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National Taxpayers Union released an open letter (available HERE) to Ohio Governor John Kasich yesterday giving due credit for his effort to reform income tax burdens, but warning against a damaging energy tax included in the proposal. The Governor’s plan would increase severance taxes on specific types of wells, harming oil and natural gas producers.
This part of the measure would undo the good from income tax reductions and curb the potential for job creation and taxable wages in the energy industry. An economic impact study by Kleinhenz Associates estimates that development of the Ultica Shale using existing tax structures will create over 200,000 jobs in the state, increasing output by over $22 billion and taxable wages by over $12 billion. Adding to the promising fiscal future of this industry, each well drilled will produce state and local incomes taxes while generating proceeds from commercial activity and current severance taxes. NTU reminded Governor Kasich that these benefits will not be realized if a drastic tax hike is imposed.
Trimming wasteful spending and modest spending restraint in recent years could have provided enough fiscal latitude to nearly eliminate the state income tax entirely. It is that type of common sense budget discipline that should accompany income tax reductions, not hikes on productive economic sectors.0 Comments | Post a Comment | Sign up for NTU Action Alerts
States Ready to Make Driving Even More Expensive
With summer rapidly approaching, Americans across the nation will be heading out onto the nation’s highways for vacations, but higher taxes may be lurking for intrepid travelers as cash-strapped states seek to evolve gas taxes into more costly forms.
Currently, states raise revenue for roads and bridges through a tax on fuel levied by the gallon, but the new proposal would tax drivers for miles traveled in addition to the taxes we already pay at the pump.
The current federal gas tax is 18.4 cents per gallon, whereas states are free to set their own fuel tax per gallon.
Minnesota and Oregon are already exploring technology that will keep track of miles driven, which has included GPS-like boxes which are inserted into people’s vehicles, pre-pay options whereby individuals can “buy” miles ahead of time, and software installed on smartphones to track distance.
These ‘next-generation’ gas and travel taxes, when added to tolls, other taxes, and the price of gasoline, could further empty America’s roads and reduce commerce. Adding to the cost of business, travel, and every day activity is not going to help the economy get back on track, or prove popular with overburdened taxpayers.0 Comments | Post a Comment | Sign up for NTU Action Alerts
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NTU State Affairs Manager Brent Mead joins Doug & a returning Pete Sepp to discuss the continuing tax picture around the country, prop 29, the World Taxpayers Associations 2012 conference, 38 Studios' collapse, and the Outrage of the Week!0 Comments | Post a Comment | Sign up for NTU Action Alerts
Speaking of Taxpayers (AUDIO): States Have Taxes on the Mind
Subscribe to NTU's podcast "Speaking of Taxpayers" via iTunes!
State Affairs Manager Brent Mead has a big state roundup including California tax hikes and budget problems, good new from New Hampshire, and more pain in Maryland.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Last month, the clock struck midnight on the Maryland Legislature’s plan to pass a broad-based income and excise tax hike. However, because officials in Annapolis really want to confiscate more of their constituents’ money they reconvened for a special session this week.
Here are some quick facts on O’Malley’s job-killing plan;
While Assembly leaders are trying to rush this tax hike through with minimal public input you can still reach out to your elected officials and urge them to oppose these ill-conceived tax increases.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Yesterday, I am sure the sight of Philadelphia Phanatics occupying Nationals Park…again…made some locals want to hit the hard stuff.
Unfortunately, D.C. continues to ban Sunday sales at package stores, so those folks had to struggle through a 6-run ninth inning with nary a drop of liquid comfort. If baseball isn’t your thing, Washington City Paper compiled a list of 10 other reasons to support ending the blue law insanity.
The good news was that for a while it looked like District imbibers might finally be able to have the beverage of their choice, at home, on the day of their choice. Opening up Sunday sales carried the nice side benefit that it would increase revenue for the city government at a time when there are mounting concerns over possible budget cuts.
