General Assembly Post-Game Wrap-Up/Pre-Game Show: Thurs., June 15, 2017
The D’s have unveiled their proposed income tax increases and, while it doesn’t go as far as I’d like, I see it as progress. The proposal would create a new top rate of 6.95% for those earning over $150,000 a year. From the News-Journal article, here is how the current rates would be changed if this proposal becomes law:
Annual income — Current rate — Proposed — Change
$0 – 2,000 — 0 percent — 0 percent — 0 percentage points
$2,001 – $5,000 — 2.2 percent — 2.4 percent — 0.2 percentage points
$5,001 – $10,000 — 3.9 percent — 4.2 percent — 0.3 percentage points
$10,001 – $20,000 — 4.8 percent — 5.2 percent — 0.4 percentage points
$20,001 – $25,000 — 5.2 percent — 5.5 percent — 0.3 percentage points
$25,001 – $60,000 — 5.55 percent — 5.7 percent — 0.15 percentage points
$60,001 – $150,000 — 6.6 percent — 6.8 percent — 0.2 percentage points
$150,000 and up — 6.6 percent — 6.95 percent — 0.35 percentage points
I have a question, and maybe there’s a legit answer for it: Why are those earning between $10-20,000 a year subject to the highest increase? Is there some sort of offset?
Yes, this is painfully incremental. But the top rate wasn’t cut from 11.4% to 6.6% in one year. It was done over a course of two decades. While I understand Rep. Kowalko’s frustration, it makes no sense to try to scuttle this in search of greater purity of purpose. I agree with what Rep. Baumbach said: “”I like this one a lot better than nothing, which is what’s going on now.” It moves the ball in the right direction. Do it.
Here is yesterday’s Session Activity Report. You will note that there are virtually no committee reports. That’s because the House generally does not reconvene after committee meetings, meaning the reports will be read into the record before the ‘changing of the legislative day’. It’s standard procedure. However, you may still find bills that were considered in committee meetings yesterday on today’s agendas. So let’s check out today’s agendas.
Today’s House Agenda doesn’t appear to feature too much controversy. Every day that I don’t see the CZA overhaul on the agenda is a good day. I sincerely hope that the sponsors press the ‘pause’ button and allow for public hearings during the legislative recess before proceeding. It wouldn’t hurt if they announced that this was their intent now.
Maybe I’m just ‘legislatived out’, but the Senate Agenda doesn’t intrigue me much either. HS1/HB 113 (Rep. K. Williams) changes education licensure provisions. The bill unanimously passed the House. HB 189 (Mitchell) seeks to ‘accelerate investment in mobile broadband infrastructure and ready the State for the next wave of economic development in the digital economy.’ This bill also unanimously passed the House. Every day that I don’t see the Lonnie George Community College Slush Fund bill on the Agenda is a good day. I sincerely hope that legislators rise up and just say no to this bill. The bill would have virtually no chance of passage if those legislators who are/were affiliated with Del-Tech recused themselves. Let’s see if that happens.
That’s it for me. What’d I miss, and whaddayathink?
The new House bill and Carney’s original proposal also eliminate itemized deductions but increase the standard deduction. That combo of steps is supposed to more than offset the higher rate for lower-income tax filers. Allegedly lower-income fliers could see their taxes go down. However, I have not seen actual examples to back that up and a lot of proposals from State Chamber-types and conservative cuckoo birds in DC also call for eliminating itzemized deductions. Hence, I am very skeptical of that move. I’d also note that eliminating itemized deductions could have a chilling effect on the willingness of some to donate to charities. Many nonprofits are already going to get whacked with Grant in Aid cuts.
“Why are those earning between $10-20,000 a year subject to the highest increase? Is there some sort of offset?”
That equals $40. I would hazard a guess that most people in that bracket would find their taxes are lower under this plan by virtue of the higher standard deduction amount.
Excellent points regarding Kowalko vs Baumbach’s take in this. I doubt JK is laying out an extreme position for bargaining purposes. He is really going to vote against this, which is hard to justify.
A proposal from a Democrat (other than him) adding a new higher tax bracket is a big victory. He should claim the victory, and start working to expand the beachhead.
Thanks, Stewball. It does raise the question as to how the increase in the standard deduction will impact charitable giving.
Anybody with a deeper understanding of that question? Is there history where this approach has been tried?
Jaques’ behavior in the House Education Committee over opt out was appalling and embarrassing to watch. It was hard to believe this was the same guy who tugged on my heartstrings in a stirring speech about Flag Day two hours earlier. I don’t know what it is about parents opting their kids out of a useless standardized test, but he has this deep loathing of a parent making this choice. I thought he changed since 2015 and his behavior then, but it appears to have gotten worse.
Honestly, this type of tax plan should have been unveiled early in the session, with an attempt to gain public support and explain the need for it. Not trot it out in mid-June in waning days of session. Just shows desperation and lack of real planning by Carney’s team.
