Tax Reform Must Retain Carried Interest As A Capital Gain

Share on Facebook
Tweet this Story
Pin this Image

Posted by Alexander Hendrie on Tuesday, January 24th, 2017, 8:00 AM PERMALINK


As President Trump and Congress ramp up discussions on what comprehensive tax reform should look like, they ought to be able to agree that reducing, not raising, the tax burden on badly-needed investment is a top priority. That's the opinion of two of Washington's most prominent taxpayer groups, which today urged leaders on both ends of Pennsylvania Avenue to get an early start on publicly declaring tax-reform principles that encourage investment, among them ensuring that all types of capital gains are treated fairly, without harsh or discriminatory exceptions in the law. 

Grover Norquist, Founder and President at Americans for Tax Reform, and Pete Sepp, President of National Taxpayers Union, offered the following statement ahead of GOP's policy retreat, where tax reform is expected to be the topic of in-depth discussions:

"The next four years represents an opportunity to reduce -- not increase taxes on capital gains. Over the past eight years, the top rate increased from 15 percent to 23.8 percent, and the top integrated rate currently sits at 56.3 percent compared to the OECD/BRIC average of 40.3 percent. 

While it appears unlikely that incoming lawmakers and the administration will increase rates outright, they should also be sure not to incrementally move the needle toward higher capital gains taxes in other ways, like boosting taxes on carried interest capital gains.

Carried interest capital gains income is earned through a net gain within a partnership formed between individuals with capital and an expert investor. They are indistinguishable from any other type of capital and so they are paid at the same capital gains tax rates. 

While supporters of higher taxes on carried interest capital gains say it takes aim at 'hedge fund guys,' it would also hurt pension funds, charities, and colleges that depend on these investment partnerships as part of their savings goals. In addition, small businesses would find themselves increasingly shut out from investment money available to them from these partnerships.

Rather than supporting proposals that lead to higher capital gains tax rates, the incoming Congress and administration should look toward lower rates. One model to follow is contained in the House GOP blueprint, which reduces the top rate on capital gains to 16.5 percent."

ATR is a nonpartisan taxpayer advocacy group, and sponsors the Taxpayer Protection Pledge. NTU is a pro-taxpayer lobbying organization working for lower, simpler taxes and economic freedom at all levels.

Photo Credit: 
Tax Credits

Top Comments

Wall Street Stallion

Ok


ATR Urges Ind. Lawmakers to Reject Cigarette and Gas Tax Hikes

Share on Facebook
Tweet this Story
Pin this Image

Posted by Miriam Roff on Monday, January 23rd, 2017, 9:52 PM PERMALINK


In a recent letter, Americans for Tax Reform urged Indiana lawmakers to reject measures being pushed by Republican House Speaker Brian Bosma that would raise the state gas and cigarette tax.

Not only are these tax increases a misguided approach to budgeting, they also set the stage for more tax hikes down the road. The last thing hardworking families and employers across Indiana need is to have lawmakers in Indianapolis restrict their economic mobility by piling on more tax hikes at the state level.
 
You can view the letter here and below: 
 

To: Members of the Indiana Legislature

From: Americans for Tax Reform

Re: 2017 Legislative Session

Dear Members of the Indiana Legislature,

The coming year looks to be one of historic policy change, not just in Washington, but also state capitals across the country. On behalf of Americans for Tax Reform and our supporters across Indiana, I write today to urge you to keep taxpayers in mind as you take up many important issues during the 2017 legislative session. Any and all tax hikes will be scored as violations of the Taxpayer Protection Pledge, a personal written commitment many state lawmakers have made to their constituents to oppose net increases in taxes.

Your constituents have been hit with over 20 federal tax increases over the last eight years. The last thing individuals, families, and employers across Indiana need is to have lawmakers in the Indianapolis pile on with further tax hikes at the state level.

