Patrick M. Gleason

Energy Tax Efforts Revived in Pennsylvania

Posted by Patrick M. Gleason on Monday, May 23rd, 2011, 1:47 PM PERMALINK

For the last two years former Pennsylvania Gov. Ed Rendell worked tirelessly to impose a new tax on natural gas extraction in the Marcellus Shale. While Rendell left office empty-handed, lawmakers in Harrisburg are back with a new proposal to tax one of the most promising sectors of the Keystone State economy. The game plan this year: just don’t call it a tax.

SB 1100, introduced last week by Sen. Joe Scarnati – who was the Senate field marshal for Rendell’s push for a severance tax last year, would impose $10,000 per wellhead “impact fee” on drilling operations in the Marcellus Shale.

Call it what you like, SB 1100 is a tax by any objective assessment. A large portion of the money derived from this new levy would go to localities where no drilling is occurring. This legislation also creates a slush fund for pet projects that have nothing to do with the impact of drilling in the Marcellus Shale.

The fact is that the natural gas industry is already required by law to compensate for the impact of their operations in Pennsylvania and no proof has been presented that industry is not in compliance with that requirement.

The reality is that the impact of drilling in the Marcellus Shale has been a net positive for the commonwealth. Rep. Rick Saccone detailed on the Commonwealth Foundation’s website the boon that the industry has been to Pennsylvania:

“The facts are that in Pennsylvania, Marcellus drillers contributed more than $15 billion in capital investment and have paid in excess of $5 billion in royalties to landowners not including more than $1 billion in state and local revenues.  Think of every well as a nearly $5 million construction project boosting a local economy while adding revenue to neighboring municipal coffers and businesses in various ways. “

In an attempt to avert attention from the state’s overspending problem, government employee union lobbyists and other Harrisburg spending interests like to demonize energy companies and their executives; but as I noted in Politico last year, it exposes their ignorance as to who owns energy companies:

“Fewer than 2 percent of oil and natural gas industry shares are owned by corporate management. The remainder are owned by tens of millions of middle-class Americans through their retirement investments in 401(k)’s, IRAs, pensions and other vehicles….Speaking of pensions, 27 percent of oil and natural gas industry stocks are owned by pension funds.”

Lawmakers have a lot of work to do to rectify the state’s overspending problem, projected at $5 billion through the next fiscal year, and efforts to tack a new tax on one of most promising sources of job creation in the state only serve as an unnecessary and ill-advised distraction.

SB 1100 is currently sitting in the Senate Environmental Resources and Energy Committee. To read the letter of opposition that ATR sent to committee members last week, click here.

To cut through the rhetoric and misinformation about natural gas taxes in Pennsylvania, check out this great primer from the Commonwealth Foundation.

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A New York Times piece that will make you dumber for having read it

Posted by Patrick M. Gleason on Tuesday, May 17th, 2011, 9:42 AM PERMALINK

In yesterday’s New York Times, Elizabeth McNichol, a senior fellow with the State Fiscal Project at the Center on Budget and Policy Priorities, attempts to make the case that when it comes to cutting state spending, Connecticut is leading the way.

McNichol writes:

"Connecticut’s Gov. Daniel Malloy is cutting spending but also increasing revenue by raising the top income tax bracket and closing loopholes, thereby averting deeper damage to education, health care, and other necessities."

Really? Connecticut is cutting spending? As I noted recently in the Daily Caller, the budget recently signed into law by Gov. Dannel Malloy, in addition to containing two dozen tax increases, represents an 8% spending increase from the current biennium. I don’t know about McNichol, but when spending goes up that’s not referred to as a cut. In fact, Connecticut is actually ending the current fiscal year with a surplus thanks to the tax increases passed by Malloy's predecessor, liberal Republican Jodi Rell.

McNichol then goes on to deride Texas Gov. Rick Perry and Wisconsin Gov. Scott Walker for balancing their budgets without raising taxes, claiming that those states will be worse off economically.