Carney DID trot out a similar plan. But w/o the higher standard deduction and the new top rate. It’s not that difficult to digest, especially when we’re now at the rubber meets the road stage of budget negotiations.
you realize Illinois’ financial problems all stem from it’s constitutionally mandated flat tax, right?
The graph in the News Journal was a little disingenuous. Remember that those making $150,000+ aren’t paying 3.95% more on the entire $150,000, only on what they make OVER $150,000. So if they make $155,000, they are paying the same extra rate as those making $60,000 (just .2%, half of what those making $10,000 pay extra), and the 3.95 only on $5000.
I don’t know. Increases are a given this year, despite what the republicans are saying. I think the Dems could have pushed for a bit more. This bill hurts lower income levels way more than it affects higher incomes, and continues the trend to stratify our class system of haves and have nots. We can do better.
This proposed “bracket” bill is akin to stealing the sunglasses from a blind man and when you are caught saying that you thought he would see better without those dark glasses. Only doing him and Delaware’s poorest (who suffer almost all of the proposed budget cuts ) a favor
Representative John Kowalko
“I don’t know what it is about parents opting their kids out of a useless standardized test, but he has this deep loathing of a parent making this choice.” In the last 6 years it was fashionable in political circles to get on the testing bandwagon. There are some bases for parental objections to the tests, 1. The tests have not been vetted for validity or reliabilty. No parent wishes their child to be the victim of an invalid and/or unreliable test. 2. Parents believed their childrean were being tested too much relative to instruction. 3. Parents didn’t like this new “testing” culture that absorbed tax dollars from instruction. Unlike vaccinations, which are a basis for public safety, administration officials were never able to come up with a justification for the testing that they could say with straight faces. So, thank you for giving me the opportunity to sound off on something that has been on my mind for some time…
Under this “PROGRESSIVE” (sic) tax restructuring plan a quqrter million dollar earning individual will pay an additional $150 per annum on the added earnings. A half million dollar earner will have to churn out an additional $350 per year and a millionaire individual will suffer the burden and bankruptcy threatening additional burden of $850 per year. Maybe we should establish a Go-Fund-Me account for those poor folks.
Representative John Kowalko
Based upon his bio, Earl Jacques may be regarded as knowledgable about veterans affairs and the air national guard. Despite his membership on the education committee “for a long time” I fail to see anything that qualifies him as an expert on public education. His biases may impede his judgement in that area. Everyone thinks they know everything about public education.
I get JK’s points, but an additional bracket is a move in the right direction, philosophically speaking. And it would not have even been proposed if JK hadn’t been pushing for this the past two years.
What’s the end goal? Tax fairness? If so, then this appears to be a step (albeit a small step) in that direction.
This won’t impact charitable giving as long as the federal deduction is still around. Personally I think they should abolish the income tax and replace it with a true progressive land rental value tax, Henry George style. And if not statewide, at least wilmington would massively benefit from it.
No Jason, I do not expect total tax fairness in my lifetime or my grown children’s lifetimes with the Capitalism first last and always agenda that is corroding the morality of Delaware and America. I respectfully submit however that I cannot and will not support the additional economic ruination of the middle class and impoverished families that is deliberately written into this bill. This bill’s tax increases for those lower bracket earners combined with the previously submitted cuts to those same earners is unconscionable and destructive to the health of Delaware’s economic stability. Taking more and giving less to these lower earners erodes the most direct consumer spending capability of these families. They do not put their extra money under the mattress or buy Microsoft or Bershire Hatthaway stock. They spend every stinking penny that they have left into the local business community. There is no victory in the additional bracket other than Pyrrhic which is a path to destruction of an entire class of people.
Re. Kowalko
John Kowalko laying it down. He is Delaware’s Bernie Sanders! Amen !
Yes, there should be actual reductions to those making less than 20K.
The real problem with the proposed income tax bracket/percentage structure is that relative to the need, there is not enough increased revenue to balance the budget without draconian cuts to programs like education that are already cut to the bone. (I taught in the public schools in Deleware from 1983-2013.) There was nowhere to cut from 2009 on. Cuts like the ones the Markell crafted hurt the home school districts, those charged with the most responsibility for educating Delaware’s youth. The point is that while this proposed schedule/percentage amount may be a tiny step in the right direction, if it doesn’t fill the need for revenue THIS year, the only alternative are cuts. This is unconscionable considering what you are asking of schools, voters…
As was pointed out, many of these lower earners will pay less in taxes due to the higher standard deduction.
But, for those of you who don’t understand why John Kowalko can’t get anything done, you’ve now got a pretty good idea.
If he can’t be the hero of his own narrative, he goes off the rails. Which is why like-minded legislators find it so hard to work with him. Legislators can effectively work w/Bernie Sanders. Kowalko? No.
“I taught in the public schools in Deleware from 1983-2013.”
Imma just leave this right here
Don’t know about anyone else, but if I were held responsible for all my typos, I wouldn’t have lasted a year here. We are our own editors, which any journalist will tell you is, to put it mildly, far from ideal.
