Wisconsin Lawmakers Consider Pro-Taxpayer Reforms

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Posted by Patrick Gleason on Friday, May 29th, 2015, 4:49 PM PERMALINK


There are currently several significant reforms pending in Wisconsin that will be decided by state lawmakers in the coming weeks, all of which have major taxpayer implications.

Wisconsin is one of 32 states that has a prevailing wage law on the books, which requires state and local governments to pay inflated wages for taxpayer-funded construction projects. Legislation to repeal Wisconsin’s prevailing wage law, which is supported by Americans for Tax Reform, was passed out of Assembly committee this week.

For lawmakers who are looking to save or free up taxpayers dollars, repealing the state’s prevailing wage law is low-hanging fruit. According to a Wisconsin Taxpayers Alliance study, Wisconsin’s prevailing wage law inflates wages 45 percent above market rates. The study found that the state’s prevailing wage law forced Wisconsin taxpayers to cough up $200 to $300 million in additional labor costs in 2014. The Madison-based MacIver Institute explains how prevailing wage laws cost taxpayers:

“The extra costs associated with prevailing wage are felt all across the state. In Vilas County, an ATV trail along Highway K will cost an additional $150,000 because of the archaic law. In the Village of Grafton, taxpayers were given the bill for an additional $260,000 to cover the maintenance costs of two water towers. No additional work was done in either scenario. Taxpayers simply had to pay more.”

Repealing the state’s prevailing wage law is a great way for Wisconsin lawmakers to save money and get more bang for the taxpayer buck. When Ohio exempted school projects from prevailing wage requirements in 1997, construction costs dropped by 10 percent. Gov. Scott Walker has come out in support of full repeal of prevailing wage. All that’s needed is for lawmakers to send him a bill.

Prevailing wage isn’t the only law that Wisconsin lawmakers should repeal in the coming weeks. Rep. Dale Kooyenga and Sen. Howard Marklein have introduced legislation to repeal Wisconsin’s Alternative Minimum Tax (AMT). Getting rid of the AMT would fix a major flaw in Wisconsin’s tax code.

Originally intended to apply to a small number of high-income filers, the AMT ensnares more and more Wisconsin families every year with higher taxes. In 2011, 5,900 Wisconsin taxpayers paid the AMT. In 2015, Wisconsin’s AMT is expected to jump 450 percent and hit tens of thousands of taxpayers. By repealing the AMT, Wisconsin lawmakers would both improve the state’s tax climate and protect thousands of individuals and families from being hit with higher taxes.

Wisconsin legislators have enacted a number of pro-taxpayer reforms in recent years, but there is still much work to be done and room for improvement. It will be a huge victory for Wisconsin taxpayers if bills to repeal the Badger State’s prevailing wage law and Alternative Minimum Tax make it to Gov. Walker’s desk this summer.

 

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Edward Stojakovic

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Post Office Continues Long History of Hemorrhaging Taxpayer Dollars

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Posted by Justin Sykes on Friday, May 29th, 2015, 3:45 PM PERMALINK


“Neither snow nor rain nor heat nor gloom of night” can keep Postal Service bureaucrats from continuing to lose taxpayer dollars.  This month the United States Postal Service (USPS) posted it’s second quarter finances for 2015, suffering a net loss of $1.5 billion in just three months. Yet losses aside, what is most concerning is how a government-backed monopoly receiving $18 billion annually in taxpayer-backed subsidies continues to flounder financially and why it has been allowed to do so for so long.

Sadly the $1.5 billion lost from January to March is just the tip of the financial iceberg. During the same period last year net losses were actually higher at $1.9 billion. While this change could appear to some as an improvement, it is actually an incremental part of a much larger trend of financial despair that has plagued the Post Office for years.

The most recent second quarter losses mean the Post Office has now consecutively posted revenue losses 24 out of the last 26 quarters. Such an economically dismal start also puts the USPS on schedule to make 2015 the 9th consecutive year in which they have suffered multi-billion dollar losses.

