Doug Kellogg

NY Budget Must Avoid Tax Hikes, Attacks on Jobs, as State Fights Off Coronavirus

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Posted by Doug Kellogg on Tuesday, March 31st, 2020, 4:33 PM PERMALINK

New York State is in the middle of an unprecedented crisis – the coronavirus pandemic. New York City is one of the epicenters of the outbreak in the U.S.

Government is not immune, as multiple state legislators have tested positive for COVID-19, adding Senator James Seward to the list on Monday. Despite all this, state lawmakers still have a budget deadline of April 1 (though rules to allow remote voting could add flexibility to that).

New York’s standard budget process is not exactly transparent, with closed-door negotiations and dysfunctional committees. This year, it has become more mysterious as the capitol building has been cleared out to stop the spread of coronavirus.

On top of that, what was already a massive $6 billion budget gap, is now estimated to be $15 billion due to coronavirus’ impact on the state economy.

Major threats at the start of session included an “ultra” millionaire’s tax, destruction of the independent contractor system (following the lead of California’s AB 5), and a digital services tax (similar to Maryland’s ill-advised policy).

While the last thing government should be doing is taking more of people’s hard-earned money when they need it in a crisis, that does not mean the temptation is not there. Many legislators remain interested in adding new tiers to the millionaire’s tax.

Left-leaning groups like Vocal-NY, the Working Families Party, Indivisible, and Citizen Action, are pushing for any millionaire’s tax hike proposal to pass. A long list of these organizations and others just sent a letter to Gov. Cuomo and leadership urging adoption of two bills from Sen. Robert Jackson which would enact ultra-millionaire’s taxes. One of which is a $4.5 billion tax hike that creates new high-tax rate brackets for people earning over $1 million, $5 million, $10 million, and $100 million annually.

Even this massive tax hike does not come close to closing a $15 billion gap, or even close the initial $6 billion gap – and that’s assuming everyone it targets would stay put and pay, an unlikely scenario.

A proposal to create a digital services tax (S6102/A9112) has not gained momentum. This awful concept would impose extra costs on businesses that would hammer consumers too, while triggering legal challenges as it violates the Internet Tax Freedom Act.

As Empire Center’s E.J. McMahon outlines, New York’s heavy reliance on capital gains taxes leaves the state vulnerable to significant revenue loss. Post-coronavirus, “the decrease in capital gains income is likely to be more on the order of 40 to 50 percent”, McMahon writes.

New York cannot make the tax environment worse. It is already too burdensome, ranking first for state and local tax burden and collections, according to the Tax Foundation. The state’s affordability crisis has driven a massive exodus, and population loss in recent years.

Gov. Cuomo has not expressed interest in increasing taxes, and his budget proposal maintains middle class income tax cuts that passed a few years ago with a multi-year phase-in plan.

Legislators must hold the line on tax increases to avoid driving more people to leave the state. The federal emergency coronavirus bill will send around $40 billion to New York State. U.S. taxpayers are already sacrificing. Though this money is aimed at coronavirus related costs, it does also include $1 billion for education.

Coronavirus has also highlighted how often government gets in the way of jobs and innovation. Americans for Tax Reform continues to track rules and regulations that have been relaxed to make it easier for services to reach people.

Unfortunately, one set of regulations that has not been relaxed is California’s misguided attack on independent contractors, AB5, a model that Governor Cuomo sought to emulate in New York.

There is no excuse to pursue this policy after its disastrous consequences have been made clear by California Untold numbers of jobs have been lost, some through layoffs at outlets like Vox and SB Nation, others as California freelancers lose work and clients, potentially forcing them to leave the state. California has also been sued over AB5 by the American Society for Journalists and Authors (ASJA).

With many industries having exemptions to the law, trucking companies getting a restraining order on complying, and now a successful effort to place an initiative on the ballot that would reform the law, it is clearly a failure.

Legislation to recreate this disaster in New York, S6699A, has not moved, and legislators should keep this job-killing proposal stalled.

