Dennis Hull

Taxpayers in Indiana, Colorado, and Oregon Set to Receive Automatic Rebates


Posted by Dennis Hull on Tuesday, November 30th, 2021, 10:11 AM PERMALINK

As states project eye-popping budget surpluses, lawmakers are debating how much of that to put toward new spending, how much to set aside in the rainy day fund, and whether to return money back to taxpayers. Thanks to state laws that automatically trigger refunds when a certain level of surplus is achieved, taxpayers in Indiana, Colorado, and Oregon will soon be entitled to major tax refunds under existing automatic refund laws. 

Indiana reported a 14% increase in tax collections last year, driven primarily by sales taxes as consumers ramped up spending. After state reserves topped $3.9 billion, taxpayers will see most of last year’s budget surplus returned to their wallets under the Hoosier State’s automatic refund law. The law mandates a tax refund if reserves exceed 12.5% of general fund appropriations; this year, reserves topped 23%. 

In 2022, a total refund of $545 million will be divided evenly into estimated payments of $170 per taxpayer – a 62% increase from the last time state revenues triggered a refund in 2012. Even with the refund, Indiana will still have billions in surplus to spend – a nearly $3.4 billion figure that Rep. Greg Porter called an “embarrassment of riches.” 

Looking ahead to next year’s session, lawmakers are already discussing a potential reduction to Indiana’s 7% sales tax, which is higher than the rate in any surrounding state. Gov. Eric Holcomb said he is keeping an open mind as the tax cut debate continues. 

On the West Coast, for the fourth year in a row, Oregon taxpayers will benefit from a unique provision known as the “kicker” law. When government revenue collections exceed 2% of the initial forecast, the state is constitutionally obligated to refund the full amount of excess revenue. Since Oregon collected nearly $1.9 billion in surplus last year, taxpayers will get 17% of their 2020 income taxes back as a kicker credit – an average refund of $850. 

That $1.9 billion kicker is a shocking figure for many Oregon lawmakers, several of whom described an earlier, smaller forecast of a $1.18 billion surplus as “unbelievable” and “stunning.” This year’s kicker smashes the previous record of $1.6 billion that was paid out to taxpayers last year. 

But revenue continues to beat expectations in Oregon. Economists are already projecting another $558 million kicker in 2024, halfway through the next two-year budget. 

In Colorado, a constitutional provision, one viewed by many as the gold standard of state spending limits, will provide a temporary tax cut in addition to $454 million in tax rebates. Known as the Taxpayers Bill of Rights (TABOR), the 1992 amendment created an annual spending limit tied to population growth and inflation. That allowable revenue growth was 3.1% in FY 2020-21, when Colorado collected 8.2% more in revenue subject to TABOR than the previous year. As such, residents will enjoy an average sales tax refund of $69 for individual filers and $166 for those who filed jointly – the largest refund in 20 years. 

Colorado voters already approved an income tax cut last November by a 56–43% margin. Initiative 16 permanently cut the state income tax from 4.63% to 4.55%. But TABOR provisions will temporarily lower the rate even further, to 4.50% over the course of 2021. 

While the TABOR tax cut is temporary, the stage is set for the possibility of more permanent tax cuts in the future. Democratic Gov. Jared Polis, who has praised the TABOR tax relief, recently proposed bringing the state income tax to zero. Meanwhile, after the resounding success of Initiative 16 in 2020, another income tax cutting ballot measure has now garnered more than enough signatures to appear on next year’s ballot as Initiative 31. If voters approve, Initiative 31 would permanently lower the income tax rate from 4.55% to 4.40%. 

Thanks to automatic tax refund laws, taxpayers in these three states – Indiana, Oregon, and Colorado – will enjoy greater financial security in the coming year. Given rising prices for basic goods and services, state taxpayer refunds will provide relief to households at a time when it is greatly needed. It’s nice that existing law is automatically triggering such refunds in IN, CO, and OR. Lawmakers and governors elsewhere would do well to follow suit. 

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PA Lawmakers Seek Constitutional Amendment to Limit State Spending

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Posted by Dennis Hull on Friday, November 19th, 2021, 3:46 PM PERMALINK

It’s not rocket science: spending drives calls for tax hikes, and the ability to hike taxes fuels more spending.

