“Duck, Dodge, and Dismantle” Bill Passes House, Faces Defeat in Senate

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On Tuesday night, the House of Representatives passed the Cut, Cap, and Balance Act (CCBA), which would cap spending at levels set forth in the Ryan budget and allow an increase in the debt ceiling only after the adoption of a constitutional amendment severely restricting future budget and tax measures.

The balanced budget amendment required as a precondition to the debt ceiling increase would be even more extreme than previous incarnations. It would limit spending to about 16.7 percent of gross domestic product and require a two-thirds majority for any increase in revenue, in addition of course to requiring that government spending equal government revenue.

Although the CCBA passed with 234 votes, the tally signaled that the ultimate adoption of a balanced budget amendment in the House is unlikely. A constitutional amendment would require a two-thirds vote to be adopted, and that’s 56 more votes than CCBA received.

A less extreme amendment received 300 votes in 1995.

Fortunately, the CCBA faces “stiff opposition” in the Senate, where it is unlikely to pass at all. (Update: The CCBA was defeated in the Senate a 51-46 vote.)

President Obama has threatened to veto the CCBA if it passes the Senate and labeled the measure an attempt to “duck, dodge, and dismantle.” Nine of the Republican presidential candidates, including current frontrunner Mitt Romney, support the CCBA.

The Center on Budget and Policy Priorities has blasted the balanced budget amendment called for by the CCBA, noting how it would tie the hands of lawmakers to react to changing economic conditions. Five Nobel Laureate economists voiced their opposition to the amendment in a letter to the President and Congress.

The radical spending cap provision would force draconian cuts to essential government programs like Medicare and Social Security, which main stream economists believe would reduce consumer demand and make it far more difficult to create jobs. The amendment would require nearly $9 trillion in cuts over 10 years, which goes well beyond the extreme measures of the infamous Ryan budget.

The proposed amendment would be so damaging that over 240 national organizations have come together to oppose it.

Even the Wall Street Journal editorial page, well known for its extremism and willingness to disregard the facts to support spending and tax cuts, opposes the BBA. The paper notes that not even Ronald Reagan’s policies would have passed muster under the radically stringent amendment.

Former Republican Senator Judd Gregg summed up the debate over the CCBA perfectly, writing, “Lord save us from the well intentioned and those who are trying to score political points or raise money” by pursing this form of “conservative misdirection.”

Photo via Speaker Boehner Creative Commons Attribution License 2.0

Illinois’ First Corporate Income Tax Reform Hearing Concludes: No Surprise What Business Wants

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Here’s a headline that shouldn’t surprise anyone: “Business groups complain about Illinois taxes.”  That’s the headline that ran in Tuesday’s State Journal-Register after a hearing in Chicago on Illinois corporate income taxes adjourned. Three more hearings on this same issue will be held across the state through the summer. The hearings are a direct result of companies threatening to leave Illinois because of legislation this year that temporarily increased the state’s corporate income tax rate.

Senate President John Cullerton asked that businesses testify at the hearings. He also said he was hoping, through the hearings, “to take a holistic approach to business taxes as opposed to the continued piecemeal policies that often pit one business against another.” This is a laudable goal, but it doesn’t take a crystal ball to predict that the some in the business community will keep making the same basic demands.

Some corporations want to reduce the corporate income tax rate, while others say that tax credits or special incentive programs should be expanded. Of course, these are costly propositions that will make it even harder for Illinois to balance its budget.

We applaud Illinois lawmakers for delving more deeply into corporate tax reform and specifically tax expenditure reform. But it’s important that the committee hear from a range of voices rather than just the same old group saying the same old thing – that their taxes are too high.

Photos via Jimmy Wayne Creative Commons Attribution License 2.0

Minnesota Government Shutdown Over, But at What Cost?

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From Duluth to Edgerton the wheels of Minnesota government will start turning soon.  Wednesday morning Governor Mark Dayton signed into law legislation that will end the nation’s longest state shutdown in a decade. The compromise legislation was passed during a marathon legislative session that started Tuesday and ended early Wednesday morning. 

Governor Dayton and the legislature finally came together in a compromise that balances the budget by delaying payments to schools and issuing bonds against future tobacco settlement monies. Despite wide voter approval, the progressive tax policy proposals that the Governor pushed during his campaign and during the budget fight never came to fruition.

