sales tax, with an increase from 5.75 percent to 6.25 percent statewide, and the commercial activities tax.  The governor’s budget also proposed a cigarette tax hike to the tune of a dollar-per-pack, as well as the implementation of the state’s first e-cigarette tax and an expansion of the sales tax base, among others.  At the end of the day Kasich’s budget would have only resulted in a $523 million tax cut for Buckeye taxpayers.

Dissatisfied with the governor’s budget bill, Speaker of the Ohio House Clifford Rosenberger stepped up to the plate and went to bat for Ohio taxpayers.  Speaker Rosenberger and other House Republicans crafted a budget bill that enacted real tax relief for Ohioans. 

“Our balanced budget provides for a $327 million surplus at the end of FY’ 17, as compared to the $27 million in the governor’s plan—ensuring a balanced budget that spends less in GRF funds than the governor’s initial proposal,” Speaker Rosenberger said in a statement following the House’s passage of the budget bill through the chamber with bipartisan support.

The significant features of Rosenberger’s budget were a 6.3 percent across-the-board income tax rate cut, a plan to phase out taxes on the first $250,000 in small business income, and a permanent 75 percent small business deduction, while lowering the top income tax rate to just below 5 percent.  The bill also eliminated the increases in sales tax, CAT, and severance tax.

While the House voted to throw out the proposed e-cigarette tax, they compromised with the state senate on the cigarette tax hike.  Smokers will pay another 35 cents per pack now that the budget has the governor’s signature.

In a recent report the Buckeye Institute regarded the House budget as a “true rarity” in that it was both growth-oriented and proposed spending less money from the General Revenue Fund than the governor’s budget did. 

After Kasich’s vetoes, which largely targeted benefits the state senate had sought in order to relieve the tax burden on large businesses and industries, the budget bill netted $1.9 billion in tax cuts.  While Kasich and Rosenberger are both playing for Team Taxpayers, this go around Rosenberger was clearly the MVP.


Governor LePage Plans March to Zero on Income Tax in Maine

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Posted by Caroline Anderegg on Friday, June 26th, 2015, 9:39 AM PERMALINK

Governor Paul LePage (R-Maine) is taking no prisoners on the road to zero state income tax.  The governor vowed to send back vetoes on every piece of legislation that comes across his desk until Maine’s legislature passes his bill.  He sent back 50 vetoes on Monday and Tuesday of this week alone.

LePage wants to do away with income tax in his state; however, he’ll need cooperation from Maine’s legislature.  In response to their pushback, the governor has decided to try the route of a citizen’s initiative in order to lower the income tax on the road to fully getting rid of it.

Because eliminating Maine’s income tax would require an amendment to the state constitution approved by the state House and Senate as well as the majority of voters, and the legislature isn’t giving their necessary two-thirds stamp of approval, LePage is postponing his plan to totally cut the income tax.  In the meantime, he plans to lower the income tax to 4 percent through a ballot initiative, beginning in September.

“I can’t eliminate it through a people’s initiative, but we can lower it. And I will be doing that," he said. “And I’m also going to bring back a bill in January to eliminate the income tax again. Since it happens to be an election year, I want in fresh in people’s mind when they go to the polls.”

Getting the initiative on the ballot will be no small feat, though.  LePage plans to gather the thousands of signatures necessary to get the measure to a vote by using a town hall-style approach to get his message out, as he did earlier in the year when he was pushing his original tax reform proposals.  Though he has a lot of work to do to accomplish his goal, his method of taking his message to the people has had mixed reviews in the past but he believes it can work this time.

Gov. LePage is unwavering in his dedication to lowering and eventually doing away with Maine’s income tax entirely, and rightfully so.  Of states levying an individual income tax Maine’s ranks 9th highest in the nation at 7.95 percent, down from 8.5 percent when he signed the largest tax cut in state history in 2011.  LePage’s ballot initiative is the necessary next step in allowing the people in Maine to keep more of their hard earned income.


Minimum Wage Proposals Would Violate Missouri State Statute

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Posted by Caroline Anderegg on Tuesday, June 16th, 2015, 3:22 PM PERMALINK

In a June 12 letter to his fellow state legislators, Senator Kurt Schaefer (R-19) raised a red flag about two proposed local ordinances to raise the minimum wage to $15 per hour in Kansas City and St. Louis. 

However, according to a Missouri statute in effect since 1998, no municipality can create a minimum wage that exceeds the state minimum wage.  In fact, a city’s authority on any subject covered by state law must conform to the state law on the same subject.  As Schaefer aptly points out, Missouri’s state minimum wage of $7.65 per hour trumps any authority Kansas City or St. Louis claims to create a minimum wage in excess of this amount.

This past year, the legislature passed House Bill 722, which reinforced the legislature’s intent to prohibit a city from requiring an employer to provide a minimum or living wage exceeding the state minimum wage.  The new legislation doesn’t take effect until August 28, hypothetically giving the two cities a window to pass their ordinances raising the minimum wage prior to the effective date.  Unless one looks back at the 1998 statute.

When Mayor Sylvester James asked Kansas City’s Attorney William Geary to weigh in on the issue in March, he was met with a resounding “no.”  Geary argues, as does Schaefer, that the ordinances would not only violate two state statutes, but also pose a significant threat to the authority of municipalities.  “To act in an area that is already preempted by the State of Missouri,” writes Geary, “may only encourage those in the General Assembly who believe local government are lawless wastelands of social engineering, to continue their assault on local governments.”

The minimum wage hike in these two cities would only worsen the “stagnant economic climate” both Kansas City and St. Louis have experienced lately, rather than present a solution.  Senator Schaefer points out that if the goal of the increased minimum wage is to keep money in people’s pockets to spend in the local economy, then the General Assembly should do away with the 1% earnings tax taken out of paychecks in both cities.  This additional layer of income tax would need to be eliminated anyway if employers were to be able to afford to pay a $15 minimum wage. 

“If we want our cities and our State to thrive and grow,” claims Schaeffer, “we must stop penalizing productivity through duplicate and burdensome taxes and higher costs.” 

You can read Sen. Schaeffer’s letter in its entirety here


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