That’s why Pennsylvania state lawmakers Ryan Warner and Camera Bartolotta reintroduced the Taxpayer Protection Act, a proposed constitutional amendment to rein in government spending.

HB 71 and SB 286 would limit overall spending increases to the inflation rate, plus population growth. A supermajority of 2/3 could override the limit.

By focusing on the spending side of the ledger, the Taxpayer Protection Act would offer needed relief for Pennsylvanians by limiting government’s demand for their tax dollars. 

This pro-taxpayer measure is especially necessary for Pennsylvania. Government spending in Pennsylvania has risen dramatically over the past 50 years. Between 1970 and 2020, state spending more than tripled. But the state’s population only grew 8.3% over the same period.

The Keystone State has even seen its population shrink in recent years, leading Pennsylvania to lose a congressional seat after the 2020 Census. The state and local tax burden costs residents $5,970 per year. While that is more competitive than some of Pennsylvania’s eastern neighbors, taxes are still driving people away.

This trend of leaving the state is especially prevalent amongst people aged 20-35. The Pennsylvania Independent Fiscal Office reported that 47,000 people in this age bracket with at least an associate’s degree left the state in 2015.  

Spending restraint is also broadly popular: 73% of Republicans and 65% of independents support limits on government spending, according to Susquehanna Polling & Research. A majority of Democrats also supports the measure.

While spending and deficits have risen over the last several years under Democrat Governor Tom Wolf, Pennsylvania was making good progress on reducing spending. From 2012 to 2017 Pennsylvania’s spending declined relative to state GDP, dropping nearly 20% – by that metric, fifth most in the nation. Republican legislators having control of the state purse strings during that period is largely why.

But lawmakers in Harrisburg are already planning to use $7 billion in surplus revenue to create more programs and new spending. Passing the Taxpayer Protection Act now would go a long way to rekindling recent progress on spending restraint, limiting the ability of future legislatures to waste the public’s money.

Now is the perfect time to pass the Taxpayer Protection Act and restrict their out-of-control spending for good.

 

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TCI Gas Tax Dead as Gov. Charlie Baker Pulls Support

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Posted by Dennis Hull on Friday, November 19th, 2021, 12:56 PM PERMALINK

Support for a regional gas tax among Northeastern governors has finally evaporated in the face of skyrocketing fuel costs. 

Massachusetts Gov. Charlie Baker on Thursday withdrew his support for the Transportation and Climate Initiative, which would have raised the price of a gallon of gas by up to 38 cents. Baker had long touted TCI as a way to reduce emissions from cars and trucks, but now says the agreement is “no longer the best solution for the Commonwealth’s transportation and environmental needs.” 

Twelve states signed on to TCI when it was first proposed last December. But with Massachusetts’ exit from the compact, only Washington, D.C. and Gov. Dan McKee of Rhode Island remain interested, leaving the climate agreement dead in the water for the foreseeable future. 

The demise of TCI is good news for drivers in New England, who have already been hammered with soaring energy costs and high inflation on essential goods and services. 

The now-unsuccessful climate initiative would have imposed stringent requirements on fuel producers to purchase a dwindling number of allowances for carbon emissions, essentially forcing a 26% reduction in emissions by 2032. Taxpayers would have footed a 3 billion dollar bill for this radical energy wishlist. 

In Massachusetts alone, the cost of a gallon of gasoline would have risen by anywhere from 17 to 38 cents per gallon, while simultaneously driving a massive fuel shortage. As a result, more than 80,000 vehicles would have been without fuel in 2025, just two years after the program was scheduled to begin – leaving low-income drivers with few alternatives. 

“TCI is a regressive gas tax scheme that would have hurt the middle class and the working poor the most,” said Paul Craney, a spokesman for the Massachusetts Fiscal Alliance. “It’s such wonderful news to see that Massachusetts families will not be forced to endure the economic hardship TCI would have imposed upon them.” 

Baker’s decision came just hours after Gov. Ned Lamont of Connecticut reversed his own course on TCI, saying he would not promote legislation to join the agreement during next year’s session. For nearly a year, Lamont had made little progress in convincing the legislature to sign up for the new gas tax, despite significant Democratic majorities in both chambers. 

“Look, I couldn’t get [TCI] through when gas prices were at historic lows. So, I think the legislature has been pretty clear – it is a tough rock to push when gas prices are so high,” Lamont said on Tuesday. 