The Minnesota Budget Project (MBP) reminds us that the compromise reached comes at a huge cost. For example, in the budget agreement higher education was cut by $351 million.  The compromise budget also includes a $54 million cut to transportation. Obviously, it’s a good thing that Minnesota will be up and functioning shortly, but in terms of spending and taxes, the budget is a real disappointment after Governor Dayton’s promising start.  MBP puts it best, “the compromise agreement means Minnesota will fail to maintain the investments we need to create the workforce of the future.”

Photo via Governor Dayton Creative Commons Attribution License 2.0

“Gang of Six” Plan Would Reduce Revenue and Encourage Corporate Tax Dodging

July 20, 2011 02:09 PM | | Bookmark and Share

The plan released by the “Gang of Six” U.S. Senators to reduce the budget deficit includes revenue measures that would actually increase the deficit — but not as much as revenue measures proposed by President Obama and Republican leaders.

Download the PDF.

 

“Gang of Six” Plan Would Reduce Revenue and Encourage Corporate Tax Dodging ]]>


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Wall Street Journal Begins Rewrite of Minnesota History

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TaxTheRich1.jpg

Twice in a span of just three days, the Wall Street Journal has run articles suggesting that anti-tax Minnesota lawmakers got their way because the voters were on their side.  This couldn’t be further from the truth.

Last week, in an effort to end an increasingly costly shutdown of the Minnesota government, Governor Dayton ended his push for a much needed tax increase on the state’s wealthiest residents.  As the Governor explained, “continuing the state government shutdown would be … destructive for too many Minnesotans.”  A budget, without the tax increase, will likely be enacted some time this week.

While it’s disappointing that the Governor was unable to secure the enactment of one his most significant campaign promises, this may have been the best outcome possible given the level of stubbornness exhibited by anti-tax Republicans.  It was not, however, the outcome that Minnesota voters wanted.

Polling from just before the shutdown made clear that a full 63% of Minnesotans wanted their elected officials to enact a tax increase on the richest 2% of taxpayers.  The same poll also showed that voters viewed Gov. Dayton much more favorably than the state legislature’s Republican majority.

With this in mind, the level of spin contained in a pair of recent Wall Street Journal opinion pieces is nothing short of astounding.

In a bizarre July 16 article that railed against “socialist holdouts,” “the welfare state,” and “perhaps the most liberal governor in the country,” one op-ed writer claimed that Republicans succeeded because they “reflected more accurately the electorate’s mood.”

Just two days later, Stephen Moore wrote in the Journal that Gov. Dayton “blinked” because “Minnesota voters seemed to understand that the state would only make its economic troubles worse” by raising taxes.

It’s true that Minnesota’s forthcoming “compromise” budget will be heavily tilted in favor of Republican legislators’ priorities, even though most Minnesotans do not share those same priorities. 

The Wall Street Journal’s opinion pages are famous for this kind of journalistic fiction.  A more interesting question is whether other news outlets will do any better in representing the opinions of ordinary Minnesotans.  The fact is, raising taxes on the richest of the rich is widely popular across the country yet strangely invisible from most media coverage of budgets and taxes.

Amazon.com Starts Big Push in Support of… Tax Evasion

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Amazon.com announced this week that it plans to bankroll a California ballot initiative that would make it easier for online shoppers to commit sales tax evasion.

At issue is a new California law expanding the group of retailers required to collect and remit sales taxes.  Virtually every traditional “brick and mortar” retailer, as well as a number of online retailers, is already required to collect sales taxes on every sale they make.  Absent this requirement, California’s sales tax law would be basically unenforceable.

But many online retailers are able to skirt this collection requirement because they lack a so-called “physical presence” in the state, like a warehouse or a store. (By contrast, Amazon.com does have a physical presence in the state even though they claim otherwise.)  This unfortunate reality came about because of a misguided US Supreme Court ruling from nearly two decades ago, and the result of this arrangement has been completely predictable.

