Caesar Rodney Institute’s longshot push for a tax cut

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Good afternoon,

The Caesar Rodney Institute, citing a  big surplus, is pushing for business and personal tax cuts.

Recent stimulus legislation has left Delaware in good financial shape, with federal money streaming into the treasury in an effort to help states and the nation recover from the coronavirus pandemic. The organization claims the surplus could balloon to $2 billion.

CRI proposes a 50 percent cut in the gross receipts tax on business sales, a 30 percent cut in the corporate income tax, and a 10 percent cut in the personal income tax. 

The organization cites the state’s high corporate tax rate as a drawback in retaining and attracting employers.

The Glasgow-based public policy group further claims the state could tap into its current surplus and avoid the prohibition on federal money being used for tax cuts or shoring up public pension systems.

Given the intertwined nature of state finances and federal assistance, any workaround would be a hard sell. CRI  acknowledges limits on the use of federal funds could end up in court.

In a letter to Gov. John Carney, the organization points to the success of Reagan era-tax cuts and the 2017 tax plan, and the lagging economic performance of Delaware.

Critics see the wave of tax cuts and other changes to the code as widening the gap between the rich and poor and spurring companies to move jobs offshore.

“Delaware desperately needs to spur economic growth. Delaware’s overall economic growth, including employment growth and personal income growth over the past ten years, lagged both the national growth markers as well as every one of our neighboring mid-Atlantic states,” CRI Executive Director John Toedtman wrote in the letter to the governor.

The chances of Carney and the General Assembly acting on the proposal are nil.

CRI argues that the cuts are sustainable, Delaware has a history of financial surprises that led to tax hikes.

Delaware also has fewer taxing options, with no sales tax that captures revenues during good times and low property taxes that have spurred residential growth. Both are points of pride.

Proposals by CRI and others deserve further study,  but 2021 is not the right year. – Doug Rainey, chief content officer. 

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