Baumbach exposes the central myth in Carney’s scam “shared sacrifice” budget
To believe that there is a budget crisis that requires “shared sacrifice” you need to buy into the myth that Delaware tax rates are not competitive with neighboring states. And that, in fact, to be competitive our taxes must be far lower that Pennsylvania and New Jersey’s. Paul Baumbach exposes that myth in this exchange with Carney:
After Carney’s presentation, two fellow Democrats questioned him on the income tax proposal. Rep. Paul Baumbach, D-Newark, asked him why he did not add another, higher tax bracket at the high end of the income scale — Delaware’s current top tax bracket starts at $60,000, which Baumbach called “woefully lower than our neighbors.”
Carney responded that his goal was to keep Delaware economically competitive, citing complaints from business leaders in the years when tax brackets were higher.
Notice how Carney (like some kind of Trump-like Man Baby) goes right back to parroting the the myth as if it has some magic power.
This idea that Delaware taxes must be FAR LOWER that our neighbors was first promoted in Jack Markell’s executive order establishing the DEFAC Advisory Council, and was adopted by Carney as an article of faith after it appeared as the leit motif in the Chamber of Commerce’s “Bipartisan DEFAC Advisory Council on Revenues” final product. In that document Carney’s masters in the State Chamber of Commerce ominously announced our dire need to be “competitive”. Indeed, the some form of the word competitive appears 77 times in a 67 page document. So it is not surprising that Carney was hypnotized by the fake news broken in the report that Delaware was at risk of being non-competitive.
It is surprising, however, that the report writers couldn’t sweep the truth completely under the rug. Delaware, as Baumbach points out is a tax haven compared to its neighbors. On page 10 of the report, the chamber of commerce masters allow the truth to slip through.
Delaware’s tax burden ranks as the 5th lowest in the nation (roughly 17% below the average.)
So the goal, it seems is not to simply be competitive with neighbors, but to run up the score. Like Sallies football versus little Laurel, winning isn’t enough. We have to win by 50 points for some reason. And what is the fake reason undergirding the fake assumption that we need to have a tax rate that is “woefully lower” than our neighbors?
That report addresses that by tossing out a discredited chestnut:
Competitiveness – A second purpose is to ensure that any changes meant to enhance adequacy and stability do not endanger Delaware’s economic growth by discouraging citizens from continuing their residence here or businesses from establishing workplaces and headquarters in Delaware.
This is flatly and completely debunked nonsense. People and businesses do not leave states to chase 2 or 3% tax savings. It is bullshit argument. So it is not at all surprising that there is no footnote supporting the notion that citizens and businesses will leave Delaware unless we are crushing nearby states. There is no citation because it is flatly untrue.
A 2011 study by the Washington, D.C.-based Center on Budget and Policy Priorities concluded that, “The effects of tax increases on migration are, at most, small — so small that states that raise income taxes on the most affluent households can be assured of a substantial net gain in revenue.”
Jon Shure, director of state fiscal studies at the center and one of the authors of the study, recently told The New York Times that tax flight from high rates “is almost entirely bogus. It’s a myth. The anecdotal coverage makes it seem like people are leaving in droves because of high taxes. They’re not. There are a lot of low-tax states, and you don’t see millionaires flocking there.”
Carney needs to stop insulting everyone’s intelligence by cleaving to all these myths and nonsense. There is only a “budget crisis” if you assume that rich people, and wealthy corporations need Delaware to have taxes 17% below the national average.
How can a person this dull and incurious get into an Ivy League college, let alone graduate from one? I blame football.
Speaking of which, has anyone talked to Carney yet about how many concussions he suffered playing quarterback? Because repeated blows to the head might explain a lot.
