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Republicans in Congress oppose extending the augmented unemployment insurance program for even three months — unless the $12.5 billion cost is offset with cuts in spending from the economic recovery act that was passed last year, which is keeping unemployment significantly lower than it would otherwise be.

Meanwhile, Congressional Republicans are demanding that the Bush tax cuts for the richest 2 percent of Americans be made permanent, at a cost of $700 billion over a decade — and they want this to be deficit-financed.

In other words, the party that will take over the House of Representatives next year believes that $12.5 billion for the unemployed is unaffordable but $700 billion for the richest two percent is absolutely vital.

Call and email your members of Congress NOW to tell them this is outrageous and unbelievable.

The Congressional Budget Office has found that extending income tax cuts, particularly for the rich, is the least effective of all the economic recovery measures Congress has debated, while unemployment insurance is the most effective because it puts money in the hands of people who will spend it immediately.

Economists expect unemployment to remain high for a lot longer than 3 months, so Congress needs to extend the augmented UI program for a full year. Congress has always provided  augmented UI during economic downturns, and has never cut off the extra help with unemployment as high as it is today.

There is reason for hope. Reports are trickling in that Democratic leaders will force a vote on a tax bill along the lines of what President Obama has proposed: Making permanent the Bush tax cuts for the first $250,000 of a married couple's income (the first $200,000 of a single person's income). The tax cuts for income over those amounts would expire, which means the richest two percent of taxpayers would continue to enjoy some, but not all, of the tax cuts enacted under President Bush.

This proposal hardly sounds like a progressive dream, but it's the best chance for the President and his allies in Congress to take a stand against continuing tax cuts that only benefit the very richest taxpayers. See CTJ's figures comparing the President's tax plan to the Republican plan (including state-by-state figures).

Hold the Vote!

Congress needs to vote on this tax plan. If lawmakers who support tax cuts for the very rich oppose this plan, then they need to go on record opposing tax cuts for 98 percent of Americans because they are trying to protect tax cuts for the richest two percent. When Americans see how their lawmakers vote on this bill and on unemployment insurance, they will finally have a clear idea of who is represented in Congress.

Putting lawmakers on the spot in this manner is one way — perhaps the only way — to get them to do the right thing.

Presumptive House Speaker John Boehner recently confessed that "what Washington sometimes calls 'tax cuts' are really just poorly disguised spending programs that expand the role of government in the lives of individuals and employers."  We couldn’t agree more.  What’s odd, though, is that Rep. Boehner has proposed moving Congress toward a “cut-as-you-go” system (or “CutGO”) that would actually make it easier for the government to overspend on these types of programs.  The folly of CutGO, and several much more sensible solutions, are the topic of this recent op-ed from Citizens for Tax Justice.

Read the op-ed

On Tuesday, the Maryland Business Tax Reform Commission chose not to recommend one of the most sensible — and most needed — corporate income tax reforms available to state policymakers, "recommend[ing] to the General Assembly that combined reporting not be implemented in 2011.” The commission failed to understand (or chose to ignore) the benefits of requiring "combined reporting" of corporate income by corporations with income from different states. This method of taxation greatly reduces the opportunities for multistate companies to shift profits from the state where they are generated to states with lower corporate income taxes or none at all.

The actions of the Commission, which has been meeting for over a year with a mandate to make recommendations to the state legislature on a wide variety of business tax issues, still leave the door open for lawmakers to pursue combined reporting in 2011. And lawmakers should seriously consider it, in the wake of news last week that the state's budget deficit for the next fiscal year is $1.6 billion.

From a tax avoidance perspective, Maryland's lack of combined reporting is the equivalent of a farmer leaving the barn door wide open. As ITEP's policy brief on this topic notes, in the absence of combined reporting, multi-state companies can easily shift their income on paper from one state to another to avoid paying income tax, creating "nowhere income" that isn't taxed by any state.
 
In a hearing last week, ITEP and other organizations testified on the need for combined reporting, both as a means of achieving a level playing field between big multi-state companies and their mom-and-pop competitors, and as a desperately needed revenue-raiser. And as a Tuesday editorial in the Baltimore Sun eloquently argues, the "level playing field" argument alone should be a compelling reason to enact this needed reform.

Hopefully, Maryland lawmakers will show clearer thinking on this topic than has the Commission when they convene next spring.

