Author: tarek

Like the Republicans last week, Democrats are featuring governors at their national nominating convention. Because convention speakers are chosen as the parties’ ambassadors to new audiences during these TV spectacles, the state policy team at the Institute on Taxation and Economic Policy are providing quick sketches of current governors from both parties who have been leaders – for better and for worse – in state tax policy. Below are profiles of tonight’s speakers, in order of appearance, at the DNC in Charlotte, NC. (The Sept. 5 speakers are profiled here.)

Connecticut Governor Dan Malloy: Connecticut Governor Dan Malloy championed a balanced and sensible approach to his state’s budget crunch last year (his first in office) that put the Nutmeg State on a path to fiscal sustainability while also protecting critical and core public services that all Connecticut residents depend on.  Malloy’s budget raised substantial new revenue by asking his state’s wealthiest residents and highly profitable corporations to pay more, and by broadening the sales tax base to include more goods and services.  At the same time, Malloy cut taxes for the state’s poorest working families with the introduction of a significant refundable state Earned Income Tax Credit (EITC), a great example of how the tax system plays a key role in alleviating hardship and boosting incomes for low-income working families.  Governor Malloy (who earned CTJ’s Most Likely to Make the Rich Pay Their Fair Share award)   frequently refers to himself as the “Anti-Christie” in juxtaposition to the New Jersey Governor who has rejected even a temporary tax increase on Garden State millionaires passed by his legislature, but has had no qualms about increasing taxes on his poorest constituents.

Colorado Governor John Hickenlooper: Despite coming into office after defeating two anti-tax candidates, Governor Hickenlooper has done very little to fix Colorado’s devastatingly regressive tax system. In fact, he refused to support a Democratic backed ballot initiative to raise taxes, Proposition 103, that would have protected funding for public schools and universities in Colorado. One small step he has taken was signing legislation that ended the agricultural property tax loophole, which had somewhat famously allowed Tom Cruise to claim massive tax breaks for letting sheep occasionally graze around his mansion.

Governor Hickenlooper has the chance to be a great reformer, however, if he uses his signature TBD Initiative (a year-long series of town halls across the state) to make the case for repealing Colorado’s crippling TABOR law and enacting graduated income tax brackets.

Delaware Governor Jack Markell: As the newly elected chair of the National Governor’s association, Governor Markell will play a leadership role in setting the policy agenda across the states over the next year. This could be a very good thing if Governor Markell sticks to the principles laid out his Washington Post op-ed, which argued that providing robust infrastructure, education, and other critical government services are more important to job creation than lower taxes. Unfortunately, last year Governor Markell did not fully stand by these principles when he squandered the improved budget outlook of Delaware by signing a wasteful tax break for banks in the state.

In addition, while Governor Markell cannot be blamed for making Delaware one of the world’s worst tax havens, he has been complicit in maintaining the low tax rates and corporate opacity that have allowed this tax haven to thrive.

Montana Governor Brian Schweitzer (not yet scheduled): Governor Schweitzer has yet to come out strongly in favor of significantly improving Montana’s regressive tax structure.  He has advocated for reducing taxes on business equipment and offering property tax breaks for homeowners. There is a lot of room for improvement in terms of fixes necessary to the Montana income tax, which currently offers a costly deduction for federal income taxes paid (PDF) and a capital gains tax break — which both disproportionately benefit the wealthiest taxpayers. The Governor has missed an opportunity to come out squarely for repeal of these measures, but Schweitzer, who’s said he would boast about his state’s low taxes and strong finances during his DNC appearance, deserves credit for not squandering the state’s surplus on unjustified tax cuts, unlike governors in other states.

Like the Republicans last week, Democrats are featuring governors at their national nominating convention. Because convention speakers are chosen as the parties’ ambassadors to new audiences during these TV spectacles, the state policy team at the Institute on Taxation and Economic Policy are providing quick sketches of current governors from both parties who have been leaders – for better and for worse – in state tax policy. Below are profiles of tonight’s speakers, in order of appearance, at the DNC in Charlotte, NC.

