Congress Should Enact Trade Promotion Authority (TPA)

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Posted by Ryan Ellis on Friday, April 17th, 2015, 9:00 PM PERMALINK


The House Committee on Ways and Means and the Senate Finance Committee have reached agreement on a very important building block to make progress on the free trade front. It is known as "Trade Promotion Authority," and Americans for Tax Reform urges all Members and Senators to support the initiative.

What is Trade Promotion Authority (TPA)? Put simply, TPA is an act of delegation from the Congress to the Executive. It is the Congress telling the Executive "go and negotiate free trade agreements for our country. We're going to give you limitations and rules that respect the rights and prerogatives of the Congress, but otherwise go negotiate. When you have a deal, Congress will vote it up or down."

​Why is TPA needed? TPA is extremely important to have if any further progress is going to be made on free trade. The executive branch must have the ability to tell negotiators from other countries that what is hammered out at the table is not going to be endangered by legislative shenanigans back home. Without TPA, other countries will be hesitant to concede anything since the executive is really only speaking for itself.

Why is free trade a good thing? Tariffs are taxes on imported goods. We pay these taxes when we buy something made abroad (increasing the cost of what we buy here), and we suffer the impact of those taxes when we sell something to another country (decreasing the profitability of our exports). There's a basic principle that if you want more of something, tax it less. If we want more trade among nations (which results in markets opening up abroad and better value for goods and services here at home), we have to lower tariffs. The way we lower tariffs (taxes on trade) is by enacting free trade agreements. The way to enact free trade agreements is to enact TPA.

Why should conservatives trust President Obama to negotiate? TPA is not about President Obama. If enacted, this TPA deal would last for three years, with an option for the Congress to continue it another three years.

That's 72 months of TPA.  President Obama will be out of office in 20 months. This TPA bill is about moving on from the disastrous free trade desert that the Obama administration has been.

For these reasons and others, ATR is a supporter of TPA and urges all free market conservatives on and off Capitol Hill to be as well.

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All Capital Gains Should Work the Same as Like Kind Exchanges

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Posted by Ryan Ellis on Friday, April 17th, 2015, 8:32 PM PERMALINK


Congress is always on the hunt for "pay-fors"--tax increases and spending cuts which can be used to offset other tax increases or spending cuts.

Unfortunately, there's a treasure trove of tax increase "pay fors" in H.R. 1, the "Tax Reform Act of 2014," which was introduced last Congress by former Congressman and Ways and Means Chairman Dave Camp (R-Mich.) One of these tax hike pay-fors is an elimination of so-called "like-kind exchanges."

This was the wrong idea, since like-kind exchanges are actually a good model of capital gains tax reform, not a loophole to be closed.

What is a like-kind exchange?

Suppose you are a business owner.  You bought a bunch of widgets a few years back for $1000. You now want to sell these widgets, and have a buyer for $1500.  In the normal course of events, when you sell the widgets you would have a capital gain of $500 (the sales price of $1500 minus the purchase price of $1000), and you would pay tax on that capital gain.

But you, the business owner, don't want to cash out. You want to buy a fresh set of widgets with your $1500. The tax code has a way for you to do that and defer paying the capital gains tax from that first sale. It's called a "like-kind" exchange. You set up an intermediary trust, which receives the $1500 you get when you sell those widgets. You then have 180 days to purchase a fresh $1500 set of widgets with the money. Your basis in the second set of widgets is the same as your basis was in the first set of widgets.

You can do this as many times as you want, provided the set of widgets you are buying are of a like kind to the widgets you are selling, and provided that you're using all the proceeds every time to buy more widgets.

Only when you decide to sell out of the widget business and cash out do you actually have a capital gain.  The gain is the difference between the final sale amount and the original tranche of widget purchases. The capital gain is embedded over the years in the business, and it becomes due when the business activity effectively ends.

A model for capital gains

All capital gains should work this way. If you buy a stock for $100 and sell it for $150, you should be able to plow that $150 into new stock purchases without having to pay tax along the way. Ditto for any time of capital gain you might have.

You know who agreed with this concept? None other than current Ways and Means Chairman Congressman Paul Ryan (R-Wisc.) Back in 2007, he introduced H.R. 2796, the "Generate Retirement Ownership Through Long Term Holding (GROWTH) Act." It would have allowed something very much a like kind exchange by default for capital gains generated within mutual funds.