Also on the labor front, Gov. Cuomo proposed a reckless expansion of the state’s prevailing wage law into private construction. This is a direct attack on non-union options that will cut them out of projects, and drive up costs for taxpayers in the process. Firms will be driven out of business, and jobs will be lost at a time when New York desperately needs more of both.

This would be triggered if only 30% of funding comes from government incentives – not even direct spending. Worse, a board appointed by the Governor could change the rules.

Unshackle Upstate is leading opposition efforts, and highlighted a Weitzman Group analysis that found “an expanded prevailing wage mandate will increase private construction costs by an average of 30%.”

Medicaid was a major factor driving the $6 billion gap, and remains in need of reform. The Governor charged a task force with finding savings in Medicaid, their sensible recommendations still only amount to a $1.9 billion reduction in spending growth, Bill Hammond with Empire Center explains.

To deal with the gap, Medicaid will have to be cut further, as will education spending.

New York consistently increases education aid in its annual budget, and despite spending among the most per-pupil gets middling outcomes. The education establishment demanded billions of dollars in aid increases this year, while Governor Cuomo proposed spending over $800 million.

Some trimming will be needed, but again, the federal response allots over $1 billion for education.

Also keep an eye out for Governor Cuomo’s effort to use a “climate emergency” to take away localities’ ability to determine taxes and approvals for wind and solar projects.

The deck is already stacked in favor of these projects being imposed on localities in New York. But under the changes highlighted in a recent New York Post op-ed by Jonathan Lesser with the Manhattan Institute, taxes would be determined by the state and local government could impose no rules or restrictions on where wind turbines or solar facilities could be built.

There is much at stake as New York’s final budget comes together in the most difficult of circumstances. Protecting taxpayers will best prepare the state to recover economically as coronavirus subsides.

Photo Credit: Albany.org

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Kentucky Sports Betting Could Be Great, But Faces Threat of High Taxes, Bad Regs

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Posted by Doug Kellogg on Friday, February 28th, 2020, 11:01 AM PERMALINK

The Kentucky legislature is taking its second swing at legalizing sports betting after striking out last session.  

Last year’s bill was perfectly good, with very competitive tax rates. That carries over to this year’s effort. The current bill, House Bill 137, would legalize sports wagering with a tax rate on in-person bets of 10.25%, and 14.25% for online.

These rates could certainly be lower, Nevada and Iowa have tax rates of just 6.25%. Still, they are solid, as tax rates on bets over 15% start to reduce betting activity. For legislators interested in using revenues to cover pension fund shortfalls, this should be of particular concern.

Kentucky should be looking to be as competitive as possible on taxes and regulation now. Sure, some of their neighbors might be pushovers. Tennessee passed one of the least competitive sports betting bills in the nation – with high tax rates, and unnecessary, costly giveaways to leagues. And Illinois’ 15% tax rate on bets remains one of the highest in the country (still behind Tennessee’s 20% though).

Yet, Indiana has very consumer and market-friendly sports betting laws, with a 9.5% tax rate on gross gaming revenues. It’s why they’ve been trouncing another neighbor, Illinois, on sports betting numbers. West Virginia also maintains a competitive 10% tax rate on revenues.  Also, Ohio continues to inch toward action on sports betting, which would bring more competition to the table.

As is, Kentucky’s legislation can compete on taxes, but amendments proposed by Representative Petrie would drive those rates to a sky-high 29.25% for in-person bets, and 42.25% for digital. Petrie also proposed an amendment allowing local governments to bar sports betting and fantasy sports.

Needless to say, these proposals would kill sports betting if they somehow were attached to the bill.

While legislators fight off bad policy on taxes, there is language already in HB 137 that deserves a look.

The bill includes a provision that would allow sports leagues to approve or disapprove in-game betting. Even if you think in-game betting deserve extra scrutiny, there is no reason to think sports leagues alone can or should provide it.