The Texas House and Senate recently passed budgets that impose real cuts, not the imaginary kind like we saw in Connecticut. In fact, the new Texas budget being worked out in conference committee will represent a reduction in spending from the previous biennium. According to McNichol, this spells disaster for the Lone Star State. Yet just this month Chief Executive magazine named Texas the number one state in the country to do business based on a survey of 550 CEO’s.

And the economic doom and gloom that Wisconsin’s tax-hike-free budget portends for the Badger State? Yesterday the Wall Street Journal noted the following about Wisconsin’s ranking in the aforementioned survey of CEO’s:

"Wisconsin made the biggest jump of any state, and one of the largest in the history of the survey, rising to 24th from 41st in 2010 and 43rd in 2009."

My only question for McNichol: Really?

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Louisiana House Ways & Means Committee takes up tax hikes

Posted by Patrick M. Gleason on Monday, May 16th, 2011, 9:59 AM PERMALINK

The cresting of the Mississippi River and catastrophic consequences it portends for communities in the Atchafalaya Basin is not distracting or deterring some Louisiana lawmakers who are hell bent on raising taxes this legislative session.

This morning the House Ways & Means Committee will take up two bills, HB 63 & HB 591, that seek to make the state more reliant on the declining and unstable source of revenue that is the state tobacco excise tax.

HB 63 would raise the state tobacco tax from $0.36 to $1.06 – a 194% increase. HB 591 would prevent the scheduled expiration of a “temporary” $0.04 cent cigarette tax passed in 2000.

The effort to block the sunset of this $0.04 tax classifies as a tax increase and a violation of the Taxpayer Protection Pledge, which nearly one-third of the Ways & Means Committee has signed.

HB 591 is also just the latest example demonstrating that there is no such thing as a “temporary” tax increase in the eyes of profligate legislators. California is also providing proof of that unfortunate truth this year, where Gov. Jerry Brown and legislative Democrats are attempting to extend the largest state tax increase in U.S. history. In Arizona, Gov. Jan Brewer is already laying the groundwork for an extension of the three year sales tax increase that she signed into law last year. Perhaps the most famous example of the fallacy of “temporary” tax hikes is Pennsylvania’s Johnstown flood tax. An 18 percent tax on alcohol put in place to pay for the clean up of that famous 1936 flood, that levy is still on the books in the Keystone State today.

By making the state more reliant on tobacco taxes, HB 63 & HB 591 represent the height of fiscal irresponsibility. Tobacco tax increases amount to a job-killing budget gimmick. Of the 57 tobacco tax increases enacted by states between 2003 and 2008, only 16 met initial revenue projections. Cigarette tax hikes are nothing more than a place holder for future tax increases on the general populace. Washington, DC experienced this first hand after the city council passed a tobacco tax increase in 2009 as an ill-advised approach to balancing the budget. That increase ended up depriving the city of millions of dollars as tobacco tax revenue plunged below pre-increase levels. Now DC Mayor Vincent Gray is pushing an income tax increase to make up the difference.

ATR encourages Louisiana taxpayers to contact their representatives in Baton Rouge today and urge them to put expenditures in line with revenues, like families across the Pelican State are doing, and to stand with Gov. Bobby Jindal in opposition to job-killing tax hikes. Louisiana residents can contact their state rep by simply clicking here.

UPDATE: Good news - HB 63, the 194% tobacco tax hike, died in committee. ATR will continue working to defeat HB 591, which would retain the "temporary" 4 cent per pack cigarette tax.

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Crunch Time in Texas Budget Negotiations

Posted by Patrick M. Gleason on Friday, May 13th, 2011, 11:58 AM PERMALINK

There are just 17 days left in the biannual session of the Texas legislature and lawmakers in both chambers are working in conference committee to complete the 2012-2013 state budget.

