Patrick M. Gleason

The Taxpayer Protection Pledge and the Arizona Budget

Posted by Patrick M. Gleason on Thursday, August 13th, 2009, 12:29 PM PERMALINK

The Arizona news cycle this week has been abuzz with discussion over the Taxpayer Protection Pledge and how it has factored into this year’s protracted budget debate. The Pledge commits signers to oppose any and all efforts to raise taxes. However, groups on the left, liberal bloggers, and other spending interests in the Grand Canyon State continually try to portray the Pledge as a vow to Grover Norquist or a distant Washington organization (see here, here, and here). This is patently false.

Yes, Americans for Tax Reform sponsors and asks lawmakers and candidates from all parties – Republican, Democrat, Whig, Bull-Moose, you name it – to sign the Pledge. However, the underlying tenet of the Pledge is that it is a promise to the constituents of the signer , not any single organization or person. Need proof? Just read the wording of the Pledge itself .

Legislators who have signed the Pledge do not oppose tax increases simply because they signed the pledge. They signed the Pledge because they rightly believe that net tax increases adversely affect the economy and even more so during a recession. The steadfast insistence among Pledge signers that the final budget be a net tax cut or at least revenue neutral has brought Arizona closer to a budget agreement that is a much better deal for taxpayers than the initial plan brought forth by Gov. Brewer months ago.

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Pennsylvania Budget Update

Posted by Patrick M. Gleason on Wednesday, August 12th, 2009, 5:35 PM PERMALINK

Things are getting tense in Harrisburg. So tense in fact that Gov. Rendell has begun to fantacize about gassing state legislators.

Gov. Rendell has signed the stop-gap budget so that 77,000 state workers continue to receive paychecks and now Pennsylvania's budget standoff is now in it's second act. Now lawmakers must go back to the drawing board and come up with a plan to close the state's $3 billion deficit. How they'll do that remains unclear.

Gov. Rendell and the Democrat majority in the House remain insistent upon raising taxes. Republicans control the Senate and remain opposed to any form of tax increase to address the state's overspending problem; a reasonable position considering that Pennsylvanians have to work until this Friday just to pay off the annual cost of their government.

Now that legislative Democrats have taken Rendell's 16% income tax hike off the table it is rumored that Dems will coalesce behind a sales tax hike or a severance tax increase on natural gas extraction. Click here for recent commentary from ATR on why a severance tax would be so bad.

ATR agrees with Senate Republicans that raising taxes right now is the worst thing that lawmakers could do for the state economy. ATR will continue to monitor negotiations

Stayed tuned for further updates on the protracted Pennsylvania budget fight.

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Governor Perdue (D-NC) Signs Billion Dollar Tax Hike; 4 Lawmakers Break Pledge

Posted by Patrick M. Gleason on Monday, August 10th, 2009, 1:58 PM PERMALINK

Gov. Beverly Perdue's approval rating has been in free fall since she took office, recently dropping to a new low of 30%, As low as that is one can expect her approval to plummet further with her signing of the budget last Friday. The final budget deal, approved 38 days past deadline, will result in $1 billion in new taxes on North Carolinians in the middle of the state's greatest economic downturn in a generation.

Upon signing the bill Gov. Perdue stated that she "would not have signed a bill that did a broad-based income tax on working families." However the Governor conveniently ignores the fact that the budget contains a one point, 14.8% sales tax hike that, much like an accross the board income tax hike, is a broad-based tax increase that will hit all North Carolina working families.

The North Carolina budget will exacerbate the state's unemployment problem, which recently broke 11% and is the 5th highest in the nation. Prior to the latest budget, North Carolina had the worst business tax climate in the region. With a 3% corporate income tax surcharge included in the final budget, neighboring states will look even more attractive to employers. 

