MS-01: Quentin Whitwell Makes Written Committment to Oppose Taxation

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Posted by John Beattie McEwan, Adam Radman on Monday, March 30th, 2015, 2:30 PM PERMALINK

Americans for Tax Reform (ATR) congratulates former Jackson City Councilman Quentin Whitwell for signing the Taxpayer Protection Pledge, which is a written commitment to the people of Mississippi to “oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses and oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates." Whitwell is running in the May 12 special election to fill the seat vacated by the recently deceased Alan Nunnelee in Mississippi’s first congressional district.

Candidates running for office like to say they will not raise taxes, but often turn their backs on the taxpayer once elected. The Pledge requires these candidates to put their rhetoric in writing and provide an additional layer of accountability to the taxpayer.

ATR has offered the Pledge to all candidates for federal office since 1987. Currently, 48 U.S. Senators and 219 members of the U.S. House of Representatives have signed the Pledge. Additionally, fourteen incumbent governors and over 1,000 state legislators have signed the Pledge.

I want to congratulate Whitwell for taking the Taxpayer Protection Pledge. The American people are tired of the tax-and-spend policies coming from Washington and they are looking for solutions that create jobs, cut government spending, and get the economy going again,” said Grover Norquist, president of ATR.

I challenge all candidates for federal office to make the same commitment to taxpayers by signing the Taxpayer Protection Pledge today,” Norquist continued.

ATR will continue to follow this race closely and will provide additional updates as more candidates sign the Pledge.

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IRS Watchdog: Agency Unable to Justify Spending Decisions

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Posted by Alexander Hendrie on Monday, March 30th, 2015, 2:00 PM PERMALINK

IRS Commissioner John Koskinen recently claimed that his current budget will force the agency to send refunds more slowly, perform fewer audits and even shut down for several days over the coming year.  The agency is pleading poverty, but according to the Annual Report to Congress released by the National Taxpayer Advocate, the IRS has failed to prioritize past budget decisions. According to the report:

“The IRS lacks a principled basis for making the difficult resource allocation decisions necessitated by today’s tight budget environment.”

The problem is not that the IRS does not have the information available. To the contrary, as the report explains: 

“While IRS collected some data that it could use to evaluate effectiveness, it did not develop plans to analyze the data or track it in a way that would allow officials to draw causal connections and develop valid conclusions about the effectiveness of its 2014 service changes.”

While the IRS is crying foul about its funding, it has not even attempted to properly ensure that scarce taxpayer funds are allocated effectively. As a result, the report states:

 “the IRS has come under scrutiny by external oversight organizations who have questioned the IRS’s rationale for its budget decisions. They have not been satisfied with the IRS’s response to their inquiries.”

National Treasury Employees Union President Colleen Kelley claims that the agency is “struggling to keep the lights on”, however the IRS has failed to properly prioritize funding even when budgetary pressure did not exist. The agency has failed to produce a single report on tax complexity since 2002, despite federal law requiring one be compiled each year.

When asked by the NTA to explain why this had not happened, the IRS said it would require “about two full time employees working for about a year” to produce the report. The IRS has 82,982 full time employees.

Although the IRS claims it needs more taxpayer dollars, an analysis by Cato Institute economist Dan Mitchell, shows the IRS’s budget has doubled in the past 30 years, even after adjusting for inflation. While its funding has declined since 2010, it remains higher than mid 2000s levels. In fact, as the NTA points out, the IRS’s refusal to compile these reports is actually making their jobs harder:

“While the IRS would need to spend some resources to produce the complexity report, these costs pale in comparison to the costs of complexity. Moreover, if they prompt a reduction in tax complexity, the reports might ultimately help the IRS do its job and reduce the cost of administering the tax code.”

The above cited material can be found on pages 26-30 & 102-108 of Volume One of the National Taxpayer Advocate’s Annual Report to Congress.

The full report may be accessed here.


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Ray Tsang

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Cigarettes: A Case Study in the Slow Rise of Excise Taxes

Posted by Paul Blair on Monday, March 30th, 2015, 1:26 PM PERMALINK

The 18th century English writer Dr. Samuel Johnson defined excise taxes as "A hateful tax levied upon commodities, and adjudged not by the common judges of property, but wretches hired by those to whom excise is paid." In the midst of ongoing debates about tax hikes on tobacco cigarettes, liquor, soda, and vapor products, this seems relevant. 

Over the last two years, a new target for the public health wretches has emerged, replacing the long-standing number one target of sin taxes aimed at extracting money from low-income consumers. Electronic cigarettes and vapor products are disruptive, innovative, technology products that are accomplishing what the public health community never could - they're getting people to quit smoking. Some estimates and national surveys suggest that more than six million people in the United States are daily vapers. This comes at a time when cigarette smoking rates are among the lowest they've been in years. 

