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Justin Sykes

E&C Poised to Rebut the EPA's War on Affordable Energy


Posted by Justin Sykes on Monday, January 27th, 2014, 10:46 AM PERMALINK


Today, the House Energy and Commerce Committee will be voting on the Electricity Security and Affordability Act, or H.R. 3826.

The Electricity Security and Affordability Act is bipartisan legislation introduced by Rep. Ed Whitfield (R-KY) and Sen. Joe Manchin (D-WV).  The Act would create guidelines for the EPA to set standards for new power plants that are actually feasible and will put the final authority for any guidelines affecting existing power plants in the hands of Congress and thus the people.

The issue is that the EPA has proposed regulations that would mandate any new coal-fired power plants to use technologies that are not commercially feasible. The required technologies under the EPA regulations are not yet commercially or economically viable and would basically impose standards that are impossible to meet. These costly regulations could put an end to the promise of a true “all-of-the-above” energy strategy. If the EPA’s rule for new plants is allowed to move forward, American consumers and businesses will be denied "the benefits afforded by coal, which provide nearly 40 percent of the nation with affordable and reliable electricity.”

However the EPA is not stopping at new plants and is also set to propose regulations for existing power plants in June 2014. New regulations imposed on existing power plants could be the most damaging and could lead to higher energy prices, the closing of existing plants and loss of jobs.

The Electricity Security and Affordability Act is the solution to help “rein in” the EPA’s proposed flood of costly regulations. By supporting Rep. Whitfield and Sen. Manchins’ bipartisan legislation, Americans can ensure that we “take full advantage of all of our domestic resources and pursue innovative opportunities to expand access to energy, while keeping prices affordable and helping American businesses to compete.”

Expected to pass out of the Energy and Commerce next Tuesday, Americans for Tax Reform President Grover Norquist had this to say about the Electricity Security and Affordability Act:

“The Electricity Security and Affordability Act is necessary legislation that repeals the EPA’s misguided greenhouse gas standards for new power plants and guides the EPA towards creating new, achievable standards. If this legislation is not adopted, it is possible that a new coal-fired power plant will never be built in the United States again. Congress never intended for the EPA to unilaterally determine what source of energy Americans consume. The Electricity Security and Affordability Act also reaffirms Congress's legislative duties by enacting numerous safeguards against EPA partisan overreach. In sum, this is essential legislation intended to rebut the Obama Administration’s war on affordable energy. I urge every Member of Congress to support the Electricity Security and Affordability Act.”

 

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Yankees Pitcher To Lose Over Half of $155 Million Contract to Taxes


Posted by Justin Sykes on Thursday, January 23rd, 2014, 1:42 PM PERMALINK


As reported by ESPN, the New York Yankees have signed Masahiro Tanaka to a 7-year contract worth $155 million, earning an estimated $22.1 million per year. According to ESPN, Tanaka's contract is the largest ever for an international free agent and the fifth-largest deal for a pitcher. However sweet this $155 million dollar deal seems, the reality is that Tanaka will lose almost $90 million over the 7-year life of his contract with the Yankees.

In addition to the Yankees, Tanaka was also being courted by the Arizona Diamondbacks and the Chicago Cubs. Unlike New York City, the cities of Phoenix and Chicago do not impose a city income tax. Had Tanaka chosen a similar contract with the Diamondbacks or the Cubs, he would have saved almost $12 million over the life of his contract. Instead, Tanaka chose New York, where the state and local rates are some of the highest in the country. By choosing to sign with the Yankees, Tanaka automatically forfeited almost $12 million in taxes that would have been saved had he signed with the Cubs or Diamondbacks.

Tanaka will pay a combined marginal income tax rate of 56.1 percent - over half of his contract. For New York state and local taxes alone he will lose an estimated $2,811,257 a year. The combined marginal income tax rate Tanaka will pay is comprised of the federal, state and local tax rates, plus the Medicare payroll tax. The chart below shows Tanaka’s tax burdens as compared between the differing franchises.

