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Corporate Inversion Regs: Is the Cure Worse Than the Disease?

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Posted by Ryan Ellis on Tuesday, October 21st, 2014, 3:04 PM PERMALINK


Fallout continues to happen from the Treasury Department's September regulation announcement on corporate inversions.  It's now becoming increasingly clear that this regulation can be added to the list of jobs-killing initiatives from the Obama Administration.  It joins a Hall of Shame which includes Obamacare, EPA regulations, Dodd-Frank, and many others.

Financial experts at the time were shocked at the size and scope of the regulations.  Reuters went so far as to report that $12.3 billion in shareholder wealth was wiped out by the announcement of the regulations alone.  How much more will each of us lose from our 401(k) plans and IRAs once this regulation actually goes into effect?

The surprise was warranted, since up until that point the Obama Administration and Treasury had been downplaying what could be done in this area absent Congressional action.  Treasury Secretary Jack Lew said that Treasury "did not have the authority."  President Obama remarked that "we can't solve the entire problem administratively."  Most definitively, IRS Commissioner John Koskinen said "we've done, I think, all we can within the statute."

This reckless and extreme regulation has had serious consequences for U.S. companies and jobs. Since the announcement, a half-dozen international business deals have been scuttled.  What does that mean?  It means that the international profits of these companies--which have already faced taxation abroad--will continue to encounter double taxation from the IRS should the companies dare to bring that money back to the United States.

That's untenable.  Predictably, action has shifted from corporate inversions to outright foreign takeovers of American companies.  Even former Bill Clinton economic advisor Laura Tyson has said of this phenomenon, "the proposed anti-inversion measures would also make it more likely that U.S. companies are the target, rather than the acquirer, in cross-border M&A deals."

So great.  Rather than letting U.S. companies simply pay tax on their foreign earnings once and only once, the Obama Administration would rather these companies be gobbled up entirely by their foreign competitors.  What's going to happen to all the jobs at those companies then?  They will quite literally be shipped overseas.

The real solution here is to simply end the double taxation of overseas corporate earnings.  Let companies pay taxes over there, and then be done with it.  That would make them more likely to bring earnings back to the United States, since they won't face a double taxation situation.

Until we solve our broken tax system, especially with regard to large multinational U.S. companies, the type of clown show we're seeing on corporate inversions is doomed to continue.

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Illinois Democrats Continue Push for "Millionaire" Tax on November Ballot

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Posted by Will Upton on Tuesday, October 21st, 2014, 5:00 AM PERMALINK


Mike Madigan, the Democrat Speaker of the Illinois House of Representatives, and Governor Pat Quinn continue their push for higher taxes via the Advisory Question: “Millionaire Tax Increase for Education Question.” In Illinois, Advisory Questions can be placed on the ballot to gauge public opinion on potential legislation – although the ballot result is non-binding. In this specific case, voters are being asked whether they would support the legislature enacting an additional three percent tax on income greater than $1 million for the purpose of granting school districts additional revenue. This past legislative session, a “Millionaire” Tax bill failed to gain the necessary votes in the Illinois legislature.

The ballot question reads, “Should the Illinois Constitution be amended to require that each school district receive additional revenue, based on their number of students, from an additional 3% tax on income greater than one million dollars?”

The Advisory Question comes on the heels of a hotly contested legislative session where a similar legislative measure was narrowly defeated – two other massive tax increases were also defeated. State spending interests are pushing the Question as a means of putting increased pressure on the legislature to enact the constitutional amendment during the 2015 legislative session.

When Illinois House Speaker Mike Madigan pushed the ballot measure back in May, the Illinois Policy Institute noted: “Illinois’ message to job-creators is increasingly clear: the state’s political leadership wants to punish you for achieving success. At a time when Indiana, Wisconsin, Florida and Texas are welcoming new entrants from over-taxed states with open arms, Madigan is doubling down on economic failure and destruction to feed Springfield’s insatiable appetite for a larger share of your wealth and capital.”

