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.

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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 the Bills Would Rewrite the Tax Code and Aid the Richest Through ALEC, corporations voted to rewrite the tax code in increase their profits or the riches of their CEOs by: Helping the richest of the rich get richer, through: Opposing windfall profits taxes on energy companies, like Exxon Mobil and BP (oil companies have been reporting out of this world profits while American workers continue to struggle to make ends meet). 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 the Bush tax cuts for the wealthy permanent, even though they were created from the Clinton budget surplus and the cuts contributed to the federal deficit. Making it easier for tax cheaters to get away with ripping off the public, by: Removing incentives for investigating and prosecuting tax cheats. 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 the needs of the public, by: Amending state constitutions to require that all tax and license fee increases be approved by a 2/3 majority of the legislature, which allows 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 (8H2), squeezing government and forcing cuts. And, supporting a flat tax (where the wealthiest pay taxes at the same rate as the poorest) 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 ALEC also provided PR sound bites to push its tax agenda, here and here. 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. Required 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. To read more about this story, click here. 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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