State

Team

Est. Federal Tax Burden

Est. State Tax Burden

Est. City Tax Burden

Total Tax Liability

New York

Yankees

$67,270,000 million

$13,671,000 million

$6,007,800 million

$86,948,800 million

Illinois

Cubs

$67,270,000 million

$7,750,000 million

$0

$75,020,000 million

Arizona

Diamondbacks

$67,270,000 million

$7,037,000 million

$0

$74,307,000 million

The Federal Income Tax Burden listed above is comprised of the 39.6 percent tax bracket and 3.8 percent Medicare Tax. For illustrative purposes, the marginal combined tax rate of 56.1 percent (which includes Federal, State, Medicare, and Local tax rates) is applied only to his contract salary and does not take into account his bonuses, endorsement, and other sources of viable income.

While Tanaka is not your average employee, the real lesson to be learned here, one you won’t see in the headlines is that higher federal and state tax burdens can have a huge impact on employees and employment in a state. The sweetness of signing a $155 million contract to play baseball for one of the leagues most renowned teams, the New York Yankees, is only made bitter by the fact Tanaka will have to settle for receiving only $68 million (less than half) of the $155 million contract due to the heavy federal and state tax burdens.

 

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The Top 10 Pitfalls of the Ethanol Mandate


Posted by Justin Sykes on Thursday, January 23rd, 2014, 1:04 PM PERMALINK


The Ethanol Mandate, maintained by the EPA under the Renewable Fuel Standard Program, requires renewable fuel to be blended into motor-vehicle fuels and fuels for non-road, locomotive, and marine engines in increasing amounts each year.

With a new year ahead, it's time to end the Ethanol Mandate and look to more sustainable options. By going to www.EndTheEthanolMandate.com you can voice your concern to Congress that the mandate is failed policy. Listed below are the 10 biggest pitfalls caused by the introduction of the Ethanol Mandate.

  1. Lower Fuel Efficiency
  2. Damage to Vehicle Engines
    • Increased percentages of Ethanol are likely to create erosion and cause long term damage to your engine.
  3. Increased Gas Prices
  4. Higher Corn Prices
    • Since the regulations took effect in 2010, corn prices have surpassed the EPA's long term estimate of $3.22 a bushel, and as of 2014 have risen to almost $7.00.
    • From 2005-2012, annual corn ethanol production grew from less than 4 billion to almost 14 billion. As of 2014, "40% of the U.S.. corn crop goes to ethanol."
    • Consumers are being hit by higher corn prices - especially low-income consumers who spend most of their disposable income on food.
    • A CBO study found - ethanol production "has exerted upward pressure on the price of corn, and ultimately, on the retail price of food, affecting both individual consumers and federal expenditures on nutritional support programs."
    • The CBO also found ethanol production drove up federal spending on nutritional programs by $900 million.
  5. Harm to Livestock Producers
    • The increase in corn prices due to the Ethanol Mandate has dramatically increased the price of animal feed and forced some livestock operators out of business.
    • In 2010, for the first time in U.S.. history, fuel was the No. 1 use for U.S.. corn.
    • Expanding corn productions have only partially offset the rapid growth in demand, resulting in higher corn prices for feed.
  6. Compliance Burden
    • Under the RFS, refiners must annually purchase a set amount of renewable fuels each year. The refiners are required to submit renewable fuel credits to the EPA, to show that they have covered their annual obligations.
    • These credits, known as Renewable Identification Numbers, or RINs, are generated by the production of biofuels and can be bought and sold by refiners, as well as banked for future use.
    • RIN credits cost 7 cents at the beginning of 2013 and could rise if the RFS is not mitigated or repealed.
    • In 2012, large refiners spent between $100-$300 million each for credits when prices were about 4 cents. "At $1 a gallon levels, the numbers become astronomical very quickly."
  7. The "Blend Wall"
    • Currently, corn ethanol refiners in the U.S. have the capacity to produce over 14.9 billion gallons, gasoline refiners can only blend 13.3 billion gallons into the fuel supply, which leads to the "Blend Wall" - the point at which the maximum amount of gasoline has been blended with 10% ethanol as required by law.
    • The declining demand for gasoline and increased fuel efficiency mean the "blend wall" will be reached this year, and some refiners have already reached it.
    • Fears they will hit the blend wall have made refiners more eager to buy credits on the open market, pushing RIN prices higher.
  8. Current and Future Ethanol Mandates are out of step with the Market
  9. Environmental Concerns
  10. Effects on the "Conservation Reserve Program"

