Sheridan Nolen

Gov. Kristi Noem Assures Taxpayers That She Will Keep South Dakota a Low Tax State

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Posted by Sheridan Nolen on Tuesday, January 26th, 2021, 4:52 PM PERMALINK

Gov. Kristi Noem – one of 13 governors who have signed the Taxpayer Protection Pledge, a written commitment to taxpayers that she will oppose and veto any and all tax increases – reminded South Dakotans once again that there will be no tax increases under her watch.   

“We don’t have a corporate income tax. There is no business inventory tax. We have no personal income tax. We also do not have a personal property tax or an inheritance tax,” explained Gov. Noem in her State of the State Address. “The taxes that we do have to fund state government are stable and predictable. In short, for those who might be worried about tax increases, you do not need to be.” 

South Dakota is one of nine states that do not tax wage income and one of six states without a corporate income tax. No wonder it ranks second best in the Tax Foundation’s 2021 Business Tax Climate Index. 

Thanks to Gov. Noem, this pro-taxpayer, bro-business record will not be changing anytime soon. “As I told you all last month, we’re in a much stronger financial position than other states across the country,” explained Noem. “States that shut down their economies are now looking at tax increases or drastic spending cuts to make ends meet.” 

Throughout the pandemic, Gov. Noem refused to cave to outside pressure to shut down South Dakota. This has resulted in South Dakota having one of the strongest economies coming out of the pandemic. In fact, by keeping the state open, South Dakota’s tourism industry held its own over the course of the pandemic in comparison to other states.  

The tourism industry accounts for 11% of state sales tax collections and supports 1 out of 12 jobs for South Dakotans. Because Gov. Noem kept the state open for business, “tourism generated $276 million in state & local tax revenue” and South Dakotans stayed employed. While most states, on average, saw tourism spending decline 45% in 2020, South Dakota only declined by 18%.  

In addition to protecting taxpayers, Gov. Noem has also made expanding access to health care a top priority for the 2021 legislative session. To fight the coronavirus, Gov. Noem issued a number of emergency orders that removed government barriers to quality care. In a press release, she recently announced that she will be introducing two pieces of legislation that make these reforms permanent.  

The first bill is based on Executive Order 2020-07, which increased access to telemedicine. “We greatly expanded telehealth in 2020. Since March, people have used tech services like these more than 70,000 times in South Dakota’s Medicaid program alone,” explained Governor Noem. 

Thanks to Gov. Noem’s telemedicine order, patients were able to receive telehealth treatment from a new health care provider without the hassle of having an in-person appointment first, providers were allowed to prescribe certain medications through telehealth, and the audio-visual requirement for telehealth was eliminated.  

Gov. Noem’s second bill is modeled after Executive Order 2020-16, which allowed South Dakota to recognize certain out-of-state healthcare licenses. “As freedom-loving Americans from around the country continue moving to South Dakota, we can address workforce shortages by recognizing the good work that they did in other states and welcoming them to continue their work by serving South Dakotans,” she explained.  

Gov. Noem’s leadership and commitment to protecting taxpayers makes South Dakota one of the most promising places for investment in the nation. With Gov. Noem keeping taxes low and deregulating the healthcare industry, South Dakota will continue to thrive through the pandemic and beyond. 

Photo Credit: Gage Skidmore

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Kansas Governor Wants to Tax Your Netflix & Online Shopping In Midst of Pandemic

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Posted by Sheridan Nolen on Monday, January 25th, 2021, 6:21 PM PERMALINK

Instead of making it easier for millions of Kansans to make ends meet and recover from the pandemic, Gov. Laura Kelly is pushing a tax-and-spend agenda during the pandemic-induced recession in her new proposed budget

Nearly 2 million Kansans use digital streaming services. If her proposed budget is passed, the state’s sales tax will be applied to digital products and streaming services. In other words, every time a person purchases a Netflix, Spotify, or Hulu subscription, a sales tax would be applied to that transaction. If someone were to purchase a digital book, video game, smartphone application, or magazine download, it would be taxed as well.  

