1 © 2008 progressive states network. all rights reserved revenue strategies for funding health care...

1© 2008 Progressive States Network. All Rights Reserved

Revenue Strategies for Funding Health Care Goals

Families USAJanuary 29, 20120


• Fight for Fair Revenue in 2009-2010

• Goals of the rightwing tax agenda

• Failure of rightwing tax revolt in recent years

• Progressive tax campaigns and messaging

• Fighting the rhetoric that progressive taxes undermines economic growth

• Moving towards corporate transparency in state budgets to save money from corproate giveaways on contracts, subsidies & loopholes

Contents of Talk Today

3

The Fight for Fair Revenue

New Top Brackets - CT, DE, HI, NC, NJ, NY, OR, WI

Reform Capital Gains – CO, RI, VT

Business Taxes – DE, IA, KS, MD, NH, NV, NY, OR, TN, VA, WI

Other states increased sales taxes and other fees

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• “Starve the Beast”- pit education against health against social services against public safety advocates

• Cut taxes on wealthy and corporations, increase relative burden on middle class

• Feed voter tax revolts based on tax burden —and tell voters across-the-board tax cuts are only solution

Rightwing Anti-Tax Strategy


Grover Norquist, head of Americans for Tax Reform (ATR) has described the conservative goal as cutting government "down to the size where we can drown it in the bathtub.“

• American Legislative Exchange Council (ALEC)

• Americans for Prosperity• Howard Rich (various front groups)• State think tanks and groups funded

by range of corporate and wealthy supporters

Who’s Behind Anti-Tax Politics


TABOR -- arbitrarily cap increases in state spending based on only two factors -- population growth and the consumer price index. No room for recessions or new programs. Enacted in Colorado in early 90s.

Results in Colorado by 2005:• CO ranked 47th in K-12 education

funding as share of state income. • Colorado ranked 50th in the nation in

on-time immunization rates• % of low-income children lacking health

insurance rose from 15 percent in 1991-92 to 27 percent in 2002-03.

TABOR and Near Destruction of Colorado


• Reacting to destruction of state, voters in 2004 changed party control of both chambers of the legislature.

• Then in 2005, Colorado significantly weakened its TABOR law at the ballot, yet rightwing activists continued to try to export the model to other states.

2005- The Anti-Tax Movement Begins to Crash


• In 2006, rightwing tried put TABOR initiatives on ballots across country

• Progressives highlighted fraud in signature collecting in multiple states and issue was thrown off the ballot in Michigan, Montana, Nevada, Oklahoma and Missouri.

• Montana: state judge ruled that TABOR clone’s:

“signature-gathering process was permeated by a pervasive and general pattern and practice of deceit, fraud and procedural non-compliance.“

• Nevada: The state's supreme court knocked TABOR clone off ballot because campaign filed one version with state and circulated with different language among voters.

• On Election Day, voters in Maine, Nebraska and Oregon finished the job in voting down the remaining TABOR initiatives

Tax Revolt 2006 Crashes and Burns


• Anti-government tax measures were defeated overwhelmingly in Massachusetts, North Dakota and Oregon.

• In all three states, proposed measures that would have slashed or, in the case of Massachusetts, completely eliminated the income tax were rejected at the polls.

• Minnesota – 3/8 percent sales tax increase approved for natural resource and cultural preservation.

• One of the only negative health care results was Maine voters' repeal of new funding, including new alcohol and soda taxes, for the state's groundbreaking health coverage program, DirigoChoice.

Tax Revolt 2008 Fails


• TABOR initiatives defeated in both Maine and Washington in November 2009

• In January 2010, Oregon voters approved tax increases on high income residents and on businesses. Measures had been placed on the ballot by conservative business groups to repeal $700 million in revenue passed by Oregon legislature.

Tax Revolt 2009-2010 Fails


• In 2004, New Jersey struggled with both a budget deficit and calls to lower the property tax burden

• The state created a new 8.97% tax bracket for those making $500,000 per year or more.

• This plan raised taxes on just 30,000 households, yet provided property tax relief for 1.8 million households.

• First income tax increase since 1990, when a broader increase set off a punishing backlash from voters.

• Yet, in 2005 elections, New Jersey House Democrats received their biggest majority in three decades.

Redefining Tax Fight — New Jersey


• A 2003 ITEP study showed, median income Marylanders were paying 8.8% of their income in taxes, while wealthiest residents were paying 5.1%.

• Had a flat tax rate then of 4.75% on income over $3,000

• Alliance for Tax Justice held rallies and town halls around the state for more progressive tax system.

• 2007, state added a 5% rate on single filers earning $150,000+ and 5.5% on those making $500,000+. In 2008, added a top tax bracket of 6.5% for those making $1 million or more.

Redefining Tax Fight — Maryland


• In 2008, groups pushed ballot initiatives to raise the severance tax on oil and gas production.

• State Constitution requires a three-fourths majority to raise tax. Rate had been unchanged since 1957.

• Governor Mike Beebe managed to get supermajorities to approve a compromise to apply a 5% tax on proceeds.

• Raised severance tax collections from $600,000 a year to $57 million in 2009 to estimated $101 million by 2014.