By imposing this surtax on corporate income, Gov. Perdue and legislative Democrats fail to recognize that ordinary workers, not big corporations, bear the burden of higher corporate taxes. As ATR has previously pointed out, there’s an emerging consensus among economists that at least $0.60 out of every $1.00 the corporate income tax collects is paid in the form of lower wages.  Furthermore, corporations are owned by the millions of 401(k) owners, IRA owners, pension plans, and individual shareholders who buy and hold corporate stock.  A majority of adults are part of this “shareholder majority.” At the end of the day, when corporate taxes rise and after-tax profits subsequently decline, the retirement plans of North Carolina residents take a hit.

Other ill-advised tax increases in the final budget include the Amazon tax, a tax on digital downloads, a personal income surtax, and tax increases on alcohol and tobacco.

The 2009 legislative session should make one fact very clear to all North Carolinians: as long as both chambers of the legislature and the governor's mansion remain controlled by Democrats with a penchant for tax hikes, the debate at the capitol will always be over what taxes will go up, not whether they should go up.

The following legislators, in voting for the final budget, broke their Pledge to constituents to oppose any and all efforts to raise taxes:



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Seattle Residents Set to Vote on Bag Tax

Posted by Patrick M. Gleason on Thursday, August 6th, 2009, 4:05 PM PERMALINK

Seattle residents recently began receiving mail-in ballots for the August 18 Mayoral election. On this same ballot Seattle voters will decide the fate of Referendum 1. Referendum 1, if passed, will create a new 20-cent tax on every disposable plastic and paper bag used in retail and grocery purchases. There are a myriad of reasons why this ballot measure should be rejected.

A 20-cent bag tax would hit family budgets in the middle of a recession and at a time when many are struggling to make ends meet. What's more, it is simply not necessary. 90% of people already reuse and recycle their plastic and paper bags. According to a study by the Washington Policy Center, disposable grocery and retail bags account for 0.5% of all solid municpal waste. The study adds that if the new bag tax were to operate as supporters hope, it will only reduce the amount of garbage produced in Seattle by a paltry 0.0014%.

Results from places that have already imposed a bag tax or outright ban show that it does little to reduce the use of plastic bags or combat pollution. Since Ireland's bag tax went into effect, use of plastic grocery bags declined but sales of other plastic bags rose 400%. In fact, total plastic bag use in Irelend has increased 10% since the bag tax became law. San Francisco's ban on plastic shopping bags has had no visible impact on litter.

To make matters worse, a bag tax may even pose a threat to public health. Reusable bags, whose use Referendum 1 seaks to encourage, become easily contaminated when used to transport common household items. Tests conducted by a Miami news station found a reusable bag used to transport meat "covered with bacteria." A bag that had been used to transport produce contained "80 organisms of coliform." Coliform is a bacteria found in the feces of warm blooded animals, not exactly something you want your groceries wading in.

A 20-cent bag tax would raise the cost of living in what is already high cost city and do nothing to reduce waste production and litter. Seattle residents worked 203 days last year just to pay for the cost of their government and face the 15th highest per capita state and local tax burden in the nation. For this and all the other aforementioned reasons, ATR urges Seattle residents to vote "NO" on Referendum 1.

A poll recently conducted by the University fo Washington found that 55% of likely Seattle voters oppose Referendum 1, 41% are supportive, and 4% are undecided.

To join the coalition working to defeat Referendum 1, click here.

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Rendell Expected to Sign Stop-Gap Budget Today

Posted by Patrick M. Gleason on Wednesday, August 5th, 2009, 11:10 AM PERMALINK

A stop-gap budget passed by the Pennsylvania House and Senate yesterday is expected to be signed by Governor Ed Rendell (D-PA) sometime today. As the new fiscal year enters its second month, Pennsylvania lawmakers remain unable to reach a complete spending package that addresses the state's $3.25 billion deficit.

Rendell has remained insistent upon his calls for a $1.6 billion personal income tax increase. However, House Democratic leadership announced this week that Rendell's personal income tax increase is now off the table. That's a good thing seeing as the 16% income tax hike that Rendell wants would result in a loss nearly 24,000 jobs according to analysis by the Beacon Hill Institute.