Gov. Kelly’s budget also codifies an Internet Sales Tax that she was previously pushing to collect unconstitutionally (using legislation that did not comply with the Supreme Court’s Wayfair v. South Dakota decision).

Kansas currently has the 8th highest combined state and average local sales tax rate in the country, sitting at 8.69%.    

Kelly is pushing for tax hikes because she wants to significantly increase spending to a record $7.9 billion, and increase pension debt. She is doing all of this despite the fact Kansans are struggling with a weak economy and uncertainty due to the pandemic. 

A “Netflix tax” would affect millions of taxpayers in Kansas, considering virtually everyone uses digital products and streaming services – especially during the pandemic. While countless Kansans have been forced to spend more time at home, they have looked to digital streaming services and other digital products as a source of entertainment.  

Instead of looking for ways to boost Kansas’ economy during the recession by cutting taxes and reducing government spending, Gov. Kelly wants to impose a sales tax that capitalizes on Kansans just trying to stay safe at home through the pandemic.  

Photo Credit: Stock Catalog

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Gov. Kim Reynolds Wants to Deliver Tax Relief in 2021

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Posted by Sheridan Nolen on Thursday, January 21st, 2021, 4:03 PM PERMALINK

Taxpayers across the country are very likely to face a number of federal tax increases in the coming year. At least for taxpayers in Iowa, they can rest assured that they will not be facing any tax hikes at the state-level.

In her Condition of the State Address, Gov. Kim Reynolds assured Iowans that they would not see any state tax increases this year. “And remember, that unlike many states we’re starting from a good financial position,” explained Gov. Reynolds. “We aren’t looking at tough budget cuts and we’re certainly not looking at raising taxes.”

And making that promise even better, Gov. Reynolds said she would like to build on her pro-taxpayer reputation by delivering more tax relief. In 2018, Gov. Reynolds signed the largest state tax cut in Iowa history into law. Once fully implemented, that pro-growth tax reform package will provide Iowans with $2.1 billion in tax relief.

That tax law reduced the rate of every single one of Iowa's nine individual income tax brackets. This has been a huge win for individual taxpayers and families, as it allowed them to keep more of their hard-earned paychecks. It was also a big victory for small businesses, which file their taxes under the individual code, as it allowed them to invest more resources in jobs and higher wages.

In 2023, that law could do even more to help taxpayers and make Iowa a more attractive place to live, invest, and do business. Once fully implemented, it will reduce the number of individual income tax brackets from nine to four and lower the top rate from 8.53 percent to 6.5 percent. The catch here is that this component of the bill is subject to certain revenue triggers being met. While official projections have Iowa coming very close to reaching those triggers, if they fall even the slightest bit short, the tax cuts will be delayed.

Gov. Reynolds would like to guarantee that relief is provided and maybe go even further. “If anything, we need to continue the conversation about cutting taxes, and we can start by getting rid of the unnecessary triggers that were put in place in 2018,” said Gov. Reynolds. “Let’s make Iowa more competitive and guarantee our taxpayers that they can keep more of their hard-earned money.”

At present, Iowa’s top marginal individual income tax rate – the part of the income tax that is most commonly used to make decisions about investment – is in the top 10 highest in the country. To ensure that Iowa definitely becomes more competitive, Gov. Reynolds, at minimum, would like to remove the triggers to make sure the promised cuts take effect.

Even better news for Iowans is that newly elected Senate President Jake Chapman has always viewed tax relief as a top priority. In a recent interview with The Gazette, President Chapman explained:

“Now more than ever is when we need to be implementing tax cuts. We need to stir our economy as never before, and one of the ways we do that is through tax cuts. I’m talking about individual tax cuts, I’m talking about people who are paying capital gains, who are wanting to bring their business back or start a business. This is the time to really focus on how we can begin to implement tax cuts that will lead to the total elimination of income tax. My hope is that we do focus on how we can reduce taxes and eventually eliminate the income tax.”