“After years of having a stranglehold on Illinois politics, Speaker Mike Madigan is looking desperate as he tries again to push his failing tax and spend agenda,” said Grover Norquist, president of Americans for Tax Reform. “After failing to garner the votes for a Millionaire Tax, a Progressive Income Tax, and an extension of the 2011 income tax hike during the legislative session, Illinois Democrats have thrown up this last ditch effort to continue pushing Illinois down the road to serfdom.”

 

Photo Credit: WBEZ

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MFA/MITFA Could Impact Up to 3.5 Million Retailers

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Posted by Matthew Bruno on Monday, October 20th, 2014, 3:48 PM PERMALINK


TaxCloud, a certified service provider (CSP), estimated that 350,000 to 3.5 million retailers could be affected by the implementation of the Marketplace Fairness Act/MITFA. An Internet sales tax mandate would place a burden on millions of retailers across the country that would force them to change their tax policy for the worse.

MFA seeks to force one state’s sales tax upon another based on the concept that the Internet has grown to the point of allowing such transactions to be made easily. However, this mandate would ultimately allow certain states to impose their tax policies on customers buying products in other states. With the potential for 3.5 million retailers to have to alter their decision making, MFA/MITFA is yet another intrusive tax that would harm the growth of both the economy and online retail.

This estimate is far above the number of businesses that one might expect to be ensnared by MFA/MITFA. This just goes to show the unwelcome and obstructive nature of such a federal tax mandate.

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sunsetally

First proponents say MFA does not burden business which would not contend with Bellas Hess/Quill.
Then, they say it is burdensome, so a ('free') mandated software is required!
Which is it??
https://www.youtube.com/watch?...


Pres. Obama Tries to Rally Support for Maryland Democrats, Taxpayers Flee

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Posted by Will Upton on Monday, October 20th, 2014, 2:11 PM PERMALINK


This past Sunday, President Obama rallied support for embattled Democrat gubernatorial candidate and current Lt. Gov. Anthony Brown. While the President spoke, rally goers seemed to lose interest with some getting up and leaving. Reuters reported on Sunday: “President Barack Obama made a rare appearance on the campaign trail on Sunday with a rally to support the Democratic candidate for governor in Maryland, but early departures of crowd members while he spoke underscored his continuing unpopularity.”

The flight of rally goers from President Obama and Lt. Gov. Brown’s event is a fitting metaphor for the flight of taxpayers and businesses from the Chesapeake Bay State over the past 8 years of tax hikes and crushing regulations imposed by Gov. Martin O’Malley and Lt. Gov. Anthony Brown.

Since defeating Republican Gov. Bob Ehrlich in 2006, O’Malley and Brown have enacted 40 tax hikes that will cost Maryland taxpayers $20 billion by 2018 according to Change Maryland. Between 2007 and 2010, IRS data shows that nearly 31,000 residents have left the state. According to Gbenga Ajilore, writing in the Washington Post, of the 31,000 residents leaving the state, “…nearly 11,500 individuals in taxpayer households, went to Virginia. The net loss to Maryland — and Virginia’s gain — is $390 million in annual incomes. A surprising close second in attracting former Marylanders is North Carolina. Combined, that amounts to almost $700 million in annual incomes streaming down the Interstate 95 corridor.” North Carolina enacted major tax reform in 2013, making the state an even more attractive destination for refugees from high tax states like Maryland.

Much like the disgruntled rally goers on Sunday, Maryland’s millionaires fled the state after a 2008 law was signed by Gov. O’Malley enacting a new; higher rate for incomes over a million dollars. The result? Roughly a third of the state’s millionaires left. The Wall Street Journal notes: “One-third of the millionaires have disappeared from Maryland tax rolls. In 2008 roughly 3,000 million-dollar income tax returns were filed by the end of April. This year there were 2,000, which the state comptroller's office concedes is a "substantial decline." On those missing returns, the government collects 6.25% of nothing. Instead of the state coffers gaining the extra $106 million the politicians predicted, millionaires paid $100 million less in taxes than they did last year -- even at higher rates.”

