Time to Raise Revenue and End Corporate Welfare

June 3, 2017

After reviewing the press advisory, available 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. I consider most of the DEFAC revenue subcommittee report as a regurgitation of failed 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, referenced by leadership as a panacea for economic stability in Delaware, is based almost solely on the concerns and wants of the corporate world and has been literally transposed in to the current budget proposals.

Numerous examples of the flawed corporatist economics are found on these pages of the report.

Personal Income Tax: “[H]igher 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.” (page 51)

Estate Tax Repeal: “The Council chiefly discussed this revenue source as it relates to wealthy households’ incentives to retain Delaware residency.” (page 44)

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.” (page 34)

Review the entire report and you will see how many times the unproven and false mantra of “businesses and the wealthy will flee Delaware” is used as a threat to preserve the corporate welfare state status enjoyed by Delaware. In consideration of these issues, I sent the following email to all of my legislative colleagues.

John Kowalko
State Representative
25th District

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


Below you can read the full statement released by the Democratic leadership of the Delaware General Assembly.

 

For Immediate Release:
May 31, 2017

Contact: Drew Volturo
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.”

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