Reducing and phasing out the state income tax would be a huge win for all Iowans. Putting the income tax on the path to zero would allow Iowa to compete with more states for businesses looking to expand, investors looking for growing economies, and families looking for better opportunities – all of which would bring new jobs and higher wages to the state.

Photo Credit: Iowa Public Radio Images

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Cuomo Calls for Federal Income Tax Hikes to Bail Out NY

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Posted by Sheridan Nolen on Monday, January 11th, 2021, 4:51 PM PERMALINK

Looking to fellow Democrats who recently took control of Washington, Gov. Andrew Cuomo called upon President-Elect Joe Biden and Congress to bail out the state of New York during his 11th annual State of the State address this morning. 

“If the federal government needs revenue, it should raise income taxes on the wealthy to finance the state’s resurgence from this national devastation. That is basic economic justice and economic prudence,” said Gov. Cuomo.  

With Democrats holding the White House, Senate, and the House for the first time in over a decade, tax hikes are a major threat. Included in Biden’s tax plan is a substantial tax increase on high-income-earning Americans. In short, Gov. Cuomo’s dream of a state bail out by Washington doesn’t seem too far-fetched.  

Groups on the left are pushing for New York State tax hikes still, even as Cuomo questions how much revenue they would raise. Some pointed to data from A Strong Economy for All, a coalition of labor unions and community groups across New York State, that suggest a California-style 13.3% income tax rate on higher earners would generate $22 billion.  

It appears Gov. Cuomo wants to place the blame of his mistakes on the federal government – and wants Washington to fix his terrible handling of the pandemic, too.  

Photo Credit: Pat Arnow

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Tax-Addicted New York Wants Fees for Package Delivery

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Posted by Sheridan Nolen on Wednesday, December 9th, 2020, 2:07 PM PERMALINK

With the pandemic forcing workers home, and government shuttering businesses, Americans have relied on ordering goods online more than ever.  

This trend is being seized on by one New York Assembly member, who wants to tax package delivery. A proposal so absurd, even Alexandria Ocasio-Cortez slammed the idea.  

The new bill would place a $3 delivery fee on all online order packages delivered to New York City residents. Packages containing food and medicine would be exempt from the surcharge. About 1.8 million packages are delivered to New York City residents every year.   

This proposal comes after the Metropolitan Transit Authority (MTA) announced the potential of 40% service cuts coming as early as May 2021. Assemblyman Robert Carroll (D-Brooklyn), who proposed the legislation, says that the fees would raise well over a billion dollars a year to fund the Metropolitan Transit Authority (MTA), whose tax and ridership revenues have been decimated by the COVID-19 pandemic. 

In addition to funding the operating costs of buses and subways in NYC, Assemblyman Carroll also mentioned the legislation would incentivize New Yorkers to shop locally from small businesses in lieu of buying from major corporations like Amazon. Of course, many of these businesses aren’t allowed to operate, or have closed their doors due to lockdowns.  

This money grab reeks of desperation from the MTA, New York’s wastefulgraft-ridden transit agency, overseen by Governor Cuomo. MTA projects have been rife with overspending. The agency is pleading for a federal taxpayer bailout so it is not forced to reform.  

Even Rep. Alexandria Ocasio-Cortez, came out against the tax. In a tweet last night, Rep. Ocasio-Cortez criticized the bill for disproportionately affecting poor and working-class New Yorkers.  

Hardworking New York City residents are already struggling financially under the harsh COVID-19 restrictions imposed by Gov. Andrew Cuomo and Mayor Bill de Blasio – the surcharge on packages proposed by Assemblyman Carroll’s bill would only continue to hurt taxpayers as they try to recover from the pandemic.  