When H.R. 1 decided to take away like kind exchanges (which would be a tax increase of over $40 billion over a decade), it implicitly labeled these sales as "tax loopholes." Nothing could be further from the truth. All capital gains should work this way, in fact. Imagine investors not having to report each and every stock and mutual fund transaction on their taxes every year, and instead having a deferred capital gain until sale, a kind of brokerage account version of an IRA.

That would not only simplify tax filing for millions of Americans, it also would make all capital markets--for everything--more efficient. Every time the government takes money out of the pool of capital investment, capital grows more slowly and we're all poorer than we otherwise would be. The key to wealth creation is to leave capital--unmolested by government--free to grow for as long as possible.

Congress should not be looking to restrict like kind exchange plans--they should be looking to do tax reform with them as a model.

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Ohio State House Republicans Push A Sound Tax Reform Agenda

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Posted by Will Upton on Friday, April 17th, 2015, 2:45 PM PERMALINK


Lawmakers in the Ohio House of Representatives have unveiled a substitute bill for House Bill 64 – the state budget. This plan greatly improves upon the original HB 64 by removing many of the base narrowing tax hikes, and instead focusing on broad-based pro-growth tax reform

The HB 64 substitute bill would lower state income tax rates by $1.2 billion over the next two years – providing a 6.3% across-the-board cut to taxes for income taxable in the year 2015. It would also make permanent the 75-percent small business deduction while lowering the top income tax rate to just below 5-percent.

The previous version of HB 64 provided net tax relief of only $500 million over two years and saw significant, job-killing tax hikes on oil and gas, small businesses (via the Commercial Activities Tax), and an increase in the state sales tax from 5-percent to 5.5-percent. It also contained an increase in the state cigarette tax – often a declining source of revenue – and an increase in the tax on products many people use for smoking cessation – namely e-cigarettes and vapor products. 

The House substitute bill is a serious improvement upon the original tax plan contained in the state budget and addresses many of the reservations that Americans for Tax Reform previously held. 

Americans for Tax Reform would urge all members of the Ohio House of Representatives and the Ohio State Senate to support this House substitute version of HB 64. 

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Portman: Tax Reform Needs to be at the Top of Our Agenda

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Posted by Alexander Hendrie on Thursday, April 16th, 2015, 3:17 PM PERMALINK


Speaking at an Americans for Tax Reform press conference in the U.S. Capitol, Ohio Senator Rob Portman called for tax reform and tax simplification for American families. The full text of Senator Portman’s remarks can be found below:

"This is the day, tax day, when we have a chance to reflect on our tax code. First, how much we should be paying in taxes and, second, how we should be collecting it. And I just want to make it very clear that there are two very different visions here.

President Obama and the Democrats have already raised taxes $1.3 trillion. People forget that. So taxes have gone up in the last six years. When we talk about the fact that pay checks are flat, in fact, we've even seen a decrease of about 8 percent in take-home pay, and people are facing the middle-class squeeze, part of this is because, by raising those taxes, we've hurt the economy and made it harder not just to get jobs, but to get good jobs.

Second, if you look at his budget that he just put out, and we're in the middle, you know, trying to do our own budget right now as Republicans, he raises taxes at least another $1.5 trillion, depending on how you account some of the fees that are in there, it can go up closer to $2 trillion. So you think about this. Over $3 trillion in new taxes is the Democrat's prescription for our economy.

By the way, he also takes taxes on households, taxes on families, individual taxes to the highest level they've ever been in the history of our country. Certainly in nominal terms but also as a percent of our economy.

So there's two very different visions here and, thanks to Americans for Tax Reform, thanks to Kevin Brady and others in the House side and now with the Senate Republican majority, we have a chance to roll back some of these tax increases but also to have a chance to collect our taxes in a different way. So it's not just about the fact that the other side wants to continually add more taxes to an already weak economy and take families' taxes up to historic levels, but we also need to change the way we tax. And tax reform needs to be at the top of our agenda.