Another provision would force sports betting operators to share data and information on betting activity with sports leagues. There is already information sharing with government regulators, and the operators themselves have the most incentive to maintain betting integrity and root out bad actors. Adding the burden of sharing this information with leagues only drives up costs for businesses, and does not improve integrity.

While less ridiculous than some policies discussed in other states – like direct payments to leagues (a.k.a. “integrity fees”), or mandates that betting operators must use official league data – these policies seem designed to give sports leagues power over other businesses for no reason.

Like the Astros, some sports leagues seem very interested in rigging the game to benefit themselves. Legislators should not give in and make government a willing accomplice.

Kentucky has a solid starting point on sports betting taxes, legislators should reject the bad ideas still on the table, and craft a final product that will help Bluegrass State sports betting industry compete and win.

Photo Credit: Wikimedia Commons

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DeSantis-Led Occupational Licensing Reform Push Would Make Florida an Even Better Place to Work

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Posted by Doug Kellogg on Wednesday, February 26th, 2020, 11:27 AM PERMALINK

Despite its welcoming tax environment, and the “Florida Man” jokes that make it seem like anything goes in the Sunshine State, Florida is a bureaucratic nightmare when it comes to occupational licensing.

The state currently has the fifth most burdensome licensing laws in the U.S., according to the Institute for Justice.

Government should not place unnecessary barriers between people and jobs. It’s commonsense. Licenses, where they exist at all, should clearly be necessary to protect public safety – and the burden to prove this should be on licensing boards.

The reforms Governor DeSantis has proposed are likely the most sweeping set of reforms pitched in a state at one time. They would address the state’s licensing problem, and make it easier for Floridians, especially people just starting careers, to find work.

Governor DeSantis has said in discussing his reform package, “If you did nothing, it seemed like government would always get bigger. And that was the default. I think the default should be that if you do nothing, then government actually gets smaller because that means that we have more freedom and opportunity.”

The biggest proposed reform addresses this point. It is a sunset review process that would require the legislature to review the state’s occupational licenses (with some exceptions), and licensing boards would have to make the case as to why any licenses they wish to keep are required to protect to public safety.

Licenses that are not affirmatively approved during the process would automatically end, or “sunset.” Meaning anyone could then engage in that profession or trade without having to go through onerous testing and pay fees. Ohio was the first state to pass a version of this reform in late 2018, setting a great example for other states to follow.

The Governor’s reforms include immediately exempting some professions from existing licensing requirements, and changing interior design from a profession that requires a license to a voluntary certification.

Voluntary certifications make far more sense for professions where someone may want to demonstrate their ability to meet a set of standards, but where there is no need to outright bar people from practicing if they don't jump through hoops.

The Governor’s proposals also seek to allow Floridians licensed in one county to have that license recognized in another county. Yes, Florida licensing is currently so absurd that even counties within the state do not universally recognize other county licenses. Fixing this is a great step, which hopefully can soon be followed by interstate reciprocity, as we’ve seen in Arizona.

Another key change would be preventing the state licensing authority from barring people with student debt problems from getting a license. It’s counterproductive to punish someone with student loan debt by preventing them from earning money to pay back that debt. Even after covering all of these cutting edge reforms, there is more to the Governor’s proposal.

Governor DeSantis and Florida legislators deserve a lot of credit for leading on this issue, and getting government out of the way of Floridians who are looking for work, and starting businesses.

This approach is how you take a state that is already great on taxes, and make it even more friendly for workers and employers.  

Photo Credit: Flickr - Gage Skidmore


T-C-I is a Massive T-A-X that Would Crush Pennsylvania Families

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Posted by Doug Kellogg on Tuesday, January 28th, 2020, 1:28 PM PERMALINK

Until recently, few people had heard of the Transportation Climate Initiative (TCI), the compact of 12 states agreeing impose a cap and trade program on transportation fuels. Now, after the program released the first details on what it would do to accomplish its goals, the uber-expensive gas tax scheme is becoming controversial.