Photo Credit: Mark Mathosian

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New Hampshire Taxpayers Can Look Forward to Much Needed Tax Relief Under Republican Trifecta

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Posted by Sheridan Nolen on Thursday, December 3rd, 2020, 3:49 PM PERMALINK

After just two years of a Democrat-run General Court – and multiple efforts to raise taxes and destroy the New Hampshire Advantage, which were fortunately vetoed by Governor Chris Sununu – voters put Republicans back in charge of the Granite State. Now, the people of New Hampshire can look forward to some much-needed tax relief.

Going into Election Day, Democrats controlled the state Senate with a 14-10 majority and the state House with a 230-157 majority (13 seats were vacant). Democrats also had a 3-2 advantage on the Executive Council, which approves expenditures in the state budget and provides oversight for receipts and spending for state departments and agencies.

With those majorities, Democrats proposed a number of tax increases, including an income tax and a sales tax. They also tried to impose a variety of burdensome regulations, such as raising the cap on the state’s net metering program, which would have increased the cost of monthly energy bills.

Granite Staters clearly had enough of the liberal tax and spend agenda, and they showed it on November 3rd.

In addition to reelecting Gov. Sununu – one of 13 Governors who have signed the Taxpayer Protection Pledge, a written commitment to New Hampshire taxpayers that he will oppose and veto any and all tax increases – for his third consecutive term, voters also handed both legislative chambers back over to the GOP. Republicans now control the state Senate with a 14-10 majority and the state House with a 229-171 majority. Buttressing this Republican trifecta, voters flipped the Executive Council to Republicans, with a 4-1 advantage.

“New Hampshire Republicans ran as a unified ticket that put New Hampshire first, and the result is an incoming Republican Majority in the Executive Council and both chambers at the State House,” tweeted Gov. Sununu. “I am pleased that Granite State voters rejected the DC style politics that had crept into the State House these last two years, and I am excited to get to work with our new Republican majorities to deliver results for the people of this state.”

Gov. Sununu is already showing the people of New Hampshire how Republicans will deliver results: Tax relief. On multiple occasions, Gov. Sununu has expressed strong support for reducing the meals and rooms tax and has also indicated that he would like to reduce other business taxes.

The New Hampshire meals and rooms tax is imposed on restaurants, hotels, and grocery stores that sell prepared food. Currently, the meals and rooms tax rate is 9% of the meal or room cost. Reducing this tax would be a huge win for New Hampshire’s tourism industry, which has been hit particularly hard by the forced shutdowns to slow the spread of the virus.

In addition to helping these struggling businesses, reducing the meals and rooms tax would actually be a win for all Granite Staters, as it would reduce the overall cost of purchasing food at restaurants and staying overnight in hotels, cabins, and other lodging facilities.

Gov. Sununu has also expressed interest in undoing Democrat-led increases to the tax Business Profits Tax (BPT) and Business Enterprise Tax (BET).

Prior to Democrats taking control of the General Court, the state’s BPT and BET rates were scheduled to be reduced in 2019 and 2021 thanks to a budget prepared by Republicans and Gov. Sununu in 2017.

The Democrats agreed to allow the 2019 tax cuts to take effect as planned, but made the 2021 tax cuts contingent upon two revenue triggers. The first trigger would have allowed the promised 2021 tax cuts to take effect if revenues had come in above a certain threshold. The second trigger would have increased the BPT and BET rates, effectively undoing the 2019 tax relief, if revenues had come in below a certain threshold.

While businesses across New Hampshire dodged the latter trigger – which would have resulted in them facing tax increases during the pandemic – the first trigger was not hit either. Now, because Democrats insisted on changing the law, New Hampshire taxpayers have been robbed of tax relief in 2021.

Fortunately, Gov. Sununu and Republicans in the General Court have expressed interested in reversing this tax hike and allowing the 2021 tax cuts to take effect as planned, regardless of revenue. This would result business across New Hampshire, who have already been making tough decisions over the past few months, having more money to invest in jobs, wages, and basic business operations.

Now that New Hampshire is totally controlled by Republicans, members of the House, Senate, and Executive Council can work with Gov. Sununu in providing much needed tax relief to the hard-working people across the Granite State.

