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?
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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:
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
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
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).
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." The budget bill excludes 100% of the capital gains realized on investments 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 budget cycle.
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." 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 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.
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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