Tax rates in Delaware were 11% in 1984. That is the year they started to be lowered. Delaware had more revenue then, relative to spending, and, with the California referendum fresh in everyone’s mind, no one wanted a taxpayer revolt. So rates came down. Now it is 2017, rates are low, (nominally 6.5% on income $60K and up) but the state is in desperate need of revenue, relative to spending. Public education, besides suffering the ignoble experiment in charter schools, has been cut to the bone for at least the last 10 years. Cut education now and you make Delaware less competitive because you are cutting instruction. The idea that we can keep cutting our way to a balanced budget has lost all merit. It only invites misery. While some taxes effect business performance, personal income taxes do not. Raise them now to close our deficit, and increase the numbers of brackets above $60K, at least two, better 3, and let the Chamber fulminate all it wants. The Chamber is not responsible for educating the next generation, citizens are…
Well put. We are yoked to some 30 year-old bullshit because it benefits 15 or so families, and some Fortune 500 companies.
This has been the case for many years. An enormous portion of Delaware’s revenue comes not from taxes on its citizens but fees on corporations. Depending on the agency compiling the ratings, Delaware’s tax burden ranges from 2nd-lightest in the nation to 5th-lightest.
That’s what makes assholes like Tom Kline so infuriating.
And remember that D’s control the House 25-16. They can pass income taxes on the highest earners w/o a single R vote. There’s no excuse for them not doing it.
Too many of the D’s in the House think the law that prevents them from raising their own pay also prohibits them from raising their own taxes.
60K for a family is not much above survival. The rates should be higher at high income
25 Dems doesn’t seem to equate to 25 votes for bracket creation. We hear more excuses from leadership than even the public can imagine. I regard a super majority of those excuses as bogus bulls**t.
Rep. Kowalko
After reviewing the press advisory (below) from Delaware’s House and Senate leadership regarding the unanticipated postponement of the Joint Finance Committee meetings I felt compelled to analyze what message was intended by this action. In light of the fact that I consider most of the DEFAC revenue subcommittee report as a regurgitation of economic ideas and a further redistribution of wealth to corporations at the expense of the needy and literally taken from the ALEC playbook. This report based almost solely on the concerns and wants of the corporate world has been literally transposed in to the current budget proposals. A few examples are found on these pages of the report.
Pg. 51) Personal Income Tax: “higher tax brackets were considered as alternative means to increase elasticity, but they were not included as recommendations given that they would increase Delaware’s reliance on an even narrower portion of volatile revenues and raise questions relating to economic competitiveness”
Pg. 44) Estate Tax repeal: “The Council chiefly discussed this revenue source as it relates to wealthy households’ incentives to retain Delaware residency”
Pg. 34) Bank Franchise Tax: “Delaware banks are exempt from Gross Receipts and Corporate Income Taxes. The Council assessed the BFT with great care, given the potential competitive impacts of any changes since the BFT is credited with preserving jobs and enticing banks to locate in Delaware”.
Review the entire report and you will see how many times the unproven and false mantra of “businesses and the wealthy will flee Delaware are threatened to preserve the corporate welfare state status enjoyed by Delaware. I have sent the following email to all of my legislative colleagues.
Dear colleagues,
The following message suggests that leadership is finally considering the reality that revenue has to be raised to pay for necessary services that benefit the economy and the most vulnerable people in Delaware. Mu optimism fades and my enthusiasm wanes when the announcement refers to the DEFAC revenue subcommittee report as a recommendation for moving forward. This report generated by and on behalf of corporate interests by the Chamber of Commerce, Business Roundtable and more than a few corporate attuned legislators represents the exact attitudes and plans that have gotten our economy into this mess. Trickle-down economics is a phrase we have all grown familiar with over the years and nothing about any incarnation of it can be honestly viewed as other than a regressive, pro-corporate, pro-affluence agenda that will diminish necessary services for the most needy. I raised objections to the attitudes and harmful economics embodied in this plan in 2015 when it first surfaced and hope all of my colleagues will see the potential for economic and social injustices that will result from embracing it.