The Tea Party has always done a great job ignoring the public benefits that we all receive as a result of paying taxes.  The opposition of some Florida Tea Partiers to a tax the Florida citrus industry would like to impose on itself is perhaps the most obvious example of this yet.

In December of last year, the Florida citrus growing industry took a vote among its members to create the Citrus Research and Development Foundation, which it plans to task with studying HLB, or the “citrus greening disease.”  The disease is apparently a very serious threat to Florida’s citrus crops, with at least one industry spokesman going so far as to call it a “worldwide citrus crisis.”

In order to fund the foundation’s research, the citrus growers had to get the money from somewhere, and decided on an extremely modest 2 cent increase in the tax levied on each 90 pound box of citrus fruit.  Clearly, the industry expects that the cost of this tax will be outweighed by the benefits it hopes to receive in terms of limiting the spread of HLB.

Thankfully, Florida’s heavily Republican legislature didn’t let its “no new taxes” promise get in the way this week when it approved the industry’s decision to tax itself.  But at least one south Florida Tea Party group has come out against the decision, complaining that the state’s anti-tax legislators did not “follow through on their word” to oppose all tax increases.  It seems that even in Florida, sometimes commonsense can trump silly no-tax promises — at least when the Tea Party isn’t calling the shots.

As if things couldn’t get any worse after spending $1 billion more on tax credits than you intended, the St. Louis Dispatch this week published a new article explaining how a big chunk of Missouri’s tax credits don’t even end up benefiting their intended recipients.

Because the groups toward which many tax credits are targeted often don’t owe very much in taxes, a large share of business tax credits handed out in Missouri are ultimately sold to other companies (and rich people) in exchange for a direct payment.  The result of these sales, or “transfers,” is that oftentimes only 92 cents of every dollar spent by the state on historic tax credits, affordable housing credits, etc. actually goes toward the goal for which they were intended.

The rest ends up in the pockets of broadcaster Bob Costas, Build-A-Bear CEO Maxine Clark, Enterprise Rent-A-Car founder Jack Taylor, and other individuals or businesses that actually pay taxes.  The biggest purchaser of such credits in Missouri has been a utility company called Ameren Corp.  Amusingly, Ameren Corp. recently asserted that making money by purchasing historic rehabilitation tax credits actually “demonstrates our commitment to revitalizing the communities we serve.”  Sure it does.

Now, this phenomenon isn’t anything new, and it’s definitely not unique to Missouri.  In Oregon, for example, Wal-Mart has gotten a return on investment as large as 50 cents per dollar by purchasing gobs of energy tax credits from other companies.

Clearly, this is information lawmakers should keep close at hand when evaluating whether these programs are actually a good use of taxpayer dollars — as the Missouri Tax Credit Review Commission is doing right now.

Virginia Delegate Harry Purkey, chairman of the House Finance Committee, introduced a bill earlier in the year to eliminate the state’s corporate income tax as a way to give the state (often ranked as one of the most business friendly) a “competitive edge.”  While the bill was not enacted, a joint resolution was passed directing staff of the Joint Legislative Audit and Review Commission (JLARC) to undergo a comprehensive study of Virginia’s corporate income tax system.

The draft report was released last week and delivered news that Del. Purkey is not likely to like.  The bottom line?  Virginia cannot afford to lose its corporate income tax, the state’s third largest revenue source.  Researchers found that eliminating the corporate income tax would result in a five year revenue loss of more than $3.6 billion while only generating about $220 million in additional personal income tax revenue.  To break even on revenue from eliminating the corporate income tax, Virginia would need to add more than 160,000 new jobs.  The study estimated the change would result in an additional 12,500 jobs, only 8 percent of what would be needed.  

But the corporate income tax is more than just an important revenue source. It's also an important part of ensuring tax fairness.  As the draft report says, “The fundamental purpose of all taxes is to raise revenues to finance public programs and services.  Nearly all states tax corporations because they benefit from many of these programs and services. For example, corporations use state-maintained roads to transport goods, hire employees who have been educated and trained in state-funded facilities, and rely on state courts to resolve legal matters.”

It would behoove the new governors in Wisconsin, South Carolina, and Florida, all of whom have proposed eliminating their state’s corporate income tax, to consider the new Virginia study before making a move that will deplete state revenues with no economic gain.

