-1
archive,date,stockholm-core-1.0.8,ctct-stockholm,select-child-theme-ver-1.1,select-theme-ver-5.1.5,ajax_fade,page_not_loaded,menu-animation-underline,header_top_hide_on_mobile,wpb-js-composer js-comp-ver-6.0.2,vc_responsive

Less is more: taxes and debt

One of A Better Delaware’s four pillars is lower taxes for Delawareans and businesses. While we usually focus on just state-level issues, new tax increases are being discussed at both the state and federal level.

Outside of President Biden’s new tax proposal, Delaware has had a few of its own recently, including a new income tax bracket that failed in the house. Despite still recovering from a pandemic and expecting over $2 billion from the federal government, state lawmakers said raising taxes was simply the right thing to do.

Why?

Raising taxes discourages economic development, business growth, and personal spending and saving. When our economy is looking to recover, how could this be the right thing?

Even the Secretary of Finance Rick Geisenberger worried the bill would risk decreasing personal income tax revenue. This is because high-income individuals, including tens of thousands of people who pay nonresident taxes, would simply leave Delaware or work from home in neighboring states to avoid the higher tax. The bill would also mean Delaware has more tax brackets than any other state except Hawaii.

Increasing the income tax would make Delaware less competitive with our neighbors, particularly Pennsylvania, as Delaware’s top marginal rate would be higher than the rates in neighboring states, with the exception of New Jersey.

Outside of this bill, raising any taxes over the next few years would be irresponsible fiscal policy. Delaware is looking at a surplus of over $600 million, plus over $2 billion total from federal stimulus. Any additional revenue grabs would serve no purpose for our residents.

You’ll hear many people tout Delaware’s status as a “tax-free” state, but that simply is not the case. Yes, Delaware does not have the sales tax, but we more than make up for that. Take for example the reason why we are able to avoid having a sales tax: the gross receipts tax. Delaware is one of only seven states with a gross receipts tax. These invisible sales taxes raise prices as these taxes are shifted onto consumers, and tend to impact lower incomes the most.

Delaware’s has the highest per capita revenue from corporate license fees and the fifth-highest per capita corporate income tax revenue. As if that wasn’t enough, Delaware has one of the highest individual income taxes and the highest real estate transfer tax in the nation.

Since 2016, Governor Carney approved large tax increases, but he did not work alone. The taxes started as bills heard and voted on in Dover that were approved for his final vote. Delaware’s tax increases over the last two General Assemblies (2016-2018, 2018-2020) were the 6th highest in the nation.

These tax increases were estimated to raise more than $200 million annually, the exact amount the state claimed was a “surplus” before COVID.

Instead of hurting residents, businesses, and the overall economy, we should avoid adding new spending programs that would require any tax increase, and focus on funding our $1.9 billion in unfunded pension benefits that have been largely ignored for years. This total is massive: for perspective, our pension debt is more than a quarter of the state’s annual budget.

Delaware’s fiscal condition is ranked 44th in the nation, in part due to its unfunded pension deficit, and is why Truth in Accounting’s audit of Delaware’s financial situation resulted in an F grade.

Delaware will eventually be obligated to pay its pensions, and lawmakers should turn their attention from what they believe is the right thing to do, to what is actually best for their constituents.

Note from ABD Executive Director

Friends of A Better Delaware,

For too long, Delaware lawmakers morphed our state into a place that is unrecognizable from what it was once known as: a low-tax business haven. While this may have been decades in the making, we don’t have to continue to accept the status quo and the Delaware Way and continue down the path to a dismal economy and fewer opportunities.

I tried to work in ways that I believed would change that course as I learned more and more about policy in our state, but everything was just how it had always been. Taxes kept rising, taxpayer money continued to flow into massive corporations in failed corporate welfare, and the ballooning spending never seemed to fix the problems we faced as Delawareans.

In 2017, Chris Kenny saw the same problem and had the means and courage to tackle it head on, and I was lucky to be a part of a new grassroots movement that was abandoning the status quo in hope of real change. Over the past year and a half, we have been thrilled to see thousands more join us in what we believe is possible: A Better Delaware.

In that time and with your help, we have been able to manage an outfit that has worked towards better policy outcomes in taxes, spending, regulations, and government transparency and accountability, and have won on issues that we truly believe in.

Fewer taxes help people keep their own money and can even lead to higher state revenues. A balanced state budget with strong reserves protects and serves the constituents. Over-regulation keeps small businesses from success and make it harder to enter or stay in the market. Better governance leads to better policy and a more informed public.

These principles can benefit both sides of the aisle politically and produce better outcomes, opportunities, and benefits for people from Selbyville to Talleyville.

As Executive Director of A Better Delaware, I have come to learn more than I had ever imagined about this state and what it could offer. Every day and every connection made it clear that the work we were doing mattered and resonated. This role has been unbelievably fulfilling and insightful.

As I exit Delaware and the role with ABD, I am left with a feeling of great accomplishment for the victories we have had and the work we put into everything, including our losses. Thank you to the thousands of Delawareans who have rallied behind our efforts to sway the tide on these issues. From a statewide soda tax, to higher income taxes, to holding our officials accountable for their decisions, we have started the change we hoped to see at our inception just a short time ago.

A Better Delaware is going to continue to make change, and I look forward to seeing you all continue to spread the word and grow the movement. Delaware can really be first again if we fight for better policy that truly uplifts and serves Delaware residents, businesses, and communities.

Take with you the main lesson I learned with ABD: Delaware is a wonderful place, but together we can make it better.

Thank you,

Zoe Callaway

Executive Director

A Better Delaware