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Reflections on CPAC
Today is the third and final day of the 2011 Conservative Political Action Conference (CPAC), the largest annual gathering of conservatives and libertarians in the nation. After three days of staffing a well-visited booth, meeting with dedicated activists, and listening to dynamic speakers, I’m looking forward to some rest and relaxation, but also to what the future holds for the conservative movement.
This year’s CPAC had the highest number of attendees (11,000) in the history of the conference. CPAC speakers ranged from Rep. Paul Ryan of Wisconsin, the House Budget Committee Chair, to Governor Mitch Daniels of Indiana, a potential presidential candidate who gave, in my view, an outstanding keynote address, which you can read here. Also, CPAC 2011 featured a number of new participating organizations that focus on both activism and policy related to social, economic, and political issues at the federal, state, and local levels.
While attending CPAC, I had the opportunity to participate in a number of discussions about important tax and fiscal policy issues facing the United States. NTUF hosted a discussion about entitlement reform that featured experts such as Rep. Devin Nunes, Maya MacGuineas, Douglas Holtz-Eakin, Steven Moore, and Dan Mitchell. The bottom line of their presentation was that we need to start tackling the problem of runaway entitlement spending before it’s too late.
But budget reform should not be restricted to social programs. CPAC also featured a panel on how the nation can reduce defense spending to a more manageable level without jeopardizing readiness. As a former military aide to a fiscally conservative Member of Congress, I was pleased to hear all of the views presented and the many ideas for maintaining an affordable defense posture. The passion the attendees displayed at the panels, and in conversations with me at the NTU table, was striking. It bodes well for conservatives if these activists carry their views home and remain outspoken and active in the political process.
For the last several weeks, there has been a lot of talk in the media about differences in the conservative movement over certain policies and suggestions that these differences spell certain doom the conservative movement. After three days of observing conservatives of all stripes from across the country, I can unequivocally say that reports of destructive differences among conservatives are greatly exaggerated. In fact, I would argue that the conservative movement has never been stronger and ready to bring real solutions to the many serious problems facing the nation.3 Comments | Post a Comment | Sign up for NTU Action Alerts
Will New Hampshire finally cut its cigarette tax?
New Hampshire may finally realize what NTU and others have been saying for a while now: high cigarette taxes are not good public policy. The powerful NH House Committee on Ways and Means is considering a bill, HB 156, which would cut the cigarette tax by 10 cents and the wholesale tax on other tobacco products by 17 percent, reducing a regressive tax burden on the poor and small businesses. Earlier today, I squeezed into a packed committee room at the Legislative Office Building in Concord to testify in person in favor of this legislation. You can find my written letter to the committee here.
As I stated in my testimony, "Since the poor are more likely to smoke, New Hampshire’s low-income families, especially those who live in the depressed North Country, have disproportionately felt the pinch of cigarette tax hikes over the years. A 2007 study by the Heritage Foundation showed that more than one-fourth of people who smoke live below the federal poverty line and another quarter of all smokers live within 100-200 percent of the poverty line. Reducing the cigarette tax will help alleviate the tax burden on these families, who struggling to get by in a tough economy."
Reducing the tax burden on cigarettes will not only help low-income families, but also help retailers, which will benefit the state in general. As I mentioned earlier today, "Sales of cigarettes and other tobacco products also comprise a substantial portion of business for small retailers. The National Association of Convenience Stores reports that cigarettes account for about one out of every three dollars of total sales nationwide at their establishments. Reversing some of the harmful tobacco tax hikes of recent years could help these businesses attract some of the consumer activity that may have migrated across state lines to stores in Maine and elsewhere."
Odds for passing the legislation looked good at the hearing today. The bill's sponsor is the chairman of the House Revenue Committee, which writes the state budget. Plus, the bill has attracted a number of consponsors. But only you can guarantee this bill passes by contacting your New Hampshire state legislators and urging them to support this long-overdue legislation. Click here to find your Representative.