While Californians who shop at Amazon.com are required to pay sales taxes directly to the state, only a small number actually do so.  But rather than attempt to track down these tax scofflaws one by one, California recently enacted a law that increases the number of retailers required to help the state enforce its existing sales tax laws.  Specifically, online retailers that partner with California businesses to generate sales are now required to help collect sales taxes, just like most other retailers operating in the state.

Evidently, Amazon views its ability to offer an open highway for sales tax evasion as a huge advantage over its competitors.  To protect that advantage, the company plans to spearhead an effort to collect half a million signatures in order to get a measure repealing the new law onto the ballot in either February or June of 2012.  Presumably, the company is also planning to spend the big money needed to combat what the California Retailers Association has already promised will be a major opposition campaign.  The fact that Amazon views sales tax evasion as so central to its business strategy that it’s willing to take these radical (and costly) steps is an enormous revelation.

Of course, as we’ve pointed out before, this is hardly the first time that Amazon has resorted to aggressive tactics to combat tax policy it dislikes.  And California is learning the online giant will go to great lengths to avoid doing what most every retailer has to do every day – collect sales taxes.

Photo via Markuz Creative Commons Attribution License 2.0

Minnesota Governor Dayton Surrenders on Tax Issue to End State’s Shutdown

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“Relieved, but not celebrating” is one of the headlines in Friday’s StarTribune. Governor Dayton and the state legislature finally reached a compromise that would balance the budget and reopen the state by delaying payments to schools and issuing bonds against future tobacco settlement monies.

In his statement to lawmakers Governor Dayton said, “despite my serious reservations about your plan, I have concluded that continuing the state government shutdown would be even more destructive for too many Minnesotans. Therefore, I am willing to agree to something I do not agree with — your proposal — in order to spare our citizens and our state from further damage.”  In his statement the Governor listed three conditions:

1) The removal of social policy issues from further consideration this year (like requiring voters to bring identification to the polls or ending taxpayer funding for abortions).

2) Dropping a provision which would have required a 15 percent across the board reduction in the number of state employees.

3) Support for a $500 million bonding bill to “put people back to work throughout Minnesota.”

The details of the budget are still being worked out, but the state will likely be up and running in just a few days.

Obviously this compromise is a huge blow to tax fairness advocates. Dayton had previously campaigned on and proposed raising taxes in a progressive way to avoid making radical cuts. Delaying payments and issuing bonds is not a fiscally responsible way to solve Minnesota’s budget problems over the long term.

Dayton closed his statement this way: “I urge the members of both of your caucuses to consider carefully the advisability of supporting alternative sources of revenue, which would provide better, long-term financial stability for Minnesota than the two sources in your offer.” It’s a real shame that his words are falling on deaf ears; by all accounts, substantial, beneficial tax reform is going to be shelved for the time being.

Photo via Governor Dayton Creative Commons Attribution License 2.0

New Tool Reveals ALEC’s Role in the Anti-Tax Movement

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On Wednesday, the Center for Media and Democracy (CMD) unveiled “ALEC Exposed,” a new website showing how corporations and right-wing politicians have partnered through ALEC to spread anti-tax legislation and other damaging bills.  The website includes over 800 model bills released for the first time by CMD.  

As CMD points out in their press release:

“ALEC has become the premier institution for crafting and promoting model legislation and resolutions that largely benefit its corporate members. Until today, it has been difficult to trace the controversial and oddly uniform bills popping up in legislatures across the country directly to ALEC.  The public can now examine the array of ALEC model bills for the first time and link them to bills being introduced in their own state house.”

Notably, this new tool comes exactly one week after we tore apart one ALEC report purporting to measure states’ economic competitiveness.

Senator Levin Introduces Bill to Crack Down on Tax Havens

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On Tuesday, Senator Carl Levin (D-MI) introduced the Stop Tax Haven Abuse Act (S. 1346) to help stem the tide of the estimated $100 billion annual tax revenue loss connected to the use of offshore tax havens. In his press conference and floor statement Sen. Levin stated that offshore tax abuses undermine public confidence in the tax system, increase the tax burden on middle America, create and unfair disadvantage for small business, and encourage the movement of jobs offshore.

The bill would give the IRS new enforcement tools to detect and prosecute these abuses. The bill is being championed by a wide spectrum of supporters including small business and the Financial Accountabiltiy and Corporate Transparency (FACT) Coalition.