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Ryan Ellis

ATR Supports Bill Ending Marriage Penalty in Child Tax Credit


Posted by Ryan Ellis on Wednesday, July 23rd, 2014, 2:20 PM PERMALINK


The U.S. House of Representatives this week will consider H.R. 4935, the "Child Tax Credit Improvement Act," sponsored by Congressman Lynn Jenkins (R-Kan.)  This bill is a common sense update of the income tax's child tax credit provision, and we urge all Members to vote for it.

Under the tax code, filers with dependent children living with them receive a credit against tax of $1000 for each dependent child under the age of 17.  This credit begins to phase out when adjusted gross income (AGI) exceeds $75,000 ($110,000 in the case of a married filing jointly couple).

There are two issues with the child tax credit which H.R. 4935 addresses:

The credit amount was never indexed to inflation.  The child tax credit was first passed in 1997, and expanded in 2001 and 2003.  Since that time, it has been set at $1000 and never indexed to inflation.  H.R. 4935 corrects that beginning in 2015.

The phaseout limit was never indexed to inflation, and contains a marriage penalty.  The phaseout limits ($110,000 for married couples, $75,000 for most others) were also never indexed to inflation.  In addition, there is a marriage penalty in that the phaseout range for married couples begins at less than double the level for other taxpayers.  The current credit phaseout range creates an incentive for parents to cohabitate rather than get married, even though the tax code should be neutral on such decisions.

H.R. 4935 corrects both problems.  The married phaseout level is set to double the "other" phaseout level ($150,000 vs. $75,000).  In addition, these phaseout rates are indexed for inflation starting in 2015.

 

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Rednecksrule

Yes Grover this will help out all those illegal aliens and trillions of new immigrants you favor. They have tons of children... wait they don't pay much in the way of taxes due to their poverty...and they need entitlements! Fairfax County, a hugely rich bloated area due to the federal government has a ton of Grover's new immigrants on free lunch... So Grover let's sign that NO TAX Pledge... uh what are we going to do about the immigrants burgeoning in our communities?


Corporate Inversions Caused by High U.S. Tax Rate on Companies


Posted by Ryan Ellis on Friday, July 18th, 2014, 12:17 PM PERMALINK


There's a lot in the news this week about "corporate inversions."  That's when a U.S. company with a foreign subsidiary becomes a foreign company with a U.S. subsidiary.

Not surprisingly, Congressional Democrats are out demonizing these companies for daring to look out for their shareholders, employees, and customers.  What you won't hear many Democrats talk about is why these companies feel compelled to do an inversion in the first place.

In a word, it's all about the U.S. corporate tax rate, plus a few other details.

The U.S. has the highest tax rate on businesses in the developed world.  Our corporate tax rate (including states) is 39.1 percent.  Flow-through firms face an even higher rate, approaching 50 percent depending on their state.

Compare this to business taxes overseas, which average about 25 percent in the developed world.  

Each of our major trading partners--Canada, Mexico, Japan, the United Kingdom, Germany, and France--have business tax rates lower than ours.  There are also minor trading partners (Ireland and the Netherlands being good examples) who have significantly lower rates and have been attracting capital recently.

Combine this with the fact that the U.S. has a worldwide tax regime (exposing our companies' profits earned abroad to potential double taxation) and painfully slow cost recovery tax rules, and you have created an atmosphere where corporate inversions become very attractive.

If you want to reverse this trend, there's only one way to really do it--lower the tax rate that businesses pay.  At the very least, companies here should not face a tax rate higher than the 25 percent average rate they would face elsewhere in the developed world.

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ToddTexas

Better yet, reduce it to a flat 10% and the economy of the US will immediately start picking up. Caution though...the reduction of that rate must NOT be offset by citizens paying the difference...like it works here in Texas. Texas, despite what's reported, is NOT a low tax State.


ATR Supports Bill Appointing Inspector General for Obamacare


Posted by Ryan Ellis on Wednesday, July 9th, 2014, 5:34 PM PERMALINK


Americans for Tax Reform is proud to support S. 2430, the "Special Inspector General for Monitoring the ACA (SIGMA) Act of 2014," sponsored by Senator Pat Roberts (R-Kan.)

Obamacare is a giant law which spans many government agencies.  Congressional oversight has been stymied by the administration, and taxpayers frankly "don't know what they don't know" about how the government is implementing President Obama's healthcare law.  What has leaked out has been a tale of woe involving broken websites, overpaid contractors, and late Friday afternoon bureaucrat resignations.