Photo Credit: U.S. Department of Agriculture

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Pennsylvania Approves Late Budget Without Tax Hikes. But What Happens Next Year?

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Posted by Sheridan Nolen on Wednesday, December 2nd, 2020, 2:08 PM PERMALINK

Recently, Pennsylvania Governor Tom Wolf signed into law a new budget that will carry state government operations through the remainder of the 2020-21 fiscal year. This legislation comes after lawmakers in Harrisburg approved a partial, stopgap budget amid the uncertainty of the COVID-19 pandemic back in May.  

This new plan will bring the total operating budget for June 2021 to $36.5 billion, which is about a 4% increase in spending from last year. Fortunately for taxpayers, the approved budget does not include any tax hikes for Pennsylvanians – for now.  

Lawmakers approved the use of roughly $1.33 billion CARES Act relief and more than $2.1 billion in federal Medicaid funding to balance the budget. However, the plan to use CARES Act funding to plug budget holes could be blocked by the federal government, as CARES Act guidance limits funds to be used only for costs directly related to the pandemic. Back in September, Pennsylvania was denied allocation of its CARES Act funds to make up its shortfall in yearly payments to school districts.   

According to the Commonwealth Foundation, using one-time sources of money could create challenges for next year’s state budget. Gov. Wolf could attempt to increase taxes in 2021 in the name of avoiding cutting state funding, even if that funding was supplemented by CARES Act funds.  

In 2009, something similar happened after Gov. Ed Rendell and the legislature used federal stimulus money to fund public schools. A few years later, when that stimulus money expired, there was sudden a $1 billion “budget cut” from public schools and the blame was placed on then-Gov. Tom Corbett. Since Gov. Wolf already proposes to increase taxes on energy bills with a natural gas severance tax every year, this could give him another excuse for it.  

Further, the state budget uses $431 million from “shadow budgets” and makes small cuts to balance the budget. While this is great news for taxpayers in the moment, as it does not call for an immediate tax hike, this is just a one-time reduction in spending and does not provide long-term solutions.  

A “shadow budget” is a portion of state spending in “off-book” accounts (not accounted for in the General Budget Revenue) that are financed by dedicated revenue sources or transfers from the General Fund. One shadow budget example is the redirection of sales tax revenue to the Public Transportation Trust Fund in 2007.   

Shadow budgets prevent public scrutiny of spending decisions made by the legislature.  

Lastly, the approved budget fails to restrict supplemental appropriations, making it highly likely that Gov. Wolf will “accidentally” overspend again. In the past, Gov. Wolf has exceeded  budgeted amounts for certain programs by hundreds of millions of dollars through “supplemental appropriations.” This is a bad habit that needs to be formally restricted by the legislature – something this budget has failed to do.  

A no-tax hike budget is another win for Pennsylvanians, but next year's budget fight is right around the corner.  

Photo Credit: spodzone


Ohio Commuters Taxed by Cities Where They Used to Work

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Posted by Sheridan Nolen on Wednesday, November 25th, 2020, 4:17 PM PERMALINK

Ohio’s current local income tax structure allows municipalities to tax employees even if they do not physically work in the city that is taxing them.  

This is a common rationale: employees can be taxed based upon where they work because they are using city resources like police, fire, and other public services while they are at work. 

However, what happens when people stop actually working at that location?  Ohio Governor Mike DeWine’s statewide COVID-19 Stay-at-Home order earlier this year has forced many employees to work from home. This means Ohioans are paying taxes to cities whose services they no longer use. 

At the beginning of the pandemic in March, lawmakers passed HB 197 which deemed all work performed at private homes during the public health emergency to have been performed at the employees’ principal place of work for the purposes of taxation. In other words, cities were permitted to collect income tax dollars as though businesses were operating under normal circumstances.  

This was originally passed under the assumption that it would be a temporary law, only to stay in place until 30 days after Gov. Mike DeWine ended his state of emergency declaration. As the pandemic has carried on far longer than initially anticipated, the temporary nature of the law has been strained.  