There is ample evidence that higher taxes make states less competitive, and harm economic growth. John Hood, chairman of the John Locke Foundation, a non-partisan think tank, analyzed 681 peer-reviewed academic journal articles dating back to 1990. Most of the studies found that lower levels of taxes and spending correlate with stronger economic performance. When Tax Foundation chief economist William McBride reviewed academic literature going back three decades, he found “the results consistently point to significant negative effects of taxes on economic growth, even after controlling for various other factors such as government spending, business cycle conditions and monetary policy”

Unfortunately, potential tax hikes are already looming in the state and your colleagues are openly endorsing them. Earlier this month, not only did Speaker Bosma publicly tout a $0.10 gas tax hike, he’s supporting a gas tax increase for a second year in a row. The plan, like last year’s bill, only focuses on raising taxes, not reforming government or reallocating currently collected resources. As such, I urge you to reject this misguided approach to budgeting.

If transportation funding were truly a priority, lawmakers would immediately use gas tax revenue for its intended purpose: roads—rather than wait until 2019, as the plan proposes.  By claiming a tax hike is needed for transportation, lawmakers are admitting that transportation needs are actually their lowest priority; otherwise they would not have funded everything else first. As such, legislators should immediately and permanently codify the earmarking of gas tax revenue to new and existing transportation projects.

Accountability is also an integral part of the legislative process and voters demand it. Yet, as the plan stands, it violates voter wishes by allowing the gas tax rate to increase automatically every year. When lawmakers place tax hikes on autopilot, they strip from the budget process the responsibility and accountability that come with annual decisions about tax rates. A 2015 national public poll found that 79 percent of Americans oppose an increase in the gasoline tax to keep up with inflation and 68 percent oppose any increase in the gas tax to spend more for infrastructure.

Contrary to popular belief, the gas tax is not a user fee. Consumers must be presented with a choice of either purchasing the service from the government (by paying the fee) or purchasing the services from a private business to qualify as a true user fee. Because anyone who purchases gasoline in Indiana is forced to pay the tax, they are not considered user fees. Gas tax increases are tax increases in the same way that income and sales tax increases are. Road tolls, however, are an example of user fees. Tolls are user fees because commuters have the option of using the roads they are imposed upon or not.  

An additional object of consideration is an increase in the state cigarette tax. Increasing the Hoosier State’s dependence on tobacco taxes by increasing them will not guarantee more revenue in the long run. As demonstrated by many states and cities across the nation, targeted excise taxes have proven to be unstable sources of revenue, and ultimately result in a decrease in tax receipts. For example, neighboring Illinois nearly doubled its cigarette tax in 2012 by raising the tax $1-per-pack; it generated $138 million less than projected. In fact, only three out of the 32 state tobacco tax increases, enacted between 2009 and 2013, have met or exceeded tax revenue projects.

Currently, Indiana has a regionally competitive cigarette tax rate of $.995-per pack. It is higher than Kentucky’s $.60-per pack tax but makes Indiana a net exporter of cigarettes to states like Illinois, which boasts the city with the highest state-local tax rate of $6.16-per pack in Chicago. 

If enacted, this tax would likely further incentivize cigarette smuggling and cross-border sales into states like Kentucky. According to the Tax Foundation, when Illinois almost doubled the cigarette tax rate, cigarette smuggling rate dramatically increased from 1.1 percent to 20.9 percent in the first year. Consequently, small businesses in this state lost tens of thousands of dollars as patrons pursued cigarettes in less expensive markets across state lines, including in Indiana.

Targeted and regressive tax hikes on low-income consumers like smokers are unwise and will prove to be an unstable source of revenue long term.

If you need another reason to not raise taxes, which is what lawmakers do instead of reforming government, there is a good chance that federal tax reform will finally happen this year, and that it will include either a significant scaling back or outright elimination of the state & local tax deduction. The federal government has been subsidizing state tax hikes and high tax states for far too long, but the 115th Congress is looking to put an end to that.

Now that hardworking Hoosier families can finally afford to fuel their cars and heat their homes, legislators should not strip them of economic opportunity by making gas increasingly unaffordable and burdening the middle class and low-income families with more tax hikes. ATR will be educating your constituents and all Indiana taxpayers as to how lawmakers in state capitals vote on important fiscal and economic matters throughout the legislative session.

Please look to ATR to be a resource on tax, budget, and other policy matters pending before you. If you have any questions, please contact Miriam Roff, State Affairs Coordinator, at (202) 785-0266 or mroff@atr.org.

