BILL ALERT:
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:
Sponsors:
Sen. Bryan Townsend, Laura Sturgeon
Reps. Valerie Longhurst, Melissa Minor-Brown, Eric Morrison, Madinah Wilson-Anton, Sherry Dorsey Walker
Reps. Valerie Longhurst, Melissa Minor-Brown, Eric Morrison, Madinah Wilson-Anton, Sherry Dorsey Walker
Co-Sponsors:
Sen. Gay, Hoffner, Lockman, Sokola
Reps. Carson, Harris, Heffernan, K. Johnson, Lambert, Lynn, S. Moore, Neal, Osienski, Phillips
Reps. Carson, Harris, Heffernan, K. Johnson, Lambert, Lynn, S. Moore, Neal, Osienski, Phillips
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.