States are getting a good look at the high costs TCI promises to impose on residents, for little environmental benefit. Here are some of the big reasons why TCI is expensive, ineffective, and unpopular…

It is a costly new gas tax:

  • TCI could impose a $56 billion annual gas tax on participating states. According to TCI’s own numbers, the impact on gas prices could be as much as a 17-cents-per-gallon.
  • The hefty cost won’t come close to keeping enough cars off the road to reach its goals. Research shows it takes more extreme increases in gas prices to reduce demand for driving. That means the actual added costs on gas could be four times higher than the initial TCI estimates.  
  • The cost of carbon implied by TCI is $2,700 per ton, but the existing Regional Greenhouse Gas Initiative (RGGI) price is $6 per ton. Based on the program’s proposed $45 billion cost to cut 16.5 million tons of CO2 emissions, the TCI cost of carbon is $2,700 per metric ton – compare that to the Regional Greenhouse Gas Initiative’s $6 per ton cost for an emissions allowance.
  • Pennsylvania’s gas tax is already the 2nd-highest in the nation. Already-overburdened families would get hit with an additional yearly cost of $210 per household under TCI.
  • Everyone will pay more for goods. Every Pennsylvanian, even the few non-drivers, would get hit with higher costs as goods shipped to the state by truck, will cost more to absorb the artificially inflated gas price.

It won’t do much for the environment:

  • TCI will have a minimal impact on emissions, as low as a 1% reduction. TCI documents claim a small 1-6% reduction in emissions from the program, meanwhile emissions will already be reduced by 19% due to existing policy.
  • TCI’s impact on temperatures would be too small to measure. Using the same modeling system as the U.N., Dr. Brent Bennett with Life:Powered found TCI’s impact on temperatures would be less than one thousandth of a degree.
  • TCI overstates health benefits. Even the EPA’s most rosy scenario for its similar “Affordable Clean Energy Rule” is only one fifth the value claimed by TCI.
  • Helps rich electric vehicle drivers. TCI might do more for well-off electric vehicle drivers than it does for the environment. They would pay lower fuel costs, and get to drive in HOV lanes in even more heavily-subsidized EVs. Meanwhile those who can least afford to pay more for a necessity, get hit with more expensive gas.
  • Pennsylvania is already slashing CO2 emissions. The state’s emissions fell by 23 percent between 2005 and 2017.

It’s unpopular:

  • Only 34% of respondents favor TCI when they know the cost. A poll conducted in Virginia found few residents favored TCI when they knew what it was and what it would cost.
  • Governor Sununu of New Hampshire announced the state would withdraw from TCI. He said, “This program is a financial boondoggle and the people of New Hampshire will never support it."
  • VT Governor Scott, and ME Governor Mills, have both voiced opposition to increasing gas prices.
  • The AFL-CIO President for Vermont slammed TCI, saying it would “do nothing more than take dollars out of the pockets of working people…”

 

Photo Credit: Flickr - Benson Kua

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Michigan Task Force Recommendations Offer Promise for Overcrowded, Costly Jails

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Posted by Doug Kellogg on Monday, January 20th, 2020, 3:44 PM PERMALINK

The Michigan Joint Task Force on Jail and Pretrial Incarceration released long-awaited recommendations last week to reform the state’s overcrowded jails. Michigan’s jail populations have rapidly gone up, a sign of a system that is not delivering the public safety, justice, and efficiency that people deserve.

In 2017, taxpayers spent an estimated $478 million on county jails. It’s not just that high costs are unaffordable for taxpayers, but they are a warning sign that too many people are being jailed, often for bad reasons, and reform is needed.

The data-driven recommendations from the Joint Task Force on Jail and Pretrial Incarceration offer an extensive set of reforms needed to create the more efficient, effective, and affordable jails that Michigan communities deserve.

The reforms include:

Ending the practice of suspending driver’s licenses for offenses that aren’t related to safe driving, like owed court debt. Driving without a valid license was the third most common reason for admissions to a correctional facility. Reform in this area would mean people can get to work to pay their fines, and don’t rack up criminal charges and lose the ability to hold a job because of a lack of means.

