Arizona voters have unfortunately approved Proposition 208, a measure that was heavily funded by out of state interests and will result in the hardworking taxpayers across the Grand Canyon State facing a permanent $1 billion income tax hike. Legal challenges against Prop. 208 are likely to ensue. 

Prop. 208 will impose a new 3.5% “surcharge” on single filers who earn more than $250,000 a year and married couples who earn more than $500,000. This amounts to a whopping 77.7% tax increase, giving Arizona the unwelcome distinction of being home to one of the highest income rates in the country. 

“Backers of Prop. 208 have been claiming this massive increase in Arizona’s top marginal individual income tax rate would only impact ‘the rich.’ But that is not true,” wrote Grover Norquist, president of Americans for Tax Reform, in an OpEd that warned of the serious negative consequences of this measure. “Prop. 208 proponents ‘forget’ to mention that small business owners also pay individual income taxes. In reality, around 50% of those whose tax rates would be targeted are small businesses, many of whom have already been struggling from weeks of forced shutdowns to slow the spread of the coronavirus.”

Adding insult to injury, Prop. 208 is also going to jeopardize future jobs and opportunities for Arizonans. “[I]t has been well documented that income tax rates are a key determinant of business location and investment,” wrote Norquist. Prior to Prop. 208, Arizona’s top marginal individual income tax rate of 4.5% was fairly competitive. Once Prop. 208 takes effect, Arizona’s new rate of 8% will rank 10th highest in the country and 2nd highest in the region. “Why would anyone want to invest in Arizona when there are so many other states that would allow them to keep more of their hard-earned money,” said Norquist.

Prop. 208, the so-called “InvestInEd” measure, will devastate Arizona’s economy, while doing nothing to actually improve education. “It would not expand parental choice. It would not call for higher standards. It is basically a slush fund for bureaucrats,” explained Norquist. “Giving all parents and students – regardless of income or address – the ability to choose the school that works best for them is the best way to improve education and education outcomes.”

A glimmer of hope for Arizona taxpayers is that legal challenges are likely to be filed against Prop. 208. There is still a chance that this massive tax increase – the largest in Arizona history – may not take effect.

The Department of Health and Human Services (HHS) this week unveiled a notice of proposed rulemaking that would enact unprecedented regulatory reform by requiring regulations to go through retrospective review. Under the proposed rule, entitled “Securing Updated and Necessary Statutory Evaluations Timely,” HHS would be required to review existing regulations every ten years under the Regulatory Flexibility Act (RFA).

As many as 85 percent of HHS regulations created before 1990 have not been edited or updated, so this deregulatory action is long overdue.

The new proposal will address this mass of outdated regulations by providing a pathway to update, modernize, and eliminate regulations and help promote a healthcare system that provides Americans with high quality, patient centered care.

The proposal would require the vast majority of regulations to undergo a two-step review process. Under this process, the agency would first be required to determine the economic impact of any rule. If it is determined that a regulation has a significant economic impact, the agency is required to perform a more detailed review, which must consider a number of factors including how complex the rule is, whether it is duplicative in any way, and whether there are any technological, economic, or legal considerations in amending or rescinding the rule.

A small minority of regulations will be exempt from this process including regulations that are jointly issued with other agencies, regulations that legally cannot be rescinded, and regulations issued with respect to a military or foreign affairs function or addressed solely to internal management or personnel matters.

Retrospective review of regulations is a bipartisan issue that has been supported by every Democrat and Republican president in the last four decades. For instance:

• In 1978, President Carter signed Executive Order No. 12044, which directed agencies to “periodically review their existing regulations,” requiring agencies to consider, among other things, whether “technology, economic conditions or other factors have changed in the area affected by the regulation.”
   
• In 1981, President Reagan signed Executive Order 12291, which ordered agencies to “review existing regulations” in view of cost-benefit principles and potential alternatives. Reagan also signed Executive Order 12498 in 1985, which ordered agencies to create an annual plan of review for existing regulations.
   
• In 1992, President George H.W. Bush released the “Memorandum on Reducing the Burden of Government Regulation,” which instructed agencies to conduct a 90-day review “to evaluate existing regulations and programs and to identify and accelerate action on initiatives that will eliminate any unnecessary regulatory burden or otherwise promote economic growth.”
   
• President Clinton signed Executive Order No. 12866, which called for review of existing regulations to determine whether they have become “unjustified or unnecessary as a result of changed circumstances,” and “to confirm that regulations are both compatible with each other and [are] not duplicative or inappropriately burdensome in the aggregate” and requiring agencies to submit a plan to the White House Office of Information and Regulatory Affairs (OIRA) for period reviews.
   