IRS reform, as we've talked about, is certainly needed, partly because it's impossible for any agency to administer this tax code it's such a mess. In terms of the business tax code where, as Grover knows I've spent a lot of time, we now have a situation where we have the highest tax rate of all of the developed countries in the world. It's no wonder we're losing jobs, losing investment, losing whole companies overseas.

This is an opportunity during tax day for us to reflect on that, to lower the tax burden, lower the eight-hours on average it takes an American to fill out their taxes, and the billions of dollars that's wasted in that. But also to reform our tax code so it works better for American families, American workers, so America can once again be a place where America's promise is met. Thanks, Grover."

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Eugene Patrick Devany

The poorer half of the population lost 70% of wealth since 1995 and the middle class is down about 10%. So the House helps the rich who do not need any help - no gift tax on political donations, no estate tax and lower marginal rates. Should workers be first or last?


ATR Supports Small Business Taxpayer Bill of Rights


Posted by Ryan Ellis on Thursday, April 16th, 2015, 2:21 PM PERMALINK


The “Small Business Taxpayer Bill of Rights Act of 2015” was introduced yesterday by Senator John Cornyn (R-Texas) and Congressman Mac Thornberry (R-Texas). This legislation will reduce the burden placed on small business owners and strengthen taxpayer protections. ATR supports this legislation and urges all members of Congress to vote for, and otherwise support this legislation.

The Small Business Taxpayer Bill of Rights Act, S. 949 and H.R. 1828 in the Senate and House respectively, makes a number of important improvements to the complex and inefficient federal tax system. Specifically, this legislation lowers compliance burdens placed on taxpayers, provides compensation for taxpayers that experience IRS abuse, improves taxpayer’s access to the U.S. tax court system, and strengthens taxpayer protections. 

Small businesses are the backbone of the American economy, a key driver of economic growth, and a pillar of the American Dream. This legislation will provide important protections to small businesses and help reduce the burden that the federal government places on hard-working Americans. ATR fully supports this legislation and urges all members of the House and Senate to support this bill. 

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Oversight Chairman Peter Roskam’s Remarks at ATR Press Conference: Stop IRS Abuse

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Posted by John Kartch on Thursday, April 16th, 2015, 1:45 PM PERMALINK


House Ways and Means Oversight Subcommittee Chairman Peter Roskam (R-Ill.) addressed ATR’s annual tax day press conference in the U.S. Capitol. Chairman Roskam successfully shepherded a series of IRS reform bills through the full House, with overwhelming bipartisan support. As Roskam pointed out, the measures are common sense yet necessary to begin to rein in the out of control IRS. The full text of Roskam’s remarks are below:

"I'm really pleased -- there is a bipartisan consensus that's developed in the House of Representatives as a restraining influence for what we've seen from the Internal Revenue Service. We've seen the IRS over the past few years act with impunity, act with impunity as it relates to targeting people, act with impunity as it relates to squandering resources, making the false claim that they're not able to get their work done because they don't have enough money, all of which is nonsense.

And on a bipartisan basis, coming out of the Ways and Means Committee, we've marked up a series of bills and we expect to have a debate on them today and have a vote on them tomorrow. And if past is prelude, I think that these are all likely to get out of the House and over to the Senate.

Let me highlight a couple of them. Two of them I've sponsored. One forces the IRS to implement the Taxpayer Bill of Rights. What's important about this legislation is it makes it a distinct responsibility of the commissioner of the Internal Revenue Service to make sure that the agency, in fact, fulfills these obligations under the Taxpayer Bill of Rights.

Second is the Fair Treatment for All Gifts Act, which is HR 1104 which permanently ensures that the IRS cannot tax gifts to nonprofit organizations. Again, this is one of these things that goes beyond your sense of wonder, that the IRS would contemplate creating a gift tax liability when there shouldn't be one, and this clears that up.

Congressman [Kenny] Marchant has jumped in to all the IRS email drama, making sure that emails are only used through official accounts. Congressman Mike Kelly has the [Taxpayer Knowledge of IRS Investigations Act]. Congressman George Holding is sponsoring legislation that will allow social welfare groups to self-declare their tax-exempt status, not unlike other elements of the code in order to expedite the process. Congressman Pat Meehan heads legislation that would permit organizations to appeal denied requests for tax-exempt status to some entity that is new and fair and neutral so they'd get a fair hearing. And, finally, Congressman Jim Renacci has legislation that makes it a firing offense to target organizations -- target Americans for political purposes.