North Carolina Governor Bev Perdue: Governor Bev Perdue took over leadership of the Tarheel state in 2009 during the worst economic recession in modern history, which had caused revenues to plummet and budget gaps to widen.  Perdue recognized the need for tax increases to be part of a balanced and sensible approach to solving North Carolina’s fiscal crisis.  The final budget adopted in 2009 included two temporary taxes – a one cent increase in the state’s sales tax rate and a personal income tax surcharge on the state’s wealthiest residents.  In 2011, revenues were still not fully recovered and Perdue proposed extending most of the temporary sales tax for another two years to prevent deeper cuts to education spending, but her proposal was blocked by the newly minted Republican majority in the state’s House and Senate.  She tried again in 2012, but was once again stopped in her tracks.  Perdue cannot be called the most progressive governor on taxes, but her strong commitment to public education gave her the courage to increase taxes early on and to later propose more, even in a politically challenging environment.  North Carolina Governor Bev Perdue announced earlier in the year that she is not seeking reelection for a second term in office.

Illinois Governor Pat Quinn: Illinois Governor Pat Quinn’s record on taxes is a mixed bag. While he’s shown leadership in terms of advocating for personal and corporate income tax increases and increasing the state’s personal exemption and Earned Income Tax Credit, the Governor has too often offered handouts to companies threatening to leave the state. Under this Governor’s watch, Illinois also stopped funding a property tax credit designed to specifically help low-income seniors and the disabled.  The Illinois tax structure is one of the worst in the country in terms of asking low-income people to pay far more than their fair share. So far, Governor Quinn has not stood up for real progressive policy changes and his piecemeal, situational approach to tax policy is only making his state’s tax code more complicated.

Rhode Island Governor Lincoln Chafee: Governor Lincoln Chafee, an independent, called for tax increases aimed at refilling Rhode Island’s depleted coffers during his election campaign in 2010.  Chafee made good on that promise and earned the A+ for Effort at Sales Tax Reform award in Citizens for Tax Justice’s Governors Yearbook.  In his first year in office, Chafee introduced a sensible tax reform package that would have modernized his state’s sales tax and raised revenue needed to mitigate spending cuts.  Chafee also supported changes to the Ocean State’s corporate income tax, including combined reporting, a smart rule that levels the playing field for small business by preventing multi-national corporations from sheltering profits in other states, as well as an improved corporate minimum tax.  Unfortunately, lawmakers rejected most of his proposal.  Chafee is one of only a handful of governors over the past two years to propose tax increases in order to restore investments or prevent deeper cuts in education, transportation, health care and other spending priorities.

Massachusetts Governor Deval Patrick: Massachusetts Governor Deval Patrick has spent his six years in office largely punting on tax policy for the Bay State.  With the exception of creating a Tax Expenditure Commission last year to examine the more than $26 billion in tax breaks the state hands out each year (which amounts to more money than the state is expected to take in this year!), Patrick has not proven himself to be a leader on improving his state’s tax system. Patrick has publicly supported making the state’s personal income tax more progressive by moving from a flat rate to a graduated rate, but also said he would not “pursue” it in his second term. The governor has supported some revenue increases in his two terms to prevent spending cuts, but mostly they have been  low-hanging fruit in the form of excise taxes (alcohol, tobacco, etc) or have relied heavily on the sales tax.  And last year, Patrick supported yet another annual sales tax holiday in his state despite admitting that he supported it, “frankly, not because it is particularly fiscally prudent, but because it is popular…. People want it.”

Maryland Governor Martin O’Malley: Last but definitely not least, Governor O’Malley has been one of the nation’s boldest leaders in standing up to anti-tax forces and protecting critical public programs, which is why Citizens for Tax Justice gave him the Defender of Public Services award in our 2012 Governors Yearbook. While many governors across the nation were continuing to slash public services in order to expand unsustainable tax breaks, Governor O’Malley bucked the national trend and ushered in a progressive tax increase that allowed Maryland to stop further cuts to education, health services and other crucial state government services. Continuing his record, Governor O’Malley has also shown his willingness to stand up for good policy – even if it’s unpopular – with his advocacy of a responsible increase in the gas tax to improve Maryland’s transportation infrastructure.

Almost all proposals for a broad-based national tax on consumption are terrible ideas. But there is one such proposal — a tax on carbon emissions — that might make sense so long as it includes features to keep it from burdening middle-income Americans and hitting low-income Americans the hardest. A new report from MIT researchers explores options for enacting a carbon tax, but unfortunately spends a lot of time discussing how the resulting revenue could be used to finance ill-advised cuts in other taxes.

Any consumption tax, like a value-added tax (VAT) or a sales tax, is regressive, taking a much larger percentage of income from middle- and low-income families than it would take from the rich.