Wisconsin Governor-elect Scott Walker and Ohio Governor-elect John Kasich want both of their states to stop any work on high speed rail projects that are funded with federal stimulus dollars. Yet, both newly elected governors seem to want the millions of dollars the federal government is offering. (For Ohio that amounts to about $400 million, and Wisconsin was slated to receive $810 million).

Neither governor wants to put the transportation money into high speed rail programs. Instead they want to use the money to fix roads and bridges. The newly elected Republican governors apparently like federal spending — when it means money they can spend as they please.  

It turns out that Ohio has already been given federal dollars to help with the transportation issues Kasich mentions. A letter from Transportation Secretary Ray LaHood reminded Kasich that Ohio has already received over $1 billion for road, bridge, and airport projects. As for the rail funding, LaHood clarified that, "none of those funds may be used for anything other than our high-speed rail program."   

On election night, Walker unveiled his new slogan “Wisconsin is Open for Business.” But shutting down the progress already made to produce a rail line connecting Madison to Milwaukee means that local employees at the company making the trains, Talgo Inc., fear for their jobs and plans to hire a total of 125 employees are on hold. Earlier this week three Wisconsin Congressman introduced a bill that would allow the state to return its federal high-speed rail money and put it toward federal deficit reduction. Of course, Wisconsin's share of the rail dollars is just a drop in the bucket compared to the deficit.

Not everybody is taking this same approach with the federal gift horse. Illinois officials seem ready to take the money and Talgo’s operations if no one else wants them. Illinois Governor Pat Quinn has said to Talgo that his office “stands ready to do whatever it can to make Illinois your new Midwestern home.”  The Illinois Transportation Secretary has said that if Wisconsin doesn’t want the money for high speed projects they will take it.  Local officials seem equally enthusiastic “Let’s get after it,” said one County Board Chairman. “I’m in line — what do I need to do? I don’t think I can do a back flip, but absolutely that would be fantastic.”

Congress is about to make a choice that will define this moment in history: Support those unemployed by this recession, or give tax cuts to millionaires.

Your Senators need to hear from you today! Please call right now. Tell them you're a constituent. Tell them it's outrageous for lawmakers to say we can't afford to extend unemployment insurance for people laid off through no fault of their own — even as these same lawmakers support extending the Bush tax cuts for the very richest Americans.

We don’t have a choice — if Congress fails to continue the unemployment programs, 2 million people in December alone will be left with no income. In the next five months it will be almost 6 million people. Local economies will be devastated if the unemployed have no income to spend in local stores.

Click on the link below and all the information you need to make the call will be provided.

Call Now

Sometimes people accidentally say what they really mean. Bill Rys, spokesperson for the National Federation of Independent Business (NFIB), recently acknowledged to the Washington Post that President Obama’s plan to raise the rates for the top two income tax brackets would only affect a fraction of small businesses, but he argued that they are the largest firms and therefore the ones that are most likely to be hiring.

In other words, NFIB claims to represent all small businesses, but when it comes to its lobbying focus, it really represents only the largest few. A new report from CTJ explains that, despite NFIB's claims, President Obama's tax plan will have little or no impact on any enterprise that can reasonably be called a "small" business.

Here are five points explained in the report:

1. Very few business people (3 to 5 percent) are rich enough to lose any portion of their tax cuts under Obama’s plan.

2. Of the business owners who would pay higher taxes under Obama’s plan, those with the very highest incomes cannot reasonably be called “small” business owners.

3. A person who receives their income from a business they own would have to receive over $250,000 (or over $200,000 if unmarried) in net profits in order to lose any part of their tax cuts under President Obama’s plan.

4. In order to hire people, business owners need customers, not tax cuts.

5. Claims that the richest 2.1 percent (who would lose some of their tax cuts under Obama’s plan) account for a fourth of all consumer spending are incorrect.

Read the report.

On Wednesday, the co-chairs of the President's fiscal commission put forth a series of options to reduce the long-term federal budget deficit by $3.8 trillion over ten years. The vast majority of the savings would come from cuts in public investments rather than from closing tax loopholes and reforming the tax system.