Americans for Tax Reform, as part of the Texans for a Conservative Budget Coalition, is urging lawmakers to reach a final budget agreement that adheres to the following principles:

  • The Texas state budget should reflect the state's fiscal means, and make hard choices on necessary cuts.
  • The Texas state budget should not use a penny of the Economic Stabilization Fund, better known as the "Rainy Day Fund."
  • The Texas state budget should not burden Texans with new taxes, however presented.

While both the House and the Senate have passed budgets that adhere to these principles, taxpayers are not yet in the clear. As Michael Quinn Sullivan, president of Texans for Fiscal Responsibility warned yesterday: 

....some senators are looking to pull more and more money from the rainy day fund, while some House members are looking for new revenues -- all in the hopes of living beyond your means.

Texans need to contact their representatives in Austin today, and can do so by simply going to the website of Texans for a Conservative Budget.

As ATR has previously noted, Texas will continue to face challenges in the coming biennia, and keeping the rainy day fund in tact will ensure that the state is on sound fiscal ground to meet those challenges. Just as important, by passing a budget that avoids job-killing tax increases and maintains the predictable, pro-growth tax and regulatory climate that Gov. Rick Perry and lawmakers have worked for over a decade to establish, Texas can send a message to the rest of the nation that the Lone Star State will continue as the nation’s economic powerhouse and leader in fiscal stewardship.

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Connecticut Legislature to Vote on Tax Hike-Laced Budget This Week

Posted by Patrick M. Gleason on Monday, May 2nd, 2011, 2:05 PM PERMALINK

The Connecticut Senate plans to hold a floor vote today on the budget agreement recently reached by legislative Democrats and first term Gov. Dannel Malloy (D). The plan, which entails two dozen tax increases, would technically be out of balance the moment it is signed into law and therefore unconstitutional.

The problem is that the budget assumes over $13 million in higher revenue from an online sales tax and cosmetic surgery tax. Yet, that revenue is highly unlikely to come to fruition according to Kevin Sullivan, Commissioner of the Connecticut Department of Revenue Services. CT News Junkie has the following on the letter that Commissioner Sullivan sent to the Office of Fiscal Analysis last month:

Sullivan goes onto say no state that has passed and implemented the tax has started collecting revenue and in all but one state, remote sellers like Amazon have simply ceased doing business with in-state businesses.....Sullivan noted in the letter that the Office of Fiscal Analysis which assumes the tax will bring in about $9.4 million a year never consulted his office when they drafted the fiscal note.

The same is true of the cosmetic tax which OFA assumes will bring in about $4.1 million next year and $4.3 million the year after.

A cosmetic tax also raises privacy concerns and has already proven to be a mistake in the only state where it has been enacted – New Jersey. Aside from the fact that it disproportionately burdens women, in today’s Daily Caller I explain why it is also a net revenue loser for the state:

The New Jersey lawmaker who sponsored the cosmetic tax in 2004 ended up leading the effort to repeal it just two years later, pointing to studies that found that for every dollar in tax collected by the Garden State’s cosmetic tax, the state actually lost $3.39 in revenue.

The budget to be voted on this week in Connecticut is a highly flawed document that relies on gimmicks, increases spending, and will only serve to impede economic recovery, increase revenue volatility, and create future budget holes. The House is expected to hold a floor vote on Tuesday. For extended commentary on the Connecticut budget debate in today’s Daily Caller, click here.


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Pelican Institute Speaking Truth to Power

Posted by Patrick M. Gleason on Saturday, April 30th, 2011, 12:27 PM PERMALINK

Kevin Kane, president of the Pelican Institute, provided some serious knowledge this week in the New Orleans Times-Picayune re: HB 63, legislation that would raise the state tobacco excise tax:

The authors tout the wonders that another $250 million would bring. Several of the items in their grab bag are of dubious value, but perhaps we should start with a simple question: Does anyone believe we are getting enough for the $25 billion we are already spending? Health care and education outcomes simply do not support the case for throwing more money at problems that have resisted the best efforts of central planners. To say nothing of the fact that we would have a more robust economy if less money was taken from the private sector. Given these facts, voter skepticism to higher taxes and more spending is understandable

To read the rest of the Pelican Institute's commentary on why raising taxes is no answer to the state's overspending problem, click here.

