Patrick Gleason

Weak Showing Of Support For Governor Charlie Baker’s Regional Cap & Trade Scheme

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Posted by Patrick Gleason on Monday, December 21st, 2020, 4:44 PM PERMALINK

Today the governors of Massachusetts, Connecticut, and Rhode Island, along with Washington, D.C. Mayor Muriel Bowser, signed a Memorandum of Understanding to join together to implement the Transportation and Climate Initiative (TCI) program, a cap and trade scheme that would impose a regional carbon tax beginning in 2022.

The TCI program, according to the press release issued by the participating states, “will cut greenhouse gas pollution from motor vehicles in the region by an estimated 26% from 2022 to 2032, generate a total of more than $3 billion dollars over ten years for the participating jurisdictions to invest in equitable, less polluting transportation options and to help energize economic recovery.”

Massachusetts Governor Charlie Baker has sought for more than a year to convince government officials from 12 northeast and mid-Atlantic states to join the program. In the end three small states and the District of Columbia were the only jurisdictions to opt in, confirming that the focus of this program will be collecting more revenue from taxpayers, not affecting global emissions and climate.

The $3 billion in new revenue referred to in the TCI press release issued today will come from the increased gas prices that residents of TCI states will soon be paying. Initial estimates projected that TCI, once implemented, would raise gas prices by 17 cents per gallon in participating states. But a more recent report released by Tufts University this fall estimates that TCI would inflate gas prices by as much as 38 cents per gallon.

The Institute for Energy Research outlines how TCI would work in practice:

“Under the plan, wholesale suppliers of motor fuels would be required to buy pollution allowances through periodic auctions, with the proceeds going back to the states. The cap on these emissions will decline over time increasing the cost of the permits. The pact mirrors an agreement among the Northeast states aimed at reducing power plant carbon dioxide emissions, the Regional Greenhouse Gas Initiative.”

In the end Democratic governors from New York, New Jersey, Pennsylvania, Maine, and Delaware declined to join TCI. The Republican governors of New Hampshire, Vermont, and Maryland also refused to sign their states onto the TCI memorandum of understanding. New Hampshire Governor Chris Sununu (R), a Taxpayer Protection Pledge signer, was arguably TCI’s most prominent critic, coming out against the plan as soon as the initial iteration was floated nearly one year ago.

“I will not force Granite Staters to pay more for their gas just to subsidize other state’s crumbling infrastructure,” said Governor Chris Sununu in December 2019. “New Hampshire is already taking substantial steps to curb our carbon emissions, and this initiative, if enacted, would institute a new gas tax by up to 17 cents per gallon while only achieving minimal results. This program is a financial boondoggle and the people of New Hampshire will never support it.”

Christopher Carlozzi, Massachusetts director of the National Federation of Independent Businesses, points out that TCI will hammer small businesses at a time when they can least afford it.:

"The same small businesses that have faced shutdowns, countless restrictions, new regulations, and capacity limits will now face higher fuel costs due to Massachusetts joining the TCI,” Carlozzi said. “Restaurants require fuel to deliver food orders, plumbers and electricians must drive to job sites, construction companies utilize fuels to operate their equipment, and now TCI will make it more expensive to run these types of small businesses.”

“The fact that only three states signed onto the TCI memorandum of understanding is a poor showing for Governor Baker and carbon tax supporters, especially after more than a year of lobbying and cajoling from well-funded green lobbying groups,” said Grover Norquist, president of Americans for Tax Reform. “This is the latest example in what is a long history of rejection for carbon taxes and cap and trade programs that seek to impose carbon taxes through complex regulatory schemes.”

Photo Credit: The New England Council (Flickr)

More from Americans for Tax Reform


California Voters Reject Property Tax Increase--Proposition 15

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Posted by Patrick Gleason on Wednesday, November 4th, 2020, 9:13 AM PERMALINK

With 99% of precincts reporting, it appears California voters have rejected Proposition 15, a massive property tax increase. Americans for Tax Reform opposed this measure.

Joe Biden, Kamala, Harris, and the California Democratic Party endorsed Prop. 15, which would have raised taxes on California employers by as much as $12 billion annually by removing the Prop. 13 property tax limit for commercial properties.