This makes little sense, given that the United States is one of the least taxed countries in the developed world. A new report from Citizens for Tax Justice explains that the most recent data from the Organization for Economic Cooperation and Development (OECD) show that the U.S. is the third least taxed country of the 27 OECD countries for which data are available.

Read the report.

Last month, Citizens for Tax Justice (CTJ) released a report explaining how and why the budget process must be reformed in order to temper lawmakers’ obsession with “tax expenditures” — that is, government spending programs that happen to be administered via the tax code.  The Pew-Peterson Commission — a group of nearly forty former lawmakers, CBO directors, OMB directors, and other prominent officials — echoed that sentiment this week in a new report proposing a variety of reforms to the federal budget process.

While some groups have expressed serious concerns over the Commission’s debt reduction target, their attempt to put tax expenditures on a more even footing with other types of government programs should be applauded.  The Commission accurately identified tax expenditures as one of the “major drivers of long-term debt growth,” and lamented that they constitute “the largest single omission of fiscal resources from the budget.”

The Commission goes on to offer a variety of sensible recommendations designed to bring tax expenditure spending under control, and end the “invisibility” of these programs in the budget process.  Among the reforms recommended by the Commission are:

• “Display tax expenditures and spending programs together in the budget so that resources allocated to one purpose by alternative means can be compared with total amounts allocated to other uses.”

• “Include tax expenditures in the budget resolution allocations and in reconciliation instructions to committees of jurisdiction.” (This is meant to erode the tax-writing committees' monopoly on this area of policy, and to allow the committees with actual expertise in program areas to weigh the relative merits of tax expenditure and traditional spending programs.)

• “Require the executive branch and CBO to provide information and analysis on the use, incidence, and efficiency of every major tax expenditure (preference) in comparison with alternative policy instruments.” (This is similar to the tax expenditure performance reviews recommended by CTJ late last year.)

Additionally, once tax expenditures have been reduced as part of dealing with the nation’s current fiscal imbalance, the Commission recommends a system of “caps and triggers” designed to ensure that tax expenditure growth will not continue at an unsustainable rate.  Under this system, Congress would be required to keep tax expenditure spending below the specified “cap” level.  If they failed to do so, pro rata adjustments to specific tax expenditures would be made automatically to bring their overall size under the cap.

Ultimately, it must be substantive policy decisions — not budget process reforms — that will bring the nation back into fiscal balance.  Nonetheless, reforming the budget process as it relates to tax expenditures would help pave the way for vital, and lasting, reductions in tax expenditure spending.

First, the good news: It looks all but certain that Democratic-Farmer-Labor party candidate Mark Dayton, who ran on a progressive tax platform, will be Minnesota’s next governor once a vote recount is completed.  But here's the bad news: It also looks likely that Dayton’s Republican opponent will attempt to delay or contest the recount just long enough to give current GOP governor Tim Pawlenty a few additional weeks in office, giving him the opportunity to lead his state with a newly elected GOP-controlled legislature (something he did not enjoy under his eight years as governor) and shepherd in a conservative lame duck agenda. 
 
Speculation has already begun on what a full GOP reign (however brief) could mean for the state.  Massive spending cuts in response to the state’s budget shortfall and tax cuts for corporations will likely be on the list, along with passing a so-called "taxpayer bill of rights," popularly known as TABOR, which would limit spending and revenues and stifle the state’s ability to provide core services such as education and public safety.

In response to the Republican victories in Minnesota’s legislature, Pawlenty wrote in a press release on the website for his Freedom First PAC, “The historic nature of this victory cannot be overstated…This is a great validation of our work over the last eight years to cut spending and keep a lid on taxes.”  However, voters also elected a new governor who has unabashedly supported progressive tax increases to mitigate disastrous cuts in state spending.  Mark Dayton’s recount manager, Ken Martin correctly described a potential GOP effort to delay swearing in Dayton as governor as a “strategy designed to hijack the will of Minnesota voters.”

Last week’s elections saw Republicans in Kansas take control of the state legislature with a 92-33 majority in the House and a 31-9 majority in the Senate. This newfound power has allowed Governor-elect Sam Brownback to speculate about revising the state's tax structure.  One of the items on his agenda will be reviewing a one percent sales tax rate increase passed earlier this year.  Brownback, while criticizing the tax hike, has not explicitly proposed repealing it.  Instead, Brownback has said he wants to evaluate and modify the current levels of income, property, and sales taxes.  Specifically, Brownback said he wanted to lower the state's individual income tax, a tax he sees as hindering growth.

