Kelly William Cobb

Court of USA TODAY Rules e-Tax Constitutional

Posted by Kelly William Cobb on Friday, December 18th, 2009, 4:53 PM PERMALINK

Today's USA TODAY opinion page sounded more like it was written by a politician than an editorial writer.  Citing a boom in internet sales over the past decade, USA Today called for taxing internet transactions.  The primary justification: "Hard-pressed states could use the money to reduce budget deficits."
The paper completely dismissed a 1992 U.S. Supreme Court ruling that such taxation is a clear violation of the dormant commerce clause and unconstitutional given the burden of tracking nearly 8,000 tax districts that aren't aligned with zip codes and change constantly.  But, the Court of USA TODAY ruled instead that "it's hard to imagine that today's software wizards couldn't figure out a solution."  Yes, they probably could, but the potential for "software wizards" to figure this out in the future doesn't make it any less of a current constitutional violation in some states.  And even after they do figure it out, the service would come with a hefty price tag - one that brick-and-mortar retailers wouldn't have to pay.
Most proponents of the tax (including the New York Times and Pittsburgh Post-Gazette) have argued that it’s a question of fairness; that online retailers should collect because brick-and-mortar stores have to as well.  This ignores the fact that brick-and-mortar retailers have to collect one tax, while online retailers would have to collect nearly 8,000 taxes at multiple rates (including combinations of state, county, and city taxes).  That's not very fair either.  Further, as an opposing view op-ed points out, states already have "use tax" laws on the books to require purchasers to remit the tax themselves.  Just because a state has enforcement problems doesn't make forcing out-of-state retailers collect thousands of different taxes any less unfair.
So, what's the real justification for taxing internet sales?  As USA TODAY put it: “Internet sales have skyrocketed, from $27 billion in 2000 to $133.6 billion last year.”  That said, their entire editorial could have been summed up by one famous Willie Sutton quote. When asked why he robbed banks, Sutton simply replied "because that's where the money is."
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Gregoire Lied, Her Tax Pledge Died...Again

Posted by Kelly William Cobb on Friday, December 11th, 2009, 3:04 PM PERMALINK

When Governor Christine Gregoire (D) ran for governor in 2004 she promised no tax increases. In her first year of office she raised the gas tax and various other taxes by hundreds of millions of dollars.  Then, in her 2008 gubernatorial race, Gregoire said flatly, “I won't raise taxes in tough economic times. We're not going to be raising taxes.” Well…you guessed it. 

This week, Gov. Gregoire announced at least $700 million in tax increases as part of her new budget plan to cover up a $2.6 billion overspending problem. Let’s ignore the fact that Washington State has increased spending by 18% between 2005 and 2008 alone – not even counting Gov. Gregoire’s most recent year in office.
The governor has yet to release a detailed list of tax increases, but she has indicated that it will involve eliminating a number of tax exemptions. So, while we await the Governor’s list of economically damaging revenue grabs in the midst of a recession, our friends at the Evergreen Freedom Foundation remind us that the state spent $20,000 on a capitol holiday tree, $30,000 on a state poet laureate, $3 million on the Museum of Flight Space Gallery, and $511,000 on a state subsidized golf resort. These are small examples of a larger spending addiction.
If Gov. Gregoire looked a little closer at where the money is going instead of who to take it from next, Washingtonians could have more sympathy for her when she says things like, “I presented a budget proposal that while balanced is unjust.” Until then, the only injustice is the Governor’s blatant electoral lies and constant raiding of taxpayers’ wallets.
(photo by WSDOT)

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It's Time for a Spending Cap in Minnesota

Posted by Kelly William Cobb on Wednesday, December 9th, 2009, 5:54 PM PERMALINK

Minnesota Gov. Tim Pawlenty’s proposed state spending cap took its first step forward on Monday. Following a rally with U.S. Representative Michele Bachmann (R-MN-6) in the state capital rotunda, the Minnesota Senate Taxes Committee held its first hearing on a constitutional “Spending Accountability Amendment.” The measure would simply restrain general fund spending to the amount of revenue received during the previous biennium. In other words, the state can’t spend what it can’t already raise.
Spending in Minnesota has grown widely out of control. In, 1999 spending and gross state product chained to 1989 levels had grown 65% and 63% respectively – nearly equal. In 2008, just a decade later, chained state spending was at 117%, while GSP was at only 84%. Runaway spending beyond what the economy can sustain has resulted in another $1.2 billion deficit that could skyrocket to as much as $5.4 billion in the coming years.
And if there was ever a sign that a spending cap is necessary in Minnesota: three of the four groups testifying in opposition to the spending limit were the Association of Minnesota Counties, League of Minnesota Cities, and the Minnesota Council of Nonprofits. Notice the common thread? They all represent those who feed off taxpayer dollars and always want more.
Americans for Tax Reform had the opportunity to testify in strong support of the measure. For a copy of ATR’s testimony, click here.