I’ve been impressed w/Paul Hayes’ posts, and don’t think they should be dismissed due to a typo.
You guys need to check your math, a .3 percent increase on a million isn’t 850, it’s 3000 and you eliminate itemized deductions, it’s 6 percent more on whatever mortgage interest or charitable deductions your million dollar earner gets. Think of it this way, you eliminate itemized deductions, you are mirroring the Pennsylvania tax system. Their top rate is 3.07, delaware will be almost 7. Do you think it is smart to encourage companies to locate in the state right on your border. Last time I looked, we don’t have companies dying to locate here. And consider this, you look at your million dollar a year coupon clippers, it’s quite easy to relocate to say Florida where there are no taxes. You lose 10 percent of those you go from 6.5 to zero. Your budget is balanced for 2018 sorta. I really enjoyed the Debbie Hudson quote that the Delaware motto should be changed to kicking the can down the road.
Geoff is right. Delaware has kicked the can for at least a decade.
I think largely as a result of ‘lifetime legislators’ who have no sense of urgency and are too fat and happy. Time to retire some folks in Dover and get fresh blood in there.
The $850 number is perfectly accurate as a calculation of the newly created tax bracket (taxable earnings in excess of $150,000) which intends to tax those earnings at a rate of an additional .15%
Representative Kowalko
Did anyone else notice that the News Journal has recently described Kowalko as a “firebrand”? He’s clearly doing something right! John, keep it up. We are with you 100%.
So “firebrand” is the new euphemism for isn’t owned by money interests..
Something like that…
Chris, let’s not trade in the staid, fat and happy lawmakers for wacko ones, okay? I think folks who say they hate government kind of self-disqualify. I’m interested in folks who say they genuinely care about the quality of governance they produce. More like that…
Hahaha, Sussex Watcher. You think I don’t know how to spell Dullwhere? Hahaha, you are a riot. You grew up in Sussex County. You should have a deep appreciation for the fine art of misspellings here and total misuse of language in this county. (Now, quick quiz, did I spell “misspellings” correctly or incorrectly? Was my grammar in that sentence correct? Agreement of number? Noun/verb connections?)
And thank you for that, El Som. That was very much appreciated.
25K to 60K is too big a spread. The earner of 25K has almost no money left over when all the bills are paid, and that family will have precious little to make them safe or comfortable. 60K creates opportunities for a very different lifestyle than 20K. Perhaps we should consider splitting the bracket at 40K-43K. 43K -60K seems like a fairer placement of brackets than the huge spread now. I’m not sure anyone under 60K should have their taxes raised, and the discussion about revenue above suggests that one additional bracket at 6.9% is not enough to raise the kinds of revenue we need to balance this budget. More brackets on the high end, and much higher rates at the high end to get the revenue pump flowing. Cuts need to be avoided at all costs. We’ve followed that empty game plan for too long now…The good thing about higher personal income taxes on incomes over 100K is that they will not hurt our local economy much if at all. The increases to franchise or incorporation fees, on the other hand, may slow down business location or development. Giving a break with the inheritance tax is just plain insulting to the wage earner. And the mantra of the Chamber of Commerce has been disconnected from working families for decades now. They don’t get that you need strong consumers to buy the goods and services they work to sell.
John k is correct. incrementalism is not an answer. kleptocrats like the vile chamber run this state.
Well your still going lose me and many, many others to PA & FL.
Time to retire. What’s your payout? 80k, 100k plus pension?
No Jason, I do not expect total tax fairness in my lifetime or my grown children’s lifetimes with the Capitalism first last and always agenda that is corroding the morality of Delaware and America. I respectfully submit however that I cannot and will not support the additional economic ruination of the middle class and impoverished families that is deliberately written into this bill. This bill’s tax increases for those lower bracket earners combined with the previously submitted cuts to those same earners is unconscionable and destructive to the health of Delaware’s economic stability. Taking more and giving less to these lower earners erodes the most direct consumer spending capability of these families. They do not put their extra money under the mattress or buy Microsoft or Bershire Hatthaway stock. They spend every stinking penny that they have left into the local business community. There is no victory in the additional bracket other than Pyrrhic which is a path to destruction of an entire class of people.
Re. Kowalko
If the angry rube 45 supporters ever figure out that’s it’s 1% have class stealing their future and not some illegal Hispanic women getting a free can of expired baby formula from the WIC program, this will change. I think at someone point, one of these 8 figure CEO’s who outsources jobs to forced child labor in China is going to get taken out and maybe that will be the wake up call we need!
“Tom Kline says:
June 16, 2017 at 2:31 pm (Edit)
Well your still going lose me and many, many others to PA & FL”
Clearly an argument in favor of raising whatever Tom Kline thinks are unraisable.
I feel sorry for Tom Kline.
I find the marks who will not quit the con, even when it has been revealed, hard to feel sorry for.