Taxes and Budgets

ALEC's Efforts to Reshape the Tax Code to Benefit Corporations This page documents how bills pushed by ALEC corporations would create tax giveaways to Big Business, to give tax breaks to the richest, and to eviscerate state legislatures' ability to raise revenue through tax increases. These "model bills" or resolutions also push for extending the Bush tax cuts and attempt to use temporary majorities to tie the hands of future majorities in legislatures to raise taxes to meet citizens' needs. 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.

How YOU Can Expose ALEC & Share What You Learn SPREAD THE WORD. Share information about ALEC through Facebook, e-mail and Twitter. Concerned groups and people in every state need this to investigate how ALEC corporations are rewriting laws for their own advantage. And, please join the conversation on Facebook! EXPOSE ALEC LEGISLATORS. Demand the truth about which politicians in your state are in ALEC. Uncover whether YOUR tax dollars are paying ALEC "dues." Expose politicians who accept “scholarships” from ALEC's corporate-funded coffers for fancy trips. EXPOSE ALEC'S ROLE IN YOUR STATE HOUSE. Read these corporate-backed "model bills" NOW and cross-check them with bills in your state legislature. Ask your local media to report on what you have found and write your local newspaper. SHARE YOUR DISCOVERIES. Tell us what you uncovered! Tweet what you learn with the hashtag #ALECexposed, join a discussion on this site or email us a confidential tip via editor AT ALECexposed.org. And, follow our tweets on Twitter!

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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 -- those over $5 million, or $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, while in other bills opposing the use of inflation as a basis for increasing 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 (AMT), which was designed to prevent the very wealthy from avoiding taxes. But after the Bush tax cuts lowered marginal tax rates without changing the AMT rates, some some middle-class households were swept in. ALEC supports extending the Bush tax cuts, but would prefer do away with the AMT rather than reform it. Eliminating the Capital Gains tax, the tax on profits from investments that protects 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, such as, 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 ALEC's 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. This measure severely restricts 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 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 state 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 5 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. Requiring a supermajority to raise taxes, as called for in ALEC's Super-Majority Act. This passed as a law rather than a constitutional amendment, so it will be difficult to enforce. In addition, 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. 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. ALEC's 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. ALEC's 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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