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Georgia Legislature Approves Health Insurance Sales Across State Lines

Posted by Patrick M. Gleason on Wednesday, April 20th, 2011, 2:39 PM PERMALINK

Good news for Georgia residents. Yesterday the Georgia House of Representatives voted for final passage on HB 47, legislation that would allow Georgia residents to purchase health insurance plans offered in other states, but not currently available in Georgia due to misguided mandates.

As I pointed out in the OC Register a little over year ago:

Health insurance mandates are government-imposed requirements that insurers and health care plans either cover, or offer coverage, for a condition or treatment. As recently as the 1960s, mandates were few and far between. However, today there are more than 2,000 mandates imposed by the federal and state governments.

Health insurance mandates drive up the cost of health insurance significantly. According to a recent study by the Council for Affordable Health Insurance, insurance mandates increase the cost of a basic health care plan by 20 percent to 50 percent. This estimate is based on analysis of insurance policies, not theories or modeling.

To understand how mandates drive up health insurance costs and price many out of the market, consider the following hypothetical situation: A new college graduate is in the market for a new car. At this point in her life she just wants reliable transportation. However, the government requires her to buy the fully loaded Lexus, with heated seats, navigation system and pricey options, even though that is not what the customer needs or can afford.

Georgia has more health insurance mandates than most states, with 45 separate requirements. Since 2009, the number of health insurance mandates has risen from 2,133 to 2,156 nationwide. Council for Affordable Health Insurance Executive Director J.P. Wieske sees the need to rein in health insurance mandates as necessary step in bending the cost curve:

While some state and federal legislators continue to pass new mandated benefit laws, others recognize that mandates drive up the cost of health insurance and make health insurance policies unaffordable for millions of Americans. As implementation of the new federal health insurance law further drives up the cost of health insurance, the cost of adding new mandated benefits will become a more important issue.

At the federal level ATR is also supportive of H.R 371, Congresswoman Marsha Blackburn’s Health Care Choice Act of 2011, which would permit all Americans to buy health insurance from anywhere in the country.

Kudos to the Georgia legislature for adopting this important reform, which will reduce costs and increase access to quality, affordable health insurance that meets the unique and variant needs of consumers. ATR encourages Gov. Deal to sign HB 47.

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ATR encourages all Louisiana legislators to join Rep. Henry Burns in signing the Taxpayer Protection

Posted by Patrick M. Gleason on Tuesday, April 19th, 2011, 12:37 PM PERMALINK

This past tax day, Rep. Henry Burns signed the Taxpayer Protection Pledge, making a commitment to his constituents, and all Louisiana taxpayers, that he will oppose any and all efforts to raise taxes. With a new legislative session set to convene next week, many challenges await state lawmakers. By signing the Pledge, Rep. Burns joins Gov. Jindal in taking tax hikes off the table in the coming legislative session.

Rep. Burns also joins 237 members of the U.S. House of Representatives and 41 U.S. Senators, along with 13 governors and over 1,200 state legislators across the country who have signed the Taxpayer Protection Pledge.

“I commend Rep. Henry Burns for signing the Taxpayer Protection Pledge and, in doing so, making it clear to all that he, like Gov. Bobby Jindal, recognizes that the state has a spending problem, not a revenue problem, and that raising taxes will only impede economic recovery in Louisiana,” said Grover Norquist, president of Americans for Tax Reform.

Over the last ten years state spending in Louisiana has increased by over 78%. Opponents of higher taxes point out that had spending been kept in line with the rate of population growth and inflation during that time, Louisiana taxpayers would’ve realized over $30 billion in savings. 