S. 2430 would create an inspector general that could knock on doors across the government, from Kathleen Sebelius' Department of Health and Human Services, to the Treasury Department, the Social Security Administration, the Pentagon, the Department of Homeland Security, the Veterans' Administration, the Department of Labor, and even the Peace Corps.  No stone would be left unturned.  Reports would start flowing to Congress and taxpayers on a quarterly basis.

This inspector general office would follow in the footsteps of other recent predecessors for Iraq reconstruction, Afghanistan reconstruction, and the TARP bailout.  These inspectors general have recovered billions of dollars in savings for taxpayers, and resulted in prosecutions of hundreds of bad actors.

It's about time taxpayers got to the bottom of how Obamacare is being implemented.  S. 2430 is a necessary step to get there.

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Rednecksrule

But what is Grover Norquist going to do to pay for the heath care of all the illegal immigrant teens and children and their mommies that are surging here with his support?

Grover and this organization are full of guano. They don't want their beloved corporations to pay taxes. They are fine with you the American Middle Class taxpayer paying taxes for corporations new immigrant workforce. That workforce that will keep their profits high will need you the American tax payer to pay for it.


ATR Supports Anti-Fraud Reforms in EITC


Posted by Ryan Ellis on Wednesday, July 9th, 2014, 4:00 PM PERMALINK


The Earned Income Tax Credit (EITC) is a refundable tax credit for low income American families with wage income.  Almost without exception, these households do not have an income tax liability. The EITC, then, is really a check written by the IRS to keep households out of poverty.  It is not income tax relief.

The EITC has a high error rate.  The IRS itself admits that, in 2013 alone, 22 to 26 percent of all EITC payments were made in error.  The erroneous payments totaled between $13.3 billion and $15.6 billion.  This was spending, right out of the Treasury Department, to people who were never eligible for this money.

Congressman Cory Gardner (R-Colo.) will this week introduce legislation called the "Earnings Advancement and Recovery Now (EARN) Act."  It makes four essential EITC reforms:
 

--increase the penalty for those who engage in willful or reckless content with regard to the EITC

​--expand the EITC disallowance period to five years for willful or reckless EITC recipients

--expand the IRS' math error authority to cover EITC claims, and

--expand penalties for erroneous EITC claims


These measures are simple reform tools for an EITC which has completely failed in its mission. No private sector business could tolerate payment errors to a quarter of their payees, but that's exactly what's happening at the IRS with the EITC.  ATR urges all Congressmen to co-sponsor and support this common sense EITC reform package.

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James Richard Spriggs

Instead of imposing penalties on people, some of whom may have made mistakes rather than committing intentional fraud, would it not be better to simply get rid of refundable tax credits? Tax refunds are government spending, not tax cuts. If a tax-payer has made an over-payment, then he should be able to treat that as a tax payment towards his next year's taxes and reduce his withholding or estimated tax payments accordingly. Only if the IRS makes a mistake itself and seizes too much from a tax-payer should the tax-payer be able to get a refund.


House Should Pass Permanent Partial Expensing Tax Relief


Posted by Ryan Ellis on Monday, July 7th, 2014, 3:30 PM PERMALINK


The U.S. House this week will consider H.R. 4718, a bill introduced by Congressman Pat Tiberi (R-Ohio) to make permanent a tax provision providing for partial expensing of business tangible asset investment.  ATR urges all Congressmen to support and vote for H.R. 4718.

Under tax law, most business expenses (wages, rents, etc.) can be deducted as costs against business income. Companies pay taxes on whatever profit is left.  One big exception is when businesses invest in essential assets like computers and machinery.  These assets are subject to long, muti-year deductions called "depreciation."  A computer, for example, takes five years to fully deduct from business taxable income.

Under ideal tax policy, all business expenses--from wages to computers to paper clips--would be immediately deducted in full in the year of purchase.

For many years, the tax code has had a temporary provision which allows companies to deduct much of the cost of these asset purchases in the year they are made.  H.R. 4719 would permanently allow a company to deduct half the cost of a new investment, meaning only the other half would be subject to long and complex depreciation rules.

Congress has a long history of support for this concept, so it makes sense to have it become permanent tax law on the way to full business expensing of all purchases. 

--In 2002, Congress created a 30 percent partial expensing rule for asset purchases made through 2005

--In 2003, Congress raised this partial expensing level to 50 percent

--In 2004, Congress broadened the scope of what was covered under partial expensing

--In 2010, Congress created a 100 percent (i.e., full expensing) tax relief provision for 2010 and 2011, reduced to a 50 percent partial expensing for 2012 and 2013

--Unless Congress moves soon, there will be no partial expensing at all in the 2014 tax year.

There is a long history of Congress supporting partial expensing.  For long-run planning purposes, however, businesses need to know that tax law won't keep changing on them.  That's why it's so important to have the certainty that H.R. 4718 brings.  