Redefining Tax Fight — Arkansas


• People often hate “government” but love schools and parks and public hospitals

• Emphasize real stories and real institutions threatened by anti-tax politics; highlight shared responsibility to maintain critical institutions

• Challenge individualistic “consumer” view of government; promote “citizen” view of government; We are all in this Together

Message - Defend What Government Does


• Business Leaders admit taxes are not main determinant of investment decisions:

Paul O'Neil, CEO of Alcoa Aluminum and Treasury Secretary under George W. Bush-- "I never made an investment decision based on the tax code...If you are giving money away I will take it. If you want to give me inducements for something I am going to do anyway, I will take it. But good business people do not do things because of inducements. ”

Or as long-time business leader and now NYC mayor Michael Bloomberg said- “any company that makes a decision as to where they are going to be based on the tax rate is a company that won’t be around very long. If you’re down to that incremental margin you don't have a business.”

Economics – Taxes Don’t Undermine Growth


Nobel Prize winner Joseph Stiglitz and Peter Orszag, new director of federal Office of Management and Budget:

“[E]conomic analysis suggests that tax increases would not in general be more harmful to the economy than spending reductions…any tax increase or transfer payment reduction would reduce saving rather than consumption…whereas [cutting] government spending on goods and services would directly reduce consumption

The spending by individuals and businesses that would be affected by tax increases often is less concentrated among local producers — since part of the decline in purchases that would occur if taxes were raised would be a decline in the purchase of goods produced out of state.”

Economics – Taxes Better than Budget Cuts


A lot of debunking of rightwing studies on supposed link between high taxes and lack of economic growth. Key problems:

• “Low tax” states often have very high user fees

• Growth in many “low tax” states in real estate bubble states

• High tax states often have higher per capita growth rates

• Many low tax states are heavy recipients of net transfers from federal government

IETP (2004) - Using accurate measures of tax progressivity, "impact of income tax progressivity on economic growth becomes insignificant "

Economic Studies–Taxes and Economic Growth

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Debunking Idea States Raising Taxes Lost Growth

States that enacted large tax increases between 2002 and 2004 – increasing state revenues by at least 5% – subsequently experienced stronger average growth in personal income than states that did not increase taxes at all.

The Wealthy Don't Leave High-Income Tax States: • From 2004 to 2006, following California’s passing new rate

of 10.3% on income over $1,000,000, there was a 38% increase in the number of millionaires in the State.

• Number of New Jersey half-millionaires grew by 70% after increasing top rate from 6.37% to 8.97% in 2002, from 26,000 in 2002 to 44,000 in 2006.

• New York had comparable increase after temporarily raising income tax rates earlier in the decade, from 250,000 in 2003 to over 325,000 in 2005, representing a 30% growth.


A 2005 study by Citizens for Tax Justice found that 252 of America's largest corporations failed to include two-thirds of their U.S. profits on state tax returns, avoiding an estimated $41.7 billion in state corporate income taxes over three years.

Problem of Corporate Tax Evaders


Continued Drop in Corporate Tax Rates


• Senator Jim Elliott, chairman of the Montana Senate Taxation Committee, outraged to find that 40% of the top 500 national and multinational businesses in Montana paid under $500 in corporate income taxes -- less than most individual Montana taxpayers.

• In 2007, Montana Senate approved a bill by Sen. Elliott to require publicly-traded corporations to disclose basic tax information, such as how much income they made in the state and taxes paid

• The Center on Budget Policy & Priorities has released a report, State Corporate Tax Disclosure: The Next Step in Corporate Tax Disclosure; only Wisconsin presently discloses corporate income tax payments for all individual corporations (and that disclosure is relatively limited and hampered by expensive fees to access the information)

Strategy- Need for Corporate Tax Disclosure


• States don’t collect good data on contractors

• States don’t collect data on jobs required by Federal recovery plan

• Stop abuses and costs to taxpayers from mindless privatization

• Enact contractor transparency and accountability legislation

Privatization and Contractor Accountability


• "Apart from selected surveys at the local (municipal) level most public administrative experiences and research involving contracting are anecdotal, case-specific, or otherwise narrowly focused."— 2005 paper on studies reviewing state contracting

• "There appears to be no consensus as to the effectiveness of privatization in part due to the lack of empirical data as well as the complexity of the issue…[M]any agency directors could not provide estimates of cost savings from privatization." -- Council of State Governments 2003

States Don't Collect Good Data on Cost Savings from Contracting Out


• Avoid costly mistakes. See Texas experience in trying to privatize health care benefits system:

Republican State Comptroller, Carole Keeton Strayhorn, investigated contract and declared, "The Accenture contract appears to be the perfect storm of wasted tax dollars, reduced access to services for our most vulnerable Texans, and profiteering at the expense of our Texas taxpayers.“

• Increase Democratic Accountability of Spending

• Reduce Corruption through Sunshine on Process

• Improve job quality through contracting standards

States Save from Transparency & Accountability Laws


• PSN is working with a range of allies on a Corporate Transparency in State Budgets campaign

• Model legislation systematically tracks potentially wasted tax dollars going to corporations through direct subsidies, government contracts and tax loopholes.

Transparency - Model Legislation Exists

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