In 2014, 15 states considered proposals to tax vapor products like tobacco products with taxes as high as 95 percent. Alternative proposals, like those on the books in North Carolina, subject vapor products to a smaller tax of $.05 per mL of liquid nicotine. A proposal in Arkansas this year would do the same thing. 

A recent history of cigarette tax increases should provide some insight into the future of e-cigarette and vapor product taxes, should more states add excise taxes to the books with regards to the products. As we at ATR have noted before, e-cigarettes should not be taxed like tobacco products. Currently, only Minnesota and North Carolina impose sin taxes on the products - with Minnesota taxing them at 95 percent, up 75 percent from two years ago. 

But what about smaller taxes, less than 75, 95, or 50 percent? A look at cigarette tax hikes since 2000 may shed light on the threat of accepting such proposals. 

The average excise tax on a pack of cigarettes in 1999 was 38.9 cents. Today, the current average excise tax is $1.54 per pack. States have increased tobacco taxes about five times as often as they have raised alcohol taxes between 2000 and 2015, with 111 increases over that time according to the National Association of State Budget Officers

Source: NASBO

Click here for a list of every statewide cigarette tax hike between 2000 and 2015. 

As you can see, the years during and immediately following a recession saw the largest number of cigarette tax increases. In 2003, 19 states increased tobacco taxes; 15 in 2004 and 16 in 2010. 

What does any of this have to do with e-cigarettes and vapor products? Many state legislators have begun to realize that their increasing reliance on tobacco revenue to fund a wide range of programs may have been a bad bet. With declining cigarette revenue, states stand to lose (and are) billions of dollars in tax dollars. One would hope this could be celebrated, as less and less people are smoking but many legislators are clearly more concerned with compensating for this declining and lost revenue. And not in public health. 

E-cigarettes are the new target. Click here to view a map of the tax threats in the states. 

The rise in cigarette excise taxes over the past 15 years should provide a warning to those who think once a tax is on the books in a state, there won't be efforts to raise it slowly over time. Minnesota's tax on e-cigarettes began at 75 percent and is now 95 percent. Some taxes are far more damaging than others. But the fact remains, it is much easier to fend off new taxes than to fight higher taxes. Just ask smokers. 

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Obama Administration Kills Program That Helps Low-Income Families File Taxes

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Posted by Alexander Hendrie on Friday, March 27th, 2015, 3:51 PM PERMALINK

The Obama Administration has quietly ended a tax assistance program that assisted low-income Americans file their taxes, despite Congress fully funding the program. Instead, the administration has given millions of dollars to liberal groups to perform the same role.

According to a report by the Daily Caller, the administration is giving $12 million in federal grants to community service groups through the Volunteer Income Tax Assistance Program in place of the federal program. Unsurprisingly, many of the largest grants issued under this program have gone to groups that have close political ties to the Obama Administration. A recent investigation by the Treasury Inspector General for Tax Administration found that these so-called “volunteer community groups” had a 49 percent failure rate.

The IRS justified the elimination of this program as a “resource management decision.” However, it is clearly a move by the Obama Administration to provide backdoor funding to its liberal allies. As ATR’s Ryan Ellis points out:

“There is a long history of using supposedly neutral government resources to fund the activists and organizers who have all sorts of agendas. It’s not surprising at all that they would be using IRS resources to essentially subsidize some of these organizations.”

According to the National Taxpayer Advocate’s Annual Report to Congress, the administration cancelled the tax assistance program without properly evaluating the impact it would have on low-income Americans.  The tax assistance program had enjoyed longstanding bipartisan support and the program was fully funded by congress despite other parts of the IRS budget facing cutbacks.

This degradation of taxpayer assistance comes at a time when filing taxes is more complex than ever, in part due to several Obamacare provisions coming into effect this year including the employer mandate and the individual mandate. In fact, IRS commissioner John Koskinen raised concerns late last year that the 2015 tax filing season could be delayed, in part due to Obamacare.


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Samuel Clemmons

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Senate Should Reject Tax Hike to Benefit Trial Lawyers

Posted by Ryan Ellis on Thursday, March 26th, 2015, 8:33 PM PERMALINK

This week, the U.S. Senate will vote on an amendment (#587, introduced by Senator Leahy) to the budget resolution. This amendment is a clear payoff to trial lawyers in the form of a brand new tax hike.