Taxes and Kids
Pay taxes? Have kids? Janet Novak discusses tax complexity, kids, and problems to watch out for at Forbes.com.0 Comments | Post a Comment | Sign up for NTU Action Alerts
California Targets Amazon.com at the Expense of Local Businesses
Online companies have seen their sales surge despite a two year economic slump. Amazon.com alone saw worldwide sales jump nearly 30 percent in 2008 to $19 billion and to $24 billion in 2009. This upward trend only continued in 2010. Brick-and-mortar retailers did not fare as well. They, along with National Retail Federation and many state legislators have back lashed against this success claiming it is predicated on the fact that Amazon “skirts” state sales taxes. They claim Amazon under cuts in-state retailers and strips state coffers of revenue. In response, Legislatures across the country are trying to skirt Supreme Court rulings to levy taxes on companies operating outside their borders.
The most recent attempt comes from high-tax California. Assemblywoman Nancy Skinner recently re-introduced a bill (AB 153) that would require out-of-state companies with in-state advertizing affiliates to collect and remit sales taxes it supposedly owes the state. She estimates the state is being shortchanged between $250 and $500 million.
The kicker: Amazon is not doing anything wrong. According to the U.S Supreme Court ruling in Quill Corp. v. North Dakota, companies are only required to collect state sales taxes from their customers when they have a physical presence in the state (state-based factories, warehouses, employees, etc. conducting general operations). Amazon currently passes this “physical presence” nexus as it is headquartered in Seattle, Washington and has warehouses and facilities considered legal entities in Kansas, Kentucky, and North Dakota. Only residents in those states pay taxes on Amazon purchases.
Quill cited the commerce clause in its ruling, arguing that if enacted, retailers would need to track a myriad of state and local sales tax rates (about 8,000) which constantly change. Facing these new barriers to entry online companies simply end their in-state affiliate programs. For example, in July 2009 Rhode Island included an affiliate-nexus tax in its budget. Amazon.com severed formal ties with all Rhode Island businesses enrolled in the “Amazon Associates Program,” which refers buyers to Amazon.com, while giving business owners up to 15 percent of the profit. As a result, Rhode Island saw less tax revenue and less economic growth as local businesses dependent on advertizing revenue were forced to close up shop.
California will suffer the same fate if Skinner gets her way. Our colleagues at Americans for Tax Reform, Patrick Gleason and Kelly Cobb, spell out the disastrous effects this new tax will have on California’s budget, businesses, and taxpayers. They note that in 2009, 25,000 individuals and small businesses in California earned $1.6 billion from online advertising, paying $124 million in state income tax. The state will loose that money, not to mention revenue from lost payroll, business, property and sales taxes. Sacramento’s budget problems are sure to get worse.
While Amazon contests the unconstitutional imposition of state sales taxes on their customers the company does support the goal of making tax laws "simple and harmonized" and does not oppose "a constitutionally permissible national system applied even-handedly.” Similarly the retail federation and 24 other states have been seeking federal approval of a formal compact that would simplify and harmonize sales tax administration among the states to get around constitutional hurdles to taxing interstate vendors.
However, this tax collusion is an affront to American federalism and tax competition. States are attempting to abandon true federalism and jurisdictional tax competition in exchange for the power to potentially recoup a small amount of tax revenue. The federalism of the Founders fostered friction and tension between competing units of government –“laboratories of democracy” if you will. Proponents of so-called tax streamlining use colorful words like “cooperation” and “harmonization” as a guise to extend tax burdens.1 Comments | Post a Comment | Sign up for NTU Action Alerts
On the GOP Response: Limited Government?
Paul Ryan, as the face of the Republican party, eloquently stated: "We believe, as our founders did, that 'the pursuit of happiness' depends upon individual liberty; and individual liberty requires limited government. Limited government also means effective government."
Man, these guys can really talk the talk. But I'm skeptical. For six years Republicans held the Presidency and both chambers of Congress. Six years of unified government! What ended up happening? Bush took office when government was consuming $1.86 trillion, 18.5 percent of GDP. When he left office the budget reached over $3.5 trillion, 24.9 percent of GDP! Mind you, all under Republican government -- the same folks who are promising to "limit" government and "cut" spending now. I would take their rhetoric with a grain of salt and hold their feet to the fiscal fire. Republicans won back the House and 20 state governments under the auspices of limited government.