Decriminalizing low-level traffic misdemeanors. Low level offenses that currently entangle people in the criminal system that pose no risk to the community can be better handled by traffic courts.  

Taking into account one’s ability to pay when imposing fines. Fines are meant to be a punishment first, not a revenue raising tool. It makes sense to limit the amount of fines to something an offender can reasonably be expected to pay. Imposing an exorbitant fine that an offender can never reasonably pay ties them to the criminal justice system in perpetuity.

Diversion for behavioral, mental health issues. With addiction driving so many people into jails, diversion that gets people with mental health and addiction issues into programs that can help is a needed reform.

More alternatives to arrest for police officers. Allowing officers to use appearance tickets when arrest and jail are not warranted for the suspected crime is a smart step that empowers police, and avoids pulling people into the jail system unnecessarily.  

Caps on jail time for technical parole violations. The possibility of being jailed is important to incentivize people who are on parole to keep up with their obligations. However, that should be weighed against the unintended consequences (losing a job for instance) for otherwise well-behaved parolees.

Defendants must be tried within 18 months of arrest. Ensuring the justice system delivers speedy trials and people are not left in jail for extended periods of time is a win for liberty and safety. Extended jail time can make people more likely to commit future crimes.

Improved data collection. It is vital taxpayers know what is happening in the criminal justice system. Better data collection accomplishes this, and it is also critical to tracking the impact of reforms. If something is not working as anticipated, citizens and legislators should know quickly, and be able to act with confidence.

There are a couple areas that are left to counties that will be important for the counties to implement in the right way. The task force recommends bail reform, with release unless the court determines that a defendant poses a risk to the community, themselves, a flight risk, or has committed certain crimes (violent or against children). Counties will have to ensure effective risk assessment fills in where reliance on cash bail is reduced to ensure public safety is not put at risk.

Michigan residents have every reason to be excited about the task force recommendations. Now, the road to reform turns toward hammering out legislation. ATR looks forward to working with the legislature to ensure the best version of these proposals becomes law.

Photo Credit: Livingston County, MI

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NJ: California-Style Attack on Contractors Will Hurt More than Just Uber & Lyft

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Posted by Doug Kellogg on Wednesday, January 8th, 2020, 11:54 AM PERMALINK

"It may be a new year, but the same policy debates from last year continue in Trenton. The first major item on the agenda is borrowed directly from California’s uber-liberal policy playbook, legislation that would aggressively redefine what qualifies as an independent contractor.  

It’s one thing to want to address cases of wage theft, or an issue in a specific business sector. But it is far different to radically alter the state’s economy, business climate, and employment opportunities, with a blatant giveaway to big labor..." Read the full article on Save Jersey HERE.

Photo Credit: Wikimedia Commons

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New Jersey's Attack on Free Speech Blocked in Court

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Posted by Doug Kellogg, Andrew DiMatteo on Tuesday, November 19th, 2019, 2:05 PM PERMALINK

That pesky constitution just keeps getting in the way of blatant attempts by state lawmakers to cripple free speech, and attack citizen groups and non-profit advocacy organizations.

A bill (S1500) passed in New Jersey that would force donor disclosure for citizen groups that weighed in on state legislation has been blocked by a federal judge. The bill would also affect independent expenditure organizations, or PACs.

The legislation was driven by a drawn-out controversy. Governor Murphy was under duress due to his use of non-profit entities to advance his agenda. Rather than focusing on a narrow issue – sitting public officials informally running non-profits – opportunistic legislators seized their chance to stifle free speech and citizen advocacy much more broadly.

Even Murphy initially opposed the bill he eventually signed because of constitutional concerns. Well, now that has been proven correct, as the state was sued successfully by Americans for Prosperity. American Civil Liberties Union-NJ, the New Jersey League of Conservation Voters also filed lawsuits.

The Supreme Court case Alabama v. NAACP already upheld the right to privacy of non-profits against state disclosure mandates.