In July, The Buckeye Institute and three of its employees filed a lawsuit against the City of Columbus and the State of Ohio. The lawsuit asserts it is unconstitutional to allow cities to tax income of workers who do not live there, and were not permitted to work there during the Stay-at-Home order. 

In order to comply with Ohio’s emergency orders, which required nonessential businesses to close, The Buckeye Institute required its employees to work from home. According to The Buckeye Institute, this is unlawful taxation and “a clear violation of due process rights under the Fifth and Fourteenth Amendments to the U.S. Constitution and violates Article I, Section 1 of the Ohio Constitution.” 

Robert Alt, President of The Buckeye Institute, cited the Hillenmeyer v. Cleveland Board of Review Supreme Court decision from 2015. In Hillenmeyer, the Court unanimously decided that local taxation of a non-resident's services must be based on the location of that person when the work was performed.  

While the Ohio Supreme Court deliberates on the case, state legislators have said they plan to work on passing a new law before the end of the year. Two companion bills, inspired by The Buckeye Institute’s lawsuit, have been introduced in the Ohio Legislature.  

Rep. Kris Jordan, R-Delaware, has sponsored HB 754 and Sen. Kristina Roegner, R-Hudson, has introduced its companion, SB 352. Both pieces of legislation would amend income tax withholding rules for work-from-home employees related to the COVID-19 pandemic. Employees in Ohio would be taxed where they live rather than where they work.  

Sen. Roegner said, “I don’t believe it’s constitutional to be able to tax someone that doesn’t step foot in your city.”  

However, while various lawmakers like Roegner have expressed their beliefs that the law is unfair, cities across Ohio say repealing the temporary law would hurt city budgets. Organizations, such as the Ohio Municipal League, have also come out against such legislation.  

Ohio Municipal League Executive Director, Kent Scarrett, said that “any shift from how income taxes are collected with the coronavirus emergency measure needs extensive debate.” Membership to the Ohio Municipal League is given to any city or village in Ohio that pays annual dues. In other words, many people who are directly part of City Government are key members of the Ohio Municipal League.  

If a new law is not passed before the end of the 133rd General Assembly, Sen. Roegner has promised to bring a new bill back to the Statehouse in January 2021. 

The lawsuit and pending legislation of HB 754 and SB 352 could benefit taxpayers during the pandemic by simplifying how they pay taxes. 

Photo Credit: Nicholas Eckhart


Californians Face Billions of Dollars in Tax Hikes On the Ballot

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Posted by Sheridan Nolen on Tuesday, November 3rd, 2020, 5:18 PM PERMALINK

Today, Californians will be facing billions of dollars in state and, in some cases, local tax hikes on the general election ballot. If approved by voters, these measures would make California an even less attractive place to live, invest, and do business.  

California is already home to some of the highest tax rates in the country. Its top marginal individual income tax rate of 13.30% is the highest in the nation. Its gas tax rate of 62.47 cents per gallon is also the highest. Its combined state and local sales tax rate of 8.66% is 9th highest. Its corporate tax rate of 8.84% is 8th highest.  No wonder the Tax Foundation ranks California 49th best on its State Business Tax Climate Index.

Yet, things may soon get worse. 

Proposition 15, which will appear before all California voters, would remove the Proposition 13 property tax limit (a voter approved measure that 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) for commercial properties. This split-roll concept – where commercial and residential properties do not face the same tax rates, ratios, or assessment schedules – could raise taxes on California employers by as much as $12 billion annually! 

Proponents of Proposition 15 claim it would only impact large commercial property owners, but that is not true. In reality, this tax hike would also impact 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.” Ultimately, this tax hike would be passed onto consumers in the form of higher prices or workers in the form of fewer jobs and lower wages. 

Unfortunately for Californians, that is not the only property tax hike that will appear before them. Voters across the Golden State will also be deciding on Proposition 19, which would raise taxes on families by repealing Proposition 58 (a voter approved measure that allows certain properties to be transferred between families without reassessment). 