Sen. Martin Looney – the influential Senate President who has railed against the climate agreement as a regressive tax on the poor – pointed out that the Connecticut legislature would never pass TCI without proactive support from Gov. Lamont. 

“Without the governor advocating for this, pushing for it, it clearly can’t happen,” he said. “What the governor said yesterday was that we’re going to defer this to another time because of the fact that gas prices are currently so high that any further increase would be punitive, and I think that’s certainly right.” 

Now that Massachusetts and Connecticut have thrown in the towel on the climate agreement, inflation-weary residents across New England will avoid state-imposed fuel shortages and even higher prices at the pump.

Photo Credit: Suffolk University Law School

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Minneapolis Proposes Permanent Fee Cap on Food Delivery Services

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Posted by Dennis Hull on Tuesday, November 9th, 2021, 1:28 PM PERMALINK

Democrats in Minneapolis want more arbitrary price controls, even though they never work.  

Restaurants were hit especially hard by Covid lockdowns. After emergency regulations banned the sale of food and alcohol indoors, restaurants relied on third-party delivery services like DoorDash and Uber Eats to continue serving their customers. 

But politicians in more than a dozen cities implemented fee caps on the amount paid by restaurants to use delivery app services, arguing that the move would protect restaurants from high commissions. In reality, however, fee caps shift the cost to the consumer and harm ordinary Americans by constraining supply. 

If the new ordinance is approved, Minneapolis will become just the second city in the nation to impose a permanent cap on the fees charged to restaurants by food delivery companies at 10% of the order total. Facing significant losses in revenue, delivery companies will be forced to increase raw delivery costs on their customers, driving down demand and raising prices across the board. 

Mayor Jacob Frey approved a temporary version of the fee cap in December 2020, using Covid emergency powers to set a maximum charge of 15% – slightly higher than the newly proposed cap of 10%. 

A similar ordinance was unanimously approved in San Francisco in July. Just as in Minneapolis, the fee cap on third-party delivery services was initially approved as an emergency provision but was made permanent just a year later by the city’s Board of Supervisors. 

Food delivery companies immediately fought back against San Francisco’s new requirement. In a lawsuit filed by GrubHub and DoorDash, the two companies slam the ordinance as an “irrational law, driven by naked animosity and ill-conceived economic protectionism.” 

The suit also highlights the crippling economic consequences of otherwise well-intentioned fee caps: “Costs to facilitate food delivery that are not covered by restaurants will likely shift to consumers — irrespective of whether those restaurants would prefer to bear those costs to increase their own sales — thereby reducing order volume, lowering restaurant revenues, and decreasing earning opportunities for couriers.” 

Indeed, fee caps make it impossible for restaurants to bear the costs of delivering food to their customers voluntarily. Both parties contractually agree to the fees that restaurants pay to delivery companies. Rather than offer their own service, restaurants typically find it more profitable to use third-party companies like Postmates, with a full understanding that delivery costs are sometimes high. But under a fee cap, restaurants lose the ability to attract more customers by shouldering a higher portion of the delivery fee. 

As with any price control, the costs never honestly go away – instead, they are forcibly passed on to some other entity, usually the consumer. The result is a distorted market in which prices are higher, demand for delivery is lower, and costs skyrocket for businesses and customers alike. 

Companies are turning to flat rate “regulatory response fees” to mitigate the harm of fee caps on the food industry. For example, in Portland, Oregon, where the City Council approved a 10% fee cap nearly identical to the current proposal in Minneapolis, UberEats has to make up the lost revenue with an additional $3 surcharge on every order. Companies have implemented similar charges in response to temporary fee caps in Boston, Chicago, Denver, and several other cities. On average, consumers are charged an extra $2 per order in cities with price controls on food delivery. 

Politicians assert that companies can shoulder the burden of a fee cap, but not a single delivery app is currently profitable. Though 2020 was the most successful year for food delivery companies to date, DoorDash came in at a $461 million loss, despite making a small profit during one quarter. UberEats suffered an $873 million loss, while GrubHub lost $156 million. These companies each have drivers to pay, employees to support, and a business to grow, but fee caps cut a major source of their revenue and put profitability even farther out of reach. 