The broad opposition from across the ideological spectrum shows just how significant an attack on the First Amendment New Jersey’s law is, and remains as there is plenty of damage to be done if the law is updated by the legislature, even with this decision.

Of course, unions are exempt from the disclosure mandate, the predictable special treatment for a political powerhouse shows how insincere the motives are behind the disclosure push.

Such legislation would set a dangerous precedent for future regulation of advocacy groups. The massive restriction on non-profit organizations would make it difficult for an average individual to create an organization. It would also equate educating the public about active legislation with direct spending on political candidates.

Disclosure mandates would make donors subject to retribution, harassment, and possibly worse. In today’s polarizing political environment, the preservation of free speech is even more important. This chilling infringement on the first amendment would discourage the free exchange of ideas, limiting constituents’ ability to hold their elected officials accountable. Which is ironic: a law touted as being a remedy for corruption would make it worse in reality.

Although many in the Garden State may see a problem with the non-profit run by Governor Murphy’s allies, unconstitutional restrictions on free speech for everybody else is not a solution, and in fact would enable corruption in Trenton.

 

Photo Credit: Jimmy Everson DVM


Clean Slate Promises Less Crime, More Jobs & Stronger Communities for Michigan

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Posted by Doug Kellogg on Monday, October 21st, 2019, 3:26 PM PERMALINK

For people who have paid their penalties, and served their time in the criminal justice system, rejoining society can be a major challenge. The stigma of a conviction, even for nonviolent and misdemeanor offenders, can follow them as they try to build a new life.

They should have a chance to earn trust again, rather than being relegated to second class citizenship and punished far beyond what was intended. It’s not just the right thing to do, but smart policy that reduces recidivism, and strengthens families and communities. Making it easier to expunge certain crimes offers that opportunity.

A study from University of Michigan law school researchers found people’s wages went up by 20 percent on average one year after expunging their record, and that former offenders who have expunged their records very rarely break the law.

Michigan is currently considering a number of commonsense “Clean Slate” criminal justice reform bills that would expand expungement, and make the process automatic in some cases for people who have not reoffended – HB 4980, HB 4981, HB 4982, HB 4983.

While Michigan has expungement, it does not allow for records to be automatically expunged, usually known as “Clean Slate”. The state allows a person with a felony offense and no more than two misdemeanor offenses to petition to expunge the felony offense. Someone with two misdemeanor offenses and no felony offenses can expunge the misdemeanor offenses.

HB 4980 would mean an eligible offense is automatically expunged. A variety of crimes from sexual assault and violent crimes, to serious misdemeanors (like breaking and entering) would not be eligible. It requires that ten years have passed since the date of any sentence has been completed, and restitution has been paid. A person could not have more than two felonies or four misdemeanors automatically set aside.

Ten years is a significant amount of time. Justice Department figures show that re-arrest for former nonviolent offenders is very rare five or more years after release. 

HB 4981 would make it possible to expunge some traffic offenses, but not serious ones like drunk driving, or if injury is caused, or if someone causes an accident while driving without a license. Currently, no traffic-related crimes can even be expunged in Michigan, which is onerous. The waiting period to apply for expungement would be reduced from five to four years following completion of any sentence.

HB 4982 would simply allow for the expungement of any misdemeanor marijuana-related offenses that are no longer a crime following the passage of Proposal 1 last year – a state voter initiative that legalized adult-use marijuana.

HB 4983 reduces the waiting period to petition to expunge a misdemeanor offense from five to three years. The waiting period for a felony offense would remain at five years.

People who have proven they have learned from their crimes should have the chance to leave that past behind, build new lives, and become full, contributing members of their communities. The opportunity to clear one’s record is an important incentive for people to avoid committing another crime later. That’s why these bills are so important as the end of this year’s session nears in Michigan.

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Michigan Governor Wants to Run Up Tax Rate on Sports Betting

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Posted by Doug Kellogg on Thursday, September 19th, 2019, 5:32 PM PERMALINK

Sports betting is advancing down the legislative field in Michigan. A House committee advanced a package of bills to legalize sports betting Tuesday.