California’s Proposition 13, passed by voters 42 years ago, limits the annual rise in the taxable value of a property, both personal and commercial, at 2% or the rate of inflation, whichever is smaller. Prop. 15, if approved, would've removed this protection for California businesses worth more than $3 million by forcing it to be taxed at market value every year. Passage of Prop. 15 would've meant billions of dollars in higher property tax bills for Golden State businesses at a time when many are already struggling amid the current recession.

Prop. 15 was marketed as a way to raise taxes on large corporations, but the additional costs would've been passed along to small businesses who rent. As John Kabateck at the National Federation of Independent Business explains, “the majority of small business owners, upwards of 80%, rent their property. That cost is passed on directly from property owners.”

Even if Joe Biden emerges victorious, it's evident from the 2020 election results that there is no mandate for the massive tax increases that Joe Biden and Kamala Harris are proposing. That much is clear based on both the outcome of US Senate races and blue state tax hikes like Prop. 15 in California. 


Massachusetts Voters Reject Ranked-Choice Voting--Question 2

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Posted by Patrick Gleason on Wednesday, November 4th, 2020, 12:59 AM PERMALINK

Massachusetts voters have rejected Question 2, ranked-choice voting. Over 54% of voters said no to the measure, with 83% of precincts reporting. 

Americans for Tax Reform opposed the measure. Question 2 would have instituted ranked-choice voting in Massachusetts primary and general election contests for state legislators, governor and other executive offices, federal congressional offices, and certain county offices. Massachusetts elections currently use a plurality voting system and semi-closed primaries.  

"Runoff elections would work fine, where there would be a second election day and the highest two vote-getters would advance to that,” explains Paul Craney, spokesman for the Massachusetts Fiscal Alliance. “That allows the voters the ability — which ranked-choice, or instant-runoff voting, doesn't allow you — to have an understanding of who the final two [candidates] are to make the determinations.” 

Photo Credit: Nicholas Erwin


Colorado Voters Approve Proposition 117 Requiring Voter Approval of Fee Hikes

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Posted by Patrick Gleason on Wednesday, November 4th, 2020, 12:36 AM PERMALINK

Colorado voters have approved Proposition 117, a measure requiring voter approval on fee hikes that generate more than $100 million in revenue over five years.

In 2019, the Colorado Supreme Court ruled that business fees were not considered taxes and thus outside the purview of the Taxpayer’s Bill of Rights (TABOR), which subjects all proposed tax hikes to voter approval. Prop. 117, which Americans for Tax Reform supported, closes this loophole in TABOR by subjecting fee increases to voter approval, as is already the case for all tax hikes.

"By approving Proposition 117, Colorado voters have closed off an end-run around TABOR frequently used by politicians, one that has been costing Colorado taxpayers dearly," said Grover Norquist, president of Americans for Tax Reform. "Between this new requirement for fee hikes and the enactment of an income tax cut with approval of Proposition 116, Colorado taxpayers got a double dose of good news from the 2020 election."

Photo Credit: Kent Kanouse


Colorado Voters Approve Income Tax Cut--Proposition 116

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Posted by Patrick Gleason on Tuesday, November 3rd, 2020, 10:54 PM PERMALINK

Colorado voters have approved Proposition 116, a measure that cuts the state income tax cut.

Americans for Tax Reform supported the proposition, which cuts the state income tax from 4.63% to 4.55%.

"Colorado taxpayers voted themselves a pay increase by reducing the single rate income tax rate from 4.63% to 4.55%," said Grover Norquist, president of Americans for Tax Reform. "While some states are hiking their personal income taxes, Colorado citizens used the initiative process to reduce theirs. That is power to the people."

Photo Credit: Mr. Tin DC


Ballot Measure That Would’ve Killed Colorado's Taxpayer’s Bill Of Rights Goes Down In Flames

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Posted by Patrick Gleason on Tuesday, November 5th, 2019, 11:52 PM PERMALINK

On the same Election Day that voters in Texas approved a new taxpayer safeguard in the Lone Star State, Colorado residents voted to protect their state’s Taxpayer’s Bill of Rights, the nation’s strongest taxpayer safeguard.

The Taxpayer’s Bill of Rights (TABOR), approved by Colorado voters in 1992, does two things: 1) It requires voter approval for all state tax hikes, and 2) It caps state spending at the rate of population growth plus inflation. Revenue collected in excess of that spending cap must be returned to Colorado taxpayers.