Sincerely,

Grover Norquist

President, Americans for Tax Reform

Photo Credit: 
Mr. Nixter

ATR Statement in Support of Rep. Mulvaney for OMB Director

Share on Facebook
Tweet this Story
Pin this Image

Posted by Alexander Hendrie on Monday, January 23rd, 2017, 3:05 PM PERMALINK


ATR President Grover Norquist today sent a letter of support for Congressman Mick Mulvaney (R-S.C.) for the position of Director of the Office of Management and Budget. Read the letter here or below. 

Dear Chairman Enzi & Ranking Member Sanders,

I write in support of Congressman Mick Mulvaney for the position of Director of the Office of Management and Budget. Throughout his time in Congress, Rep. Mulvaney has displayed a commitment to addressing Washington’s rampant overspending problem and reforming the bloated federal bureaucracy. Senators should have no hesitation supporting his nomination to lead OMB and should swiftly approve him to this position.

The federal budget is on an unsustainable trajectory that must be addressed. In coming decades, spending and debt are projected to rapidly increase to historically high levels. The Director of OMB will play an integral part in reining in the out-of-control federal government and Rep. Mulvaney has proven he is willing to make the tough choices that will undoubtedly be required to reverse the looming fiscal crisis.

As an advocate of bringing the Department of Defense under full audit, Rep. Mulvaney has shown a willingness to look for waste and abuse wherever it may be.

As a signer of the Taxpayer Protection Pledge – a commitment made to his constituents to oppose any and all new tax increases – Rep. Mulvaney has shown he understands the need to reduce spending and the deficit without burdening American families and businesses with higher taxes.

Congressman Mick Mulvaney is the right choice to lead OMB at a time when the federal budget is in desperate need of restraint. I urge you and your colleagues to swiftly approve his nomination as Director of OMB.

Onward,

Grover Norquist

Photo Credit: 
Gage Skidmore

Top Comments


ATR Supports Congressman Tom Price for HHS Secretary

Share on Facebook
Tweet this Story
Pin this Image

Posted by Alexander Hendrie on Monday, January 23rd, 2017, 1:52 PM PERMALINK


ATR President Grover Norquist today sent a letter of support for Congressman Tom Price (R-Ga.) for the position of Secretary of the Department of Health and Human Services. Read the full letter here or below. 

Dear Chairman Hatch & Ranking Member Wyden:

I write in support of Congressman Tom Price for the position of Secretary of the Department of Health and Human Services. Throughout his career in public office, Dr. Price has proven to be an advocate for pro-growth, fiscally responsible reforms, a champion of patient-centered, free market healthcare, and a supporter of ending Washington dysfunction and gridlock. All Senators should vote to confirm Rep. Price as to lead HHS.

As Chairman of the House Budget Committee, Dr. Price has released fiscally responsible proposals that address Washington’s overspending problem and reduce the deficit without burdening American families and businesses with higher taxes.

Dr. Price has also made it a priority to fix Washington’s gridlock and political dysfunction. Dr. Price last year released a detailed proposal to reform the broken federal budget process by replacing the 1974 Budget Act with reforms to reassert Congressional authority over the federal budget, establish enforceable benchmarks to rein in the deficit, and reverse the bias toward unaccountable spending.

As a member of the House Ways and Means Committee, Dr. Price has advocated for conservative, pro-growth tax reform. Dr. Price is a signer of the Taxpayer Protection Pledge, a commitment he has made to his constituents to oppose any and all new tax increases.

Over the last eight years, Dr. Price has conducted important oversight over the Obama administration. Most notably, Dr. Price last year led oversight efforts over Centers for Medicare and Medicaid Innovation (CMMI), which used its broad authority to unilaterally change to healthcare policy despite opposition from doctors, patients, and lawmakers on both sides of the aisle.

In addition to oversight over Obamacare, Dr. Price has also shown leadership in proposing free market solutions. Rep. Price is the author of the “Empowering Patients First Act,” legislation that replaces Obamacare with a series of reforms that lowers costs, increases efficiency, and empowers patients and doctors across the country.

