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Delaware Legislators Want to Raise Taxes
It is a horrible idea to raise taxes during a recession. Defeat HB 128.

By Charlie Copeland, Director

Center for Analysis of Delaware's Economy & Government Spending

June 2, 2023



In the last 15 months, Delaware's inflation-adjusted economy contracted a recessionary amount of 14.2%. Meanwhile, COVID-19 Relief Funds have given the State a record level of cash in the bank ($963.5 million).
What might the response from the Delaware General Assembly be to this situation of a horrible economy but plenty of State cash?
Shockingly, over one-third of our legislators want to increase the income tax on households and small/family businesses. Delaware Rep. Paul Baumbach has introduced just such a bill - House Bill 128 (amending Delaware Code Relating to Personal Income Tax).
HB 128 is simply a BAD policy. The worst time to raise taxes is during an economic downturn when family businesses are suffering and struggling to keep employees. A better idea would be to eliminate Delaware's small business killer, the Gross Receipts Tax, a variable tax that can force small business tax rates to jump 100% or more in bad economic times.
Delaware's in a Recession but has Excess Cash
Last year Delaware's inflation-adjusted economy shrank by 10.6%. The trend continued in the first quarter of this year as the economy shrank an additional 3.6% (Source: U.S. Bureau of Economic Analysis & Bureau of Labor Statistics Series CUURS12BSA0 CPI for Philadelphia-Camden-Wilmington).
In 15 short months, Delaware's real economy shrank by 14.2%!
Even the State's primary economic forecaster, Delaware Economic and Financial Advisory Council (DEFAC) - long a provider of rosy prognostications - expects an economic recession with the State's real Gross Domestic Product (GDP) declining by 1% in 2023.
DEFAC also reports that the State has almost $1 billion in "extraordinary revenues" available to spend. That's a lot of excess cash.
Take Action and Stop HB 128
This bill should be stopped. The following names are all Sponsors & Co-Sponsors of this awful bill:
This list is over one-third of the members of the Delaware General Assembly. Simply bizarre that during the worst economic conditions in a decade, our legislators want to take money from the pockets of hardworking families and small businesses. 


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