Proposition CC, which was referred to the November 2019 ballot earlier this year by the Democrat-controlled Colorado Legislature and Governor Jared Polis (D), would have permanently ended taxpayer refunds due in accordance with TABOR. Proposition CC was defeated today with nearly 56% of voters rejecting the ballot measure, which would’ve gutted TABOR forever and led to a significantly higher state tax burden in Colorado’s future.

“Presidential contenders and others running for office should pay attention to what happened in Colorado tonight,” said Grover Norquist, president of Americans for Tax Reform. “Every Democrat running president has promised massive tax increases if they win next year. A battleground state that recently elected a progressive-run state government just voted to uphold the nation’s strongest taxpayer protection measure. This indicates that a plan to run on a platform chalk full of huge tax hikes is not the wisest approach for 2020 hopefuls to take.”

Photo Credit: Matt Santomarco


Texas Voters Pass Income Tax Prohibition

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Posted by Patrick Gleason on Tuesday, November 5th, 2019, 11:24 PM PERMALINK

The Lone Star State’s 2019 election results are in and an overwhelming majority, more than 77% of the electorate, voted to approved Proposition 4. By approving Proposition 4, Texans voted to amend the state constitution to include an income tax prohibition. 

Texas is one of nine states that does not levy a state income tax. Passage of Proposition 4 inserts a new taxpayer safeguard in the state constitution ensuring that future legislatures, no matter who is in charge, cannot easily impose an income tax on Texans. 

“I applaud Texas voters for putting an income tax prohibition in the state constitution,” said Grover Norquist, president of Americans for Tax Reform. “Austin and DC progressives dream of turning Texas blue and will spend a great deal of money in 2020 and beyond attempting to do so. By approving Proposition 4, Texans have installed long-term protection against well-funded progressive plans to take over the state and ultimately impose a state income tax.”

This move by Texas voters comes five years after the passage of a similar constitutional amendment in Tennessee, another no-income-tax state, back in 2014. 

“The lack of an income tax has played a key role in making Texas a magnet for employers, jobs, and people,” added Norquist. “Passage of Proposition 4 ensures Texas will remain a no-income-tax state, no matter how many Californians move in.” 

Photo Credit: Knowsphotos


After Gas Tax Hike, Alabama Employers And Households Now Hit With Massive Property Tax Hikes

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Posted by Patrick Gleason on Saturday, October 5th, 2019, 1:11 PM PERMALINK

Alabama Governor Kay Ivey (R) saw her approval rating decline precipitously this year. According to Morning Consult, which publishes a quarterly survey of approval ratings for all 50 governors, Governor Ivey’s approval rating has declined substantially and was a noteworthy drop compared to her counterparts in other states.

“The state’s former No. 2, who is serving her first full term as the leader of the state, saw her net approval decline by 17 percentage points,” Morning Consult reported in its Q2 gubernatorial approval survey. “Democrats and independents soured on Ivey’s job performance by 20 and 18 points, respectively, but Republicans were also 15 points less likely to approve of her.”

Morning Consult tried to pin Ivey’s drop in approval on abortion-related legislation that consumed the media’s attention during the legislative session, but a better explanation is the regressive gas tax hike that Governor Ivey made her top priority upon moving into the governor’s mansion. In fact, Morning Consult’s survey points out that none of the other governors who enacted the same abortion restrictions this year have experienced a drop in approval rating like Ivey has. That’s because none of those governors also imposed a regressive tax hike this year like Ivey did in Alabama.

In fact, because Governor Ivey made this gas tax hike her top priority, the first vote ever cast by many freshman Republican legislators was a vote for a gas tax hike that will disproportionately harm low and middle income households in their districts. No corresponding tax relief has since been enacted by Alabama lawmakers, despite smart recommendations from Alabama Policy Institute and others who are calling upon Alabama legislators to provide much-needed tax relief.

Adding insult to injury, following the gas tax hike passed earlier this year, some Alabama employers and households are now being hit with large property tax hikes. Jefferson County, Alabama’s most populous county, has significantly increased property appraisals for both residential and commercial properties. The result is that some home values are going up by hundreds of thousands of dollars.

“In Jefferson County, people are going to be shocked when they see it,” Abe Brand, a Birmingham, AL-based property tax consultant told AL.com’s William Thornton. “Some of these increases may be deserved. There will be a lot which will not be.”