Pennsylvania legislators must now go back to the drawing board. It's uncertain where things will go from here. Rendell insists that he still wants $1.6 billion in new revenue however he can get it. Senate Republicans, who hold a 30-20 majority in that chamber, remain steadfast against any tax increases.

Smart money is on Pennsylvania lawmakers spending a long, hot summer in Harrisburg.

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South Carolina Gubernatorial Candidates Sign Taxpayer Protection Pledge

Posted by Patrick M. Gleason on Friday, July 31st, 2009, 6:53 PM PERMALINK

Two Republican candidates in the South Carolina gubernatorial race, Congressman J. Gresham Barrett (R-03) and Atty. Gen. Henry McMaster (R-SC), signed the Taxpayer Protection Pledge this week. The Pledge commits signers to, “oppose and veto any and all efforts to increase taxes.”

To date, 34 U.S. Senators and 172 members of the U.S. House of Representatives have signed the Pledge. Additionally, seven governors and over 1,100 state legislators have signed the Pledge.
“Americans, now more than ever, need leaders committed to fiscal responsibility and pro-growth economic policies,” said Grover Norquist, president of Americans for Tax Reform. “Americans are desperately searching for candidates and politicians that will protect their livelihoods and put their wallets ahead of government coffers.”
“By signing the Pledge, Atty. Gen. McMaster and Congressman Barrett demonstrate their commitment to hardworking South Carolina taxpayers. I applaud them for their leadership and dedication to the ideals of limited government and pro-growth policies,” added Norquist. “I strongly encourage, and challenge, every candidate for state and federal office to sign the Pledge.”

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Connecticut Governor Jodi Rell Proposes $391 Million in Tax Hikes

Posted by Patrick M. Gleason on Friday, July 31st, 2009, 12:10 PM PERMALINK

Americans for Tax Reform condemns Gov. M. Jodi Rell’s (CT-R) latest budget plan, which was unveiled yesterday. Despite her public statements throughout the year that she would not raise taxes, Rell’s latest proposal includes $391 million in tax increases.  

Key provisions of the plan include a 50 percent tax increase on a pack of cigarettes, a 10 percent increase in alcohol taxes, and a 10 percent surcharge in the corporate profits tax. The corporate profits tax would be back dated to January of this year. Additionally, companies that do business in Connecticut but have no physical presence (property or employees) in the state would be required to pay the new 10 percent levy.
For help understanding why her latest budget plan is a disaster, ATR points to Gov. Rell's June statement in which she explained that raising taxes right now "would be the worst thing we could do in the middle of a national recession."
Rell should also explain how she reconciles her latest budget with her March remark that "families cannot raise taxes on someone to pay for their bills and neither should the state.”
Rell's budget - if approved by the Democrat-controlled legislature, which is likely - will continue the policies that have made Connecticut, and the entire northeast for that matter, an economic blackhole. If higher taxes were the answer, Connecticut would be in great shape. Only New York and New Jersey have a higher state and local tax burden and Nutmeg State residents work longer than anyone else to pay for the cost of their government.
At least Connecticut can make Michigan feel better about itself.

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New Penn State Study Shows Governor Rendell's Severance Tax to be an Economic Loser

Posted by Patrick M. Gleason on Wednesday, July 29th, 2009, 6:05 PM PERMALINK

While Pennsylvania lawmakers remain deadlocked in what has been the Keystone State's longest budget stalemate in nearly two decades, a new study on the Marcellus Shale Formation out of Penn State couldn't be more timely. Geosciences professor Terry Engelder's study helps explain why Gov. Ed Rendell's proposal to impose a severance tax on natural gas production would hurt the Pennsylvania economy, impede job creation, and actually have a negative effect on revenue.