Representative John Kowalko
———- Forwarded message ———-
Delaware General Assembly
State of Delaware
For Immediate Release: Contact: Drew Volturo
May 31, 2017 Work: (302) 744-4001
Contact: Jesse Chadderdon
Work: (302) 744-4282
Legislative Leaders Issue Statement on Budget Process
Joint Finance Committee to cancel Thursday session; Legislative leaders
to meet to discuss revenue measures
DOVER – House Speaker Pete Schwartzkopf and Senate President Pro Tempore David McBride issued the following joint statement regarding Joint Finance Committee:
“Legislative leaders have instructed the Joint Finance Committee to cancel its meetings for the remainder of the week to allow the leaders of all four caucuses to meet and continue discussions regarding raising additional revenue.
“We understand that JFC already has completed a first round of budget cuts, which drew on Governor Carney’s recommendations. Yesterday, the committee began a second round of deep cuts that could have serious long-term consequences for Delawareans. These include slashed education and public health programs – programs that provide the stability and foundation for middle class families to thrive and help grow Delaware’s economy.
“We heard loud and clear from legislators, community stakeholders and affected residents about these potential cuts and we understand those sentiments. For that reason, we have asked JFC to take a step back and give legislative leaders the opportunity to meet and see if there is room for compromise to raise additional revenue so that we can balance any cuts we might have to make to the budget.
“This is a simple mathematical issue: Solving our budget issues requires both parties to work together and reach consensus. Budget issues are not partisan, and neither are the solutions. We must use this opportunity to fix the structural problems with our budget so we have sustainable revenue to maintain important services to all residents. We must fix those structural issues that the DEFAC revenue subcommittee identified so we don’t find ourselves in a similar position in future years.
“We are optimistic that both sides can work together to produce a responsible, balanced budget that protects services for Delawareans and puts us in a better position for the future.”
BTW – Kudos to Baumbach for joining JK in being a Dem who is openly disgusted with this BS. It should be the norm, but we have a chickenshit caucus, to be sure.
Jason
Please post this urgent matter on your site.
Please share,forward and post everywhere. It is urgent that you help stop another Bloom debacle that will add millions to the electric bills of Delaware customers of DP&L. Please note and call the prime sponsors (who also Chair the Energy committee’s in the House and Senate) of this assault on the middle class, poor and small business community. The public will be the victims of another greedy corporate taking and you must call and email all of the General Assembly now to stop this. I need your help now and your neighbors need your help now.
Representative John Kowalko
From: Joanne Cabry
Sent: Sunday, June 4, 2017 10:09 PM
To: Joanne Cabry
Subject: Fwd: Delmarva wants more $$$ — Time to speak out against corporate greed.
Delmarva wants to add another surcharge to our bill. And some of our legislators are ready to give them the increase without checking with us.
Senate Substitute 1 for Senate Bill 80 (SS1/SB80) will allow Delmarva to impose a Distribution System Improvement Charge (DSIC) between the regular rate increases that happen about every two years.
This DSIC is a surcharge and has nothing to do with the amount of electricity we use. It will produce approximately $17 million for Delmarva’s parent company, Exelon — whose revenue in 2016 was over $30 billion.
We are already paying a number of surcharges, including the one to Bloom Energy that was supposed to bring 900 jobs to Delaware. (900? Not even close!) We Delmarva customers have paid Bloom $130 million in the first four years of ‘our’ contract, and we’ll keep paying Bloom until 2033. News Journal
And let’s not forget the surcharge facing us when the Artificial Island project starts. Delaware customers are slated to pay 60% of that one.
Back to the current corporate greed issue…
We are grateful that the Public Advocate for Delaware, Drew Slater, opposes SS1/SB80. He is fulfilling his “role is to advocate for the lowest reasonable rates for consumers consistent with the maintenance of adequate utility service and principally on behalf of residential and small commercial consumers.”
Please speak out now against SS1/SB80. The lobbyists for Exelon and Delmarva have been in Legislative Hall for weeks building support for this bill. Talking points below.
1. If your senator or rep is a sponsor, contact them and ask them to take their names off SS1/SB80.
Sponsors: Senators McDowell (primary), Poore, Cloutier, Hocker
Representatives: Paradee, Longhurst, Brady, Carson, Heffernan, Hudson Q. Johnson, Smyk and Wilson
2. Testify at the Senate Environmental, Natural Resources & Energy Committee hearing for SS1/SB 80 on Wednesday, June 7 at 1:30 in the Senate Majority Caucus Room. Prepare a maximum two-minute speech.