If Brownback wants to keep taxes low and balance the state budget, he would be wise to listen to the proposals coming out of the Kansas Advisory Council on Intergovernmental Relations (KACIR).  KACIR’s recommendation included a three-year moratorium on creating new sales tax exemptions and an examination of the effects of current sales tax exemptions. The report also suggests a three-year moratorium and examination of property tax exemptions. If enacted, these proposals would go a long way toward both modernizing the state's tax structure and making it more stable. 

These proposals should not sound new to returning Kansas legislators.  Secretary of Revenue Joan Wagnon has been advocating these proposals since the legislature began debating the sales tax last year.  Hopefully Brownback’s new administration will be open to reconsidering these sound proposals.

As they say, elections have consequences, and for the state of Missouri, the term “consequences” is putting it mildly. Last year, a bill to eliminate the state’s income tax and rely more heavily on the sales tax passed the House, but didn’t go very far in the Senate. Things could turn out very differently during the next session.

In a post-election report, the Kansas City Star says “Missouri Republicans won historic and unprecedented majorities in the state House and Senate on Election Day. The party picked up 17 new seats in the 163-seat House, stretching its caucus to 106 members and a nearly veto-proof 65 percent of the body. In the Senate, the GOP will be even more dominant, with 26 of the chamber’s 34 seats.”  These results mean that the personal income tax will likely be on the chopping block again. Tax justice advocates may be interested in “following the money” to understand why this destructive proposal has become such a priority for elected officials in the state.

Speaker-elect Steve Tilley has said that this plan to weaken and undermine the state’s tax structure is one of his top priorities. Not surprisingly, this proposal is strongly supported by Rex Sinquefield (bankroller of Proposition A — which eliminated the right of local governments to have local income taxes). Sinquefield reportedly gave Speaker-Elect Tilley $200,000  in campaign contributions even though Tilley ran unopposed in both the primary and the general election.

The Florida Center for Fiscal and Economic Policy (FCFEP) has released a new report detailing the effects of costly and regressive tax policy changes made by Florida lawmakers in recent years. 

The FCFEP report focuses on how the elimination of Florida’s tax on intangible property, and the repeal of the state’s estate tax, have drastically reduced Florida’s ability to provide vital public services.  Specifically, over $12 billion in revenue has been lost as a result of the disappearance of these two taxes.  Moreover, because each of these taxes was progressive, their elimination has also resulted in Florida’s tax system becoming sharply more regressive.

In this context, Governor-elect Rick Scott's proposal to eliminate the state's corporate income tax is especially alarming, because it would repeal the only progressive tax that Florida still levies.

Earlier this week, voters in states across the nation voted overwhelmingly against implementing major changes to their states’ tax codes. Voters in Massachusetts defeated an effort to slash the state’s sales tax, preserving much-needed revenue to fund education, public safety and other vital services. In Colorado, three anti-tax measures that would have wreaked havoc on the state’s budget were also soundly defeated. Washington State voters rejected a plan that would have created an income tax while rolling back other taxes.

In other states, big business successfully used its money to influence the outcomes of ballot measures on tax issues. Voters in Missouri and Montana passed initiatives designed to ensure that neither state could implement a tax on the transfer of real estate. Neither state currently has a real estate transfer tax, yet the real estate lobby spent millions trying to pass the initiatives. In Washington and Massachusetts, the beverage and alcohol industries poured millions of dollars into campaigns to see that sales taxes levied on their products were rolled back.

And in California, corporations spent millions to defeat a ballot measure that would have repealed several poorly-thought out corporate tax breaks. As the New York Times noted earlier this week, Fox News aired a critical piece on the ballot measure as part of their "War on Business" series, as parent company News Corporation gave $1.3 million to defeat the measure. Fox executives said they "didn't know" the parent company had made these contributions.

Unfortunately, voters in a number of states also ratified measures that will make it harder to raise revenues going forward. California and Washington each face tighter supermajority constraints on revenue-raising, Indiana voters enshrined property tax caps in their constitution, and voters in Massachusetts and Washington retroactively rejected small tax increases enacted by state legislatures in the past year.