The current legislative package (HB 4916) would legalize sports betting with a tax rate of 8%, and a licensing fee of $100,000 – very competitive policies.

For whatever reason, Governor Whitmer and some others would like to snatch defeat from the jaws of victory, and are pressing for a much higher tax rate of 15%, perhaps more.

It has been a rough past few years for Michigan sports teams, but that’s no reason for the Governor to steer the state toward losing tax policy on sports betting.

Michigan would be in a good place on sports betting tax rates with HB 4916. Neighboring Indiana has a 9.5% tax rate on adjusted gross revenue. Michigan’s tax rate would come in under that, and well under nearby Illinois’ 15% tax rate.

If anything, the debate in Michigan should be about lowering the rate. Increasing the tax rate, as Governor Whitmer wants, would put the state at a massive disadvantage.

It would then be easy for neighboring states that have not legalized, like Ohio, to come in with a lower tax rate than their regional rival. The Buckeye State has yet to legalize sports betting, but it is a ripe target for legislators in Columbus who finished work on their two-year budget this summer.

States that have legalized sports betting with lower tax rates have succeeded, New Jersey was the first and has seen industry performance catch up with Nevada already. Meanwhile, states that have not had the results they hoped for tend to have high tax rates: Pennsylvania with an effective 36% tax rate, Delaware and Rhode Island take over 50% of betting revenues.

There is a ways to go before the finish line on sports betting in Michigan, and some things will change. One thing that should not happen is making the tax rate higher.

Photo Credit: Michiganradio.org


Ohio Moves Toward Nuclear Plant Bailout

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Posted by Doug Kellogg on Monday, July 22nd, 2019, 5:10 PM PERMALINK

Hopes that state legislators in Ohio would avoid meddling in energy markets with a bailout for struggling nuclear power plants is fading fast. A vote is now planned for Tuesday, July 23rd in the House, which would be voting to approve a Senate version of the bailout legislation the House initially passed.

The now notorious House Bill 6 (HB 6) is a response to a long, ongoing push from FirstEnergy to get state (and federal) money to assist nuclear power plants it says are struggling and would have to close without an infusion of taxpayer dollars.

The bill does reduce renewable energy mandates and efficiency mandates to lower their cost to consumers. In fact, the better version of the bill would have done away with Ohio’s renewable energy mandates entirely. The current version of the bill promises to save ratepayers $140 million over six years even after the bailout charges. This trade is better than a bailout-only bill, but there are many problems with HB 6.

The headline cost is $150 million per year for nuclear plants alone, over 6 years that amounts to nearly $1 billion in taxpayer money being given away. That money will go out the door with few strings attached, and little oversight.

Plant owners have cited a need to purchase fuel to keep the plants going as a reason for urgency for the bailout. However, if the money they get from taxpayers exceeds fuel costs, they don’t have to give it back.

One report questions whether the plants need the money at all.

And the former chairman of the Public Utilities Commission testified to the Senate that: “there could be 50% fewer new natural gas plants built in Ohio if nuclear is subsidized, creating the opposite effect and raising costs by about $16 million a year instead.”

If energy costs went up as a result of the bailout, that would be a huge counterweight to provisions limiting renewable mandates and lowering costs.

Make no mistake, consumers and businesses will be paying costs directly for the bailout. Residential customers will pay 85-cents, and industrial/commercial businesses will pay $2,400 per month. Making matters worse, small commercial enterprises do not have bailout fees capped, and could be swamped with higher costs.

Hitting consumers and businesses with higher costs to directly pay for the bailout will drive up costs for products and services, and generally drive up the cost of living in the state.

Reforming renewable energy mandates would be great. But a Republican-dominated legislature should be able to do better than flawed policy like HB 6 which will impose guaranteed costs on Ohioans, and mess with a competitive energy market, leading to unintended negative consequences.

No wonder Senator Uecker slammed the bill, saying, “When you put lipstick on a pig, it’s nothing more than a pig."


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