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Environmental Destruction Proves RFS is a Handout to Big Agriculture


Posted by Justin Sykes on Thursday, January 16th, 2014, 11:54 AM PERMALINK


With the start of the New Year, the Renewable Fuel Standard's Ethanol Mandate is poised once again to be one of the most discussed pieces of legislation in 2014. Touted by the Obama Administration and those on the far left as a way to curb emissions and encourage environmental preservation, the only thing the Ethanol Mandate has encouraged is environmental harm. New studies show that the Ethanol Mandate has contributed to increased pollution and the destruction of millions of acres of conservation lands. It is time for Americans to voice their concern by going to www.endtheEthanolMandate.com and demanding Congress end this failed legislation.

In recent testimony before the EPA, the Environmental Working Group (EWG) outlined their findings on the effects of the Ethanol Mandate. The EWG is one of the far left's most revered interest groups as well as a strong Obama supporter. The main points of the EWG's testimony are highlighted below:

  1. From 2008-2011, the corn ethanol mandate contributed to the loss of 23 million acres of wetlands and grasslands - an area the size of Indiana.
  2. In places where the loss of wetlands has been greatest, corn accounts for most of this conversion - 68%, or more than 236,000 acres.
  3. Farmers have increased nitrogen fertilizer use, which washes off fields, contributes to poor water quality, and increases water treatment costs creating low-oxygen or "dead zones."
  4. Increased fertilizer use has caused contamination of surface and ground water, which causes "hypoxia, algal blooms, eutrophication" and depletion of aquifers and streams.
  5. On a well-to-wheel basis, "producing a gallon of gasoline consumes far less water than producing a gallon of corn ethanol."

The EWG's findings are only affirmed by a report released last month by the Associated Press. The AP found that the Ethanol Mandate had destroyed millions of acres  of conservation land and increased pollution from nitrogen fertilizers by the billions. The main findings of the AP's study are outlined below:

  1. 5 million acres of conservation land - "more than Yellowstone, Everglades and Yosemite National Parks combined" - have vanished under Obama's watch.
  2. In the first year after the ethanol mandate, more than 2 million acres disappeared.
  3. Between 2005-2010, "corn farmers increased their use of nitrogen fertilizer by more than 1 billion pounds." Since 2010, nitrogen fertilizer use is projected to increase another 1-billion pounds.
  4. Increased spraying has pumped out billions of pounds of fertilizers, some of which seep into drinking water, contaminate rivers and worsen the huge dead zone in the Gulf of Mexico.
  5. Nitrates from the Midwest travel down river to the Gulf of Mexico, contributing to the "Dead Zone" that now covers more than 5,800 square miles.
  6. Studies by Texas A&M University officials found the "ethanol mandate has worsened the dead zone" each year since its inception.

The findings above show that the Ethanol Mandate of the RFS has exacerbated pollution and destruction of conservation lands. Typically environmental policy is created to protect the environment. Let Congress know the Ethanol Mandate is not working by going to www.endtheEthanolMandate.com. As long as the Ethanol Mandate remains good policy, the environment will continue to suffer.

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The Future of Shale Gas is Bright in the U.S.


Posted by Justin Sykes on Wednesday, January 8th, 2014, 3:18 PM PERMALINK


In a report completed last month by IHS Global titled “Oil and Natural Gas Transportation & Storage Infrastructure”, IHS found that the future of unconventional oil and gas production in the U.S. is bright. Not only did the report find that the U.S. is the world’s largest natural gas producer but that the U.S. is now the “global growth leader in crude oil production capacity."The report focused on the growth in investment in oil and gas transportation and storage infrastructure and the resulting economic impacts in terms of associated employment growth, contribution to GDP and tax revenue.