That’s because middle- and low-income families have little choice but to put most or all of their income towards consumption (spending their paychecks to obtain basic necessities) while rich families can put a lot of their income towards savings — which are not touched by a consumption tax.

The same is true of a tax on carbon emissions, which would raise the price of gasoline, coal-generated electricity, and any product that is produced or shipped using fossil fuels (which is just about everything).

A carbon tax might be justified if these problems were addressed, and it met the compelling interest of preventing catastrophic climate change caused by greenhouse gasses. A tax on carbon emissions would reduce the amount of greenhouse gasses released into the atmosphere as manufacturers, shippers, and consumers shift away from fossil fuels.

Even though the purpose of a carbon tax would be to reduce the amount of carbon emissions, there would still be plenty of carbon emissions to be taxed, resulting in significant revenue. How that revenue is used determines whether or not the regressive impact of the tax is addressed.

The Congressional Budget Office recently found that a tax of $20 on each ton of carbon emissions would raise $1.25 trillion over a decade if it went into effect in 2012. The MIT report finds that it would raise $1.5 trillion over a decade if it went into effect in 2013.

In offering options for how this revenue could be used, the MIT report relies on some questionable assumptions that other types of taxes cause significant economic distortions. (A contrary view, in research from economists Peter Diamond and Emmanuel Saez, for example, finds that taxes affecting the rich are especially unlikely to create much economic distortions.) Yet the MIT report suggests that lower taxes on the well-off might be an appropriate use of carbon-tax revenue. To be fair, the MIT report does show (on pages 12-15) that the overall impact of a carbon tax would be regressive if the revenue is used to cut the personal or corporate income taxes. It also finds that the overall effect could be progressive if the revenue is used to shore up social programs that alleviate poverty.

In other words, a carbon tax could reasonably be considered as a part of a larger tax and budget reform if the revenue is used to offset the tax increases on middle- and low-income families, protect the elderly, and shore up the public investments that benefit people who would otherwise be hardest hit by such a tax.

But even if a Congress full of global-warming deniers would be willing to consider a carbon tax, the big question that would still remain is whether it would also be willing to offset the tax’s otherwise very regressive effects.

“Unlike President Obama, I will not raise taxes on the middle class,” Republican presidential candidate Mitt Romney said during his acceptance speech. It was a startling statement because it describes one of the facts about Romney’s own tax plan and attributes it to the policies of his opponent, President Obama.

Romney’s Tax Plan: Breaks for the Rich No Matter How You Look at It, Leaving the Bill for Low- and Middle-Income Americans

A recent CTJ report shows that the basics of Romney’s tax plan would give out huge tax cuts to those who make between half a million and one million dollars and those who make over a million dollars, no matter how the missing details are filled in. Romney cannot possibly meet his goal of offsetting the costs of the tax cuts (besides the enormous Bush tax cuts, which he doesn’t think need to be paid for) without raising taxes on people farther down on the income ladder.

The CTJ report finds that Romney’s proposed tax cuts would reduce taxes by an average $80,000 for people who make between half a million and one million dollars and by an average $400,000 for people who make over a million dollars.

Now, Romney promises to offset the cost of these tax cuts (aside from the enormous Bush tax cuts, which he would make permanent) by reducing or eliminating “tax expenditures,” which are the credits, deductions, exclusions and loopholes that lower people’s tax bills. But even if Romney made the very rich give up all the tax expenditures that he has put on the table, they’d still be getting huge tax cuts —  an average $48,000 for people who make between half a million and one million dollars, and an average $250,000 for people who make over a million dollars.[1]

If Romney’s plan is going to be revenue-neutral (not counting the huge cost of the Bush tax cuts) as he claims, then someone is going to have to pay higher taxes than they do now so that the people who make over half a million dollars a year can pay less. The loss of tax expenditures for low- and middle-income people can be larger than the benefits they receive from Romney’s rate reductions and other proposed breaks, meaning they face a net tax increase. In fact, this must happen for Romney to keep his promise about not losing more revenue, as the Tax Policy Center has already pointed out.

Obama’s Problem Is that He’s Cut Taxes Too Much, Not that He Raised Taxes

Romney’s claim that Obama has raised taxes on the middle-class is initially hard to understand, given Obama’s two-year extension of all the Bush tax cuts and his call to again extend the Bush tax cuts entirely for 98 percent of Americans while letting them expire partially for the richest 2 percent of Americans. (In fact, we pointed out that many of the taxpayers within the richest 2 percent, like those with incomes just over $250,000, would only have to give up a tiny fraction of their tax cuts under Obama’s plan.)

