Coalition Against Regressive Taxation

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This article is part of the Tobacco portal on Sourcewatch funded from 2006 - 2009 by the American Legacy Foundation.

The Coalition Against Regressive Taxation, generally known in the tobacco industry as CART, was a collection of industries organised by the tobacco industry lobbyists to counter the threat of increased excise taxes. This happened in the Reagan Administration when the Republican tax cuts exposed the budget to ridiculous blow-outs.

Senator Robert Packwood (Oregon) who chaired the Senate Finance Committee took a proposal to the president to boost excise tax collections. This raised the ire of representative organisations from those industries likely to be affected: aviation, beer, wine, telephone, gasoline, coal, department stores, tobacco, automobiles and trucking. CART was organised in 1986 to oppose these measures.

The mobilisation of forces opposing the Packwood tax plan]] was quite extensive, and included the tobacco industry front, the Institute for Research on the Economics of Taxation [IRET] and the Heritage Foundation, Citizens for Tax Justice released a poll showing the majority of voters would reject this move, and it took out full page ads in the Washington Post to advise the Senate Finance Committee of this fact. Jack Kemp, a long-term tobacco supporter and a potential Presidential candidate against Vice President George HW Bush, also came out vocally against excise increases.

The entry Packwood tax plan has a full series of documents leading up to the formation of CART. The tobacco industry initially tried to create their own Consumer Tax Forum, but then settled into supporting an initiative of the American Trucking Associations, which put CART under the control of their President Thomas J Donohue.

Donohue also worked at, and through, the National Chamber Foundation and became its President. He was also President of the Center for International Private Enterprise, which was a core institution of the National Endowment for Democracy. He had a $3.7 million salary, a chauffered Lincoln, and a leased jet aircraft. He was the sixth highest paid lobbyist in the country.).

Documents & TimeLine

1986 Mar 14 Sam Chilcote the CEO of the Tobacco Institute is replying to queries raised by Gene Knorr at Philip Morris, about the Consumer Tax Forum.

Dear Gene:
Earlier this week, we spoke of our early attempts to enlist the help of Bob Gray to build a coalition of business organizations opposed to excises. Gray's proposal is attached.

As you will read, this document outlines a fairly logical process. As such, we authorized Gray to recruit members for the coalition. Over the course of several months, it became apparent that the "Consumer Tax Forum" would not exist. There were several reasons:

Cost: To be credible, the Forum needed a broad base of funding. Other organizations were unwilling to make the financial commitment or were waiting to see if others would make the commitment first.

Trust: In many instances, business coalitions have been formed to fight tax packages. These coalitions are strong only as long as the tax package holds together.

Timing: We wanted to get ahead of the curve by forming a coalition before it was needed. Most organizations respond only to emergencies.

Today, the Packwood tax reform measures pose just such a threat. Ironically, this morning, two of our staff members are attending a meeting called by the American Truckers Association and attended by many of the groups described here, to oppose Packwood's excise-related concepts.

[This resulted in the formation of CART - Coalition Against Regressive Taxation]

An inability to create the Consumer Tax Forum prompted us to seek relationships with other groups opposed to excises. The strong support of Citizens for Tax Justice, the AFL-CIO, the League of United Latin American Citizens, the U.S. Hispanic Chamber of Commerce, the National Black Caucus of State Legislators and even the American Legion is the result of our change in direction back in 1983. [2]

1987 Oct 8 Taxation and Accounting: Excise Taxes: Poor would be hard hit by tax hikes, study shows. This illustrates the consequences of their battle over Packwood. They are now fighting against a revised Gramm-Rudman Law which requires $23 billion in deficit reduction for fiscal 1988

Thomas Donohue, president of CART and the American Trucking Associations, told a news conference that "even a small dose of excise taxes would be bad medicine for low-income taxpayers." The study analyzes two alternative increases in alcohol, tobacco and gasoline excise taxes. One alternative assumes only half of the needed revenue —$6 billion —will come from excise tax increases. The second assumes that all the needed revenue will come from excise taxes.

Donohue said that excise taxes are the most regressive of taxes and would have an overwhelming negative impact on families making below $20,000, and would discriminate against narrow groups of consumers and businesses.

Donohue declined to suggest an alternative revenue source, but said that any revenues should be paid for fairly. He ruled out an increase in income tax rates. The trucking industry, which experienced 1,500 bankruptcies in 1986, would be "devastated by a jump in excise taxes," Donohue said. He predicted that because of the time lag in the trucking industry for changing price structures, the bankruptcy rate for mid- and small-sized firms would double and the survivors would be forced to let go "thousands" of employees.

CART, formed in March 1986 to oppose excise tax and tariff increases proposed as part of tax reform, is made up of major retail and industrial trade associations. [3]