“After watching politicians in Washington raise federal taxes by over $350 billion in the last two years – including more than 20 separate tax increases just due to ObamaCare – it’s imperative that Louisiana legislators not pile on with more job-killing, recovery-impeding tax increases at the state level,” continued Norquist. “I applaud Rep. Henry for making clear to the spending interests set to descend on Baton Rouge next week that he will be putting taxpayers first and that proposals that raise taxes and take more money out of the private economy are a non-starter. I strongly encourage all members of the Louisiana legislature to join Gov. Jindal and Rep. Burns in signing the Taxpayer Protection Pledge today.”

For a list of Louisiana legislators who have signed the Pledge, Click Here.

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ATR Testifying in Texas Today Against eTaxes

Posted by Patrick M. Gleason on Monday, March 28th, 2011, 3:43 PM PERMALINK

Today the Texas House Ways & Means Committee is holding a hearing on HB 1317 and HB 2403, legislation that seeks to force out-of-state businesses to collect the Texas sales tax.  They are also considering HB 1454, which would force out-of-state travel companies to pay a high and discriminatory hotel tax rate on their business revenue.

It is because of the Lone Star State's competitive and predictable tax and regulatory burden that the state has become the economic powerhouse of the nation. By rejecting these ill-advised and unconstitutional pieces of legislation, Texas legislators can send a clear message to Texas employers and businesses considering moving to Texas that the legislature isn't about to do anything to diminish the state's hospitable and predictable tax and regulatory regime.

The Digtal Liberty Project's Kelly Cobb will be testifying at today's hearing in opposition to HB 1317, HB 2403, and HB 1454. For more information why online sales tax legislation should be rejected, click here. And for the clearest red flag that this bill would adversely impact the Texas economy - just know that California Democrats are currently looking to pass this same legislation.

For live updates from the hearing, follow ATR's @patrickmgleason on twitter.

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ATR Urges Texas Legislators to Preserve the Rainy Day Fund

Posted by Patrick M. Gleason on Friday, March 18th, 2011, 2:48 PM PERMALINK

As 82nd session of the Texas legislature turns its attention to the 2012-13 biennium, Americans for Tax Reform urges lawmakers to bring expenditures in line with revenue without using anymore of the rainy day fund. While it is disappointing that lawmakers have already tapped a portion of the fund for the current biennium, Gov. Rick Perry is correct in ruling out any reliance on the rainy day fund in the ’12-’13 biennium. That is not only a good policy decision, it is a necessity.

The fact is there are there are known budgetary challenges looming on the horizon; as such, further depletion of the important taxpayer safeguard that is the rainy day fund would threaten the state’s fiscal stability.

Texas, like many states, is on the verge of realizing a significant spike in Medicaid costs. Implementation of Obamacare will only make matters worse, exacerbating the projected increase in state Medicaid expenditures. According to a recent study from the Texas Public Policy Foundation, even assuming ObamaCare is repealed, state spending on Medicaid in Texas will rise by $10 billion in the ’14-’15 biennium. Under ObamaCare the increase in Medicaid costs for the Lone Star State jumps 50% to $15 billion for that budget cycle.

It is incumbent upon conservatives in the Texas legislature to do everything in their power to prevent their constituents from getting hit with this unconstitutional legislation which raises taxes by $500 billion over the next decade and will tie the hands of state budget writers. That’s why ATR is supporting HJR 24, Rep. Ken Paxton’s Healthcare Freedom Act. 

Accounting for 70% of jobs created since ’08, Texas emerged from the recession five months before rest of the country not by accident. Texas has been then economic powerhouse of the nation for more than a decade thanks to a low tax burden and predictable regulations. Preserving the remainder of the rainy day fund and avoiding all tax increases, as Texas legislators did in 2003, will send a strong message to the business community and investors that the Lone Star State isn’t about to do anything to diminish its hospitable tax and regulatory climate.

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