Romney’s claim that Obama has raised taxes on the middle-class appears to refer to the new mandate to obtain health insurance, which the Chief Justice of the Supreme Court decided was actually a tax and therefore within the Constitutional powers of Congress.

As we pointed out at the time the Supreme Court ruled on the health care mandate, very few people would ever actually pay the “tax,” which is the fee that will be imposed on people who choose to go without health insurance. As we explained,

It’s a tax that hardly anyone will pay.

That’s because for the vast majority of Americans who don’t have employer health coverage, the government subsidies to buy insurance will be so large that it would be foolish not to buy insurance.

For starters, any family with income less than 133 percent of the poverty line (that means all families of four with incomes of $30,000 or less) will be eligible to sign up for free coverage under Medicaid.

Above that level of income, the government will provide cash subsidies to buy insurance, starting at almost 100 percent of the cost and gradually phasing down. But the subsidies won’t disappear for a family of four until its income exceeds about $90,000.

An Urban Institute study found that fewer than 3 percent of households would be subject to the fee.

Another point that Romney and his allies seem to forget is that the 2009 economic recovery act that they criticize so much actually cut taxes for 98 percent of working families. (See the national and state-by-state estimates from CTJ.)  

If President Obama has made any mistakes on taxes, it’s that he has been entirely too willing to extend too many tax cuts for too many Americans at a time when we desperately need revenue.

[1] Notice we say that the $48,000 and $250,000 figures are the tax cuts these groups would get if they had to give up all the tax expenditures that Romney has put on the table. That’s because he has pledged to keep the tax expenditures that benefit the rich the most — breaks for investment, like the low rates for capital gains and stock dividends.

The GOP’s core philosophy about tax policy is perfectly distilled in its 2012 platform where it states simply that “[l]owering taxes promotes substantial economic growth.” What this one-sided analysis misses is that lower taxes do not promote economic growth, because they inevitably require (PDF) the government to either cut spending or to increase the deficit.

(Our GOP platform review Part II, Tax Ideas on the Fringe, is here.)

Supports More Individual Tax Cuts

The fact that the GOP platform does not make the connection between tax cuts and deficits is starkly demonstrated by the platform’s warning that the US faces an “unprecedented legacy of enormous and unsustainable debt,” while at the same time calling for a complete extension of the Bush tax cuts, at a cost of $5.4 trillion (PDF). While some GOP leaders like to say that tax cuts boost the economy so much that they pay for themselves, there is no evidence to support that claim, and even economists from the Bush Administration and a former Reagan advisor have conceded that over the long run, the Bush tax cuts have no real discernable affect on economic growth.

Supports More Corporate Tax Cuts

Another misguided tax proposal in the GOP platform is the call for a lower corporate tax rate. For one, the platform rests on the mistaken assumption  that “American businesses now face the world’s highest corporate tax rate.” While it may be true that the US has the highest statutory rate on paper, the actual amount of taxes paid by US corporations is nowhere near the statutory rate because of the large swath of corporate tax breaks and loopholes that allow many enormously profitable companies, like General Electric and Verizon, to pay nothing at all in taxes.

Comparatively, the amount of corporate taxes paid as a percentage of GDP in the US is the second lowest in the developed world. In fact, a recent CTJ analysis found that two-thirds of the largest US multinational corporations with significant foreign profits paid a lower corporate tax rate on their US profits than the rate they paid to foreign governments on their foreign profits.

Rather than dealing with the breaks and loopholes that plague our corporate tax system, the GOP platform advocates expanding them, most notably by moving the US to a territorial tax system under which corporations would have a greater incentive to move profits and jobs offshore (a problem that can be solved by ending deferral).

The new Republican platform identifies high rates as the core problem with our current tax system, but the real problem is decades of cuts and proliferating breaks and loopholes are making it impossible over the long term for the government to provide critical services without dangerously increasing the national debt.

Romney and Ryan Both Propose Plans that Would Give Millionaires Average Breaks of at Least $250,000, and Possibly as High as $400,000

Presidential candidate Mitt Romney and his running mate, Congressman Paul Ryan, have both proposed tax plans that would make the Bush tax cuts permanent, further slash personal income tax rates, reduce the corporate income tax rate, and enact several other tax cuts.