Business investment is ultimately what creates new business capital, and with it new jobs.  If Congress wants to create an environment for job creators to thrive, passing permanent partial expensing is the best jobs package possible.

 

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Rednecksrule

Yes... Grover is all for corporations paying less tax while he supports massive poor illegal immigration to the US. You the middle class taxpayer can't avoid the cost of Grover's illegal immigration.

Hey Grover... can we deduct the cost of illegal immigration on our federal state local income tax returns? They are a tremendous expense!

lookout1

How about a flat tax and getting rid of the tens of thousands of code...

Make it easy to pay taxes


Wyden Highway Bill Markup Is a Tax Hike on Middle Class Savers and a Taxpayer Protection Pledge Violation


Posted by Ryan Ellis on Tuesday, June 24th, 2014, 1:12 PM PERMALINK


On Thursday, the Senate Finance Committee will mark up a bill to spend taxpayer dollars on highways through the end of 2014.

In order to pay for this new half-year of federal spending, the chairman's mark puts into place $9 billion of permanent tax increases on the American people. ATR has said that we oppose tax increases for highway reauthorization, and we have made suggestions on where to cut spending instead.

The largest of these tax hikes is by far the most damaging.  In a move to raise nearly $4 billion from savers, the chairman's mark changes the rules for distributions on inherited 401(k)s and IRAs.  

Under current law, those who inherit an IRA can elect to "stretch" distributions from the IRA over the remainder of their lifetime, which could obviously be decades.  This allows IRA money to continue to largely grow tax-free, creating an even bigger nest egg than if the IRA was simply distributed upon the death of the original owner.  This is the proper tax treatment of savings under a consumption base, and should actually apply to all types of savings, not just IRAs.

Under the chairman's mark, this "stretch IRA" concept, which is a conventional estate planning tool used by middle class families, would be abolished.  In its place would be a requirement in most cases (surviving spouses being the biggest exception) that an inherited IRA be distributed over just five years.  Thus, the tax deferral advantages of a stretch IRA are almost completely obliterated.

Unlike the type of estate planning tools used by rich Americans like Bill and Hillary Clinton, a "stretch IRA" is used by normal, middle class Americans and their financial planners (except maybe Vice President Joe Biden).  This is the stuff of PBS pledge drive specials and walk in bank advertisements, and should not be confused with the complex estate planning that the uber-wealthy use.

To put it bluntly, this IRA tax increase is an income tax increase on the middle class.  Because the entire bill is a net income tax increase, it also violates the Taxpayer Protection Pledge.  ATR urges senators to oppose and vote against the chairman's mark on Thursday, and on the floor if necessary.

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ATR Supports S. 2488, the "Working Parents Home Office Act"


Posted by Ryan Ellis on Friday, June 20th, 2014, 2:00 PM PERMALINK


ATR is happy to support S. 2488, the "Working Parents Home Office Act," sponsored by Senator Mitch McConnell (R-Ky.)  

Under current tax law, a taxpayer is allowed to claim a deduction for a home office related to a trade or business.  Among other restrictions, tax law provides that the home office space must be exclusively (that is, 100 percent) business use.

That is not realistic for startup companies that get launched from home.  In many cases, parents (especially Moms) starting a new business also have to take care of children at home, often in very close proximity to a child (like a baby).

S. 2488 would loosen the "exclusive business use" home office requirement in this case.  It would allow for incidental parental child care in a home office, while preserving the ability of stay-at-home entrepreneurs to deduct their home office in full.  

ATR encourages all pro-taxpayer senators to support and co-sponsor this common sense legislation.

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ATR Supports Permanent Tax Relief for Small Employers


Posted by Ryan Ellis on Friday, June 6th, 2014, 3:11 PM PERMALINK


The U.S. House this week will consider three bills which would permanently cut taxes on small employers.  ATR is very supportive of each of these bills, and encourages pro-taxpayer Members of Congress to vote for them.

H.R. 4457, "America's Small Business Tax Relief Act of 2014," is sponsored by Congressman Pat Tiberi (R-Ohio).  It would make permanent a tax provision allowing small employers to expense (immediately deduct from taxable profit) up to $500,000 of equipment purchases per year.  If current law is not changed, small businesses can only expense $25,000 of purchases for things like computers, office furniture, manufacturing equipment, etc.  The rest must be subject to a slow, multi-year deduction process known as "depreciation."​

H.R. 4453 and H.R. 4454 are both sponsored by Congressman Dave Reichert (R-Wash.)  These are two permanent tax cuts which make tax compliance easier for S-corporations, a common tax form for medium-sized, mature businesses.  According to the IRS, there are 4.1 million S-corps with 7 million owners (S-corp owners pay the business' taxes on their individual 1040s). The permanent law changes involve built-in gains and basis adjustments for charitable contributions.