Besides individual taxpayers fleeing the state, the radical tax and spend policies of O’Malley and Brown has caused a flight of businesses as well – resulting in thousands of jobs relocating outside of Maryland. Just one week ago, the Bechtel Corporation announced it would be moving a large chunk of jobs from Maryland to Virginia. Besides Bechtel, Maryland has seen operations from Northrop Grumman, Hilton Worldwide, SAIC, Volkswagen North America, Coventry, Constellation Energy, and Black & Decker either fold or leave the state. Change Maryland notes: “Since 2007… 6500 small businesses have left or shut down, the second-highest in the region, and just three Fortune 500 companies remain in the state. This is a sharp contrast to 24 large corporate headquarters in Virginia and 23 in Pennsylvania.”

When rally goers walked out on President Obama and Lt. Gov. Anthony Brown this past Sunday, they showed that Marylanders are increasingly turning their backs on the radical tax and spend policies of the Democrats in Maryland and in Washington, D.C.

 

Photo Credit: Edward Kimmel

 

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ATR's Chris Prandoni on the Most Expensive Regulation in White House History (and more...)

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Posted by Loren Long on Friday, October 17th, 2014, 12:19 PM PERMALINK


 In a Forbes column, ATR staff member Chris Prandoni writes about the possibility of the most expensive regulation in history that could be coming to the White House:

Look out! Last week, the Environmental Protection Agency (EPA) just sent what could be the most expensive regulation ever to the Office of Management and Budget for final review. We don’t know what the ozone rule will look like, but an EPA advisory board is pushing for standards that would, under EPA’s own estimates, cost about $100 billion to comply with every year. Another study by the National Association of Manufacturers estimates the rule could cost $270 billion per year and would put millions of jobs at risk.

Also pointing towards a huge price tag, EPA was ready to issue the ozone rule in 2011 but President Obama delayed the rule fearing the regulation’s cost would hamper his reelection chances. No longer encumbered by the electorate, the ozone rule will likely come at a huge cost. With the EPA already promulgating 9 of the 10 most expensive regulations in history, this sort of activity has become par for the course.

Tim Cavanaugh wrote in a National Review Online article on Mark Warner’s desire to raise taxes:

The equation of “new taxes” with “compromise” — which the paper should really be embarrassed to make after the stunning non-apocalypses of the budget sequester and the partial shutdown of some non-essential government services last year — also elides a point the two campaigns have been arguing over. Though Warner claims Gillespie signed the tax pledge created by Americans For Tax Reform’s Grover Norquist, and his campaign even flooded the press room with literature to that effect at Monday’s debate, Grover himself has shot that story down. As Post Virginia reporters Jenna Portnoy and Laura Vozzella point out, “Norquist tweeted late Monday that Gillespie did not sign the pledge: “Gillespie told me he would not sign pledges. He didn’t. He told the people of Virginia he wouldn’t raise their taxes. He won’t. Warner did.’”

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Obama Era Hits New Low

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Posted by Matthew Bruno on Friday, October 17th, 2014, 9:22 AM PERMALINK


An ABC News/Washington Post Poll released Wednesday reveals the lowest support for the Democrat Party in 30 years and the lowest approval for President Obama since he took office. Americans are unhappy with many of his positions, contributing to Obama’s approval rating this week falling to 40%, the lowest of his career. Although Obama is not on the ballot this November (unfortunately), he has said himself that his policies are. A vote for a Democrat is a show of continuing support for Obama’s failed presidency.

With weakening support for Obama’s policies across the board, it is hard to point to any one particular area that most highlights the problems under his leadership. However, Obama’s unpopularity seems to stem from the stagnant recovery. More Americans describe their finances as “not as well off” (30%) instead of “better off” (22%) since Obama became president, with 77 percent of respondents worried about the country’s economic future. With 37% of registered voters naming “the economy and jobs” as the single most important issue in their vote for Congress, the Democrats are in trouble. Almost four times as many Americans now describe the standard of living in the country as getting worse as opposed to getting better (57% vs 16%). Americans see the country on the wrong track, with Obama supervising the train wreck.

As Democrat candidates seek to distance themselves from Obama’s sinking ship, they must worry about the diminishing support for Democrat policies as well. Obama now sees career lows in his handling of:

  • Immigration (29%)
  • International Affairs (37%)
  • Terrorism (42%)
  • The ISIS situation, dropping 15 percentage points in the last two weeks (35%)


Obama’s unsuccessful agenda will be on the ballot this November. With Obama and his Democrat policies at their most unpopular, Americans this election have an opportunity to steer our country back in the right direction.