Congressman Tom Price has a proven record fighting for lower taxes, responsible spending, free market healthcare, and an accountable federal government. Senators should have no hesitation supporting his nomination to lead HHS and should swiftly approve him to this position.

Onward,

Grover Norquist 

Photo Credit: 
Gage Skidmore

New York Governor Andrew Cuomo Proposes New Vape Tax in Budget Request

Share on Facebook
Tweet this Story
Pin this Image

Posted by Paul Blair on Wednesday, January 18th, 2017, 5:07 PM PERMALINK


In his $152.3 billion state budget proposal, Governor Andrew Cuomo (D-N.Y.) proposed a 10-cent per mL tax on the liquid contained in electronic cigarettes and vapor products. The tax would be imposed on the wholesale level and would apply both to e-liquid that contains nicotine and e-liquid that does not. According to state revenue estimates, the tax would generate $3 million annually.

This reckless tax hike proposal flies in the face of conclusive evidence that vapor products are effective smoking cessation tools that represent no greater than 5 percent of the harms to consumers as traditional combustible tobacco cigarettes. Balancing the state budget on the backs of smokers looking to quit flies in the face of decades of efforts aimed at curbing cigarette use to drive down public health costs.

Currently, six states impose an excise tax on vapor products including North Carolina (5 cents per mL), Louisiana (5 cents per mL), Kansas (20 cents per mL), West Virginia (7.5 cents per mL), Pennsylvania (40% wholesale), and Minnesota (95% wholesale). Beginning April 1, California will also impose a 27.3% wholesale tax on vapor products.

Earlier this month I outlined the possible relationship between state overspending problems like New York's and possible tax threats to vapor products in the states. That map can be found below and the original piece can be read here. Click the map to enlarge. 

Though only a small portion of Cuomo’s large tax hike plans (including an extension of the nearly 9% “temporary” tax surcharge on income over $1 million), the tax on vapor products is among the most punitive. It not only targets smokers, who are some of the most heavily taxed consumers in the United States, but it targets former smokers who have found vapor products as a successful means of quitting smoking. Similar to other nicotine replacement therapies (NRTs), vapor products should remain taxed at the sales tax rate exclusively.

The state’s declining revenue collections from cigarettes may play a role in the increased interest from the governor in taxing vapers. During the current fiscal year, tobacco products generated about $1.3 billion for the state, a figure projected to decrease to roughly $1.2 billion this year and even further in future years. At $4.35 per pack, New York’s state cigarette tax is the highest in that nation. Residents of the Big Apple are hit with another local tax that brings smokes bought there to a per pack tax rate of $5.85.

This high cigarette tax rate has led to the highest rate of cigarette smuggling in the nation. According to an analysis conducted by the nonpartisan Tax Foundation and Mackinac Center for Public Policy, 55.4 percent of cigarettes consumed in the state are smuggled in, which helps consumers avoid paying taxes on the products. 

Unlike cigarettes, consumers can purchase vapor products online where taxes are not collected or imposed by the government. This will result in the closing of vape shops across the Empire State, a loss in sales, income, and excise tax revenue, and will harm those seeking a brick and mortar experience in their quit journey.

The legislature should reject this senseless cash grab and focus on spending restraint instead.

Want to keep up to date with news like this? Subscribe to my newsletter, "Vapor News and Views," by clicking here. 

Photo Credit: 
Flickr: Diana Robinson

Top Comments

Olivera

Isn't it wonderful to give away other people's money? First you come up with all kinds of freebies. Then you decide who should foot the cost! You won't pay for the freebies from savings or sacrificing other services which may not be as needed. Nope, you find some suckers to pay for it by taxing them more! Wow, that's really clever. And the population of Florida just keeps on growing, and New York's shrinking. I guess people aren't as dumb as we think they are.

Barbara E

New York State collects over one billion dollars a year in cigarette taxes. He's now proposing a tax that will collect '3 million dollars' per year. Do you really think he'll leave it at that? Hah!

Thank God I moved out of New York years ago.