Here are the results of initiatives we’ve been following.

Personal Income Tax

Washington: Initiative 1098 - FAILED
Initiative 1098 would have introduced a limited personal income tax applicable only to the richest Washingtonians, reduced the state property tax and eliminated the Business and Occupation tax for many businesses.

Colorado: Proposition 101 - FAILED
Proposition 101 would have reduced Colorado’s income tax rate and eliminated various fees resulting in an estimated loss of $2.9 billion in state and local revenue once fully implemented.

Business Tax Breaks

California: Proposition 24 - FAILED
Proposition 24 would have eliminated several business tax breaks enacted in 2008 and 2009 and would have increased state revenues by more than $1.3 billion.

Super Majority Voting Requirements

California: Proposition 25 - PASSED
California: Proposition 26 - PASSED

The passage of California’s Proposition 25 removes the current two thirds super majority requirement needed to pass the state budget (replacing it with a simple majority vote). However, Proposition 26 institutes a new super majority requirement for raising certain fees (classifying them as taxes, which still require a two thirds vote).

Washington: Initiative 1053 - PASSED
Initiative 1053 will ensure that all tax increases (no matter their size) be approved either by a two thirds majority in the legislature or a public vote of the people.

Earnings Tax

Missouri: Proposition A - PASSED
Proposition A requires voters to decide whether two local earnings taxes levied in St. Louis and Kansas City should exist and also prohibits other localities from levying a local income tax.

Sales Taxes

Massachusetts: Question 1 – PASSED
Massachusetts: Question 3 - FAILED

Question 3 would have cut the state’s sales tax rate from 6.25 to 3 percent, resulting in an annual revenue loss of $2.5 billion.  Question 1 removes the sales tax on alcohol, which was just added last year in order to raise $80 million for substance abuse programs.

Washington: Initiative 1107 - PASSED
Initiative 1107 repeals a recently enacted sales tax increase on a variety of goods including soda, bottled water, and candy.

Property Tax Exemptions

Missouri: Constitutional Amendment 2 - PASSED
This constitutional amendment fully exempts disabled prisoners of war (POWs) from paying property taxes.

Virginia: Question 2 - PASSED
Question 2 changes Virginia’s constitution to exempt disabled veterans and their surviving spouses from paying property taxes.

Property Tax Caps

Indiana: Public Question #1 - PASSED
The amendment to Indiana’s state constitution permanently limits property taxes to 1 percent of assessed value for owner occupied residences, 2 percent for rental and farm property and 3 percent for business property. These limits already existed in statute. This ballot measure simply makes them more difficult to repeal.

Colorado: Amendment 60 – FAILED
Amendment 60 would have taken away the ability of voters to opt out of Colorado’s TABOR limitations as they relate to property taxes and require school districts to cut property tax rates in half over the next ten years, replacing the lost revenue for K-12 schools with state funding.

Real Estate Transfer Fees

Montana: Constitutional Initiative 105 - PASSED
Initiative 105 prohibits the state from enacting any type of real estate transfer tax.  

Missouri: Constitutional Amendment 3 - PASSED
Amendment 3 prohibits the state from enacting any type of real estate transfer tax.

Government Borrowing

Colorado: Amendment 61 – FAILED
Amendment 61 would have prohibited or restricted all levels and divisions of government from financing public infrastructure projects (such as building or repairing roads and schools) through borrowing.

California: Proposition 22 – PASSED
Proposition 22 amends California’s Constitution to take away the state’s ability to borrow or shift revenues that fund transportation programs.

On Tuesday, voters in 37 states went to the polls to vote for Governor. The results of nine gubernatorial races provide a small glimmer of hope for sensible, balanced, and progressive approaches to addressing the next round of state budget shortfalls.  Two candidates campaigned on raising taxes, four incumbents were re-elected after implementing new taxes to close previous budget gaps, and three governors-elect won races against opponents who sought to dismantle progressive tax structures.

As for those governors-elect who have rejected revenue increases, the next four years will be quite a challenge. In Texas, Governor Rick Perry will face a projected two-year $21 billion budget shortfall.  Likewise in Pennsylvania, Governor-elect Tom Corbett is staring at a $5 billion budget deficit next year.  Faced with these problems, this new crop of state executives can take either a dogmatic cuts-only approach or they can opt for a more flexible approach that allows for raising new revenue by closing tax loopholes or implementing other reforms.