According to the Howard Jarvis Taxpayers Association, Proposition 19 was put on the ballot via a last-minute backroom deal among legislators. The non-partisan California Legislative Analyst's Office has noted that Proposition 19 could eventually cost California families two billion dollars annually in higher property tax bills. 

In some parts of California, voters will also be deciding on local tax hikes. Residents of San Francisco, for example, will be voting on: 

Proposition RR, which would generate more hard-earned tax dollars for Caltrain rail services in the form of an additional 0.125 percentage sales tax. If approved, this sales tax, which would remain in place for at least thirty years, would take the San Francisco sales tax rate from 8.5% to 8.625%. 

Proposition I, which would raise the real estate transfer tax. If approved, transactions of $10 million to $25 million would face a tax rate of 5.5%, and transactions of $25 million or more would face a tax rate of 6%. 

Proposition L, which would impose an additional gross receipts tax of 0.1 to 0.6 percent or a payroll tax of 0.2 to 2.4 percent on businesses whose highest managerial employees have salaries 100x’s greater than the median compensation for employees. 

Since March, a number of successful business owners and entrepreneurs have come out against California’s tax climate and incompetent governance. Just last month, Jeffrey Gundlach, a billionaire bond fund manager and founder of DoubleLine Capital LP, tweeted

“Elon Musk, Joe Rogan and Ben Shapiro, to name just a few, are leaving California to escape incompetent governance. The ‘response’ from Sacramento?  Wealth and massive income tax increases on job creators (AKA 'the wealthy').” 

This is part of a larger trend of people fleeing the Golden State to escape the high taxes and expensive cost of living. According to the Internal Revenue Service’s Migration Data, California saw a net loss of 153,197 residents between 2017 and 2018. In addition to people migrating out of California, there was a net loss of $7,983,739,000 leaving the state.  

A rational lawmaker would recognize it is time to lower taxes and figure out other ways to encourage people to stay in California. Instead, Democrats have focused on exporting California’s tax burden. This past August, lawmakers in Sacramento proposed legislation that would impose a 0.4% wealth tax on anyone whose net worth is greater than $30 million that, alarmingly, would apply to former residents for 10 years after they leave the state.  

To come up with such an outrageous policy, lawmakers must know that California is driving businesses and people away. But they love to tax and spend, so they are still piling on with MORE tax hikes. 

Gov. Gavin Newsom and the Democrat party support Propositions 15 and 19. If approved, these tax hikes will only give taxpayers another reason to leave California. 

 

Photo Credit: Ray_LAC

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Illinois “Fair Tax” Amendment Opens Door for Billions in Additional Tax Hikes

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Posted by Miriam Roff, Sheridan Nolen on Wednesday, October 21st, 2020, 3:36 PM PERMALINK

The fate of Illinois’ constitutionally mandated flat tax lies in the hand of voters, who will decide on Nov. 3, 2020 whether or not to adopt the Proposed Amendment to the 1970 Illinois Constitution— also known as the “fair tax” amendment or the “Illinois Allow for Graduated Income Tax Amendment.”

A NO vote would uphold the state’s current 4.95% flat income tax rate. A YES vote would open the door for significant state income tax hike, with the top rate rising to 7.99%.

By voting YES, voters will eliminate the only safeguard Illinois taxpayers have against income tax hikes, the flat tax— allowing Governor J.B. Pritzker and the Democrat-controlled state legislature to impose some of the highest tax rates in the nation with little or no recourse. If the measure is approved, on January 1, 2021 Illinois would move from a flat 4.95% income tax to new six bracket system with rates ranging from 4.75% to 7.99%, resulting in a  $3.7 billion income tax increase. 

It’s important to note that although the new rates and brackets, as passed by the Democrat-led legislature under SB 687 in 2019, are separate from the proposed constitutional amendment, this $3.7 billion income tax hike is completely dependent upon voters permitting a graduated-rate income tax structure.