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2009 State Tax Trends: Overview of Tax Changes and Spending Habits

Posted by Kelly William Cobb on Wednesday, November 18th, 2009, 12:37 PM PERMALINK

As the end of 2009 nears, Americans for Tax Reform has compiled a preliminary report on tax hikes in state legislatures across the country. The report, 2009 State Tax Trends: An Overview of 2009 Tax Changes and Spending Habits, provides an initial overview of why states faced some of the largest budget battles in decades, how trends in government spending factored in, and what the tax-hikes-du-jour were for state policymakers.

This year, lawmakers opted for targeted tax hikes as opposed to broad-based increases, despite being more economically distorting. Of the 32 states that hiked taxes this year, the following trends are of note:
  • 14 states and D.C. raised cigarette taxes, more than any other type of tax this year. The trend continued despite the fact that tobacco tax collection is already coming in under projections.
  • 8 states specifically went after small businesses and high-income earners by raising marginal income tax rates. While most were marketed as “millionaires” taxes, they kick in with incomes as low as $125,000.
  • 8 states raised taxes on alcohol beverages, with many simply extending the state’s sales tax to include alcohol.
  • 8 states raised taxes on internet commerce, known as eTaxes. Check out for more information.
Some other key findings:
  • Tax cuts did not make state budget crises worse. In fact, states with budget surpluses in FY2009 actually cut taxes by over $105 million in the two years prior, while states with the largest budget gaps raised taxes well beyond other states – by over $370 million.
  • Over the past two recessions state spending growth either matched or was below GDP growth. From 2005 onward, spending grossly outpaced GDP, causing a foreseeable gap in spending and tax revenues that cause the largest drop in tax collection in over 50 years.
  • Higher income households move from states with high tax rates and burdens. Households that migrated from high-tax states had average incomes of $70,525 – above the national average of about $50,000. Households that specifically chose to move to low tax states had incomes of nearly twice as much, at $101,091.
Click here for the preliminary 2009 StateTax Trends report. At the end of 2009, ATR will be updating the publication to include more information on specific states, specific taxes, and other trends across the country. In the meantime, keep checking for state tax and budget updates.


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Michigan Gov. Granholm's Healthcare Tax Flatlines in Senate

Posted by Kelly William Cobb on Thursday, October 29th, 2009, 1:37 PM PERMALINK

A new tax on doctors flatlined in the Michigan Senate yesterday, despite multiple attempts by Gov. Jennifer Granholm to resuscitate it. The 3% tax hike, which has been a priority of Granholm and some legislators, suffered a clear and bipartisan defeat when Senators rejected it by a whopping 32-4.

The misnamed “Quality Assurance Assessment Program” (QAAP) was a $300 million tax hike that would have increased the cost of medical care by forcing doctors to pass the tax on to patients and insurance companies, ultimately raising premiums. Proponents argued that the tax would also bring in another $500 million in matching federal Medicaid money. However, federal matching aid is certainly not “free money.” It saddles the nation – Michigan included – with higher debt or higher taxes.
The move is a win for taxpayers, families and doctors, but there are still numerous tax hikes on the table – including on sporting events, cigarettes, bottled water, and more. Granholm has pushed for the hikes despite stating in 2007 that she was done raising taxes, and repeating in 2008, “You will not see a tax increase from me in this year coming up.” For your entertainment, click here to hear Granholm recently say she regrets making those commitments; in other words, lying to Michiganders.
Michigan residents: CLICK HERE to write your lawmaker and tell them to continue their opposition to tax hikes. Also, click here for ATR’s recent letter to the Senate.