This posed a conundrum for Councilman Jim Graham (D-Ward 1);
A) He could repeal onerous regulations, increase economic activity, and raise revenues for the District’s coffers. Or;
B) He could raise taxes.
When you look at Councilman Graham’s history it should not be surprising he chose option b. Last year, he supported efforts to raise the sales tax rate for liquor stores. This year, short $3.2 million after opposing the Mayor’s proposal to extend bar hours, the Councilman decided on pushing an increase on the wholesalers excise tax rate.
Councilman Graham’s proposal manages to distill everything wrong with government thinking into one bad idea. Raising the wholesale liquor alcohol tax hurts consumers through higher prices, hurts the hospitality industry by driving customers to Virginia or Maryland (both of which would have lower tax rates), and hurts wait staff who will likely see their tips suffer.
All is not lost. Instead of sitting at home, drinking away the sorrow of D.C.’s latest rejection of common-sense, free-market reform I would encourage you to join the facebook group End DC Blue Laws. Like them, share them, and join the cause. As they say, it is time to end blue laws, not raise taxes.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Good news today out of the Land of Lincoln. Cook County Judge Robert Lopez Cepero ruled Illinois’ affiliate nexus tax, or Amazon tax in layman’s terms, unconstitutional and struck the law in its entirety. This is a great, if not wholly unexpected, win for Illinois taxpayers and sets precedent that other states would be wise to follow when considering such schemes.
For background, following the 1992 U.S. Supreme Court decision in Quill v. North Dakota, all businesses have followed a common set of rules. In order for a state to subject a business to its tax laws, that business must be physically located in the state. This “physical presence” test protects taxpayers from rogue state tax collectors and prevents businesses from shouldering the heavy burden of complying with the rules of thousands of different taxing jurisdictions nationwide.
Affiliate nexus schemes attempt to undermine this standard by creating a false physical presence by linking out-of-state retailers, such as Amazon.com, to in-state websites who advertise for the retailer. Such schemes are constitutionally dubious as they clearly violate the intent of the 1992 ruling and create onerous barriers to interstate commerce.
That simple principle is at the heart of today’s Illinois ruling. The circuit court judge ruled the statute facially unconstitutional and held the state law violated the federal Internet Tax Freedom Act, which prohibits states from unfairly targeting online activity for tax purposes.
Of course, as stated above, none of this should come as new information. In fact, this is what NTU wrote to Governor Quinn during last year’s debate;
States that have attempted to prey upon online retailers beyond their borders through the “affiliate nexus” route have not raised the desired revenues. In fact, North Carolina officials report that they are not keeping track of collections from their tax scheme. Additionally, Rhode Island’s tax administrators say that their treasury has actually lost revenues following enactment of the tax. What these policies have done is impose high costs on the states through litigation and lost business activity. Both North Carolina and New York have been sued over this issue and the litigation continues to this day. Several major online retailers have also terminated their affiliates programs in Colorado and Rhode Island due to those states’ sales and use tax-reporting requirements for online transactions. If Illinois enacts an affiliate nexus tax, the state’s more than 9,000 affiliates, who earned $611 million and paid $18 million in state income tax in 2009, will suffer the same fate; Amazon.com and Overstock.com have already notified their Illinois affiliates of their intention to terminate the program because of this measure.
I would love for NTU to claim some sort of prescient knowledge that Amazon and Overstock would cancel their affiliate contracts, that companies (notably FatWallet.com) would move out of state, that the law would fail to raise the promised revenue, and that the state would be subject to a successful court challenge. However, the reality is that this information is basic common sense, which the state chose to ignore. Hopefully, after today’s decision Illinois will take a hard look at its overspending problem rather than try to concoct an even more exotic tax scheme.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Good News Everyone, You Can Now Start Working for Yourself*
While you are finishing up filing your taxes take a moment to celebrate. Yes, celebrate. For today is Tax Freedom Day! That joyous occasion when the average American worker has finally put in enough hours to pay Uncle Sam’s tax bill.