Key findings from the study, outlined in the Pittsburgh Tribune-Review, are as follows:

"nearly 500 trillion cubic feet of natural gas could be produced from the entire formation, which is found in portions of five states, including most of Pennsylvania."

"Pennsylvania's Marcellus Shale natural gas formation alone could generate $13.5 billion in economic activity in the next 11 years."

Dr. Engelder's study concludes that plans by Rendell and legislative Democrats to impose a severance tax will yield a "30% drop in drilling activity and an estimated $880 million loss in taxes between now and 2020."

It is estimated that Marcellus Shale will create 98,000 gas industry jobs by next year. If one deduces that a 30% reduction in drilling activity will result in an equal reduction in jobs tied to drilling, Rendell's severance tax will result in upwards of 29,000 lost jobs.

This is in addition to the 24,000 jobs that the Beacon Hill Institute estimates would be lost due to Rendell's income tax hike alone.

Given the job destroying and economy depressing prowessness of Rendell's budget plan it's no wonder the Pennsylvania Governor's approval rating has sunk to record lows.

Lawmakers are set to take budget negotations to conference committee this week. Click here to view the July 14 letter that ATR sent to Pennsylvania lawmakers.

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Golden State Budget Band-Aid Complete

Posted by Patrick M. Gleason on Tuesday, July 28th, 2009, 2:04 PM PERMALINK

Moments from now Governor Arnold Schwarzenegger (CA-R) is scheduled to sign the latest budget agreement passed by the legislature late last week in a marathon session.

Before Schwarzenegger signs the $85 billion general fund budget he will need to use his line item veto to address the $1.1 billion hole created by the Assembly's failure to pass two provisions from the Big 5 agreement reached last week. Parts rejected by the Assembly include a plan for the state to keep $2 billion in gas tax funds earmarked for local goverments over the next two years. The other provision that failed to pass was heavily supported by ATR and would've have permitted drilling for oil off the coast of Santa Barbara. It would have been the state's first offshore drilling lease in 40 years.

In an official statement last week on the budget deal, Grover Norquist expressed ATR's position that while "there are a number of unpalatable provisions in this budget deal, as a whole it represents progress.... most importantly, does not raise California’s already high tax burden.”

In the wake of the budget deal Golden State lawmakers from both sides of the aisle expressed the need for tax reform in order to put an end to the state's perennial budget battles and reduce revenue volatility.

Final recommendations from a 14 member blue ribbon tax commission tasked with reforming California's tax code are expected to be released soon.

The legislature comes back into session on August 17.

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North Carolina Budget Negotiations Stall

Posted by Patrick M. Gleason on Tuesday, July 28th, 2009, 1:27 PM PERMALINK

It has been 28 days since the deadline to pass a budget and North Carolina lawmakers remain unable to reach an agreement. In light of an aproximate $4 billion deficit, the Democrat controlled House, Senate, and Governor's mansion have been at odds over which taxes to raise.

The conference committee was nearing a budget agreement last week that would raise income, tobacco, and alcohol taxes. However Gov. Perdue effectively blew up negotiations when she announced her opposition to an income tax.

Gov. Perdue's budget proposal includes alcohol and tobacco tax increases but she favors a temporary hike in the sales tax over an income tax increase. Perdue cited her concern for the middle class and working families as the reason for her opposition to an across the board income tax increase. What Perdue fails to explain is how she reconciles this concern with her sales tax proposal.

According to a recent poll by the Civitas Institute, not only do most North Carolina voters oppose a temporary sales tax, they don't trust Perdue's assertion that the sales tax would be temporary. 66% of those polled oppose Perdue's 1 point, 14% sales tax hike and 77% of those polled believe the sales tax increase would become permanent.

The latest reports from those on the ground in Raleigh allege that a continuing resolution will likely be passed today and all lawmakers except for conference committee members will be sent home. Stay tuned for further developments.

To view the letter that ATR recently sent to all North Carolina legislators, Click Here.


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