Taxes and Budgets

ALEC's Efforts to Reshape the Tax Code to Benefit Corporations The bills on this page represent ALEC corporations' efforts to create Big Business tax giveaways, to offer tax breaks to the rich, and to eviscerate state legislatures' ability to raise revenue through tax increases. These "model bills" are drafted at American Legislative Exchange Council conventions with input from, and approval by, Big Business, then introduced in state legislatures to limit educational opportunities for all Americans. Politicians are elected to represent the people, not corporations; through ALEC, corporations have both a VOICE and a VOTE on specific state laws. Do you?

READ the "Model Bills" HERE Click here for a zip file of Tax and Budget bills For a full list of bills from this section, click here For descriptions of some of these bills, scroll down or click here.

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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.

How Corporations Tried Reshaping the Tax Code in Their Favor Corporations, Big Business, and Banksters VOTED to reshape the tax code in their favor by: Requiring a majority vote of U.S. electors before increasing taxes or spending Calling for repeal of the estate tax, which only taxes very large estates (over $5 million / $10 million for couples) and draws government revenue off perpetuation of wealth and inequality Limiting states' ability to raise revenue by indexing tax brackets to inflation] (but in other bills opposing the use of inflation to increase the minimum wage) Providing talking points for how to oppose local taxation efforts Supporting extension of the Bush tax cuts that contributed to the federal deficit and exacerbated wealth inequality Supporting repeal (rather than reform) of the Alternative Minimum Tax, a tax designed to prevent the very wealthy from avoiding taxes, but after the Bush tax cuts lowered marginal tax rates without changing the AMT rates, swept-in some middle-class households; ALEC supports extending the Bush tax cuts, but would rather do away with the AMT rather than reform it Eliminating the Capitol Gains tax (the tax on profits from investments), protecting wealthy investors (Wisconsin adopted this in 2011 and the South Carolina legislature is considering it) Supporting a "flat tax" that would reverse America’s history of progressive taxation through: state-level business and personal income flat tax, and giving state-level taxpayers the "option" to pay a flat tax supporting a federal flat tax Prohibiting state governments from increasing revenue as the economy improves through: automatically adjusting individual and corporate tax rates downward if tax revenue collected in previous years had increased above a certain percent (8H2), squeezing government and forcing cuts 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 (for example, a double digit rise in health care costs). "Restricting the use of vehicle fees and taxes for highway purposes" through a state Constitutional Amendment requiring that revenues from gas taxes and vehicle-related fees be used for highways, rather than investment in less fossil-fuel dependent rail transit or bike lanes. The proposed ALEC Amendment has been adopted in 29 states (eight of which copied the ALEC language verbatim). A constitutional amendment requiring that all tax and "license fee" increases be approved by a 2/3 majority in each house (unless the state cannot pay interest on its debt), severely restricting the ability to raise revenue Providing talking points for tax reduction Opposing "windfall profits" taxes on energy companies like Exxon Mobil and BP, which have had record earnings in recent years. "Removing incentives for investigating and prosecuting tax cheats" Supporting federal legislation that limits all spending to the rate of inflation More Helpful Resources Additional resources on ALEC's corporate agenda: ALEC Funding, PRWatch (2011) American Legislative Exchange Council and other related articles, SourceWatch (2011) Ghostwriting the Law for Corporate America, American Association for Justice (2010) Climate Denial Report on ALEC and Exxon Funding for ALEC, Greenpeace (2011) Governing the Nation from the Statehouses, Progressive States Network (2006) Wolves in Sheep's Clothing, Common Cause (2006) Prison Economics Help Drive Ariz. Immigration Law, NPR (2010) Exposing ALEC, blogging group, Daily KOS (2011) ALEC: The Voice of Corporate Special Interests In State Legislatures, People for the American Way (2011) Corporate America's Trojan Horse in the States, Defenders of Wildlife and the Natural Resources Defense Council (2002) The Attack on Trial Lawyers and Tort Law, Commonwealth Institute (2003) Wisconsin's Cronon Affair: The Power of a Simple Fact, The Nation Magazine (2011) Ghostwriting the Law, Mother Jones (2002) ALEC Behind Voter Disenfranchisement Efforts, Center for American Progress (2011) ALEC Report, Center on Juvenile and Criminal Justice (2011) ALEC Exposed: Business Domination Inc., The Nation Magazine (2011)

Did You Know about these Bills? Some of this Corporate Agenda Has Already Become Law Under the administration of Wisconsin Governor (and ALEC alum) Scott Walker, several changes to the state tax code were drawn from the ALEC corporate wish list in 2011. For example, Governor Walker and the state legislature: Eliminated the capital gains tax, as called for in the ALEC "Capital Gains Tax Elimination Act." Wisconsin Republicans led by Rep. Garey Bies (R-1) introduced SB 10 in 2011 which phases out the taxation of capital gains, but the action was superceeded by the Wisconsin budget bill which excludes 100% of the capital gains realized on investment s in Wisconsin for 5 years, costing Wisconsin approximately $79 million per year (according to analysis by the AFL-CIO). An additional exclusion from income tax for capital gains will amount to $36 million per year. Eliminated combined reporting, which is designed to prevent corporations from hiding profits by filtering income through subsidiaries in states with no income tax (like Nevada). The same principle was set forth in the ALEC "Resolution in Opposition to Mandatory Unitary Combined Reporting." Requiring a super-majority to raise taxes, as called for in the ALEC "Super-Majority Act;" passed as a law rather than a constitutional amendment, it may be non-binding. Gov. Walker thanked the State Chair of ALEC in Wisconsin, Rep. Leah Vukmir, for her work on the bill. To learn more about this story, click here (PLACEHOLDER) (Have any of these bills been introduced or enacted in YOUR state? If so, please add that information to the ALEC Exposed page on your state by searching for your state's name in the search engine at the top of this page.) Drowning State Government in a Bathtub One "model bill" and a proposed constitutional amendment would severely limit the ability of state government to raise revenue or increase taxes, thereby forcing it to restrict spending and cut social programs. The "Automatic Income Tax Rate Adjustment Act" would automatically adjust individual and corporate income tax rates downward if income tax revenue collected by the state increased over the previous two years by an average of more than 3.1 percent. The size of the income tax rate reductions would increase in proportion to the amount by which the two-year average surpasses 3.1 percent. This would squeeze government and require spending cuts even in times of budget surplus. The "Tax and Expenditure Limitation Act" would amend the state constitution to require voter approval for tax increases and set revenue limits with all excess revenue being transferred into an emergency reserve fund. It would also set expenditure limits, with spending only allowed to increase based on inflation and population growth-- this hard cap would severely constrain government's ability to respond to developing problems or price increases for certain products (such as health costs, which regularly post double digit increases). This too would require a reduction in state services.

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