Exacerbating the pain and shock to taxpayers, Jefferson County sent their tax cards late this year, which left taxpayers with only a month to dispute the jacked up assessments.

It doesn’t have to be this way. Were Alabama to have a property tax cap on the books like those found in other states, taxpayers would be protected from the massive property tax hikes now hitting employers and families in Alabama. These property tax adjustments are not limited to Jefferson County.

“Jefferson County is one of twenty-one counties implementing the new Alabama appraisal manual for ad valorem tax collections beginning October 1st 2019,” reports ABC 33 Birmingham. “According to the department representative, in the first year of this process each county is to establish their own value of land and improvement values of personal property.”

The Alabama Legislature isn’t scheduled to convene until February. Yet if Alabama lawmakers were able to call an early special session to raise the state gas tax this year, perhaps they can call and early special session to provide tax relief and to enact a clearly-needed property tax cap. That’s an idea Americans for Tax Reform will be urging Alabama lawmakers to consider as the 2019 comes to a close and the 2020 session rapidly approaches.

Photo Credit: Jimmy Emerson, DVM


Triggering Tax Reform Through Revenue Triggers

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Posted by Patrick Gleason on Friday, September 27th, 2019, 5:50 PM PERMALINK

Tax reform is arguably the most politically difficult undertaking a policy maker can pursue. One of the reasons why tax reform is so hard is that when rates are lowered and the base is broadened, particular industries, businesses, and consumers can be adversely affected even if the reform is a net tax cut for taxpayers and an overall good the state economy. 

Facilitating or “paying for” rate-reducing tax reform through revenue triggers and the allocation of projected revenue growth has proven to be the path to tax reform that entails less political resistance and friction. Recent years have provided some examples from the states, both proposed and enacted, of revenue trigger-facilitated tax reform and how it works.

North Carolina

That tax code overhaul approved by North Carolina lawmakers in 2013 utilized revenue triggers to reduce the corporate tax rate by 63.7%, taking the rate from 6.9% (which was the highest corporate tax rate in the Southeast at that time) down to 3% (the lowest state corporate tax rate in the nation, not including the few states that do not levy a corporate tax). The 2013 North Carolina tax reform act did the following: 

Corporate Income Tax Relief:

  • Reduce rate from 6.9% to 5% by 2015;
  • If certain revenue targets were met (and they were), the rate would decrease to 4% in 2016 and 3% in 2017. (lawmakers enacted a subsequent rate reduction in 2017 that brought the corporate rate down to 2.5% in 2019)
     

Individual Income Tax Relief:

  • Flatten and lower rate, dropping the top rate from 7.75% to 5.75% by 2015;
  • Increase standard deduction to $7,500 (for singles);
  • Allow full deductibility of charitable contributions;
  • Fully exempt Social Security income from state income tax; 
  • Allow for certain itemized deductions (total of mortgage interest and property taxes paid would be capped at $20k); and
  • Retain current child credit of $100 for those earning $40k and increase credit to $125 for those earning under $40k.
     

Other Changes:

  • Cap gasoline tax;
  • Fully repeal estate tax
     

North Carolina’s tax code overhaul, along with subsequent rate reduction that brought the personal rate down to 5.25% and the corporate rate down to 2.5%, has improved North Carolina’s standing in the State Business Tax Climate Index.

Prior to the passage of revenue trigger-enabled tax reform in 2013, North Carolina had the nation’s 44th ranked business tax climate. Today North Carolina’s business tax climate is ranked as that nation’s 12th best

Here is a link to the legislative language of North Carolina’s revenue trigger-enabled 2013 tax reform. 

Virginia

Ed Gillespie, when he was running for Governor of Virginia in 2017, introduced a pro-growth tax reform plan that would’ve significantly improved Virginia’s business tax climate, making the commonwealth’s tax code more competitive, less burdensome, and more conducive to economic growth and job creation. 

Gillespie proposed lowering personal income tax rates by 10% across the board, which his plan facilitated with revenue triggers. Gillespie’s campaign platform explained that the revenue triggers would work thusly:

“Revenue triggers will be designed by the Secretary of Finance, agency heads from the Department of Planning and Budget, Department of Taxation, Department of the Treasury in partnership with a working group to include the House Appropriations (HAC) Staff Director, Senate Finance Committee (SFC) Staff Director and other individuals as designated by the governor. The revenue triggers will be reviewed by the Governor’s Advisory Committee on Revenue Estimates (GACRE) and ultimately adopted by the General Assembly. The triggers will be designed to ensure that Virginia can maintain its existing commitment to core services.”