Glen Appleton

New York (like California and other states) are hurting for revenue now more than ever, partly due to the tobacco bonds they've issued in recent years. These tobacco bonds leverage future tobacco tax and MSA payments, which are proportional to the sales of actual tobacco cigarettes in the state. Now that smokers are switching from smoking to vaping, these states are having to pull funds from other revenue pools to pay the dividends on the bond issues, and they're scrambling to find another revenue source (vaping).

These states gambled that smokers would continue to smoke at current or higher rates, and the tobacco economy would continue on the projected course. They were wrong.


ATR Statement in Support of Steven Mnuchin for Treasury Secretary

Share on Facebook
Tweet this Story
Pin this Image

Posted by ATR on Wednesday, January 18th, 2017, 1:14 PM PERMALINK


ATR President Grover Norquist issued the following statement today in support of President-elect Donald Trump’s nomination of Steven Mnuchin for Secretary of the Treasury:

“Americans for Tax Reform supports Donald Trump’s nomination of Steven Mnuchin to be the next Secretary of the Treasury. Mr. Mnuchin truly understands the importance of tax reform and its positive impact on economic growth and job creation. He has extensive experience in housing, finance, banking, and trade, as well as a far-reaching comprehension of financial markets.

“Mr. Mnuchin has committed to passing pro-growth tax reform in 2017. It has been more than thirty years since tax reform was last signed into law and our tax code is woefully outdated and uncompetitive. Pro-growth reform will ensure higher wages, more jobs, and a stronger economy while also helping our businesses compete with the rest of the world.

“Under President Obama Americans have seen the role of government in the market increase exponentially with regulatory regimes such as the Dodd-Frank Act. While Dodd-Frank was supposed to target Wall Street, impacts of the law have instead fallen heaviest on Main Street, reducing small business lending, shuttering credit unions and community banks, and growing the number of unbanked Americans.

“Mr. Mnuchin has made it clear that reforming the Dodd-Frank Act will be his ‘number one priority on the regulatory side’ once he becomes Secretary of the Treasury.

“I know that Mr. Mnuchin will be a leader in his role as Treasury head, and will work to ensure American consumers and taxpayers are protected, while also working to foster a regulatory climate that allows business to grow and prosper.” 

Photo credit: greatagain.gov

 

Top Comments

SZwartz

A stimulus during a boom, even a small boom, is unwise


Norquist: Trump and House GOP Tax Reform Plan Coming Together

Share on Facebook
Tweet this Story
Pin this Image

Posted by Hannah Daniel on Tuesday, January 17th, 2017, 3:28 PM PERMALINK


ATR president Grover Norquist was a guest today on Mornings with Maria on the Fox Business Network to discuss tax reform. He said:

The big story over time is how Trump’s plan and the House Republican plan – Chairman Brady and Paul Ryan – have come together. Remember, Trump started at 15% -- the corporate rate – and the Republican plan started at 25%. When they updated it they moved it to 20% towards where Trump was. Trump’s was the only Republican plan, of all the 1500 Republican candidates for president, he was the only one who didn’t include full expensing for business investment in his first plan. Second plan, he joined with the House in going to full expensing for business. So rather than long depreciation schedules, you expense it the first year. Very powerful pro-growth tool. So on both of the drivers of growth, full expensing and a lower corporate rate, the Trump plan and the House Republican plan have moved towards each other in the right direction.

The full video can be found here

Photo Credit: 
Gage Skidmore https://www.flickr.com/photos/gageskidmore/

Top Comments

Trump Tax Hike

Some people's tax brackets will actually be raised and many people will pay MORE in income tax than under Obama.

How is this tax reform?

http://trumptaxhike.wordpress....


Norquist Statement Urging Support of Betsy DeVos Nomination

Share on Facebook
Tweet this Story
Pin this Image

Posted by John Kartch on Monday, January 16th, 2017, 5:46 PM PERMALINK


ATR President Grover Norquist sent the following letter urging senators to approve the nomination of Betsy DeVos as Secretary of Education:

On behalf of Americans for Tax Reform, I write you to urge your committee and the full United States Senate to approve the nomination of Betsy DeVos to become the Secretary of Education.

Betsy DeVos has been a leader in providing innovative solutions to bring higher quality education to children throughout the United States who are most lacking in educational options and opportunity.