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ATR and AVA Oppose New E-Cigarette and Vapor Tax in Philadelphia

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Posted by Paul Blair on Thursday, October 16th, 2014, 3:19 PM PERMALINK


Today, Americans for Tax Reform President Grover Norquist and American Vaping Association President Gregory Conley sent a letter to the Philadelphia City Council in opposition to a proposal to raise taxes on e-cigarettes and vapor products. The bill, proposed by Councilwoman Blondell Reynolds Brown, would enact a new $2 tax on e-cigarettes and up to a $5 per purchase tax on e-liquids for vapor devices.

The letter reads as follows:

Dear Council Members,

We write today in opposition to all efforts to impose a new tax on e-cigarettes and vapor products in Philadelphia. These efforts come on the heels of a new $2-per-pack cigarette tax that went into effect just over two weeks ago.

A proposed bill by Councilwoman Blondell Reynolds Brown would enact a new $2 tax on e- cigarettes and up to a $5 per purchase tax on e-liquids for vapor devices. Hundreds of thousands of dollars in higher taxes will financially cripple new small businesses in Philadelphia. The small but growing segment of vapor specialty stores rely on the sale of these products as their sole source of revenue. To make the products sold in these stores uncompetitive will drive sales onto the Internet and outside of city limits.

That’s precisely why higher taxes don’t necessarily generate more revenue for the intended cause. Increasing public education's reliance on a volatile revenue source means that once businesses have been chased out of the city and sales go online, the city will be clamoring for even more revenue. This proposal is simply a placeholder for further tax hikes. This is particularly troubling in times of tepid economic growth and in light of the 20 new or higher taxes that have been imposed by Congress in the last few years.

Currently 44,000 students are on waiting lists for better performing charter schools. The problem lies not in lack of tax revenue for schools, but with the education system itself. Higher taxes will not rectify the achievement gap of Philadelphia students compared to those across the country and globe. Since the 2002-2003 school year, revenue for the school district has increased by over $1 billion to $2.97 billion. Meanwhile, there has been no improvement in testing scores since 2009, and a staggering 80 percent of students are not proficient in both math and reading.

The proposal to tax e-cigarettes would represent a massive step backwards for a city with the highest adult smoking rate among the U.S.’s ten major cities according to the CDC. A number of studies have shown that electronic cigarettes stand to improve health and prevent disease. This includes groundbreaking research by Dr. Igor Burstyn of the Drexel University School of Public Health on the chemistry of e-cigarette liquid and vapor.

By choosing to “vape” e-cigs instead of smoking traditional tobacco, consumers get their nicotine fix without the combustion and smoke, which are responsible for almost all of the negative health effects of tobacco cigarettes. Studies indicate that more and more smokers are abandoning the thousands of chemicals in traditional cigarettes in favor of smoke-free and tobacco-free e-cigarettes. Indeed, a recent study out of the United Kingdom that tracked nearly 6,000 smokers looking to quit found that the largest share of successful respondents had done so using e-cigarettes (20 percent), beating those who quit without help (15 percent) and those who used nicotine-replacement therapy such as gum or a patch (10 percent).

For decades, lawmakers have tried to mitigate smoking and the harm it causes through excise taxes and heavy regulation. However, with e-cigarettes, the free market has provided a solution to a problem that social engineers have not been able to address through stiff government regulations. The imposition of new taxes on these products perpetuates an issue lawmakers have spent so much time trying to eliminate, as studies show that almost all e-cigarette use is by smokers looking to significantly cut back or transition away entirely from their dependence on combustible cigarettes.

This e-cigarette tax hike is a shameless cash grab and should be rejected in favor of real reform.

Click here for a PDF of the letter. 

Americans for Tax Reform (ATR) is a non-partisan coalition of taxpayers and taxpayer groups who oppose all tax increases.

