Efforts to Reshape the Tax Code to Benefit Big Business and the Ultra Rich
| This page documents how bills pushed by ALEC corporations would create tax giveaways to Big Business, give tax breaks to the richest, and eviscerate state legislatures' ability to raise revenue through tax increases. These "model bills" and resolutions also push for extending the Bush tax cuts and attempt to use temporary legislative majorities to tie the hands of future majorities to raise taxes to meet citizens' needs.
Through ALEC, corporations have both a VOICE and a VOTE on specific state laws through these model bills. Do you?
How the Bills Would Rewrite the Tax Code and Aid the Richest
Through ALEC, corporations voted bills to rewrite the tax code that would increase their profits or the riches of their CEOs by:
Helping the richest of the rich get richer, through:
- Eliminating the Capital Gains tax, the tax on profits from investments that benefits the richest the most. Wisconsin adopted this give away in 2011 and the South Carolina legislature is considering it.
- Calling for repeal of the estate tax, which only taxes very large estates -- those over $5 million, or $10 million for couples -- and limits revenue for public services in favor of expanding the wealth of the most privileged in America.
Making it easier for tax cheaters to get away with ripping off the public by:
Preventing key taxes from helping America reduce its dependence on oil, through:
- Restricting the use of vehicle fees and taxes for highway purposes by amending state constitutions to require that revenues from gas taxes and vehicle-related fees be used for highways, rather than investment in developing alternative fuels or things to reduce oil dependence, like light rail, trains, or bike lanes. The proposed ALEC amendment has been adopted in 29 states, eight of which copied ALEC's language verbatim.
Allowing a small minority of legislators to thwart tax increases, regardless of public needs, by:
- Amending state constitutions to require that all tax and license fee increases be approved by a 2/3 majority of the legislature, allowing a minority of politicians to dictate policy and thwart majority will.
Limiting taxes of businesses, top income brackets, and others, regardless of national or state needs, through:
- Supporting federal legislation that limits all spending to the rate of inflation, regardless of national or state emergencies or federal commitments such as for military defense of the nation.
- Limiting states' ability to raise revenue by indexing tax brackets to inflation, while in other bills opposing the use of inflation as a basis for increasing the minimum wage.
- Promoting a constitutional amendment capping revenue and spending, and requiring that collections above the limit be transferred into an Emergency Reserve Fund, severely limiting a state's ability to respond to price increases, such as, for example, a double-digit rise in health care costs.
- Automatically adjusting individual and corporate tax rates downward if tax revenue collected in previous years had increased above a certain percent, squeezing government and forcing cuts.
- Supporting a flat tax, where the wealthiest corporations and people pay taxes at the same rate as the middle class or poorest, reversing America’s history of progressive taxation: see this bill, this bill and this bill.
ALEC also provided PR sound bites to push its tax agenda: see here and here.
To see a full list of bills from this section, click here
This information is available for download as a one-page fact sheet here.
Did You Know about these Bills?
Some of this Corporate Agenda Has Already Become Law:
Under the administration of ALEC alumni Wisconsin Governor Scott Walker, several changes to the state tax code were drawn from ALEC's 2011 corporate wish list. For example, Governor Walker and the Republican-controlled legislature:
- Eliminated the capital gains tax, as called for in ALEC's Capital Gains Tax Elimination Act. The budget bill excludes 100% of the capital gains realized on investments in Wisconsin for five years, costing Wisconsinites approximately $79 million per year, according to an analysis by the AFL-CIO. An additional exclusion from income tax for capital gains will amount to $36 million per budget cycle.
- Eliminated combined reporting, which is designed to prevent corporations from hiding profits by filtering income through subsidiaries in states that have no income tax, like Nevada. The same principle was set forth in the ALEC's Resolution in Opposition to Mandatory Unitary Combined Reporting.
- Required a supermajority to raise taxes, as called for in ALEC's Super-Majority Act. This was passed as a statute rather than a constitutional amendment, so it could be invalidated more easily by a future majority.
- And even a tax break for a tobacco product that may appeal to children? Wisconsin Senator Alberta Darling rolled a motion into the Wisconsin budget bill that gave a big tax break to a big tobacco company, Altria/Phillip Morris. The committee voted to convert the tax on moist tobacco products from a price-based tax to a weight-based tax. Some moist tobacco products target kids with packaging and candy-like flavors like cherry, apple and grape. The details of the budget motion are identical to ALEC's Resolution on Taxation of Moist Smokeless Tobacco Products. To read more about this story, click here.
Drowning State Government in a Bathtub
"My goal is to cut government in half in twenty-five years, to get it down to the size where we can drown it in the bathtub." - Grover Norquist, Americans for Tax Reform
Some ALEC model bills would force severe austerity measures for basic services by severely limiting the ability of state government to raise revenue, even before Wall Street crashed the U.S. economy in 2008.
One bill would change the state constitutions across the country to require that all tax increases of any kind be approved by two-thirds of the legislature. If such a restriction were embedded in a state's constitution, then any statute contrary to it could be struck down as unconstitutional by the state Supreme Court. But more importantly, while framed as requiring a "super majority," what such a provision actually does is allow a stubborn minority of legislators to block any tax increase that addresses public needs, even if a majority of the people elected in the state favor the increase. Under this wish list for ALEC corporations and politicians, if just one-third of the legislators plus one more oppose a tax increase, they could thwart it until the next election, no matter the public will or need. Giving a small minority of legislators such veto power is anti-democratic. It is also profoundly unwise to allow current legislators such power to tie the hands of future majorities, regardless of the needs of the people of the state for basic services, or even to address natural disasters or other emergencies. It has already been adopted in several states causing severe problems, as with the similar prior measure in California that has choked off school budgets and other public services for the state's growing population.
(Grover Norquist is a frequent featured speaker at ALEC, and Americans for Tax Reform is an ALEC member.)
This information is available for download as a one-page fact sheet here.
READ the "Model Bills" HERE
|Click here for a zip file of Tax and Budget bills
For a full list of individual bills from this section, click here
For descriptions of some of these bills, scroll up or click here.
Learn MORE about the "Model Bills" ALEC Corporations Are Backing to Rewrite YOUR Rights
The Center for Media and Democracy analyzed the bills ALEC politicians and corporations voted for. More analysis is available below and also at ALEC Exposed's sister sites, PRWatch and SourceWatch.