In 2014 USPS found that “its total liabilities were $67.16 billion…compared with $23.16 billion in assets.” Thus it is no surprise analysts estimate the Post Office has seen over $47 billion in losses over the last decade. However, as outrageous as the losses themselves are, the USPS’s suggestions for reducing the revenue gap are even more ridiculous.

For instance, since last year USPS has actually been beta testing an amazingly illogical grocery delivery scheme in San Francisco. Additionally, just last week the USPS’s Office of Inspector General published a white paper suggesting that the Post Office could raise needed revenue by expanding it’s services to banking. Admittedly the last institution any rational consumer would want handling their finances is an institution that can’t handle it’s own finances.   

The ironic aspect of these revenue schemes is that a government entity is trying to raise revenue by expanding non-core related services (groceries and banking) in order to make up revenue losses from its core services (mail delivery). This is the literal equivalent of trying to put out a fire with gasoline.        

A more logical approach to improving the Post Office’s financial failures would be common sense reforms such as increasing spending transparency and accounting as well as simply focusing on the primary service it was created to provide – mail delivery.

Yet until action is taken on Capitol Hill to examine the financial shortcomings of the Postal Service, the only thing Americans can expect to be on time each year is increased waste and billions more of taxpayer dollars being lost.  

 

Photo Credit: Brian Hefele  

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Comprehensive List of Martin O’Malley Tax Hikes

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Posted by Will Upton on Friday, May 29th, 2015, 3:39 PM PERMALINK


Former Maryland governor Martin O’Malley is making it official: He is running for President. A darling of radical spending interests, environmentalists, and union bosses, O’Malley's time as governor saw astronomical increases in taxation in Maryland. Overall, in his eight years as governor, Martin O’Malley raided the wallets of Marylanders to the tune of $8 billion – according to the Maryland Department of Legislative Services.  

"O'Malley was committed to raising as many different taxes as high as possible during his eight years as governor," said Grover Norquist, president of Americans for Tax Reform.  "The voters of deep blue Maryland gave their verdict on his governorship when they defeated his hand-picked candidate and elected an anti-tax Republican as Governor. Not everyone can lose an election when they were not even on the ballot."

Below is a comprehensive list of the major tax increases championed by O’Malley while serving as Maryland’s governor:

2013:

  • Gasoline tax increase from 23.5 cents per gallon to 43.5 cents (fully phased in by 2016): $350 million
  • Additional contingent fuel tax rate increase tied to failure of Congress to pass Marketplace Fairness Act: $210 million
  • Indexing of fuel tax to CPI: $87 million

 

2012:

  • Flush tax hike: $53 million
  • Tax hike on smokeless tobacco and “Little Cigars”: $5 million
  • Elimination of Telecom Property Tax Credits (Corporate Income Tax): $7.4 million
  • Elimination of personal exemptions (Individual Income Tax): $51.7 million
  • Income tax hikes on individuals making over $100,000 and couples over $150,000: $195.6 million

 

2011:

  • Highway and Bridge toll increases: $90 million
  • Vehicle titling tax hike from $50 to $100: $52.4 million
  • Hospital provider tax: $390 million
  • Alcohol sales tax hike from 6-percent to 9-percent: $84.8 million

 

2008:

  • The Millionaires Tax pushes top marginal rate from 5.5-percent to 6.25-perent: $154.6 million


2007:

  • Senate Bill 2 - Real property transfer tax hike: $14.1 million
  • House Bill 5 – “Tip Jar” tax hike, 20-percent “Admissions and Amusement” tax: $8 million
  • Tobacco tax hike from $1 per pack to $2 per pack: $133 million
  • Vehicle excise tax hike: $36.9 million
  • Vehicle titling tax hike (bumped from $23 to $50): $23 million
  • Sales tax hike from 5-percent to 6-percent: $603.4 million
  • Income tax hike with new rates between 4.75-percent and 5.5-percent: $191.3 million
  • State corporate income tax hike from 7-percent to 8.25-percent: $118.6 million
  • Eliminated use of captive real estate investment trusts for income tax purposes: $10 million

 

The tax increases above represent the most significant increases signed into law by Gov. O’Malley. The Maryland House Republican Caucus has compiled a list of all taxes, tolls, and fee increases signed into law by Martin O’Malley for a grand total of 83. 