• In 2001, President George W. Bush released a report to Congress that reviewed how to assess the costs and benefits of existing federal regulations, including their aggregate costs.
   
• President Obama signed Executive Order No. 13563, which ordered agencies “to facilitate the periodic review of existing significant regulations . . . to promote retrospective analysis of rules that may be outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned.”

This latest regulatory reform builds on these past actions. In addition, it builds on the record HHS has amassed in enacting significant regulatory relief during the COVID-19 pandemic. For instance, the agency issued emergency authorization for new COVID-19 tests and allowed out-of-state doctors to treat patients through telehealth. In addition, the agency eased rules to increase ventilator production and allow hospitals and providers significant flexibility regarding workplace rules, scope of practice requirements, and off-site treatment.

More recently, the agency unveiled a proposal streamlining the approval process of laboratory developed tests (LDT). The proposal removed duplicative regulations that required the FDA to conduct premarket review of LDTs even though diagnostic laboratories are already subject to regulation by the Centers for Medicare & Medicaid Services under the Clinical Laboratory Improvement Amendments of 1988. There was no statutory requirement for the FDA to exert oversight over LDTs – this requirement was created through unofficial guidance. This resulted in significant regulatory costs for laboratories -- the FDA review process took an average of 262 days and impaired the ability for diagnostic laboratories to respond to public health emergencies.

The new proposal from HHS to require retroactive review of regulations will help ensure that these rules are efficient, modern, and are not overly burdensome to the American people. It builds on the recent record of regulatory reform and past efforts by Democrat and Republican administrations. Moving forward this rule should be swiftly finalized and implemented in order to provide important regulatory relief to taxpayers and the healthcare system.

An unexpected winner in the 2020 elections looks to be… *checks notes*… New York taxpayers? It’s hard to believe, but then again it is 2020.

New York saw some key election results that may give some hope to the state’s beleaguered taxpayers.

In recent sessions, a consolidated Democrat-controlled state legislature, along with Governor Cuomo in his third term, moved more costly tax-and-spend policies like the Green New Deal through Albany.

With a few wins in 2020, Democrats would grab a supermajority in the state legislature. Policies like socialized medicine, wealth and investment taxes, and more economy-destroying fantasy proposals seemed right around the corner. Even policies too radical for Governor Cuomo would become reality. Add to that, redistricting for the state is coming up as well.

On the verge of irrelevance, Republicans performed well in the state, regaining ground in the state senate.

In district 3, Alexis Weik leads Monica Martinez, In district 5, Edmund Smyth leads Jim Gaughran, in district 6, Dennis Dunne leads Kevin Thomas, in district 22, Vito Bruno leads Andrew Gounardes, in district 38, William Weber leads Elijah Reichlin-Melnick, in district 40, Rob Astorino leads Pete Harckham, in district 42, Mike Martucci leads Jen Metzger.

These would all represent flips from Democrat to Republican. With days left before outstanding mail-in votes are counted, these races could change. Still, Democrats will fall short of the 42 senators needed for a supermajority barring a miracle, and Republicans expect to gain 4-to-6 seats on net. There are 63 seats total in the New York Senate, Democrats held 40 seats before the election.

New York Republicans also look to have held onto all their congressional seats, though reporting for the 3rd district is very low (according to the New York Times), and they will add NY-11, Nicole Malliotakis, and likely NY-22, Claudia Tenney.  

Policies like the expansive Green New Deal legislation passed last year can’t be undone, so New York taxpayers will continue to be subject to costly, job-killing left wing experiments. Taxes will remain high. People will continue to leave for greener pastures. Still, it was about to get a lot worse, and a surprising election likely prevents the worst case scenario from unfolding… for now.

Arkansas voters have unfortunately approved Issue 1, a sales tax increase.

Americans for Tax Reform opposed this measure. Issue 1 will permanently increase Arkansas’s sales tax rate by 0.5 percentage points or 8.33%, resulting in Arkansas having one of the highest combined state and local sales tax rates in the country.

In 2012, Arkansas voters approved a “temporary” sales tax increase of 0.5 percentage points that was supposed to expire in 2023. Issue 1 will now make that tax hike permanent, which, contrary to many claims, is, in fact, a tax increase.

“Sadly, Arkansas saddled itself with a sales tax increase that was originally peddled by the state legislature and governor as temporary,” said Grover Norquist, president of Americans for Tax Reform. “Now, the Governor decided that promises to his voters are old fashioned. He broke his word and put a referred question that would make the “temporary” tax hike permanent. For ever and ever and ever.”

For further details, see ATR president Grover Norquist's op-ed here.