Most recently, New Hampshire lawmakers enacted a new budget that relies on revenue triggers to cut the state business profits tax. That tax cut will only take effect if revenue collections exceed projects by more than 6%. 

In addition to showing that significant improvements can be made to a state tax code in a short period of time, North Carolina’s experience demonstrates how revenue triggers enable lawmakers to enact rate-reducing tax reform in a fiscally responsible manner. 

Revenue Triggers Protect Fiscal Health 

By making income tax rate reduction based on certain revenue triggers being met, North Carolina lawmakers were able to significantly cut income tax rates while ensuring the state would not have revenue problems like those encountered in Kansas, a state where lawmakers irresponsibly cut taxes at the same time that they were ratcheting up state spending levels. 

Spending restraint, coupled with income tax cuts based on revenue triggers, have allowed North Carolina lawmakers to return more than $5 billion to taxpayers over the last seven years, all while the state has realized repeated budget surpluses. During this time North Carolina has outperformed the national average on job creation and economic growth. 

By eliminating the possibility of future budget deficits and reducing political resistance that comes with an overreliance on base-broadening, revenue triggers have proven to be an effective tool for reducing income tax rates in a fiscally responsible and politically palatable manner.  

Photo Credit: Wendy


Wyoming Lawmakers Vote To Advance Corporate Tax

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Posted by Patrick Gleason on Saturday, September 21st, 2019, 8:07 PM PERMALINK

Wyoming is one of two states that does not impose a corporate income tax on employers, but that could change in 2020. Earlier this year Wyoming lawmakers debated legislation, House Bill 220, that would institute a 7% state corporate tax. The Wyoming House of Representatives passed that bill but the Legislature adjourned without the state Senate doing likewise. However that proposed corporate tax, as was predicted at the time, did not die with the 2019 legislative session. The proposal is now back and primed to pass both chambers of the Wyoming Legislature in 2020.

This week the Wyoming Joint Revenue Committee approved a new version of the proposed  corporate tax, which would apply to companies with more than 100 shareholders by a 9-4 vote. Were state lawmakers to enact a corporate tax in 2020, that would have Wyoming moving in the opposite direction of many states and nations, which have been cutting their corporate taxes in recent years.

While proponents of the proposed corporate tax portray the levy as a way to soak large corporations, the burden of a corporate tax would be borne by both business owners and workers. That’s why key non-partisan fiscal scorekeepers, such as the Congressional Budget Office and the congressional Joint Committee on Taxation, have adjusted their methodology in recent years to account for the harm corporate taxes do to workers.

In addition to the tens of millions of dollars it is estimated the proposed corporate tax would siphon from employers to fill state coffers, the corporate tax advanced by Wyoming Revenue Committee members this week would also lay the groundwork for a personal income tax.

“The bill has a little-noticed feature in it that allows for the creation of a personal income tax,” explains Sven Larson, a senior fellow at the Wyoming Liberty Group, a Cheyenne-based think tank. “If this bill becomes law Wyoming will have the legal infrastructure in place for both a corporate and a personal income tax.”

In addition to the costs a corporate tax would impose on businesses and the negative impact it would have on the state economy, a corporate tax would cost Wyoming taxpayers millions of dollars just to collect.

“The system to collect these taxes would cost $10 million to set up and $3 million to maintain, along with $1.5 million for staff – costing essentially 10 percent of the rough revenue estimate annually,” the Casper Star-Tribune reported earlier this year as the corporate tax proposal worked its way through the Legislature.

There is a wealth of social science demonstrating that corporate taxes are one of the most economically destructive ways to fill government coffers. That’s why states across the country and nations across the globe have been cutting corporate tax rates and reducing their reliance on them in recent years.

The corporate tax isn’t the only tax hike threat facing individuals, families, and employers across Wyoming. State lawmakers in Cheyenne are also advancing tax hikes on property, sales, and nicotine. Altogether, 2020 is shaping up to be Taxmageddon in Wyoming.

Photo Credit: Roger Smith


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