IHS estimates that in 2014 “$85-$90 billion of direct capital will be allocated toward oil and gas infrastructure” in the U.S. IHS further estimates that more than “$80 billion will be invested annually in U.S. midstream and downstream petroleum infrastructure.” While the IHS's projections are impressive, the report highlights a bourgeoning interest in the U.S. in shale gas production.

This most recent IHS report comes on the heels of another IHS study which looked specifically at shale gas production and the impact it would have on the U.S. economy over the next few decades. Specifically the development of shale gas production is projected to – create jobs, reduce consumer costs of natural gas and electricity, stimulate economic growth and bolster federal, state and local tax revenue.

Job Creation

Reduction in Consumer Costs

Economic Growth Stimulation

  • $1.9 trillion in cumulative capital investments are expected to be made between 2010 and 2035
  • Annual capital expenditures will grow to $48.1 billion in 2015
  • Shale gas contribution to the U.S. GDP was more than $76.9 billion in 2010 and will rise to $118.2 billion by 2015 before tripling to $231.1 billion in 2035

Tax Revenue

  • Over the next 25 years, the shale gas industry will generate more than $933 billion in tax revenues for local, state and the federal governments

A specific case example of the economic potential of shale gas comes from Pennsylvania and the Marcellus shale formation. The Marcellus shale is a geological formation which contains huge reserves of natural gas. “Wells in the Pennsylvania part of the Marcellus produced 895 billion cubic feet (bcf) of gas in the first half of 2012, up from 435bcf in the same period in 2011 and almost nothing as recent as 2008." The most recent estimates indicate that the Marcellus maintains over 100,000 jobs in Pennsylvania, a figure that is expected to grow to 220,000 by 2020. Shale gas production gave the local Pennsylvania economy a $14 billion boost last year and is projected to rise to $27 billion by 2020. This $14 billion boost generated nearly $3 billion in tax revenue for the State of Pennsylvania.

Along with these results in Pennsylvania, states such as Arkansas, Louisiana, Oklahoma and Texas have all had comparable results from shale gas production.  As capital investments in unconventional oil and gas production in the U.S. grow in the New Year, American consumers can expect job creation, reduced consumer costs, a burst of economic growth and increased tax revenue. 

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Obama Loots $716 Billion from Medicare


Posted by Justin Sykes on Tuesday, August 14th, 2012, 11:42 AM PERMALINK


Senior Obama adviser David Axelrod attacked Romney and Ryan this week with the accusation that a repeal of Obamacare would bankrupt Medicare. David Axelrod however is misinformed, as the real threat to Medicare is President Obama, who has taken billions of dollars from Medicare to fund Obamacare.

Medicare cost saving measures could be beneficial, however such measures should be used to make the Medicare guarantee stronger for tomorrows' seniors while preserving contemporary enrollee's plans. Instead, President Obama took Medicare dollars from today's seniors to fund Obamacare.

A report issued by the Congressional Budget Office (CBO) finds that the amount of money President Obama has taken from Medicare to fund Obamacare totals $716 Billion:

Obama's Cuts to Medicare: Total Amount Cut by Service:
Hospital Services $260 Billion
Medicare Advantage (MA) $156 Billion
Home Health Services $66 Billion
Skilled Nursing Services $39 Billion
Hospice Services $17 Billion
Medicaid/CHIP $114 Billion
Other Services $33 Billion
DSH Payments $56 Billion

Senger, Alyene, Heritage.org, "Obamacare Robs Medicare of $716 Billion to Fund Itself".

Worst of all, President Obama has taken $56 Billion from Disproportionate Share Hospital (DSH) Payments. DSH payments go to Hospitals that primarily serve low-income patients.