Candidates Who Campaigned on Raising Taxes

In Minnesota, Mark Dayton ran for governor on a progressive tax platform, calling taxes “the lubricant for the machinery of our democracy." He has proposed increasing taxes on the wealthiest 5 percent of Minnesotans to raise revenue to address the state’s continuing budget woes and to improve tax fairness.  Although the Minnesota gubernatorial race remains undecided and Dayton may face a recount, Dayton’s small lead demonstrates the support he has received for purposing such a beneficial progressive tax plan.

In Rhode Island, Lincoln Chafee won a three-way race against Republican John Robitaille and Democrat Frank Caprio.  Like Dayton, Chafee championed tax increases aimed at refilling the state’s depleted coffers.  During the campaign Chafee, whose father lost a Rhode Island gubernatorial race 42 years ago after supporting a state income tax, proposed a one percent sales tax on previously exempted items.  Though more likely to adversely affect low-income families than Dayton’s plan, Chafee deserves credit for supporting a moderate tax plan in this cycle of anti-government sentiment.

Candidates Who Defeated Opponents Targeting Progressive Tax Structures

Besides Dayton and Chafee, three other winners on Tuesday night defeated opponents who sought to drastically cut taxes and reduce spending and government services.  In California, Jerry Brown defeated Meg Whitman, who supported a regressive tax cut that would only benefit taxpayers who claim capital gains income. 

In New York, Andrew Cuomo defeated Carl Paladino, who promised to cut taxes by 10 percent and spending by 20 percent in his first year.  Unfortunately, however, Andrew Cuomo has not fully distanced himself from Paladino’s vilification of taxes.  Instead, Cuomo, along with eleven newly elected Republican Governors, has pledged to freeze taxes, vetoing any hike that comes his way.  This absolutist approach does nothing to alleviate the enormous deficit problems faced by each of these states.

In Colorado, Democrat John Hickenlooper defeated Republican Dan Maes and Independent Tom Tancredo.  Maes, who lost voter support after the Republican primary, promised to lower income taxes and cut spending.  As Maes’ popularity decreased, Tom Tancredo began to gain steam, eventually garnering around 37% of the vote.  In their final debate Tancredo proposed removal of “any tax rebates or incentives.”  For his own part, Hickenlooper never committed to raising or lowering taxes, but did call for a "voluntary" tax on the oil and gas industry to fund higher education.

Incumbents Re-elected After Raising Taxes

The Governors of Maryland, Illinois, Arkansas, and Massachusetts pulled off victories after enacting or supporting new taxes during their previous terms. 

In Maryland, Martin O’Malley, who defeated former Governor Robert Ehrlich, oversaw tax increases in his first term to fix a $1.7 billion deficit.  O’Malley’s plan relied in part on progressive tax increases, including a temporary increase in the income tax rate paid by millionaires. While Republicans criticized the tax increases, the citizens of Maryland approved enough to re-elect O’Malley with over 55% of the vote.

In Illinois, Governor Pat Quinn is the likely winner of a tight race against Republican challenger Bill Brady.  Since becoming Governor in the wake of former Governor Blagojevich’s scandal, Pat Quinn has repeatedly proposed to raise income tax rates to fill budget holes.  Quinn would use the revenue raised to fund education.  Meanwhile Brady, Quinn’s opponent, championed tax cuts that included repealing the sales tax on gasoline and eliminating the inheritance tax.

In Arkansas, Republican Jim Keet was soundly defeated by Governor Mike Beebe in his re-election bid.  During his first term, Beebe implemented a significant hike in tobacco sales taxes, raising the tax on a pack of cigarettes by 56 cents.  The increase was designed to increase revenues by $86 million to fund statewide trauma systems and expanded health care coverage for children.

In Massachusetts, Deval Patrick was re-elected Governor after signing last year’s budget that included an increase in the sales tax rate. Patrick also showed interest in improving fairness in Massachusetts’ tax code. Bay State voters rewarded Patrick for his tough decisions by handily re-electing him.

Last week, the Associated Press took a close look at how local-level tax increases have fared on the ballot leading up to this week’s election.  Out of the 39 states surveyed by the AP, 22 of them held local primary elections or special elections where tax measures were voted on in 2010, and a whopping 19 of those states saw their residents approve more than half of all proposed local tax increases.