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ATR Supports H.R. 4777, the "Health Savings Act of 2014"


Posted by Ryan Ellis on Tuesday, June 3rd, 2014, 11:27 AM PERMALINK


ATR is proud to support a new bill introduced in the U.S. House of Representatives last week. H.R. 4777, the "Health Savings Act of 2014," is sponsored by Congressman Michael Burgess, M.D. (R.-Texas).  

Health savings accounts (HSAs) are tax-advantaged accounts which are used to pay for routine, out-of-pocket medical expenses.  They are used in conjunction with insurance plans which tend to cover large and/or unexpected health events.

H.R. 4777 makes HSAs more readily available to the public by implementing the following reforms:

Creation of Child HSAs.  As a way of saving for the future health needs of children, child HSAs are created with a maximum annual contribution limit of $6350 (indexed to inflation). Importantly, these HSAs can be rolled out of or into upon the death of a family member.  This allows for a kind of pre-funding of a child's anticipated Medicare liability decades before she turns 65.

Increase HSA contribution limits.  HSA contribution limits would match the maximum out-of-pocket limit on HSA-qualified insurance plans.  That limit is currently $6350 for a single person, or $12,700 for a family.  These numbers are indexed annually to inflation.  This would allow people to use HSAs not only for short- and intermediate-term medical needs, but also as a real health retirement account.  This is important since the insolvency of Medicare means that future seniors will likely be called upon to pay for more of their own Medicare benefit.

Allow mandatory IRA and 401(k) withdrawals to be deposited tax-free into HSAs.  When seniors reach age 70 and 1/2, they are required to take minimum distributions every year from their pre-tax IRA and 401(k) plans.  H.R. 4777 would also these "RMDs" to be rolled over tax-free to HSAs.  That way, the pre-tax nature of these dollars can be preserved and the money used to pay for health needs in retirement.

Give HSAs the same bankruptcy protection as IRAs and 401(k)s.  Under the law, a bankruptcy settlement cannot access retirement savings accumulated in IRAs and 401(k)s.  H.R. 4777 would extend this protection to HSAs, as well.

Expand the definition of an HSA-qualified insurance plan.  There is a definition in tax law of an HSA-qualified insurance plan necessary to have in order to make HSA contributions.  H.R. 4777 would expand this definition to include any Bronze, Silver, or catastrophic plan offered on any health insurance exchange.  Furthermore, HSA compatible plans would be clearly identified for health market consumers.  This would mean that nearly all Americans on the individual market would be able to fund an HSA to pay for their out-of-pocket medical expenses.

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ATR Supports H.R. 4718, Permanent Bonus Expensing Legislation


Posted by Ryan Ellis on Wednesday, May 28th, 2014, 1:06 PM PERMALINK


This week, the U.S. House Ways and Means Committee will report out H.R. 4718, a bill which would make the "50 percent bonus depreciation" temporary tax extender a part of permanent tax law.  

The bill, introduced by Congressman Pat Tiberi (R-Ohio), is a welcome one for taxpayers. All pro-taxpayer Members of Congress should support this bill.

Earlier this year, ATR went on record saying that the bonus depreciation provision is the "crown jewel" of the extenders package, and we urged the Ways and Means Committee to consider a permanent extension of this provision.  A dozen free market conservative groups sent a joint letter to Chairman Camp with the same request.  We're happy to see that Chairman Camp agrees that this tax policy should become a part of permanent tax law.

H.R. 4718 allows businesses of all sizes to immediately-deduct half the cost of new business equipment investments.  The remaining half of the cost remains subject to punitive and slow "depreciation" deductions over many years.  Under ideal tax policy, 100 percent of these costs would be recouped in the first year, a policy goal known as "full business expensing."  But Congressman Tiberi's bill gets us more than halfway there.  That matters greatly for economic growth and job creation.

The capital stock of the economy grows when businesses and households deploy scarce resources toward investments.  When a farmer buys a tractor, or an architecture firm buys a computer, they are investing in their own productivity: the farmer can grow more crops; the architecture company can design better blueprints.  This increased productivity results in more company profits, higher wages, new jobs, and an increased return to shareholders in their 401(k)s and IRAs.  Capital investment is the mother’s milk of wealth creation. 

There's not a more pro-growth bill the Ways and Means Committee will consider this entire Congress than H.R. 4718.  It deserves the broad and enthusiastic support of not only the committee, but the whole House.

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