BILL ALERT: Delaware Legislators Want to Raise Taxes

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

Co-Sponsors:

Sen. Gay, Hoffner, Lockman, Sokola 

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.