The measure would permanently deny employers the ability to deduct punitive damage assessments from lawsuits as a business expense.​

It is not tax reform.  It is a permanent new tax increase.  Taking away this legitimate deduction results in higher taxes.  If it's not canceled out by equal or greater tax relief elsewhere, this income tax increase violates the Taxpayer Protection Pledge.

Businesses can deduct all “ordinary and necessary business expenses” under tax law.  This has always included punitive damage costs.  To deny this well-grounded deduction to employers is arbitrary and clearly intended to benefit a constituency.

Since settlements out of court are still deductible under this tax law change, trial lawyers will be empowered to file junk lawsuits (hoping that employers will choose to settle rather than risk a punitive damage award with no tax benefits). When a lawsuit is settled rather than challenged, the trial lawyer gets a guaranteed win.​

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ATR Opposes Increase in Passenger Facility Charge Fee

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Posted by Alexander Hendrie on Thursday, March 26th, 2015, 3:19 PM PERMALINK

ATR President Grover Norquist today sent a letter to members of Congress urging against an increase in the Passenger Facility Charge (PFC) fee which would raise the cost of air travel for passengers.

The proposed 90 percent fee increase is entirely unnecessary because airports already have ample funding for infrastructure investment and have successfully financed numerous projects over the past few years. As the letter states:  

Since 2008, the 30 largest airports in the nation have spent nearly $70 billion on completed, underway or approved airport capital projects to improve their infrastructure. At the same time, airports have enjoyed a revenue increase of 52% since 2000, far exceeding the consumer price index which rose just 35% in the same time period. Given this period of prosperity, it is puzzling that airports are now pleading poverty and asking passengers to pay more.

Doubling the PFC would result in yet another increase in the cost of air travel for passengers. Already taxes and fees make up 21% of the cost of air travel. As the letter states:

Air passengers are already overburdened by government taxes and fees – taxes make up 21% of the cost of an average domestic flight, and passengers paid $20.5 billion in taxes last year. While airports are requesting a seemingly modest $4 increase in the PFC, this proposal represents a $2.8 billion annual tax increase on air passengers. 

See the full letter here.

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U.S. Senate Should Reject Price Controls in "Vote-a-Rama"

Posted by Ryan Ellis on Thursday, March 26th, 2015, 10:09 AM PERMALINK

The Senate this week may be voting on a pair of amendments to the budget resolution pertaining to government price controls on prescription medicines.  The Senate should reject any and all such efforts.  They are bad health care policy, they are even worse trade policy, and they're not a free market solution.

Importing Foreign Government Price Controls

One amendment in question would allow Americans to purchase prescription medicines from Canada.  On its face, this is a pro-free market amendment.  Why should the government prevent people from buying goods or services from anywhere they want to, especially from a developed nation like Canada?

The free market answer is that consumers would often not be importing just the medicine, but also the price control.  In most countries, the prescription drug industry labors under burdensome government-imposed price controls.  These price controls allow politicians to give voters seemingly-cheap medicines, but there's a heavy price.  Since the drug companies are left with little or negative profit, there is virtually no money left over to finance the next generation of drug research and development.

One of the only countries left that allows drug prices to be (mostly) set by the free market is the United States.  The profits made here finance the next generation of life-saving and life-improving prescription medicines.  If the U.S. market suddenly gets flooded with price-distorted drugs from all around the world (they only need to make their way to Canada first), our drug market will be permanently-damaged by price controls in other countries.

Think about it this way: suppose you are taking a blood pressure medication that costs you $50 per dose.  This amendment passes, and you start to purchase a medicine from Canada (really, from anywhere) that only costs $20 per dose, thanks to the price control in the other country.  You would be a fool not to take that deal.  Millions of other Americans do the same, and suddenly no one is buying the $50 version of the drug anymore.  No new drugs have entered the country--it's the exact same medicine whether it's a market-set $50 or a government-set $20.  But price controls dictated by foreign bureaucrats have entered the country, totally distorting our drug market.  By importing price controls today, the miracle drugs of the future are strangled in the crib.  All the capital for future R&D is gone.

This type of amendment would be a good idea in a world free of market-distorting price controls.  Free trade is a good thing.  But free trade requires transparent, signal-setting prices set by markets, not by governments.

Price Controls from Our Own Government

A related amendment may also seek to impose price controls on prescription medicines from our own government.  There are already government price controls on medicines purchased in the Medicaid system.  Congressional Democrats would like to expand this price control regime to also include medicines purchased in the Medicare system.  

Doing so is the opposite of a free market solution.  Prices send signals.  If prices are distorted by governments, they can't do their vital job of regulating supply and demand.  