Customers begrudgingly accepted higher costs in the form of regulatory response fees as the pandemic drove up demand for food delivery. But now, with vaccines widely available and infection rates on the decline, fewer patrons will be willing to pay an extra $2–5 to have their food delivered. Unfortunately, that means fewer drivers and, ultimately, lower access to food delivery services for millions of Americans. 

Independent restaurants only stayed afloat during the pandemic lockdowns thanks to the crucial assistance of food delivery. In the face of rising inflation and uncertain economic prospects, restaurants in Minneapolis deserve the choice to freely contract with third-party delivery drivers to find new customers and generate more orders. 

Photo Credit: Solomon203

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Popular Blueprint Nebraska Tax Plan Calls for Lower Income and Property Taxes

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Posted by Dennis Hull on Friday, November 5th, 2021, 3:48 PM PERMALINK

An innovative plan to overhaul the Cornhusker State’s tax code is gaining momentum among legislators as state revenue collections continue to smash expectations. 

Blueprint Nebraska, an economic report sponsored by the Platte Institute, outlines 15 concrete steps to modernize the state’s economy, primarily by lowering key taxes and broadening the sales tax base. The recommendations aim to improve five key priorities: job growth, quality of life, population growth, income growth, and research and development. 

Most notably under the Platte Institute’s plan, taxpayers would see $2 billion in additional property tax relief. With a property tax rate of 1.65% – the 7th highest in the country – Nebraska remains uncompetitive in the region, where states like Oklahoma and North Dakota have property tax rates below 1%. The Blueprint plan would significantly ease the burden on Nebraskan homeowners and create a lucrative new incentive for families moving to the region. 

Lawmakers already approved a “Truth in Taxation” law during the 2021 legislative session, requiring municipalities that raise property taxes by more than 2% to inform voters of the increase directly by mail. With the new notification requirement, property owners will no longer be hit with surprise bills as a result of secretive local tax hikes. 

The Platte Institute also hopes to dramatically revamp corporate taxes in the state. Rates currently at 7.81% for income above $100,000 would be lowered biannually before reaching 4.99% in 2028. Small businesses making under $100,000 would see rates slashed immediately by more than a quarter, from 5.58% to 4%. 

The report’s third major priority calls for eliminating the state income tax on Nebraskans’ first $50,000 in earnings. All other income would be subject to a flat tax identical to the corporate rates, phased down to 4.99% in 2028. In exchange for the tax cut, itemized deductions would also be eliminated, ultimately making the tax code fairer and flatter. 

These income tax cuts would allow every family and small business to keep more of their hard-earned dollars in their wallets, while giving potential new residents another reason to choose to invest in Nebraska. 

The true strength of the Blueprint framework, however, is in its proposed alternatives for state funding. The state sales tax rate of 5.5% – already lower than Nebraska’s peer states – would not increase, nor would it be applied to groceries. Instead, the plan would end most other sales tax exemptions, apply the tax to services, and broaden the tax base. 

Polling shows this approach is popular with voters across the political spectrum. In a survey conducted earlier this year, 58% of Democrats, 57% of independents, and 61% of Republicans approved of a tax plan that cut property and income taxes while eliminating sales tax exemptions. 

Relying more on sales taxes gives families and businesses more control over the amount of taxes they pay. With substantially lower property, corporate and income tax rates, as well as an elimination of the inheritance tax, residents will save money and pay taxes in a way they are more comfortable with. Families on both sides of the aisle understand the tremendous implications of the Platte Institute’s modernization plan. 

This year, Nebraska legislators approved a small cut in the top corporate income tax rate from 7.81% to 7.25% over two years. But as state revenues soar to new highs, Platte Institute Policy Director Sarah Curry says the extra money could encourage the legislature to take a bolder approach to cutting taxes. 

“As these revenue numbers continue to be positive, it’s clear a faster implementation of the rate reduction is affordable for the state budget,” she said. Even without adopting the Blueprint plan, “the Legislature intends to eventually match the top personal income tax rate, which is currently 6.84%."  

As the state offers a more welcoming tax structure to future residents and businesses, state finances will also benefit under the Blueprint framework. A modernized tax code would bring nearly $500 million in additional revenue to Nebraska despite big rate cuts, according to an independent fiscal analysis. 