All of these things when you hear them are fairly intuitive. All of these things when you hear them seem very, very common sense and, yet, it's only in Washington, D.C., that this tends to be groundbreaking legislation. So I am really pleased that it seems like there is a bipartisan consensus that's developing about this and that, essentially, what is happening is the American public, through their elected representatives, are reclaiming delegated authority. It was delegation that was abused and now it's authority that's being reclaimed."

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ATR Applauds Passage of H.R. 1104, the “Fair Treatment for All Gifts Tax Act”

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Posted by Alexander Hendrie on Thursday, April 16th, 2015, 10:40 AM PERMALINK


The US House of Representatives yesterday unanimously passed H.R. 1104, the “Fair Treatment for All Gifts Tax Act." In past years, the IRS has been caught applying improper scrutiny towards conservative organizations. This legislation addresses the agency inappropriately applying federal gift tax rules to contributions given to some non-profits.  

H.R. 1104, introduced by Ways and Means Oversight Subcommittee Chairman Peter Roskam (R-Ill.) was part of a package of legislation passed yesterday that will make the IRS more accountable to the American people and put a stop to the politicized decision-making that has become all too frequent within the agency. H.R. 1104 passed unanimously and will now be considered by the US Senate.

The Fair Treatment for All Gifts Tax Act will prevent the IRS from assessing the gift tax on contributions to certain non-profit organizations. Americans for Tax Reform, as well as numerous other free market groups are organized under Section 501(c)(4) of the Internal Revenue Code, and were therefore affected.

In the past, the IRS has tried to assert that 501(c)(4) groups are "persons" under the tax code, and therefore any donations to them in excess of $14,000 should trigger tax consequences to the donor. But as ATR’s Ryan Ellis has previously pointed out “No serious tax expert would say that this interpretation holds water."

This is a clearly a perversion of federal gift tax rules – the gift tax was never intended to affect voluntary donations to non-profit groups. In fact, this intimidation tactic occurred around the same time that Lois Lerner was denying conservative and Tea Party non-profits the ability to organize and get tax status, and so was a clearly an extension of the agency’s politicized targeting.

The passage of this legislation will put a stop to one pathway that the agency used to apply improper scrutiny to non-profits, and is a key victory for advocates of a fair and accountable political system. ATR applauds the unanimous passage of the Fair Treatment for All Gifts Tax Act, and urges the Senate to quickly pass this much-needed legislation.

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lary

This law threatens the very principles which this nation was
founded on as it gives already influential people the ability to give almost
limitless amounts of financial support to campaigns which would better
represent them and their interests rather than the true interests of their
constituents .

tom2

Too much red tape. Replace this agency with a simpler system that doesn't lend itself to political abuse.


McConnell: IRS Needs to be Reined In

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Posted by Alexander Hendrie on Wednesday, April 15th, 2015, 4:37 PM PERMALINK


Senate Majority Leader Mitch McConnell concluded ATR’s annual tax press conference with a strong call to rein in the IRS and the Obama administration, which “believes that pursuit of their objectives justifies almost any way of doing it.”

The full text of McConnell’s remarks are below:

“Let me lead off by thanking you for the great work ATR has done over the years in keeping the issue of the IRS and tax reform front and center. It sure needs to be kept front and center, given the behavior of the current administration over the last six years.

Not only has the President succeeded in raising a lot of taxes, you have the -- the issue of the agency itself selectively targeting the President's political adversaries with audits and the like. This is an agency that needs to be reined in. As long as we have the agency, it ought to be a benign tax collector, not a pursuer of any administration's political adversaries.

Now that we're in the majority in both the House and Senate, I fully expect both the Ways and Means and -- Committees and the Finance Committee to continue to pursue these examples of abuse. But I'm going to say this, any effort by the President to kind of put it off on the agency doesn't work. In fact, when they were targeting Tea Party groups, the administration was actually publicly asking them to do what they did. And, if I were being pursued by a prosecutor and I worked at IRS, I think my first defense would be, well, you know the President was saying this is what we ought to do. And as Senator Durbin and others were saying, 'this is what we ought to do.'