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ATR’s Norquist & Gleason Discuss Why we Need Trade Agreements

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Posted by Alexander Hendrie on Friday, May 29th, 2015, 2:32 PM PERMALINK


ATR President Grover Norquist and Director of State Affairs Patrick Gleason recently wrote an op-ed in Reuters discussing the benefits of free trade. Trade is hugely beneficial to the entire US economy and will create more jobs, higher wages, and strong economic growth. 

At present, the US is deep into negotiations on two agreements: The Trans-Pacific Partnership (with Asia) and the Transatlantic Trade and Investment partnership (with the EU). As Norquist and Gleason explain, completing these agreements will have strong and immediate benefits to the economy: 

“Trade supports one out of every five U.S. jobs, according to the Brookings Institution. Jobs tied to trade are more lucrative, paying 18 percent more, on average, than other occupations. European Commission analysis of a Center for Economic Policy Research study finds that approval of the European trade pact would raise wages for both high- and low-skill jobs.”

But in order for the US to have new trade agreements of any kind, Congress must pass Trade Promotion Authority. As the op-ed explains:

“The only way the agreements get done, however, is for Congress to approve trade-promotion authority, known as fast-track authority. With this, trade agreements negotiated by the White House go to Congress for an up-or-down vote and are not subject to amendments. Granting the president fast-track authority is the only way to get prospective trading partners to sit down for the time-consuming and complicated negotiations required to reach an agreement.”

Despite President Obama supporting free trade, Democrats in Congress have stubbornly opposed TPA. But as the op-ed notes, they do so at the disservice of their own states:

“Regardless of how much they distrust Obama or how much money they get from labor unions, any of the 68 Republicans and 29 Democrats in those congressional delegations who oppose giving the president fast-track authority would be doing their states a great disservice.”

See the full op-ed here

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Top Five Reasons Not to Raise the Gas Tax

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Posted by Emma Boone on Friday, May 29th, 2015, 1:37 PM PERMALINK


As the May 31st deadline approaches for Congress’ latest temporary highway funding bill, the biggest gas tax hike in over twenty years is being debated. The federal gas tax is currently 18.4 cents per gallon but some misguided lawmakers claim a much steeper 33.4 cents per gallon is necessary to fund the Highway Trust Fund (HTF) and its endless list of non-highway related projects.

As if common knowledge that keeping more money in American’s pockets will pump more money into the economy isn’t enough, here are 5 more reasons not to raise the gas tax:

1. An increase in gas taxes will hurt middle-income Americans the most. Middle-income families make up roughly one-third of Americans. By increasing the gas tax, not only are you lessening the amount of money in their pockets, but the amount of money being pumped into the economy is being lessened too. It’s estimated that a 1 percent increase in gas prices takes $1 billion out of consumers’ pockets. That’s $1 billion dollars that could be spent on eating out, clothes, and leisure activities.  

2. Raising the gas tax will likely encourage more non-highway related spending. Revenue from the tax would go to the HTF. One would think money from the HTF would be funding highways but instead, HTF funds have supported squirrel sanctuaries, landscaping, trail hikers and trolley riders. In fact spending on side projects has increased 38% since 2008 while spending on core highway projects has remained flat.  