In addition to billions in Medicare pillaging to fund Obamacare, President Obama has essentially circumvented the law and future presidential vetoes by using the Independent Payment Advisory Board (IPAB) to insure all cuts to Medicare "must become law by August 15th, 2014." 

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5 Important Numbers on Obama


Posted by Justin Sykes on Monday, August 13th, 2012, 4:03 PM PERMALINK


Following Governor Romney's announcement that Rep. Paul Ryan would be his running mate, President Obama has been on the offensive, attacking Gov. Romney and Rep. Ryan on healthcare. The Obama White House has gone so far as to outline 5 Important Numbers on Health Reform on its website. The 5 numbers referenced by President Obama are misleading and ignore the 5 numbers which truly characterize the Obama Administration:

  1. $500 Billion in Tax Increases
  2. $62 Billion in New Regulations
    • $46 Billion  in new regulations since President Obama took office.
    • $16 Billion  in new regulations in 2012 thus far.
  3. 8% Unemployment
    • America is experiencing the longest period of unemployment above 8% since the Great Depression under President Obama.
  4. 11 Hours - The Buffet Rule
    • Gov. Romney's statement that the revenue raised by the Buffet Rule would "pay for 11 hours of government."
    • The fiscal year 2013 federal budget is projected to have $3.803 trillion in outlays. So, dividing $5 billion into that figure, you end up with the Buffet Rule covering 0.131% of the budget.
    • There are 8,760 hours in a year, that works out to just over 11 hours.
  5. 7 Tax Hikes on under $250,000-A-Year-Earners:
Obamacare's 7 Tax Hikes On Under $250,000-A-Year Earners
Obamacare Tax Hike Effective Start Date
1. The Indoor Tanning Services Tax July 1, 2010                                       
2. Health Savings Account Withdrawal Penalty Jan. 1, 2011
3. The Over-The-Counter Drugs Trap Jan. 1, 2011
4. The Medical Itemized Deduction Hurdle Jan. 1, 2013
5. The Healthcare Flexible Spending Account Cap Jan. 1, 2013                                             
6. The Individual Mandate Excise Tax Jan. 1, 2014
7. The Cadillac Health Insurance Plan Tax Jan. 1, 2018

 Ebeling, Ashlea, Forbes Staff - "Obamacare's 7 Tax Hikes On Under $250,000-A-Year Earners".

 

 

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Obamacare Doubles Premiums for Many Americans


Posted by Justin Sykes on Friday, August 10th, 2012, 5:42 PM PERMALINK


In a recent campaign speech in Cincinnati Ohio President Obama claimed "premiums will go down."

However, studies on the effects of Obamacare evidence premiums will not go down but will increase for "a material portion of the population." Specifically the young and healthy will be burdened by exponential increases in their premiums as a result of Obamacare.

An article published by the Washington Post today compiled numerous studies from around the country, all of which indicated that Obamacare will lead to sharp premium increases for young and healthy Americans.

President Obama's campaign promise that "premiums will go down" finds no factual support. If legislative action is not taken to repeal Obamacare:

  • Nationwide Study - Premiums in the individual market would increase from 8 to 37 percent in 2014 - with a cumulative increase of as much as 122 percent between 2013 and 2017.
  • Ohio - A healthy young man would experience a rate increase of 90 to 130 percent.
  • Indiana - The law would boost premiums in the individual market on average by 75 to 95 percent and in the small employer market by 5-10 percent in 2014.
  • Ohio - Rates would go up 55 to 85 percent above current rates.
  • Minnesota - Individual market premiums will increase between 26 to 42 percent.
  • Maine - Individual premiums will increase on average by 40 percent and premiums in the small group market are likely to increase 8 to 9 percent...20 percent of the individual market would still experience premium increases even after subsidies.
  • Maryland - Individual premiums will go up on average by 34 to 36 percent.
  • Wisconsin - Before tax credits, the average premium increases in the individual market will be 30 percent.
  • Colorado - Individual premiums will go up on average 19 percent.
  • Rhode Island - Before tax subsidies, premiums for individuals will increase on average by 8 percent.

