Georgia Tax Reform Report a Taxpayer Protection Pledge Violation

/PRNewswire/ -- Today Americans for Tax Reform announced that a vote in favor of the recommendations of the 2010 Special Council on Tax Reform and Fairness for Georgians would violate the Taxpayer Protection Pledge, as it constitutes a net tax increase. 55 Georgia lawmakers, including Governor Nathan Deal, House Speaker David Ralston, and Senate Majority Leader Chip Rogers have signed the Pledge, a written promise to constituents to oppose and vote against or veto all tax increases.

While the Council proposes some pro-growth reforms, such as the gradual reduction of personal and corporate income tax rates, they are more than offset with net tax increases. The income tax reductions amount to roughly $750 million in savings for Georgians, but tax increases on groceries, tobacco, communications services, the Internet and other services approach $2 billion. ATR believes that tax reform is a noble goal, but not when it constitutes a net revenue increase for state government.

ATR President Grover Norquist issued the following statement:

"In its current form, last week's tax reform proposal should be a non-starter for fiscal conservatives in the Georgia Legislature. While tax reform is indeed a laudable goal, it should not be presented in a way that increases the net burden on taxpayers and raises even more money for state government. Unfortunately, this report recommends just that.


"A significant reduction in marginal tax rates is long overdue in Georgia, which is wedged between two states – Tennessee and Florida – that levy no personal income tax at all. But if the goal is to use such reductions to mask bigger tax increases on groceries, tobacco, and a variety of services, it is not even worthy of a conversation.


"This is akin to shards of glass in a delicious creme brulee. It is a bit of desirable tax reform ruined by an overall tax hike. Thankfully, Taxpayer Protection Pledge signers run state government in Georgia. Because they have taken tax increases definitively off the table, I am confident that we can move past this initial foray into tax reform and begin a serious conversation about reducing the size and scope of state government in Atlanta." 

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Senator Proposes Use of Internet Gambling Revenue to Help Fund Health Care Reform

/PRNewswire/ -- An increased focus on the benefits of Internet gambling regulation are expected as the Senate Finance Committee considers a proposal introduced on Saturday to use Internet gambling revenue to offset the costs of health care reform. The amendment offered by Senator Ron Wyden (D-OR) would dedicate Internet gambling tax revenue generated through implementation of the currently pending Internet Regulation, Consumer Protection and Enforcement Act (H.R. 2267) to increase low-income subsidies provided through the America's Healthy Future Act of 2009. A PricewaterhouseCoopers analysis shows that collecting taxes on regulated Internet gambling would allow the U.S. to capture up to $62.7 billion over the next decade.

"We applaud Senator Wyden's proposal to collect and put to good use tens of billions in Internet gambling revenue that would otherwise be lost in the underground marketplace," said Michael Waxman, spokesperson for the Safe and Secure Internet Gambling Initiative. "The Senate Finance Committee should approve the resolution, finally putting to an end a failed prohibition on Internet gambling that leaves Americans unprotected and unlicensed offshore operators as the only beneficiary in a thriving marketplace."

The Internet Gambling Regulation, Consumer Protection and Enforcement Act of 2009 (H.R. 2267), introduced in May by House Committee on Financial Services Chairman Barney Frank (D-MA), would establish a framework to permit licensed gambling operators to accept wagers from individuals in the U.S. The legislation mandates a number of significant consumer protections including safeguards against compulsive and underage gambling, money laundering, fraud and identify theft. Additional provisions in the legislation reinforce the rights of each state to determine whether to allow Internet gambling activity for people accessing the Internet within the state and to apply other restrictions on the activity as determined necessary.

A companion to Chairman Frank's legislation introduced by Rep. Jim McDermott (D-WA), the Internet Gambling Regulation and Tax Enforcement Act (H.R. 2268), would raise revenue for the U.S. Treasury primarily through ensuring that applicable individual taxes, corporate taxes and license fees on regulated Internet gambling activities are collected. Without this legislation, this revenue will remain uncollected while millions of Americans gamble online without consumer protections.

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Congress Should Stimulate Economy With $500 Billion in Private Investment By Temporarily Reducing U.S. Business Taxes on Foreign Earnings

/PRNewswire-USNewswire/ -- The quest for cash to jumpstart the ailing U.S. economy could be alleviated if congress would revisit the 2004 successful economic stimulus measure that enabled U.S. businesses to invest $360 billion of foreign earnings at a temporary, reduced tax rate of 5.25%. In a new study commissioned by the American Council for Capital Formation (ACCF), renowned economist Dr. Allen Sinai of Decision Economics, Inc. analyzed the benefits that would occur based on an estimated $545 billion of repatriations, similar to the 2004 American Jobs Creation Act (AJCA). Sinai concludes that the U.S. economy would see a substantial boost in investment in plants and equipment and R&D, leading to higher U.S. GDP and job generation. He also projects nearly $140 billion in tax revenue over five years for the U.S. Treasury - money it would not otherwise receive.

"Unlike many of the stimulus proposals that bear a high price tag, this is a virtual free lunch that congress, the new administration and taxpayers can easily digest," said ACCF President and CEO Mark Bloomfield. "This temporary tax reduction can provide a lift to the U.S. business sector, significantly improve the financial position of nonfinancial corporations, and help relieve the tight credit and liquidity restraint for a number of companies."

Sinai's quantitative study concludes that temporarily reinstating an 85% dividends-received-deduction for repatriated foreign subsidiary earnings would lead to the following economic benefits:

-- Increased U.S. GDP, peaking at an additional $110 billion in 2010
-- Reduction in outstanding debt, which would improve credit availability
-- An average annual increase of $56 billion in new investment over the
next 5 years
-- Increased U.S. R&D spending by approximately $7 billion per year over
the next five years
-- Job generation within the U.S. economy peaking at 614,000 in 2011
-- Nearly $140 billion in tax revenue over five years from initial cash
investment and residual economic activity


ACCF also pointed to a survey of U.S. companies that utilized the 2004 AJCA and found, on average, that 25% of the funds repatriated were used for U.S. capital investment, 23% for hiring and training of U.S. employees, 15% for U.S.-based R&D, and 13% for U.S. debt reduction. Another survey indicated repatriating companies increased their total investments in the United States by over $230 billion compared to prior years.

"This temporary tax reduction would provide much needed cash flow for capital spending, R&D, strengthening corporate balance sheets, new jobs and produce gains for the overall economy," said ACCF Senior Vice President and Chief Economist Margo Thorning. "This is a true win-win alternative to placing further strains on the federal budget and Federal Reserve."

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