The American Vaping Association (AVA) is a nonprofit organization that advocates for the rapidly growing vaping and electronic cigarette industry. The AVA's membership is comprised of small- and medium-sized vapor businesses and has no ties to tobacco companies. The AVA is dedicated to educating the public and government officials about the growing evidence that e-cigarettes – battery-powered devices that heat a liquid nicotine solution and create an inhalable vapor – are harm-reduction products that effectively help smokers quit.

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Grover Norquist Appears on "The Willis Report" to Discuss the CDC and NIH


Posted by Zoe Crain on Thursday, October 16th, 2014, 1:57 PM PERMALINK


Americans for Tax Reform president Grover Norquist appeared on Fox Business Network’s “The Willis Report,” hosted by Gerri Willis, to discuss wasteful NIH and CDC spending, and their failed response to the ebola crisis. An excerpt of his comments is below:

“It’s kind of sad that the Democratic groups, instead of trying to solve the problem, are trying to exploit this crisis for political gain- step one. Step two, let’s look at the numbers- in 1980, the National Institute of Health had $3 billion, today, it’s 10 times that size: $30 billion.  The Center for Disease Control, which is supposed to be focusing on this sort of stuff, has about $6 billion. It got an extra $4 billion over the past few years, and they turned around and spent about 6% of that on infectious diseases. So the Center for Disease Control and the NIH decided to make Ebola and other similar infectious diseases not exactly a top priority. They say if they had more money, they would have done something. They had $30 billion. They had lots of money and they chose to spend it other places.”

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How the Taxpayer Protection Pledge Enables True Tax Reform

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Posted by Adam Radman on Thursday, October 16th, 2014, 11:51 AM PERMALINK


During ATR president Grover Norquist’s inaugural podcast, he discusses the history of the Taxpayer Protection Pledge and why it has been such a powerful tool in protecting taxpayers from tax hikes and facilitating real tax reform on the state and federal level. 

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Novel Concept on Wisconsin Ballot: Using Gas Tax Revenue Only for Transportation

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Posted by Will Upton on Thursday, October 16th, 2014, 5:00 AM PERMALINK


Voters could put an end to the legislative abuse of raiding gas tax monies for non-transportation projects.

This November, Wisconsin taxpayers could decide to guarantee gas tax revenue goes only towards transportation projects via Question 1: “Creation of a Transportation Fund”. This legislatively referred constitutional amendment would legally dedicate revenues generated by use of the state transportation system, namely the state gas tax, to be used only for funding Wisconsin’s transportation system. The measure reads: “Shall section 9 (2) of article IV and section 11 of article VIII of the constitution be created to require that revenues generated by use of the state transportation system be deposited into a transportation fund administered by a department of transportation for the exclusive purpose of funding Wisconsin's transportation systems and to prohibit any transfers or lapses from this fund?"

State governments often raid state transportation funds to pay for other projects having nothing to do with roads or other transportation needs. Question 1 would constitutionally mandate that state gas tax revenue go towards projects within the purview of the Wisconsin Department of Transportation, ensuring that the revenue is not raided and the fund abused.

The ballot measure has received bipartisan support from Wisconsin’s Lt. Gov. Rebecca Kleefisch and a bevy of legislators. In addition to the support of numerous elected officials, Question 1 is being backed by many Wisconsin businesses, local chambers of commerce, and industry associations. Vote Yes for Transportation – the organization primarily backing a Yes vote on Question 1 – notes: “A winning "yes" vote simply requires that your gas tax and registration fee dollars remain in the transportation fund to be used to pay for Wisconsin's roads, public transit systems, ports, airports, rail and bicycle and pedestrian facilities.” The Wisconsin Taxpayers Alliance noted in 2013 that, “The change in revenue mix [shift to borrowing for transportation] coincided with the use of transportation fund revenues to help balance the general fund budget… In every year from 2002 to 2011, lawmakers transferred money from the transportation fund to the general fund – a 10 year total of more than $1.4 billion.”

Americans for Tax Reform president Grover Norquist noted, In a trick that is getting old and tired, politicians refuse to spend tax dollars raised through the gas tax on roads, then claim poverty, and promise  that 'if you only agree to another tax hike--this time the money will actually go for roads.' No surprise, it doesn't. Rinse. Repeat.He continued, This ballot measure ends this game in the state of Wisconsin. Forty-nine other states should follow suit.

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