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Obamacare's Pizza Tax: Taxing an Even Larger Slice


Posted by Justin Sykes on Friday, August 10th, 2012, 11:33 AM PERMALINK


Papa John's founder John Schnatter caused a stir this week with his comment that the Obamacare law would cause a "hike in pizza prices." The most stirring thing about John Schnatter's statement is...that it's true. As a result of Obamacare employers such as John Schnatter will be forced to change their workforce strategy, which means increasing the costs of products offered to consumers as well as layoffs.

In a study recently released by Mercer, analysts surveyed 1,203 employers, 60% of which were preparing for an increase in cost as a direct result of Obamacare. Of employers hit the hardest by Obamacare, Mercer found the effects would primarily hit retail and hospitality employers who employ "the most part-time and low-paid employees."

To exemplify the effects Obamacare will have on employers:

  • Beginning in 2014 employers will be required to extend coverage to all employees working 30+ hours per week or face possible penalties.
  • A fourth of all survey respondents said they will have to take action to avoid...penalties.
  • Retail/ wholesale employers...are more inclined to change their workforce strategy.

 

The Cost of Obamacare is not reserved to retail and hospitality:

Cost impact of Obamacare by Industry
Retail and Hospitality 46%
Health Care Services 40%
Manufacturing 33%
Financial Services 32%                                                   
Transportation/ Communication/ Utility 31%
Other Services 29%
Government 24%

 

If legislative action is not taken, the effects of Obamacare will be widespread, hurting employers and potentially costing part-time and low-wage employees their jobs.

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New Study Confirms Death Tax Kills Jobs, Hurts Growth


Posted by Justin Sykes on Thursday, July 26th, 2012, 5:19 PM PERMALINK


A study released this week by the Joint Economic Committee found that the death tax fails to produce any recognizable benefits and significantly hinders economic growth in the U.S.

The study shows that the death tax fails to achieve any of the goals that it was intended to achieve.

Specifically, the death tax has: (1) reduced the amount of capital stock in the U.S.; (2) significantly hindered entrepreneurial activity; (3) prevented economic mobility; and (4) raised an insignificant amount of revenue.

The death tax has reduced the amount of capital stock in the U.S. Over the 96 years in which the death tax has been enacted, it has "reduced the amount of capital stock in the U.S. economy" by almost $1.1 trillion. This $1.1 trillion reduction in capital stock almost totals the entire amount of revenue raised by the death tax since its implementation in 1916.

The death tax has significantly hindered entrepreneurial activity. The JEC's study found that the death tax is the "overwhelming cause of dissolution of family businesses" because such businesses are likely unable to comply with estate tax liabilities. A study recently released by the Tax Foundation found that the estimated cost of complying with the death tax totals over $88 million, in addition to 2.3 million hours of average compliance effort. As such, the death tax remains a large hindrance to entrepreneurial activity.

The death tax has prevented economic mobility. The death tax discourages savings and instead encourages consumption. To exemplify this, the JEC study found that for persons faced with a potential 55 percent marginal tax rate, "it costs $2.22 for a decedent to give $1 of pre-tax assets as a result of estate and gift taxes." Thus the JEC reasons that people will spend assets as opposed to saving.

The death tax has failed to raise a significant amount of revenue. According to the most recent CBO estimates, the revenue from the death tax and gift tax combined for 2011 equaled out to "less than one-half percent" of all federal revenue, and a mere 0.05 percent of GDP. Relative to spending by the federal government, the revenue from the death tax "would cover less than one day of federal spending."

The JEC's report further points out that abolishing the death tax would raise revenue in two ways: (1) "the estate tax robs additional federal tax revenues from the collection of other taxes like the income tax; and (2) a larger total capital stock could increase income tax revenue."

Absent congressional action, the estate tax rates will soon revert back to pre-EGTRRA levels and the estate tax exemption will reach $1 million in 2013.

 

http://www.atr.org/dont-die-confiscatory-percent-death-tax-a7051 

 

 

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