Both candidates also say that they would reduce or eliminate many “tax expenditures” (deductions, credits, exclusions and loopholes) so that their plans would cost no more than making all the Bush tax cuts permanent would cost. That’s hard to believe because neither has specified a single tax expenditure they would target. But one thing is clear: for the richest Americans, the rate reductions and other breaks would be far more valuable than any tax expenditures they could lose under either plan. (The details of the Romney and Ryan tax plans are in the appendix.)

Both Romney and Ryan’s plans would give people making over $1 million an average tax cut of about $250,000 if these millionaires had to give up all of their tax expenditures. If Romney or Ryan’s plan was implemented without closing any tax expenditures for the rich, then people making over $1 million would receive an average tax cut of around $400,000.
 
Read the report.

The GOP’s 2012 platform contains many of the policies that you would expect from the party, such as calling for the extension of the Bush tax cuts and reducing corporate tax rates. Here we focus, however, on three planks in the platform that fall far outside the mainstream of tax policy.

(Our GOP platform review Part I, Same Old Supply Side Stuff, is here.)

1. Support for a Radical Constitutional Amendment to Restrict Taxes and Budgets

Following efforts by the House GOP last year to pass the most extreme balanced-budget amendment ever, the GOP platform calls for the passage of a constitutional amendment that would require that the federal government have a balanced budget, cap federal spending at its historical average share of GDP (around 18 percent), and require a super-majority for any tax increase (with an exception for war or national emergency). This kind of amendment poses all kinds of problems, not the least of which is that it would immediately cause unemployment to double (according to nonpartisan, private sector economists) and drive the economy into a deep recession.  Balanced budget amendments in all their forms (including state level versions) are disastrous, because they essentially tie the hands of legislators and cripple government functions.

2. Nod to National Consumption Tax

Warning that we must “guard against hypertaxation of the American people,” the GOP platform says that the creation of a national sales tax or value-added tax (VAT) can only happen in conjunction with the repeal of the Sixteenth Amendment, which allowed for the federal income tax.

On the one hand, this plank is odd because a national sales tax or VAT is not a political possibility; even the hint of it prompted the US Senate to pass a resolution explicitly rejecting a VAT by an 85 to 13 vote just a couple of years ago.  Anyway, the fear that a national consumption tax would lead to some sort of “hypertaxation” is unfounded. Its implementation in Canada (PDF) is a case study showing how overall taxes can actually decrease following the creation of a national consumption tax.

On the other hand, the existence of this plank in the GOP platform suggests that the Republican party’s establishment might actually be considering a radically regressive policy like the so-called “Fair Tax” (which is just a national sales tax) and elimination of the federal income tax (the primary source of fairness in the tax code and sustainable, sensible revenue source).

3. Opposition to a United Nations Global Tax

Perhaps the most inexplicable plank in the entire GOP platform is opposition to “any form of UN Global Tax.” While there are conspiracy theories, such as how the UN may very well invade in Texas in order to enforce its radical tax agenda during Obama’s second term, the reality is that no one takes the possibility of a UN global tax seriously. To be clear, there is no indication of support among US lawmakers to implement such a UN tax, nor does the UN have the power to impose one.

by Robert S. McIntyre, CTJ Director

Almost a year ago, long before Mitt Romney became the Republican presidential nominee, CTJ was the first to figure out just how little Romney pays in federal income taxes. Based on Romney’s limited but useful financial disclosures at the time, we calculated that his 2010 effective federal tax rate was a ridiculously low 14 percent (on his reported income) — less than half of what Warren Buffett’s famous secretary pays.

Michael Scherer of Time Magazine, who’d asked us to do the analysis, posted our results on Time’s website on Oct. 3, 2011. The story got widespread attention, and led to growing demands that Romney release his actual federal income tax returns. After months of stonewalling, Romney finally released his 2010 return, which confirmed our prediction that he’d paid only 14 percent in federal income taxes.

Since then, Romney has adamantly refused to release any of his earlier tax returns, causing speculation that he has something even more damaging to hide (and keeping CTJ busy fielding media questions about what such things might be).

Looking at Romney’s past tax returns could provide some valuable information, not just about Romney himself but also about the egregious loopholes that allow him to pay so little.

But Romney is hiding a much more important tax secret: the truth about how the tax plan he’s campaigning on would affect the rest of us.