3. Raising the gas tax will not solve the real problem. The problem is that there is a funding deficit because the HTF is spending more money than they are bringing in. Currently the gas tax brings in around $34 billion annually, yet the federal government is spending roughly $50 billion each year. There is no solution in the “raise gas taxes” method. Tax proponents claim raising the tax would close the deficit and cover future, necessary funding from the HTF. However there is no guarantee for either of these things. More likely than not, this solution would only support and encourage more wasteful spending.

4. A gas tax hike will increase the price of consumer goods. The transportation of goods is primarily done via highways. Cars drive on highways and gas fuels cars. It’s a no-brainer that raising the gas tax will cost drivers more to fuel their way to deliver goods. Higher gas taxes, leading to higher gas prices will mean a higher cost on goods. This means increased financial pressure on middle to lower-income families if tax advocates get their way with this regressive increase in the gas tax.

5. Tax hikes have a negative impact on economic growth. As discussed, higher gas taxes mean higher gas prices which reduce the discretionary income of millions of Americans.  Reductions in discretionary income often correspond with diminished economic growth. In fact, analysts at Goldman Sachs predict “lower gas prices could add as much as half a percentage point to GDP growth this year.

 

Photo Credit: Patrick Emerson

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Ex-Im: Obama's Solyndra Banker

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Posted by Dorothy Jetter on Friday, May 29th, 2015, 9:41 AM PERMALINK


In 2010, President Obama visited Solyndra, a renewable energy company, and called it a model of his initiative to expand clean-technology jobs. The administration favored Solyndra so much, the company received over $500 million in taxpayer subsidies.  Just one year later Solyndra notoriously filed for bankruptcy.  Before that, it was just one of the many companies to benefit from the corporate welfare of the Export-Import Bank.  
 
The Ex-Im Bank is, at its core, a tool that allows the government to redistribute taxpayer money, and the jobs that go along with it, to companies it deems fit.  Representative Scott Perry (R-Pa.) explains: “it subsidizes some of the wealthiest corporations in the world, often based solely on ideological, political considerations, and has resulted in market distortions that hurt American companies that don’t receive its financing.”
 
In this particular case, the government chose to provide subsides to a renewable energy company, favored heavily by the Obama Administration.  Solyndra was unable to sustain itself, even after receiving hundreds of million in taxpayer dollars, with $10.3 million coming from the Ex-Im Bank. And Solyndra is not alone.  Abound Solar, another well connected solar panel company, received $9.2 million in Ex-Im subsides before going belly up. 
 
The American people shouldn't have to pay out of their pockets to fund companies well connected in Washington, like Solyndra and Abound Solar.  It isn't fair, and it doesn't work.  The US government shouldn’t choose which companies get a head start on the competition.  As long as the Ex-Im Bank continues to operate, the US government will have its hand in private business dealings, distorting the free market.  The infamous Solyndra Saga is just one example of corporate welfare, facilitated by the Ex-Im Bank, running amuck.
 
The Ex-Im Bank’s charter expires on June 30th.   It is not the job of the federal government to interfere with competition.  Congress should stand with the free market and let the Ex-Im Bank expire.  

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USPS Delivers Dubious Grocery and Banking Proposals to Taxpayers

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Posted by Justin Sykes on Thursday, May 28th, 2015, 4:47 PM PERMALINK


According to a white paper released last week by the Office of Inspector General (OIG) for the U.S. Postal Service (USPS), USPS is now considering expanding its services to banking in a last ditch effort to raise revenue. This announcement follows close on the heels of the USPS’s recent illogical efforts to expand services into grocery delivery.

For years the Postal Service’s finances have been in dire straights. The USPS reported second quarter losses this year of $1.5 billion marking the 24th quarter out of the past 26 they have posted massive revenue losses. They have additionally posted multi-billion dollar losses the last 8 years, signaling an inherent inability to efficiently manage the finances of the primary service it is charged with – delivering the mail.

Logically, one would think choosing to expand services to banking and grocery delivery could be a financial nail in the coffin given the USPS’s inability to keep their core mail delivery service out of the red. However the bureaucratic mindset seldom finds itself in the company of logic.