Nebraska legislators should look to the Blueprint framework during next year’s session as they consider how to best utilize higher state revenue and more than $1 billion in federal stimulus funds. Nebraska families and businesses deserve lower rates and a more competitive economy. 

Photo Credit: Tequask

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Youngkin, Sears, Miyares Turn Virginia Red After Commitment to Taxpayers

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Posted by Dennis Hull on Wednesday, November 3rd, 2021, 2:09 PM PERMALINK

Virginia voters chose three candidates who put up a passionate fight against their opponents’ plans to spend more government money and raise taxes. 

All three Republicans running for statewide office – Glenn Youngkin, Jason Miyares, and Winsome Sears – signed the Taxpayer Protection Pledge, a promise to voters that they will oppose “any and all” efforts to raise taxes while in office. Youngkin will be Virginia’s 74th governor, Sears the lieutenant governor-elect, and Miyares Attorney General.  

The three Republican candidates’ written commitment against new taxes gave them a palpable advantage in a state Joe Biden won by a 10-point margin. 

Miyares, who will serve as Virginia’s first Latino attorney general, championed public safety and responsible government spending during his campaign. As a House of Delegates representative, Miyares cut business regulations and sponsored a constitutional amendment for property tax relief. 

Sears will likewise make history as the first woman of color to become lieutenant governor. 

As for Youngkin, tax cuts proved to be a popular part of the prospective governor’s agenda. Since announcing his campaign, the former CEO focused heavily on his plans to ease Virginians’ tax burden, particularly in light of the state’s massive budget surplus last year. 

“Virginia ran a $2.6 billion surplus last year in the middle of a pandemic because the liberal leadership in Richmond overtaxed everybody,” Youngkin said during a candidate forum in McLean last month. “That’s Virginia’s money, not Terry McAuliffe’s.” 

Last month, Youngkin released a “Day One” game plan that would slash taxes in Virginia by a substantial $1.8 billion – the equivalent of $1,500 in first-year savings for a family of four. Among other priorities, the innovative tax plan would eliminate the 2.5 percent sales tax on food and personal hygiene products, provide a one-time tax rebate of $600 and $1,200 for individual and joint filers, and require voter approval for any local property tax increase. 

“It’s time for Virginia to be the place where everyone wants to live, not leave,” Youngkin said during his victory speech Tuesday. 

As Youngkin, Miyares, and Sears signed the Taxpayer Protection Pledge, their opponents doubled down on a tax-and-spend agenda. McAuliffe’s policy proposals – mainly new social and education spending – would have forced Democrats to push for higher taxes, despite a weak statement from his campaign policy director that he had no plans to do so. 

McAuliffe previously promoted tens of millions in new taxes on Northern Virginia residents during his first term as Virginia governor from 2014 to 2018, including a $65 million tax hike on real estate, hotel stays, and gasoline. The former governor also proposed the first $100 billion budget in Virginia history. This time around, McAuliffe hoped to give $2 billion to teachers unions to raise salaries and create a universal pre-K program in Virginia.  

Thankfully, voters can have confidence that Taxpayer Protection Pledge signers Youngkin, Sears, and Miyares will oppose tax hikes and defend the livelihoods of Virginia families and businesses. 

Photo Credit: Glenn Youngkin Campaign

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TCI Gas Tax Continues to Stall Despite Democratic Supermajorities

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Posted by Dennis Hull on Sunday, October 31st, 2021, 5:10 PM PERMALINK

New England Democrats are wavering on a new gas tax as fuel prices spike to 7-year highs across America. While environmentalists continue to push for the embattled Transportation and Climate Initiative, Democratic lawmakers in Connecticut, Vermont, and Rhode Island are making little progress on passing a regressive, multi-state carbon tax in the Northeast. 

During a meeting to boost support for TCI last week, a Rhode Island Democrat awkwardly concluded that Republicans are not the holdup in passing the climate agreement – the problem, rather, lies with dissenters in her party. “Rhode Island has a Democratic majority – significant Democratic majority in both chambers. So…” said Sen. Meghan Kallman, trailing off. Her unstated point: Democrats could easily pass the hyper-partisan climate legislation if only they could all agree on its purported merits. 