(photo by brykmantra)

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Granholm Turns Up the Tax Hike Rhetoric in Michigan

Posted by Kelly William Cobb on Friday, October 23rd, 2009, 5:41 PM PERMALINK

Earlier this month, the Michigan legislature succeeded in passing a balanced budget with no new taxes. But like a child who failed to get her way, Gov. Jennifer Granholm is not giving up on her push to raise the tax burden in Michigan.
The Granholm strategy: threaten cuts to education funding to scare parents, teachers, and lawmakers into supporting tax hikes. Last month, Granholm and the teachers’ union killed a proposal to modestly cut spending by less than 3%. Then, after a budget with smaller cuts was passed, Granholm vetoed $51.5 million in excess funding to wealthy school districts (a good idea), but called for tax hikes to fill the hole she created. Now, Granholm has announced massive education spending cuts will be necessary unless taxes are raised, citing a report by her own Treasury Department that contradicts the nonpartisan Senate Fiscal Agency.
Simply put: Granholm is playing the politics of fear to strong-arm legislators into passing a tax increase. To date, tax hikes have been proposed on personal income, bottled water, sporting events, cigarettes, and more. However, the tax-hike-du-jour is a 3% tax on doctors – a proposal that will raise the cost of health care and drive physicians and more businesses out of Michigan.
Nevermind that Michigan's punitive tax code has contributed to the loss of 750,000 private sector jobs over the past decade. Nevermind that nearly 420,000 individuals and small businesses have fled the state during the past ten years - taking $9.5 billion in taxable income out of Michigan's economy. Nevermind that the unemployment rate is at an historic high of 15.3% and climbing. And certainly nevermind that Michigan's excessive tax burden on families and businesses is much of the cause for state's economic troubles.
CLICK HERE to write your Michigan lawmaker and tell them taxes in Michigan are high enough.  Also, click here for ATR's recent letter to the Michigan Senate urging them to continue opposition to tax increases.


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Michigan Gov. Granholm and Teachers Union Pave the Way for Tax Hikes

Posted by Kelly William Cobb on Thursday, October 1st, 2009, 3:04 PM PERMALINK

Two hours into a government shutdown last night, the Michigan legislature caved on passing a set of budget bills and instead approved a temporary measure that keeps the government running for another 30 days. The midnight hold-up: approval of a K-12 budget that cuts school aid fund spending by less than 3% ($218 per pupil). The demand: higher taxes on Michigan residents.

 The Senate had already passed a balanced budget earlier this summer when Gov. Jennifer Granholm (D) and House leadership began discussing higher taxes. In the crosshairs: a new tax on hospitals and doctors, bottled water, cigarettes, entertainment and sports tickets, as well as reductions in tax credits for low-income Michiganders and the elimination of business deductions.
Then a few weeks ago, House Speaker Andy Dillon (D) joined Senate Leader Mike Bishop (R) in agreeing to $1.2 billion in spending cuts and no tax increases. But, with the collapse of budget negotiations over school funding, all these tax hikes are back on the table.
Most of the state’s tax-hike-free budget bills have been approved by both chambers, after spending cuts were carefully crafted by a conference committee. However, proponents of higher taxes had a simple plan. If they could stall attempts to pass at least one of the tax hike-free-budget bills, it would force either a shutdown or a temporary budget that buys another month for special interest groups to campaign for tax hikes. It also provides lawmakers an excuse to vote for higher taxes, claiming the initial budget plan just didn’t have the votes.
So, early in the day Gov. Granholm attempted to stall the budget by threatening to notify state employees of a government shutdown unless a temporary budget was sent to her immediately. Once the legislature balked at that plan, the Michigan Education Association stepped in to finish her job.
Before the education budget vote at the end of the night, the MEA’s taxpayer funded lobbyists targeted several lawmakers to effectively kill the bill, thus sending it back to conference and burying hopes to finish a long awaited budget. The MEA then released a statement claiming they were “very disappointed that we’re still without a budget agreement.” Well, so are Michigan residents, taxpayers, and lawmakers who worked to provide a tax-hike-free budget agreement, until the MEA killed it at the eleventh hour.
Having bought one month, Gov. Granholm now has an opportunity to veto the tax-hike-free budget bills she disapproves of without causing a government shutdown – knowing her tax hikes can still be pursued. Further, House Speaker Dillon, the shepherd of the 2007 multi-billion dollar tax increase package, has an excuse to accept tax increases in the budget and backtrack on the spending cut agreement. In fact, the House plans to vote on some of the tax hikes as soon as today.
Nevertheless, tax hikes will be a difficult sell in the State Senate. After some legislators complained about spending cuts, the republican caucus called their bluff and put brought a democrat income tax hike to a vote. It failed a bipartisan and resounding 33-2.
CLICK HERE to contact your Michigan lawmakers and tell them to oppose taxes in the Michigan budget. Also, check out and for more budget updates.
(photo by matthileo)

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Massachusetts Tax Hiker Dodges Alcohol Tax

Posted by Kelly William Cobb on Thursday, September 3rd, 2009, 12:13 PM PERMALINK

Time and time again, ATR and taxpayer advocate groups point out that raising targeted taxes on specific goods (tobacco, alcohol, etc) results in consumers crossing state lines to find lower prices.  And time and time again, legislators dedicated to taking more of their residents' money ignore both the data and empirical evidence (see here for example).