Thus instead of working to increase financial efficiency and decrease waste in existing services, the Postal Service is proposing to gamble taxpayer dollars away on revenue schemes well outside the purview of delivering mail.

For instance in the recently released white paper titled The Road Ahead for Postal Financial Services, the OIG suggests possibly expanding services to handing out loans, check cashing and even creating its own “full-fledged post bank.”

The USPS has also started beta testing a grocery delivery service in San Francisco meaning they are now competing against actual hard working entrepreneurs and businesses. However, unlike their competitors USPS is not susceptible to free market forces thanks to government backing, essentially making them “to bureaucratic to fail.”  

Not only do such practices disrupt the market and disregard the basic free market principles America was founded on but will also leave taxpayers holding the bag for the Postal Service’s future failures. 

Until lawmakers take action to reign in and reform the financial recklessness with which the USPS operates taxpayers can only expect billions more of their hard earned dollars to be wasted.     

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ATR Supports Legislation to Make Bonus Depreciation Permanent

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Posted by Ryan Ellis on Thursday, May 28th, 2015, 3:30 PM PERMALINK


Congressman Pat Tiberi (R-Ohio) recently introduced H.R. 2510, legislation that would make the 50 percent bonus depreciation tax extender permanent. In turn, this will encourage strong job creation and economic growth. ATR endorses this legislation and urges all members of the Congress to vote for and otherwise support this important pro-growth bill.

Currently, businesses are able to immediately deduct 50 percent of qualified purchased property such as new equipment. But since this provision was enacted in 2002, it has been increased, extended and expired in a haphazard way. This uncertainty is problematic for businesses owners as it affects their ability to effectively make long-term decisions. But by making bonus depreciation permanent, H.R. 2510 will create much needed certainty and spur job growth, economic activity and increase wages.

H.R. 2510 also contains several improvements that encourages Americans to invest in their business. First, it expands the definition of qualifying property under bonus depreciation to include retail and restaurant improvements. Addressing this inequity will help encourage business owners to make important investments. Second, H.R.2510 will allow businesses to claim unused Corporate Alternative Minimum Tax credits and use these credits for capital investment.

Making bonus deprecation permanent will produce immediate and strong economic benefits. A study released by the Tax Foundation found making bonus depreciation permanent will add $182 billion to the economy, increase federal revenue by $23 billion a year, and create 212,000 new jobs.

This pro-growth legislation will help increase economic growth and jobs and create much needed certainty for American businesses. ATR supports this legislation and urges members of Congress to support and pass this bill. 

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Top Five Reasons Congress Should Lift the Ban on Crude Exports

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Posted by Justin Sykes on Thursday, May 28th, 2015, 2:57 PM PERMALINK


Since the early 1970s the U.S. has had a ban in place on the export of crude oil. The ban was originally enacted to protect the U.S. supply of crude in response to decades of declining domestic production and issues in the international oil market during the 1970s.

Yet in recent years these concerns have become obsolete as the U.S. is now experiencing a renaissance in the production of crude thanks in part to improvements in extraction and exploration methods. In fact since 2008 U.S. crude output has increased a whopping 64 percent.

This massive increase in crude production has the potential to: reduce U.S. gas prices; create hundreds of thousands of new jobs; increase GDP; increase household incomes; and reduce the U.S. trade deficit.

However all of these benefits are contingent on whether Congress will act to lift the decades old ban on crude exports.          

1. Lower U.S. Gas Prices. Lifting the export ban would increase global crude supplies, in turn lowering global prices. Lower global prices would put downward pressure on domestic prices reducing the price Americans pay at the pump. A recent IHS report found lifting the ban would reduce gasoline prices 8 cents a gallon thereby saving drivers $265 billion over the next 15 years.        