Proponents of the progressive tax amendment are selling it as the be-all-end-all solution for ending the state’s infamous budgetary woes, claiming SB 687 will actually lower taxes for 97 percent of Illinois residents. The former is a flat out lie, whereas the latter is barely even a half truth.

If the amendment is approved, it’s true that Illinois taxpayers with up to $100,000 in income would see their marginal tax rate drop from 4.95% to 4.75% or 4.90% depending on their income level. However, the expected $3.7 billion in new revenue raised off the backs of the rest of the populace would barely make a dent in Illinois’ whopping $226 billion deficit.

Further, the proposed amendment does not contain language that limits the amount of tax brackets state lawmakers can create or how high they can raise taxes. The graduated income tax measure also provides zero accountability measures on how the new money will be spent and fails to address years of runaway spending. Keep in mind the Governor has promised over $10 billion in new spending despite the state being broke. Odds are any tax relief for middle and lower-income families would be short-lived.

According to research conducted by Americans for Tax Reform, government spending has ballooned over the last decade. In fact, Illinois had the nation’s second highest increase in spending per capita, rising 29.30%, between 2010 and 2018. During this time, Illinois raised the state income tax twice to fund this out-of-control spending. Further, just last year state lawmakers hit taxpayers with 20 new tax increases including the doubling of the gas tax, vehicle registration fee hikes, and the increase of online sales taxes. Even with all these tax increases the state still had an $8 billion budget deficit and an unfunded pension liability over $137 billion prior to the Covid-19 pandemic.

As the Illinois Policy Institute points out, for Democratic lawmakers to fully finance all of the Governor’s campaign promises and plug budget holes, a typical middle-class family could end up paying $3,500 more in income taxes. Even Gov. Pritzker admits that “there’s certainly no guarantees” that the amendment would protect middle and lower-income Illinoisans from future tax hikes.

The governor’s claim that there’s certainly no guarantees is correct. Take, for instance, Connecticut—the one state that has swapped out its flat income tax for a progressive income tax in the last 30 years. Nutmeg State lawmakers touted the progressive income tax as a way to fix state finances, address inequality, and promised spending restraint. However, that’s not what happened. It instead, cost the state’s economy over $10 billion, 360,000 jobs, and middle class families have seen their income tax rates climb over 13% and their property tax burden increase by more than 35% since 1999—the year that the personal income tax was first collected. As a result of these failed policies, Connecticut dons the 6th highest outmigration rate in the nation.

If voters need another reason to reject a progressive income tax structure with the higher rates set by SB 687, it’s worth remembering that it would kill jobs and small businesses by imposing the second-highest business tax rate in the nation. Under the Governor’s Fair Tax Plan, the corporate tax rate would rise from 7% to 7.99%, and when you take into account the 2.5% replacement tax already imposed on Illinois corporations, the total taxable rate is 10.49%. In 2018, the U.S. Bureau of Labor Statistics reported that Illinois’ private sector job growth ranked 46th out of 50 states. With the coronavirus pandemic looming over the heads of local businesses, many of which are on the brink of bankruptcy, the proposed Illinois income tax hike would exacerbate the financial hardships of a dilapidated economy.

A study conducted by the University of Illinois indicated that the state of can expect more than half a million full-time job losses and tens of billions of dollars in lost income over the next year as a result of the novel coronavirus. Illinois had already lost a record 850,000 residents over the last decade. By instituting another financial requirement on employers, this would be the last straw for thousands of small businesses and large employers, driving them to leave the state.

Giving Illinois lawmakers a blank check to spend billions of taxpayer dollars however they please will not provide a different outcome this time. The only way to address the state’s financial crisis is by reining in/reforming government spending in a way that taxpayers can afford. If taxpayers in Illinois truly wish to take a stand for fiscal responsibility and accountability, they should vote ‘NO’ on the graduated income tax amendment this November.

Photo Credit: Alan Cleaver


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