So I think we have an administration here that believes that pursuit of their objectives justifies almost any way of doing it.

And so there's been no organization in our country who's kept the issue of high taxes and IRS abuse more in the public eye than ATR. And so, Grover, I wanted to come by and thank you for what you all are doing. Let's keep it up. Hopefully, in the next few years we can begin to slim down the size of government and get taxes lowered once again. Thanks a lot."

 

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Fred Chittenden

That's a laugh -- Mitch and his fellow RINOsaurs have just figured this out?

How many more decades before these Crony RINOsaurs actually get something done on fixing the tax code that they helped make so complicated.

Oldtaxpayer1001

Yes. Reform should start by replacing the IRS with a simple fair tax. Kill the IRS for good for a free America.


Sen. Mike Lee Calls for Aggressively Pro-Growth Tax Reform

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Posted by Alexander Hendrie on Wednesday, April 15th, 2015, 4:26 PM PERMALINK


At an Americans for Tax Reform press conference in the U.S. Capitol, conservative hero Senator Mike Lee (R-Utah) called attention to the tax burden faced by Americans and called for “aggressively pro-growth” tax reform. Sen. Lee noted that Americans “work three or four months out of every year just to pay their tax bills.” 

In introducing Sen. Lee, ATR president Grover Norquist spoke of taxation’s role in the founding of our country: "Before the country was founded in 1774, we were paying 1 to 2 percent of our income in taxes. This was considered outrageous, they were thinking of moving maybe to 3% and the guns came out and we told the British to leave. They, by the way, were paying 20 percent in London. The guys in London were paying 20 percent in order to repress us and tell us what to do and we paid 1 to 2 percent.

Since then, there's been some backsliding and I'm going to ask Senator Mike Lee to come explain why we went from 1 to 2 percent up to about 30 percent of our income being taken, and what are we going to do about it because something needs to be done. This has not been moving in the right direction for a while."

Senator Lee said: "Thank you, very much, Grover. I appreciate your leadership on this as well as that of ATR, the House Ways and Means Committee, and also the Senate Finance Committee. But we live in a country that has, as you referred to, increasingly been overrun by tax burden. On the eve of tax day, we see our tax freedom day going further and further into the year. We see Americans working three or four months out of every year just to pay their tax bills. This was not always the case, as you pointed out, that from the founding, we -- we paid a very small percentage of our GDP in taxes. But over the couple of centuries since then, we've seen the growth of government explode and that has all been facilitated by a tax code, one that has some serious problems."

One of them relates to its complexity. The fact that, together with its implementing regulations, it takes up tens of thousands of pages. The overall tax burden is substantial, forcing people to spend months out of every year just working for the government.

There are also other problems that relate to the fact that it punishes people for being married. It punishes people for having children. The marriage tax penalty and the parent tax penalty are horrible burdens, horrible disincentives for the very kind of behavior that we ought not be punishing. And so we need tax reform, we need simplification, and we need the kind of reform this aggressively pro-growth and that is pro- family. Our republic requires nothing less."

Norquist then praised Sen. Lee on the landmark Rubio-Lee tax reform plan: “Your leadership with Senator Rubio on the legislation is a powerful pro-growth, pro-family reform for the tax code.”

ATR has praised the Rubio-Lee plan here and here.

 

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ATR Supports H.R. 709, Prevent Targeting at the IRS Act

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Posted by Dorothy Jetter on Wednesday, April 15th, 2015, 1:51 PM PERMALINK


Earlier this year, Representative Jim Renacci (R-Ohio) introduced H.R. 709, the “Prevent Targeting at the IRS Act.”  This bill would authorize the IRS to terminate employees who target individuals based on their political beliefs.  Given the agency's recent behavior, this bill is an appropriate and necessary measure. 

Rep. Renacci stated:

“Though it’s been nearly two years since we learned of the IRS’ abuse of power, the American people’s distrust in the agency remains.  If someone at the IRS targets taxpayers based on their political beliefs, he or she should be held accountable. It’s that simple.”

H.R. 709 has bipartisan support in the House, with 54 cosponsors. Americans for Tax Reform supports the Prevent Targeting at the IRS Act.   

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