As chairperson of the American Federation for Children, Mrs. DeVos assisted organizations and lawmakers in dozens of states to promote and adopt policies to enable students, particularly from high-need communities, to have equal access to schools that best meet their educational needs.

Thanks in part to Mrs. DeVos, more than half the states have tax policies that encourage charitable donations to scholarship funds to help students from low-income families, or encourage support for students with disabilities, or enable parents to choose schools that best meet the needs of their children.  More than 40 states now have charter school laws.

The specific approach of education tax credits to encourage increased charitable support for scholarship funds has been especially effective in providing children from low-income families a financial pathway to attend a quality school – something that upper income parents already can provide for their children.  At present, 17 states have a donation tax credit law for scholarships, which serve as models for Congress to consider adopting nationally so that many more children can be empowered to attend schools that will provide the education they need and deserve.

Thanks to the leadership and encouragement of Betsy DeVos, there are millions of students who have an education that puts them on a quality-of-life trajectory to become productive citizens. 

It is this kind of national leadership that has made a positive difference in the lives of so many students that warrants your approval for Betsy DeVos to become the next Secretary of Education.
 

Grover Norquist

President, Americans for Tax Reform

Photo Credit: 
betsydevos.com

Top Comments


Rep. Emmer's "CREATE Jobs Act" Will Fix America's Competitiveness Problem

Share on Facebook
Tweet this Story
Pin this Image

Posted by Toni-Anne Barry on Friday, January 13th, 2017, 5:42 PM PERMALINK


Congressman Tom Emmer (R-MN) recently introduced H.R. 533, the Corporate Rate Equality and Trade Empowerment (CREATE) Jobs Act. This innovative legislation lowers the corporate tax rate to a globally competitive level so American businesses are able to compete in the global economy. ATR urges all members of Congress to support and co-sponsor Rep. Emmer’s bill.

America’s corporate income tax rate is close to 15 percent higher than the average in the developed world. The tax rate has barely changed since tax reform was passed 30 years ago in 1986.  At the time, we lowered our rate to 39 percent – below the developed average of 44 percent. Since then, other countries have cut their rates aggressively.

32 of the 35 developed countries have reduced their corporate rates since 2000. Only the U.S. and Chile have higher corporate tax rates than they did in 2000. Our high rate makes it difficult, if not impossible for our businesses to compete with competitors that have much lower rates Canada (26.3 percent), the United Kingdom (20 percent), and Ireland (12.5 percent).

The CREATE Jobs act would address this inequity by reducing the U.S. corporate rate to five points below the OECD average and creating a process by which the U.S. rate is regularly reviewed to ensure economic competitiveness.

The current high U.S. rate not only hurts American competitiveness, it has real world implications for the economy. The high rate has resulted in close to 50 American businesses leaving the country through an inversion in the past decade, according to data compiled by Democrats on the Ways and Means Committee. The uncompetitive code has also resulted in a net loss of more than $700 billion in assets that have been acquired by foreign competitors according to a report by Ernst and Young.

By creating a system that creates a competitive corporate tax rate, Rep. Emmer’s CREATE Jobs Act ensures that the U.S. again becomes a leader in the global economy and it stays there. Members of Congress should support and pass H.R. 533 to help provide a much needed booster shot to the economy. 

The letter can be read here.

Photo Credit: 
Viet Fuji

Top Comments


ATR Supports Rep. Renacci's "Fiscal State of the Nation" Resolution

Share on Facebook
Tweet this Story
Pin this Image

Posted by Toni-Anne Barry on Friday, January 13th, 2017, 5:15 PM PERMALINK


ATR today sent a letter in support for H.Con.Res.8, the Fiscal State of the Nation Resolution, introduced by Congressman Jim Renacci (R-Ohio) along with 34 other members of the House of Representatives. 

This bipartisan resolution will require the Comptroller of the United States to provide an official report on the financial status of the United States to a joint session of Congress.

Financial statements for the United States are already compiled, but are too complex and too long. As a result, important information on the federal government’s assets, liabilities, revenues, expenses, and sustainability of programs are often ignored or missed by Members of Congress, the media, and the public.

The full letter can be read here.

Photo credit: Cafecredit.com

Top Comments


hidden
×