In late July, the Massachusetts legislature voted to raise the state sales tax from 5 to 6.25 percent and apply it to purchases of spirits, beer, and wine for the first time (the state already imposes other higher taxes on alcohol beverages).  The tax hike came despite the fact that neighboring New Hampshire has no tax on spirits or wine.

Yet, in a hypocritical turn of events, this week State Rep. Michael Rodrigues (D) was caught lugging three bottles of tax-free liquor and two bottles of tax-free wine out of a New Hampshire liquor store just north of the Massachusetts border.  Rodrigues not only voted in favor of the tax hike, but sits on the powerful House Ways and Means committee that first wrote and approved the legislation.  (See his car with an MA House District 29 license plate parked outside the store above.)

In order to make sure Taxachusetts can squeeze every penny out of residents, state lawmakers have also made it illegal to cross state lines with more than 3 gallons of alcohol purchased in another state, forcing consumers to pay their higher tax rate.  After some media pressure, Rodrigues announced he would comply with that law and turn over a check to the state for the taxes owed.

(H/T Citizens for Limited Taxation)

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Candy: Breakfast of Champions

Posted by Kelly William Cobb on Tuesday, September 1st, 2009, 1:01 PM PERMALINK

Soon, the Breakfast of Champions may be a bowl of candy.  Not that the ingredients will have changed in Wheaties, only the way the state determines it should be taxed.  Your childhood favorites: Cheerios, Rice Krispies, and Lucky Charms?  Candy.  Raisin Bran?  Candy.  Oh, but Cookie Crunch?  That's definitely cereal.

This month, the Streamlined Sales Tax Project (SSTP), a closed-door cartel of state policymakers that essentially writes the tax code for over 20 states, will determine whether certain cereals that meet SSTP’s definition of candy should be taxed accordingly. This is a legitimate question for a group whose mission is to simplify the tax code, but often does anything but.
Under SSTP’s definition, candy is a combination of sweeteners and other ingredients that does not contain flour. Cookie Crunch and Wheaties both have sugar, but since Wheaties does not have flour (sorry, whole grain flakes) it fits under SSTP’s definition of “candy.” The request for SSTP to clarify their definition raises another good point:
Lucky Charms contains oat pieces and marshmallows. The oat pieces contain flour while the marshmallows do not [and are candy].  The oat pieces and marshmallows are sold mixed together…Should Lucky Charms be taxed as candy?
Meanwhile, candy is excluded from SSTP’s definition of food (along with soft drinks), meaning that SSTP compliant states can place targeted, higher taxes on these products. If SSTP expands “candy” to include what the rest of the world calls “cereal," that means more money for tax-and-spend politicians who raise the “candy” tax. And, in case you missed it, last month we reported on how SSTP helped lawmakers in Illinois do exactly that.
(photo by galapogos)

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Kim Thatcher to Chair Oregon Taxpayer Protection Caucus

Posted by Kelly William Cobb on Monday, August 17th, 2009, 2:33 PM PERMALINK

Today, Americans for Tax Reform announced that Rep. Kim Thatcher (R-Keizer, St. Paul, Newberg) will chair the Taxpayer Protection Caucus in the Oregon House of Representatives. The Caucus consists of all signers of the Taxpayer Protection Pledge and provides a single voice on tax issues among pro-taxpayer legislators.  With the addition of Representative Thatcher, there are now 45 active caucuses in 32 states.  From ATR's press release:

“Kim Thatcher has proved to be a fiscal watchdog and a leading advocate for Oregon taxpayers,” said Kelly Cobb, Oregon state affairs manager for Americans for Tax Reform. “In recent years, policymakers in Salem have pushed for higher and higher taxes, including new taxes on residents and employers this year. As a result, unemployment has reached recordlevels and the state’s economy has been left in shambles."

For a PDF of the press release, click here.  Also, click here for a list of all Taxpayer Protection Caucuses around the country.

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