But, as gas prices continue to climb close to $4 a gallon in Rhode Island, legislators are thinking twice about the wisdom of a new tax on transportation fuel. Their caution is particularly warranted in light of TCI’s regressive impact on the poor. Consumers will bear the vast majority of $3 billion in gas taxes in the form of higher prices under TCI, with low-income drivers paying a disproportionately large share of their income to support the new tax. Vermont Governor Phil Scott has already expressed reservations about the impact of TCI, saying he feels good about the state’s direction “without the need to raise taxes, and certainly not a regressive carbon tax.” 

IN JUNE, the TCI passed the Rhode Island Senate but remains stalled in the House, despite Democratic supermajorities. However, Governor Daniel McKee remains “totally committed” to joining the agreement, according to Michael Healey, a spokesman for the Department of Environmental Management. “[We] continue to engage legislators, environmental and equity advocates, and other stakeholders to discuss the benefits of TCI,” said Healey. “We are very hopeful that both houses of the legislature will take up the issue early in the 2022 session.” In addition, despite the long road to TCI’s ultimate implementation, McKee is “actively in conversations” with Connecticut Gov. Ned Lamont and Massachusetts Gov. Charlie Baker to make the gas tax a reality. 

Thanks to an existing emissions law in Massachusetts, Baker is the only governor with authority to join TCI unilaterally, without support from the legislature. But a petition effort sponsored by the Massachusetts Fiscal Alliance could successfully place the question before voters on next year’s ballot, giving residents the chance to reject the counterproductive new fuel tax. 

In Connecticut, an amended version of TCI will almost certainly come up for another vote when the legislature reconvenes in February. The program likely has enough votes to pass the House, although the legislature declined to discuss it during a special session in September. However, it faces an uphill battle in the Senate, where President Martin Looney continues to criticize the disproportionate impact of a gas tax on the poor. As Democrats continue to deliberate over how to offset the regressive effect of the gas tax, Looney said he is open to passing a framework to implement TCI if it is paired with “progressive tax adjustments.” 

Local communities and activist groups in Connecticut are also weighing in on the program’s merits. For example, the Hartford City Council joined West Hartford in passing a resolution to urge the state legislature to pass TCI. Hartford Mayor Luke Bronin also supports TCI, as does Governor Lamont. Meanwhile, Connecticut-based environmental action group Save the Sound hired more lobbyists in a renewed push to enact the legislation. 

If implemented, TCI would require fuel producers to purchase a dwindling number of allowances for carbon emissions, essentially forcing a 26% reduction in emissions by 2032. Taxpayers would foot a three billion dollar bill for this radical energy wishlist.

Photo Credit: Judgefloro

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NJ Governor Phil Murphy Wanted to Increase Taxes by $1.2 Billion More than Massive Enacted Tax Hikes

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Posted by Dennis Hull, Doug Kellogg on Friday, October 29th, 2021, 2:38 PM PERMALINK

During his first term, New Jersey Governor Phil Murphy proposed over $4 billion in tax hikes, succeeding in increasing taxes by over $2.7 billion on New Jersey residents. That means he wanted more than $1.2 billion in tax hikes that were left on the table, that would have been another billion dollar-plus burden for Jersey families and businesses.

Even with full Democrat control of the legislature, Murphy’s tax hike wishlist was too much to achieve in three non-election years. That is cold comfort to New Jersey families and businesses who are left to wonder if Murphy will push for those tax hikes should he win a second term in office.

New Jersey businesses are already set to face new tax burdens to replenish the state’s unemployment fund. This, even though New Jersey has only spent a small fraction of the federal American Relief Plan money it has received – which could be used to refill the unemployment insurance fund.

Governor Murphy may sense his tax hiking agenda is not popular, as he recently stated, “I pledge to not raise taxes,” during the first gubernatorial debate. Yet, Murphy has failed to put that promise in writing, and recently chided Elon Musk for his criticism of high-tax blue states, saying being in a liberal state is worth the higher costs.

Meanwhile, Republican challenger Jack Ciattarelli has signed the Taxpayer Protection Pledge, publicly committing to Jersey voters that he will oppose all tax increases should he become governor.

Murphy’s tax hikes – and massive new debt – fueled a nearly 34% increase in the state budget in just four years. He took the budget up to $46.6 billion in 2021, from $34.7 billion, in the last year Gov. Christie was in office.

On top of the enacted tax hikes, Murphy’s debt plan is backed by an automatic property tax increase, should the state have any issuing paying the debt back. This threat of yet another tax hike looms over New Jersey families who already pay the highest effective property tax burden in the nation.