Furthermore, artificially lowering the price of anything--life saving medicines especially included--steals the capital needed to finance the next generation of that good or service.  Government imposed low prices today mean the miracle cures of tomorrow simply never happen.

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Governor Rick Scott Kicks Off “Cut My Taxes Week” at Florida State Capital

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Posted by Paul Blair on Tuesday, March 24th, 2015, 4:56 PM PERMALINK

Today, Gov. Rick Scott (R-Fla.) kicked off “Cut My Taxes Week” at the Florida State Capitol. Taxpayers are being invited to bring their bills and use a tax cut calculator to see their savings under the governor’s proposed cell phone and TV tax cut.

Whether or not you’re a resident of Florida, you can use the calculator to see what kind of savings you’d experience under Gov. Scott’s proposal by clicking here.

The Florida Communication Services Tax (CST) is imposed on cell phones, cable and satellite TV, and non-residential landline phone services. While the state rate is 9.17 percent, with local taxes the average rate exceeds 14 percent and is as high as 17 percent in some areas.

Governor Scott’s proposed tax cut reduces the state portion by 3.6 percent to 5.57 percent, which equates to a potential $470 million in annual savings for taxpayers. Estimates suggest the cut will save every single Florida family around $43-$54 a year, depending on their provider and service.


Currently, Florida has the fourth highest CST rate in the country, behind Washington, Nebraska, and New York. These state, local, and federal taxes can add up to more than 22 percent of service costs, which represent a significant burden on families, especially low-income ones. Prepaid calling services are not subjected to these high discretionary tax rates, making switching more attractive.

The CST tax is not neutral as it forces consumers to alter their behaviors. Reducing it will provide financial relief to families and small businesses and may create jobs by attract more investments in telecommunications infrastructure.

Gov. Scott is so committed to this most recent set of tax cuts that he will be manning the booth at the state capitol himself today and tomorrow. Florida residents are encouraged to take advantage of the opportunity to calculate their savings with the governor in person.

The Senate Communications, Energy, and Public Utilities Committee unanimously passed a version of Scott’s tax cut. Americans for Tax Reform encourages the entire legislature to pass the CST cell phone and TV tax relief legislation.

Flashback: Governor Rick Scott has already signed over $2 billion in tax cuts into law. He also campaigned for re-election on reducing the communications tax and is a signer of the Taxpayer Protection Pledge.

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Robert Bentley Breaks His Pledge, Runs From the Truth

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Posted by Will Upton on Tuesday, March 24th, 2015, 2:53 PM PERMALINK

After unveiling a $541 million tax increase at the beginning of this year’s legislative session, Alabama Gov. Robert Bentley has been called out for violating his written promise to the voters to “oppose and veto any and all efforts to increase taxes.”

Yesterday, Gov. Bentley sat for an interview with FOX’s WBRC-Birmingham. In the course of the discussion, Gov. Bentley responded to a question about tax increases with this:

I think those are legitimate concerns. Well let me say this. I did sign a no tax pledge my first four years. I did not sign it the last four years. What we did the first four years, we streamlined, we cut, we consolidated, we did everything that was necessary to make our state more efficient and we've done that. We've cut government by 12%. We've saved the taxpayers $1.2 billion annually. And so we have done everything that you could do the first four years to make government more efficient. Now, it's halftime, little bit past halftime in fact, but we don't have enough money to fund the general fund.

Gov. Bentley is hung up on his written promise to voters to not raise taxes despite Americans for Tax Reform, Alabama’s United State Senator Richard Shelby, and many others having pointed out numerous times the danger that his proposed $541 million tax hike poses to the Alabama economy.

Despite this, Gov. Bentley would like Alabama taxpayers to think he’s just being reasonable. That he is the victim of circumstance here. In reality, it is the opposite.

In 2010, when he first ran for governor, Robert Bentley signed the Taxpayer Protection Pledge. The Pledge reads: “I, Robert Bentley, pledge to the taxpayers of the state of Alabama, that I will oppose and veto any and all efforts to increase taxes.” At no point in the history of the Pledge has it been construed to only apply to one term in office (for more information click here). If a politician says they are pro-life, is it not safe to assume that they will remain pro-life for more than just one term in office? When someone takes their vow in marriage, is it not safe to assume that that vow is supposed to be for life?

Given his response to WBRC, it would seem that Gov. Bentley doesn’t want to be bound by promises.

In fact, he has gone out of his way to attack those who have tried to hold him to his promise. State Senator Bill Holtzclaw, a retired Marine, made it clear that he would not support Bentley’s call for higher taxes with a bill board in his district. How did Gov. Bentley respond? He put a stop to $100 million worth of road projects in Sen. Holtzclaw’s district.