Let's hope they put their money where their mouths are.2 Comments | Post a Comment | Sign up for NTU Action Alerts
Obama on how we win the future
Obama on how we win the future: "We need to out-innovate, out-educate, and out-build the rest of the world. We have to make America the best place on Earth to do business. We need to take responsibility for our deficit, and reform our government. That’s how our people will prosper. That’s how we’ll win the future"
While these are all true and noble goals, I hope that the President realizes that this will be achieved by allowing the private sector to innovate and compete, when the government keeps the budget manageable, and the scope of government is limited.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Obama praises tax cuts?
President Obama says this about the recent tax cut package.
"Thanks to the tax cuts we passed, Americans’ paychecks are a little bigger today. Every business can write off the full cost of the new investments they make this year. These steps, taken by Democrats and Republicans, will grow the economy and add to the more than one million private sector jobs created last year."
Hopefully, this is a sign that he recognizes that high tax burdens cost the economy and will continue to push for tax relief in the next two years.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Tune into NTU's State of the Union Coverage tonight
Tonight at 9 p.m. EST, the National Taxpayers Union's crack government affairs and policy analysis teams will provide special online coverage of the President’s State of the Union Address, and we want you to be there and be a part of the discussion. We will be breaking down the President's proposals and what they will mean for taxpayers. Details on how you can join the conversation are below.
We look forward to seeing you online tonight at 9 p.m. EST!
We look forward to seeing you online tonight at 9 p.m. EST!
Where do our taxes go?
Ever wonder what our taxes pay for? Ned Flanders, our favorite neighbor from the Simpsons, knows exactly what taxes pay for and provides us with some fun for Friday.
Thanks to my colleague Dan Barrett for bringing this insight to my attention.0 Comments | Post a Comment | Sign up for NTU Action Alerts
While Illinois raises taxes, Georgia reforms them
While Illinois was busy raising taxes, Georgia was busy finding ways to make the tax code simpler, fairer, more stable, and more competitive for the 21st century. On January 7, the Special Council on Tax Reform and Fairness for All Georgians released its final report of recommendations for reforming Georgia's antiquated, agriculture-based tax system. Sometime in the next few weeks, the legislature will act on the Council's recommendations. From NTU's perspective, there are some good recommendations but also some proposals that need attention.
As NTU stated in a letter to Georgia lawmakers, the positive recommendations include a proposal to reduce the personal and corporate income tax rates. The report calls for the elimination of the current six tax brackets and a substantial reduction in the personal income tax (from the current highest marginal rate of 6 percent) over time. The Council envisions a rate that does not exceed 4 percent in 2014, at which point the income tax changes should (by the Council’s estimates) be revenue neutral. Additionally, the report calls for the corporate income tax rate to maintain parity with the personal income tax. As we said in our letter, "Flattening, simplifying, and reducing the income tax rates will help spur investment, lead to more job growth, and provide more revenue stability."
But while NTU supports the income tax reductions, there are several aspects of the Council’s report that we have concerns with. For example, we are concerned that the plan’s recommendation of an income tax rate higher than the revenue-neutral level of 4 percent for several years after the plan’s adoption would lead to substantially higher tax collections, an outcome that we cannot support because it is not fair for taxpayers. Furthermore, as we stated in the letter, the Council's call for "a flat communications service excise tax fails to take into account the unique aspects of how each service is delivered. Communications taxes differ because the communications technologies themselves differ in how they interact with public resources. Satellite television, for example, does not utilize public rights of way, so imposing a 7 percent tax on over one million satellite television subscribers in Georgia to pay for something they don’t use makes no sense. Additionally, the proposal to increase the cigarette tax is misguided because it can disproportionately harm the poor and small retailers without raising the projected revenue. Such has been the case in numerous places, among them New Jersey and the District of Columbia."
Reforming the tax code to alleviate the burdens on taxpayers is a worthwhile pursuit. The best possible reform is one that remedies the distortive and burdensome aspects of a tax code, but remains revenue neutral. There are some questions about this tax code that the legislature can and should address in the weeks ahead. Georgians are counting on their lawmakers to build a better tax code for a stronger, more prosperous economy.0 Comments | Post a Comment | Sign up for NTU Action Alerts