Here is the full slate of tax hikes that Governor Murphy has tried to impose on New Jerseyans, and whether they were enacted or not:

$2,778,000,000 – Total tax hikes enacted under Gov. Murphy:

  • $425 million Corporation Business Tax (CBT) hike – FY19
  • 9% to 11.5%
  • Surcharge on corporations earning over $1 million
  • Highest in the nation
  • $210 million: Corporation Business Tax (CBT) hike – FY21
  • Extended 2.5% tax hike through 2023
  • Originally intended to phase out starting in 2020
  • $436 million Corporate tax code "modernization” – FY19
  • Combined reporting, taxes profits moved out of state
  • $188 million Sales tax expansion – FY19
  • Taxes out-of-state Internet retailers for the first time
  • $100 million HMO premium tax hike – FY20
  • 2% to 3%
  • All residents with HMO health insurance
  • $263 million HMO premium tax hike – FY21
  • 3% to 5%
  • All residents with HMO health insurance
  • $280 million Wealth tax hike – FY19
  • 8.97% to 10.75%
  • All income above $5 million
  • $450 million “Millionaire’s Tax” hike – FY21
  • 8.97% to 10.75%
  • All income above $1 million
  • $4 million E-cigarette tax – FY19
  • 10 cents per milliliter of nicotine fluid
  • $15 million Airbnb tax hike – FY19
  • All online rental booking sites (Airbnb, VRBO, etc.)
  • Must collect 6.625% sales tax
  • Must also collect 5% hotel occupancy fee
  • $12 million Tax on ride-hailing apps – FY19
  • All ride-sharing services (Uber, Lyft, etc.)
  • 50-cent surcharge on solo rides
  • 25-cent surcharge on shared rides
  • $100 million Tax on carried interest – FY19
  • 17% tax on Wall Street hedge fund performance earnings
  • $295 million Average annualized cost for Unemployment Insurance tax hike – FY22
  • New 3-year $885 million tax on employers to replenish Unemployment Insurance Fund
  • 2021: $252 million
  • 2022: $296.6 million
  • 2023: $336.4 million

 

$1,229,000,000 – Proposed Murphy tax hikes (not enacted):

  • $581 million: Sales tax hike – FY19
  • 6.625% to 7%
  • $218 million: Cigarette tax hike – FY21
  • $2.70 to $4.35 per pack
  • $21.5 million: Opioid tax hike – FY20
  • Up to $5 million fee (read, tax) on pain medicine
  • $65 million: Tobacco tax hike & vape tax – FY19
  • 30% to 68% rate on tobacco products
  • New 75% rate on e-cigarette distributors and wholesalers
  • $8.5 million: Firearms fee hike – FY21 (third year in a row)
  • Firearm permit application: $2 to $50
  • Firearm ID card: $5 to $100
  • Carry permit: $20 to $400
  • Dozens of other fee increases
  • $13 million: Sales tax on limousine services – FY21
  • $7 million: Eliminate sales tax cap on boats – FY21
  • $315 million in additional millionaire’s tax – FY19
  • Murphy’s millionaire’s tax proposal would have taken $765 million from taxpayers, $315 million more per year than the version that ultimately passed.
  • Tax hike on Realty Transfer Fee on sales of high-end homes – FY19
  • 1% to 2%

Photo Credit: Flickr - Phil Murphy for Governor

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New Michigan Law Eliminates Punitive Driver License Suspensions

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Posted by Dennis Hull on Tuesday, October 12th, 2021, 6:58 PM PERMALINK

There is reason to celebrate in Michigan, as legislators eliminated driver’s license suspension as a penalty for offenses unrelated to dangerous driving, such as court fines.

“No one should be denied the ability to drive a car because of an unpaid fine or fee,” said Grover Norquist, president of Americans for Tax Reform. “Denying a person a driver’s license because they owe money creates a modern version of the debtors prison - you cannot leave your house until you pay your debts, but you cannot pay your debt if you cannot go to work. This is wrong.”

The practice of indiscriminately suspending licenses tends to trap vulnerable populations into a vicious cycle of debt. Unable to pay down their fines, but legally prohibited from driving to work, millions of Americans are effectively forced to risk accruing even more court fines by driving illegally.