Some of the more interesting results highlighted by the AP include the approval of 83% of local tax increases in Louisiana, 72% in Ohio, and 66% in Arizona.  Kansas, Nebraska, and Washington also approved particularly high percentages of local tax increases.

It’s important to note that the AP study was conducted before this week’s election, and therefore doesn’t tell us how local measures fared on November 2.  Moreover, as the AP points out in their review, there is no single source for information on the results of local ballot measures, and even most states fail to publicize local results in a centralized location. 

Unless and until a study of this week’s local measures is completed, we’ll be left to wonder whether trends from earlier this year have continued to hold.  If they have, there could very well be many more stories of local ballot successes like this one in Colorado.

Americans Are Frustrated Today, But in the Future Will Prefer the 111th Congress Over the 112th

Americans may not realize it today, but the legislation enacted by the 111th Congress will be seen in the years to come as major victories for working people. The legislation that Citizens for Tax Justice was most involved in — the economic recovery act, health care reform and the smaller jobs bills  — will have positive effects on Americans everywhere. They reduced unemployment significantly below what it would otherwise have been and will end the worst abuses and inefficiencies in our health care system.

But Americans understandably only see that unemployment is still unacceptably high and the health care law is a long way from taking effect. In frustration, voters opted for what they believed would be a change from the status quo.

There will come a day when the economy recovers and it will become clear that the collapse would have been far greater without the economic recovery act. There will come a day when it will become clear that Speaker Pelosi's Congress stopped health insurers from discriminating against people with pre-existing health conditions and capping benefits when people get sick, and it'll be clear that 32 million Americans owe their coverage to this legislation.  The progressive accomplishments of the 111th Congress will then get the credit they deserve.

There will also come a day, probably not too far off, when Americans will realize that the incoming House leadership does not have much of a plan for America other than slashing programs that the middle-class depends on and providing more tax breaks for the wealthy investor class.

An exit poll done for the Associated Press on Tuesday gave voters three alternatives for Congress to focus on, and found that four out of ten voters wanted Congress to focus on reducing the budget deficit, an equal number wanted Congress to focus on creating jobs, and the remainder want Congress to focus on cutting taxes. An exit poll conducted for the AFL-CIO showed that 63 percent of voters wanted the Bush tax cuts to expire at least for taxpayers with incomes above $250,000.

Unfortunately, the team that will lead the majority party in the House of Representatives has offered tax cuts that increase the budget deficit and have no plan for job creation other than those same tax cuts, whilch failed to create prosperity during the Bush years. The House and Senate GOP leadership team all got Fs on CTJ's legislative report card for each of the six years of the Bush administration when Congress voted on a major tax cut.  

John Boehner, the presumptive Speaker of the House, recently offered a plan that he openly describes as taking us back to the policies in place in 2008, the last year of the Bush administration (even though the plan would actually cut spending dramatically lower than that), and of course this includes extending the Bush tax cuts for even the richest taxpayers.

The likely chairman of the House Budget Committee, Paul Ryan, is best known for his "Roadmap," which a CTJ analysis found would slash taxes for the richest 10 percent, raise taxes on the remaining 90 percent and would still manage to lose $2 trillion over ten years.

Then there's the Republican leader in the Senate, Mitch McConnell, who will have a larger caucus, even if not a majority, and who is on record saying he believes tax cuts pay for themselves.

It would be easy to laugh at the bizarre proposals and convoluted justifications put forth by the anti-tax lawmakers in Congress, except that the stakes are far too high and much too serious. As Congress decides what to do about the long-term budget deficit, it must decide how much we will rely on revenue increases (and what type of revenue increases) and how much to rely on huge cuts in government programs that ordinary Americans rely on. The 112th Congress will almost certainly make the wrong choices if we don't stay involved.

The danger posed by the 112th Congress is not just to the legislation passed in the 111th. If Congress refuses to increase revenues, that dramatically increases the chances that any real measures to limit budget deficits will target Medicare, Social Security, transportation, education and other programs that working people depend on.

So the coming battle is not just about defending the progressive achievements of the last two years. It's about defending the progressive achievements of the last 75 years.