2. Job Creation. As a result of increased economic activity from lifting the ban, average U.S. job creation is projected to reach up to 859,000 new jobs. Additionally, U.S. job creation resulting from lifting the ban is estimated to peak in 2018 at between 1 million and 1.5 million new jobs.

3. Increase Economic Growth. A recent study by the Government Accountability Office (GAO) found lifting the ban would increase the “size of the economy…employment, investment, public revenue, and trade.” This finding was echoed by similar studies that project lifting the ban would increase U.S. GDP by $73 billion in 2016 with an additional increase of $134 billion in 2018.     

4. Increase Household Income.  Due to the increased investment, job creation and low gasoline prices resulting from lifting the ban on crude exports, average disposable income per household would increase by $391 in 2018. A recent study by the Aspen Institute further found that real household income would increase up to $3,000 per household by 2025. 

5. Reduce U.S. Trade Deficit. Allowing crude exports would also have a profound and positive impact on the U.S. trade deficit.  Lifting the crude export ban would contribute to expanded U.S. exports. Such expansion is projected to narrow the U.S. trade deficit by $22.3 billion in 2020 through increased international trade of U.S. crude.   

 

Photo Credit: Bridget Coila

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Bridget Coila

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Congress Must Take a Stand Against Crony Capitalism by Ending the Ex-Im Bank

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Posted by Alexander Hendrie on Thursday, May 28th, 2015, 9:30 AM PERMALINK


Members of Congress love to tout their support for the free market and their opposition to crony capitalism.  So when the Export-Import bank expires on June 30, Congress has the opportunity to prove it really means what it says by putting an end to this poster child of corporate welfare.

Ex-Im provides loans and financing to assist US companies to export their goods and services. It does so by financing the foreign companies purchasing of US products. In theory, this helps companies compete overseas when they would otherwise be unable to. In reality, the bank finances commerce between wealthy well-connected foreign and US companies to the tune of billions of dollars.

By far the biggest beneficiary of Ex-Im largesse is Boeing, which benefits from 40 percent of all loans the bank has given out. There is no reason Boeing needs this assistance. Just last year the company reported record high revenues.

A report from the Wall Street Journal found that Boeing has worked closely with Congress whenever the bank has come up for reauthorization, and helped craft terms for loans that it directly benefits from. The Aerospace giant has become so involved in this process that there was “an extraordinary level of coordination between public officials and corporate executives.” It is no wonder that Ex-Im is sometimes referred to as “Boeing’s Bank.”

In fact, the Sunlight Foundation found that 19 of the top 20 recipients of Ex-Im largesse lobbied congress to extend the bank. In the process, these companies have shaped the bank to provide highly favorable loans. Not only do US firms not need this welfare, foreign recipients are completely undeserving of these handouts. Foreign firms that have received Ex-Im loans include Russian oligarchs that supply arms to Syria and Iran, State owned airlines, and a Mexican energy conglomerate.

Supporters of Ex-Im claim that the bank helps small businesses. But in reality, small businesses do not have the resources and connections to compete for Ex-Im subsidies and so less than 1 percent of 1 percent of small business benefit from subsidies distributed by the bank.

If that were not bad enough, the bank has come under scrutiny because of for numerous cases of fraud and corruption that have been uncovered by the Inspector General and Government Accountability Office (GAO). In the past six years alone, there have been 85 criminal indictments, 48 criminal judgments, and a quarter billion in fines, restitution, and forfeiture from investigations into Ex-Im. The Heritage Foundation has noted that job numbers touted by bank officials as part of Ex-Im’s necessity have been subject to unabashed criticism from the GAO.

Not only are Ex-Im’s loans unnecessary, they are also costly. According to the Congressional Budget Office, reauthorizing the bank will cost taxpayers $2 billion over the next decade. Taxpayers can no longer afford to finance this crony capitalism, especially in today’s environment of tight budgets.

Urge your Congressman to oppose reauthorization of the Export-Import Bank by calling 202-224-3121 

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