3. If you cannot be at the hearing and your Senator is on the Committee, please contact him or her and ask that they represent you, not Exelon.
Committee members are
Harris B. McDowell
Stephanie L. Hansen
John Walsh
Gerald W. Hocker
Ernesto B Lopez
4. Pass this on to other Delawareans.
If you are a member of the Delaware Electric Cooperative, please contact your legislators in support of your neighbors who are forced customers of Delmarva.
Talking Points
Some of the arguments you will hear from Delmarva are:
1. The need for less rate cases, which are costly
2. Less volatility in consumer bills
3. The water utilities have a DSIC
In a News Journal article, Delmarva Power’s vice president, Glenn Moore said, “If the plan were implemented this year Delmarva would postpone a request for a full rate increase from this August until next year.” (Notice that Delmarva still plans to ask for a rate increase. But they’ll be nice and wait a year if they get the surcharge this year.)
Public Advocate: “Exelon says it is only asking for what the water utilities have had since 2001; however, it is my opinion that the water utilities companies should not have a DSIC either.”
(Artesian, the largest water company in Delaware, has had a DSCI since 2001 and yet they still come in for rate cases every 2.5 years.)
Public Advocate: “Exelon is not requesting this legislation because it needs more money for reliability investment; if it really needed the DSIC funds for that, it would not have agreed to cap its reliability spending from 2015-2019 to $225 million. Rather, it is requesting this legislation because DPL is not currently earning its Commission-approved 9.7% return on equity, but instead is earning around 7%…. I do not believe that company and shareholder profit should be subsidized by Delaware’s captive residential, small commercial or industrial consumers.”
Public Advocate: “This generous grant of money would come with significantly less oversight and examination….The base rate increase is an important way for regulators to make sure utility companies have a justification for increasing rates. And the process sometimes leads to companies getting less than they asked for. In its last electric rate increase, Delmarva asked for an increase of $64 million but settled for about half that amount.”
Public Advocate: Regulated utilities are given the opportunity to earn the returns on equity awarded by the PSC, but they are not guaranteed they will earn it. Allowing any utility to collect revenues from captive customers without the oversight that comes through the rate case proceeding is the antithesis of good regulatory policy and serves as a disincentive to control costs in the manner that competitive businesses do. Delaware already has some of the highest rates in the south-Atlantic region. Delaware’s high electric rates deter large commercial and industrial concerns from considering Delaware. Moreover, there is a very real likelihood that DPL’s ratepayers’ rates will increase substantially when the Artificial Island project commences. If this legislation passes, DPL’s low-income residents will be even less able to afford their bills, and economic development opportunities will be further stifled – to the benefit of the Chicago-based headquarters of Exelon Corporation.
Contact information attached.
Thank you!
Joanne Cabry
Chair
Progressive Democrats of Sussex County
302.228.4210 (cell)
302.226.5019 (home)
Speaker Pete can’t be too crazy about raising income tax rates on all those Lewes and Rehoboth millionaires he represents.
Which is just one reason why he shouldn’t be Speaker. If he can’t lead the D’s b/c his district constituents don’t support those policies, then someone else, unencumbered of a spate of wealthy retirees in their district, should push for D priorities.
I thought the speaker came out in favor of the PIT increase. He’s the one who stopped the JFC from cutting anymore. It was Melanie Smith from the dem stronghold of Bear who was dedicated to cutting our way out.
JFC doesn’t have the authority to raise revenue. Their job is to take the projected funds and do with them what they can.
That’s why I think that making some of the worst cuts first could have been Kabuki Theatre on JFC’s part, as the inevitable outcry would lead to a more serious discussion about additional revenue enhancers.
As to PIT increases, which does Pete support? You’ve got Carney’s ‘shared sacrifice except for the uber-wealthy’ and you’ve got the higher tax brackets. There could well be other proposals, I think there will be.