So far, all Romney has told us about his individual income tax plan is the following: First, he would extend all of the Bush tax cuts and permanently repeal the Alternative Minimum Tax. Second, he would make interest, dividends and capital gains tax-exempt for people with other income up to certain levels ($200,000 for couples). Third, he would reduce all federal personal income tax rates by a fifth (so, for example, the top income tax rate would fall to 28 percent). Fourth, well, the fourth item is the big secret.

Romney says that he would partially pay for the $8 trillion ten-year cost of the income tax cuts he proposes  by getting rid of many personal tax breaks. But he refuses to specify even a single one of them! To be sure, at one point, he suggested he might curb the mortgage interest deduction for vacation homes, but he quickly backed off even that tiny reform.

How can voters calculate even roughly how they would be affected by Romney’s tax plan without knowing the crucial details of which tax breaks he wants to eliminate? Will he crack down on tax breaks for wealthy investors like himself? Well, no, he’s ruled that out. Will he eliminate deductions for mortgage interest and property taxes? Tax credits for middle- and low-income families with children? The tax exemption for employer-paid health insurance? Tax deductions for extraordinary medical expenses? Who knows?

It’s all well and good that analysts with high-powered tax models (like ITEP’s) can calculate that even if Romney eliminated all non-investment-related personal tax breaks, his gargantuan tax plan can’t possibly break even — and thus will mean huge increases in budget deficits. But American voters also deserve to know whether Romney plans to raise taxes on them, and by how much.

Barring a speech tonight that answers these questions, that’s the crucial tax secret that the public and the media should be clamoring for Romney to reveal.

Oklahoma Governor Mary Fallin is not backing down from her quest to phase out the Sooner State’s personal income tax.  Despite her best efforts, lawmakers adjourned earlier this summer after defeating every single tax cut proposal (more than half a dozen serious versions) debated during the session. But in an interview with the Wall Street Journal’s Stephen Moore (a frequent collaborator with Governor Fallin’s tax advisor, supply-sider Arthur Laffer) the governor vowed, “[w]e are going to get that tax cut done next year.” 

Hear, Hear! The Cleveland Plain Dealer editorializes that Ohio Governor John Kasich shouldn’t reduce income taxes anymore and should “leave Ohio’s income tax alone.” The Governor first tried (and failed) to pay for income tax cuts through increased fracking taxes, and now through increases in the sales tax. The progressive income tax (PDF) is the only major revenue source directly linked to a taxpayer’s ability to pay and the income tax can help to offset regressive sales and property taxes.

Wyoming’s gas tax is low by historical standards and shrinking, but perhaps not for long.  Members of an interim legislative committee on revenues approved a draft bill to increase the rate from 14 to 24 cents per gallon, which would raise an additional $72 million annually for road construction and repair.  It’s only one of several fixes Wyoming should make to restructure its gas tax, including, as the experts at Equality State Policy Center point out, provisions to “reduce the effect on lower-income residents in Wyoming” of a gas tax increase.

Both Republicans and Democrats are featuring governors at their national nominating conventions. Because convention speakers are chosen as the parties’ ambassadors to new audiences during these TV spectacles, the state policy team at the Institute on Taxation and Economic Policy are providing quick sketches of current governors from both parties who have been leaders – for better and for worse – in state tax policy. Below are profiles of two governors: Louisiana’s Bobby Jindal, who was scheduled to speak tonight but bowed out to handle Hurricane Isaac, and Susana Martinez of New Mexico.

Louisiana Governor Bobby Jindal: Last year, the Governor dismissed a legislative plan to eliminate the state’s personal and corporate income taxes as too radical. This year, the budget he ultimately signed was full of “one-time” money lifted from other parts of the budget to fill in gaps. Still, as he turns his attention toward reforming the state’s tax structure, he is opposed to raising more revenue, saying, “[w]e are not going to do anything that raises revenue. It needs to be revenue-neutral.”

New Mexico Governor Susana Martinez:  In her 2011 State of the State Address, Governor Martinez waxed eloquent about supporting small business, saying, “It’s the small businesses — the mom-and-pop shops, the small startups — that get lost in the layers of red tape….We will help them….”  But the fact is, Martinez failed even in her ill-advised effort to exempt roughly half the state’s small businesses – those earning less than $50,000 per year – from the gross receipts tax. And, when she had a chance to sign a bill that really did support small business owners (and that had widespread support from business groups in her state!), Martinez vetoed it. She always said she would, actually, oppose combined reporting, which is a smart rule that levels the playing field for small business by preventing large corporations from creating subsidiaries in other states to avoid paying taxes.