While running for a second term in office in 2014 – supposedly a term in which Bentley viewed himself as no longer bound by his pledge not to raise taxes – the Bentley campaign was awash with “No New Taxes” rhetoric. 

Literally, the words “No New Taxes” were on Gov. Bentley’s website.

His campaign’s Facebook page.

And on campaign billboards across Alabama.

Gov. Bentley claims that he did not know that Alabama would be facing a budget shortfall (read overspending problem) during his re-election campaign, but Alabama talk radio host Matt Murphy has thrown cold water on that theory.

The fact is, Gov. Bentley has broken his no new taxes pledge to Alabama voters and in doing so broken their trust in him. Unfortunately, having entered his second and final term as governor, Bentley may not have to face the voters ever again.

In the end – with a preponderance of evidence against him – one can only conclude that Gov. Robert Bentley is either grossly incompetent, a prisoner of spending interests and influential Democrats, or a liar.

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Of course, any politicians who haven't broken the No Taxes pledge are like frogs in the cooking pot who can't tell the water is heating up.

Because it makes no allowances for disaster or circumstances, not even inflation, one of the major engines of the US economy.

This turns the pledge from a restriction on government to an ever tightening noose. Most people's awareness of how government affects their day to day lives is rather like that story of the fish who asks "What's water?"

No government is the same thing as anarchy. If you can afford a private army and a staff surgeon, then no big whoop. But most folks have no idea of what a no government reality would be like.

Indiana Legislators Considering 911 Tax Increase

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Posted by Sven Werner on Monday, March 23rd, 2015, 5:42 PM PERMALINK

Indiana state senators are considering legislation, HB 1475, that would double the point of sale 911 tax for prepaid wireless customers, assessing a levy of $1.00 for every retail transaction.  This increased rate would be four times greater than what was paid just two years ago.

If passed, HB 1457, the Indiana 911 Board would get the authority to hike the tax for prepaid wireless customers by 0.10$ without any legislative approval. Below is a copy of the letter that ATR sent to Indiana senators, urging them to oppose HB 1457:

March 19, 2015

Dear Member of the Indiana Senate

On behalf of Americans for Tax Reform and our supporters across Indiana, I urge you to reject House Bill 1475, legislation that would increase taxes and fees on Indiana residents. HB 1475, which will soon come to the Senate floor, would target Indiana residents who utilize pre-paid wireless services and impose drastically increased costs.

HB 1475 would double the point of sale 911 tax for prepaid wireless customers, assessing a levy of $1.00 for every retail transaction. This increased rate would be four times greater than what was paid just two years ago. Worse, HB 1475 would give the Indiana 911 Board authority to hike the 911 tax for prepaid wireless customers another $0.10 without legislative approval. It’s never a good idea to give taxing authority to an unelected body. Under current law, legislative approval is required for any 911 tax increase and it is best for Indiana taxpayers that it stays that way.

HB 1475 also increases the 911 tax on standard billed, postpaid, wireless customers from $0.90 to $1.00. That represents a 10% increase from the current rate and a 100% hike from what the rate was just two years ago. HB 1475 also includes provisions to aid the 911 Board’s goal of taxing low-income Indiana residents who receive federal Lifeline benefits.

Over 20 federal tax increases, along with a host of costly regulations, have been imposed by Washington on Indiana residents in recent years. The last thing Hoosiers need are higher taxes at the state level. As such, I urge you vote “No” on HB 1475. Americans for Tax Reform will continue to follow this issue closely throughout session and will be educating your constituents as to how you vote on this important matter. If you have any questions, please contact Patrick Gleason, ATR’s director of state affairs, at (202) 785-0266 or


Grover G. Norquist

President, Americans for Tax Reform

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ATR needs to read the bill. The .10 cent increase can be proposed by the Board, but requires Budget Committee approval. The Budget Committee are all elected representatives.

Prepaid is the fastest growing segment of the wireless industry. These pay-as-you go plans are almost indistinguishable from legacy monthly contract plans. Both types of plans now offer unlimited voice, unlimited text and unlimited data.

The bill does not contain provisions to tax federal lifeline users, but does contain provisions to ensure that the 911 surcharge - which is paid through the federal lifeline program to the wireless providers - is remitted to the state program

Today, these providers receive the surcharge, but some keep it rather than remit to the state 911 fund.

The current 911 statute sunsets if HB-1475 is defeated. That means 911 service for Indiana would cease to be provided since there is no funding to operate the service.

ATR's position appears to be that the safety of the public is not worth $12 a year to continue to fund an efficient, effective service that is used 20 million times a year by Indiana residents and visitors to the state.