The consequences of a license suspension can be truly devastating. In New Jersey, more than 40% of those with a suspended license lost their job. Meanwhile, in most states, driving with a suspended license is also a serious crime that can easily land someone in jail. Virginia law, for instance, establishes the crime as a 1st degree misdemeanor with up to a year in jail and $2,500 in additional fines.

Michigan’s reforms are arriving in the nick of time for a problem that has only grown in recent years. In 2018 alone, more than 350,000 licenses were suspended in the state for failure to pay court fees.

The practice also creates a significant racial disparity: from 2016 to 2018, driving without a valid license was the most common serious charge at jail admission for black Michiganders, making them more likely than other groups to be jailed for the offense.

Thankfully, drivers in Michigan will no longer lose their driving privileges because of overdue fees and fines. The new law will combat a growing problem: more than 350,000 state licenses were suspended in 2018 alone for failure to pay court fines and fees. High suspension rates also suck time, money, and efficiency out of the judicial system. Half of all Michigan court filings in 2018 were traffic offenses.

These factors make the issue a non-partisan one, reform earns support from members of both major parties.

At least 11 million Americans currently have their licenses suspended – not because their presence on the road is a danger to others, but because they are unable to pay a government fine.

More and more legislatures are addressing the issue. And federal lawmakers are considering the Driving for Opportunity Act. Despite progress, millions of low-income Americans await action in their states so they can regain the ability to travel to work and pay back court debt without the constant fear of arrest.

Photo Credit: versageek

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Connecticut Won’t Join Regional Gas Tax Scheme, Mass. Withdrawal Vote Takes Step Toward Ballot

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Posted by Dennis Hull on Friday, October 1st, 2021, 5:09 PM PERMALINK

The multi-state double gas tax plan known as the Transportation and Climate Initiative (TCI) faced more setbacks recently. After the Connecticut legislature declined to vote to approve joining the compact earlier this year, they just decided not to consider the initiative during a special session this fall.

Connecticut will join Rhode Island and a cadre of other states that declined to pass enabling legislation for TCI, becoming the latest of the program’s initial 12 member states to get cold feet.

Next door, opponents of TCI in Massachusetts won approval to begin collecting signatures for a ballot measure that would withdraw the state from the climate agreement.

Unlike in Rhode Island and Connecticut, the Bay State legislature never committed to join TCI. Rather, Governor Charlie Baker made the move on his own, provoking intense opposition that ultimately resulted in a successful application for a referendum on the issue. Now it is even more likely that Massachusetts voters will have the opportunity to say no to the TCI gas tax on the ballot next November.

The cap-and-trade initiative would require New England vehicle fuel suppliers to purchase energy “allowances” for CO2 emissions. The number of those allowances will then decrease each year, forcing providers to bid up the price they pay for emissions – an expense that is ultimately passed on to consumers through higher prices at the pump.

Taxpayers would bear the brunt of the $3 billion in revenue the program is anticipated to collect over the next decade.

Vermont Governor Phil Scott, who has debated the merits of TCI for years, is having renewed doubts. “I’m not convinced today that it works for Vermont,” Scott said last month to the New England Council. He continued to express reservations about the climate plan, highlighting its impact on lower-income residents. “I feel good about the direction we’re going, without the need to raise taxes, and certainly not a regressive carbon tax.”

In Massachusetts, the House Speaker Pro Tempore has proclaimed a similar sentiment, calling it a “regressive tax” on working class families.

TCI member states will experience rising gas prices and major fuel shortages as a direct result of the new tax. Low-income residents will suffer the most as gas prices skyrocket by up to 38 cents per gallon – a problem compounded by their inability to afford an electric vehicle.

The TCI program now faces an uphill battle to become reality. Only Washington, D.C now remains a guaranteed member of the pact. Dozens of community members and state senators in Stratford, CT pushed back at a “Stop the Gas Tax” rally earlier this month. Even environmental groups are lobbying against the agreement, including the Sierra Club, which cited TCI’s projected 26% reduction in carbon emissions as “too weak.”

The approval of the Massachusetts petition and Connecticut’s decision not to consider TCI legislation this month offer hope for drivers. Fuel consumers in the Northeast deserve better than state-imposed fuel shortages and crippling new taxes on rising gas prices.

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