Sin Tax

Taxin’ Tim Kaine Tried to Raise Income Taxes on the Poorest Among Us

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Posted by John Kartch on Monday, October 3rd, 2016, 9:30 AM PERMALINK

If Hillary Clinton running mate Tim Kaine had his way, Virginia residents would today be paying billions in higher taxes. As governor, Kaine sought to impose nearly $4 billion in higher taxes, including an income tax hike on families earning as little as $17,000 a year. He also pushed for higher taxes on distilled spirits and cigarettes.

Income Tax Hike on Working Families: Kaine tried to Increase the bottom tax rate from 5.75% to 6.75%, directly affecting low income families earning as little as $17,000 annually. As noted by Politifact Virginia: “Not everyone at that level would have paid more under Kaine’s plan, but it’s a safe bet that large number of them would have seen their overall tax bill rise.”

Alcohol Tax: Kaine pushed a 2% markup on distilled spirits sold in Virginia’s fully monopolized state-owned retail stores.

By law, Virginia residents and businesses must purchase distilled spirits from the monopoly Alcoholic Beverage Control (ABC) stores. Residents can’t even escape the regime by buying their beverages elsewhere, because Virginia only allows residents to bring home one gallon from another state.

Rather than reform the system, Kaine tried to squeeze more money out of hard working Virginians. He called for a two percent across the board markup, which would have raised the retail price for people shopping in ABC stores as well as those enjoying a beverage in a restaurant. Virginians would have had no choice but to pay the Kaine-imposed markup.

Kaine’s attempted $8 million beverage tax hike was part of his final budget proposal, released Dec. 18, 2009.

Cigarette Tax: Kaine pushed a 60-cents per pack cigarette tax increase on smokers, whose median income was about $40,000 per year.

Kaine’s record in support of tax hikes made him an attractive running mate Hillary, who has proposed a series of tax increases totaling at least $1 trillion over ten years. 

To learn more about Kaine and Clinton’s tax hike records, visit ATR’s dedicated website,

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Proposed Tax Hikes in Kansas Won't Solve Overspending Problem; Will Hurt Small Businesses

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Posted by Will Upton on Monday, January 26th, 2015, 10:55 AM PERMALINK

As a part of his 2015 Kansas budget, Gov. Sam Brownback has proposed tax increases on alcohol and tobacco products. These tax increases would have a detrimental impact on  working class consumers and small businesses alike. In a letter to the Kansas legislature, Americans for Tax Reform president Grover Norquist noted:

Increasing the sate cigarette tax from 79-cents to $2.29 per pack represents a 190% increase in the tax rate on mostly middle and lower class consumers. Increasing the state tax on liquor from 8% to 12% would have a detrimental impact on many of Kansas’s small businesses who are reliant on liquor revenue – small businesses that the 2012 and 2013 tax reform legislation was designed to help and grow... A pack-a-day smoker would end up paying an extra $547.50 in taxes a year. Kansans living along the Missouri border may opt to avoid the tax altogether by purchasing their tobacco products in Missouri – where the tax would be lower. If consumers flock to businesses across state lines, they may make other purchases while shopping for tobacco – hurting the bottom lines of Kansas retailers.

In addition to the burdensome costs to retailers and consumers, sin taxes such as those proposed by Gov. Brownback are traditionally a declining source of revenue. Kansas has an overspending problem and it can be solved not by hiking taxes but by eliminating government waste and reducing spending. The ATR letter to the Kansas legislature notes:

States should aim to increase spending at the rate of inflation and population growth. Using those metrics Kansas has over-spent by about $12 billion between 2000 and 2009. That’s an over one-billion-dollars-per-year overspending problem. That data point alone should put to rest any claims that there is no room to cut from the state budget.

To read the full letter, click here.

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E-Cigarette Tax Hikes Threaten State Revenue, Public Health

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Posted by Alexander Bobroske on Thursday, June 26th, 2014, 3:23 PM PERMALINK

A number of states over the past two years have attempted to impose new and higher taxes on e-cigarettes and vapor products. Though many legislative efforts have been thwarted, potential e-cigarette tax increases continue to pose a threat to state revenue, businesses, and public health.

States are scrambling to find new funding to replace the decline in tobacco tax revenue. Earlier this year the Surgeon General published a 980-page report predicting an eventual end to cigarette smoking in the United States. Whether those predictions come true or not, what’s clear is that as tobacco use declines, consumers are transitioning to healthier products like e-cigarettes. Higher excise taxes on these products will result in cross-border sales and even less revenue for states.

New and higher e-cigarette taxes are not serious public policy alternatives to declining tobacco revenue. The sale of these products is highly mobile due to the popularity of online sales. That’s precisely why state efforts to generate more revenue from these products are misguided. Massachusetts’s proposed 90% wholesale tax hike and Vermont’s proposed 92% would have crippled the industry and further harmed small businesses, like convenience stores, who are already suffering from a decline in tobacco related purchases had they become law.

For tobacco sales, tax evasion is a significant issue for states. The Washington Department of Revenue estimated $376 million in tax revenue was lost in 2012 due to tobacco tax evasion. A combination of tax evasion and higher online sales (not subjected to sales taxes) may become a growing issue for states if they impose higher in taxes on e-cigarettes and vapor products. States like Washington have taken note. The state Senate this year rightfully rejected a 95% tax on e-cigarettes and vapor products, preventing a further loss of revenue for convenience stores and brick and mortar vapor shops as a result of the fleeing of consumers across state lines.

Besides hurting taxpayers and diminishing state coffers, e-cigarette tax hikes also pose a threat to public health. Overtaxing products accredited to potentially saving lives makes little sense. In opposition to former New York Mayor Michael Bloomberg’s hypocrisy on public health for raising taxes on these products, ATR’s Patrick Gleason wrote:

Studies have shown that electronic cigarettes stand to improve health and prevent disease. By choosing to “vape” e-cigs instead of smoking cigarettes, consumers get their nicotine fix without the combustion and smoke — responsible for much of the negative health effects of tobacco cigarettes. For smokers already addicted to nicotine, e-cigs provide an alternative delivery mechanism that does not come with the proven harm that results from smoking.

Lawmakers like Bloomberg claim to champion public health and crusade against rising health care costs, yet they miss the irony of their contradictory legislation. While saying they seek to encourage smokers to successfully move away from tobacco products, their proposed higher taxes on e-cigarettes and vapor products are contributing to the high health care costs associated with a lifetime of smoking cigarettes. With e-cigarettes, neither tobacco nor second hand smoke poses a threat to anyone.

Despite the evidence staring them blankly in the face, there are still legislators and governors attempting to make money off of this growing industry. Democrats like Rep. Reuven Carlyle (D-WA) vow to revive failed attempts in future legislative sessions for tax hikes. ATR encourages Ohio, New Jersey, and legislators across the country to kill all bills aimed at increasing e-cigarette and vapor product taxes. These tax hikes will not result in new revenue, but instead declining economies.


Photo Credit: Wendy

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