This year it took 107 days for most families to pay their share, about 29.22% of income for all federal, state and local taxes. That is four more days than last year, primarily due to higher federal corporate and personal income taxes. Americans will also fork over more to the tax man than they spend on food, clothing and housing combined. Tax Foundation, who compiles the Tax Freedom Day numbers, adds the situation could be worse. If you count the $1.014 trillion deficit, Americans would have to work until May 14th before the government is paid for. As it is, residents in New Jersey, New York, and Connecticut will have to wait until at least May 1. You can check out the entire state-by-state breakdown here.
Of course, the hard work of taxpayers did not go unappreciated; Dan Bucks, head of Montana’s Department of Revenue said, “Montana taxpayers have made this a great tax season.” Hear that? It has been a great tax season! Unemployment above 8 percent, the highest corporate income tax in the world, and sluggish growth? Truly a “great” season.
What would make the season “great” in my mind is to move Tax Freedom Day up on the calendar. However, unless we rein in government spending, Tax Freedom Day will continue to fall later and later in the year. Spending pressure from entitlement programs and Obamacare is set to explode over the next ten years posing an increasing threat to taxpayers.
Now is the time to celebrate. After four straight years of trillion dollar deficits and looming tax hikes in December you may not have much time left before the tax collector exacts an even higher toll.
*Offer not yet valid in: CA, CT, DC, DE, IL, MA, MD, MN, ND, NJ, NV, NY, PA, RI, VA, VT, WA, WI, and WY0 Comments | Post a Comment | Sign up for NTU Action Alerts
Hark to an exiled son’s appeal.
The past four years have been a long lament for Marylanders fleeing the state’s oppressive tax burden for greener pastures. According to Rich States, Poor States, over 95,000 residents have left never to return. These are 95,000 taxpayers no longer helping fill the state’s coffers. In fact, if you do a quick extrapolation using the state’s per capita tax collections, the mass exodus has cost Maryland $218 million per year. These families are fleeing to the low tax havens such as Texas and Florida.
Why do we mention this? Very simply because Maryland has tried and failed to tax its way out of budget deficits before, and this only exacerbates the real problem that people are leaving the state precisely because of the tax burden. Residents pay over $5,200 per year in state and local taxes, roughly ten percent of household income. When you pile federal taxes on top of that burden it becomes an unsustainable situation.
Despite the economic and migration realities Annapolis showed no signs of empathizing with the common Marylander. Earlier this week, Governor O’Malley’s tax hike package fell apart when the clock struck midnight on Monday. Rather than accept the good fortune, the Governor and legislative leaders took turns blaming one another for not raising taxes on their constituents.
Early indications are that a tax deal will be reached without public input and only then with the General Assembly reconvene in a special session. All manners of tax increases will be placed back on the table, income tax increases, property tax shifts, gas tax hikes, tobacco tax increases, etc. Although, of note, one tax will not be debated and that is the “flush tax” as the Assembly managed to double the fee to $60 before adjourning on Monday.
The details of the final tax package become less important in the grand scheme of things. The Governor and General Assembly have had numerous opportunities to close the $512 million budget gap without raising taxes. Last fall, the Assembly was well aware of a growing budget hole. Rather than seek relative austerity, the state decided to increase spending. Furthermore, the Governor pitched hiking the gas tax knowing full well most of the current shortfall, such that it exists, is due to his efforts backed by the Assembly to transfer over $1 billion out of the Transportation Trust into the General Fund.
I can go on and on, but the law of diminishing returns kicks in at a certain point. Annapolis appears to have a single-minded purpose to raise taxes on its citizens. If this is indeed the case, more and more Maryland residents and businesses will flee and the politicians will be left to wonder what happened to Maryland, My Maryland.0 Comments | Post a Comment | Sign up for NTU Action Alerts