Ryan Ellis

The Obama Budget's Double Taxation of U.S. Employers

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Posted by Ryan Ellis on Tuesday, February 3rd, 2015, 9:35 AM PERMALINK


President Obama released his FY 2016 budget yesterday. It contains dozens of tax increases that go on for page after page. Buried in there is a series of tax increases on U.S. employers who also do business abroad. Because the U.S. has a "worldwide" tax regime, any further U.S. taxation of overseas income represents a double tax on that income. By definition, these overseas profits have already faced taxation in the country where they were earned. The United States should instead move to a "territorial" tax system, where the IRS only taxes profits earned inside our borders. That's what the rest of the developed world does, and it's time to modernize the code to reflect current best practices.

Unfortunately, the Obama budget moves in the wrong direction in three key ways.

Immediate 14 percent tax on overseas earnings.  U.S. companies who earn money overseas have a problem. They have already paid taxes on these profits in whatever country they earned the money in. But if they try to bring their after-tax profits back to the United States, they face a double tax from the IRS. They have to pay the difference between the U.S. corporate income tax rate (which is over 39 percent when states are--properly--included), and the rate they already paid overseas (the OECD average is under 25 percent).

The Obama budget makes this problem even worse by slapping an immediate 14 percent tax (close to 20 percent when states are included) on all after-tax earnings overseas--whether the money ever comes back to the United States or not.

A much saner strategy would be to make this decision optional and beneficial for companies.  Back in 2005, companies could voluntarily bring back overseas after-tax corporate earnings with a small double tax of 5.25 percent.  When given this choice, over $300 billion came back that year alone.  In the absence of a territorial system, which would have no double taxation at all, U.S. policymakers should give strong consideration to another round of repatriation.

A new global minimum tax of 19 percent. Another provision in the Obama budget would say that companies have to pay a tax rate of 19 percent (really 24 percent when states are included) on their global profits.  This means that companies who do business in countries with the good sense to have low, internationally-competitive corporate income tax rates will be punished. This is a clear case of rich, developed, and bloated countries picking on developing countries in Eastern Europe and elsewhere who are trying to attract capital. American companies are merely being used as a football here.

A real territorial system would not care what the tax rate overseas is, since it would not concern itself with overseas profits. Trying to slap global minimum taxes around the world is a sure recipe for forcing companies out of the United States entirely.  Speaking of that...

New restriction on "corporate inversions."​ President Obama and Congressional Democrats like to rail against "corporate inversions" (when a U.S. company is bought out by a foreign company) in the same way an angry drunk objects to the bruises on his wife's face.  We have the worst corporate income tax system in the world.  We impose the highest marginal income tax rate in the world.  We force our companies to live under a totally insane worldwide tax regime which exposes their profits to all sorts of international double taxation.  We force companies to slowly deduct investments and double tax their equity, yet they can write off debt interest immediately.   It's the opposite of what you want to do if you want to attract jobs and capital to the United States.

​Yet the Obama budget makes it worse.  It changes tax rules so that if 50 percent or more of the shareholders in the acquired company were in the old company, the new business is treated as if it were domestic.  To translate that into English, it exposes these companies to full international double taxation, and potentially causes massive "exit taxes" on companies just trying to comply with a very punitive tax system.

The solution for "corporate inversions" is simple--fix the U.S. tax system so that we're inviting capital and jobs in, rather than pushing them out the door.

See also: 
Obama Budget Creates Second Death Tax

Obama Budget: Highest Cap Gains Tax Since 1997
 

Photo Credit: 
Vivi Barros

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John (magnum)

"The Obama Budget's Double Taxation of U.S. Employers"

Odumbo and the dem-wit party are JOB KILLERS with taxation and excess regulations.

Fewer and fewer makers paying for the Odumbo takers.

This is just a continued attack on the middle class since companys do not actually pay taxes, but passes them along to consumers !

David Addams

Corporations will take very predictable actions in order to avoid these taxes.

The most obvious being to set up a holding corporation in another country and have that company own the corporations in the various countries in which they do business.

The U.S. company would be a subsidiary and would have no ownership rights in the other companies and therefore no claim to those companies' profits.

ToddTexas

The reality is this...businesses don't pay taxes...the people who buy products or use a service from a business pay its taxes. Anytime any tax is levied, we the people pay it...and that's how we should talk about it too.


ATR Supports Bill to Repeal and Replace Obamacare


Posted by Ryan Ellis on Monday, February 2nd, 2015, 4:37 PM PERMALINK


This week, the U.S. House of Representatives will vote on H.R. 596, legislation to repeal and replace Obamacare. ATR supports this bill and urges members to vote yes.

The legislation, introduced by Representative Bradley Byrne (R-Ala.​), will repeal Obamacare 180 days after the law is enacted to allow has time to enact free market reforms that provide American families with lower medical costs, stronger care and protect the doctor-patient relationship.

Put simply, Obamacare has not worked how its supporters have hoped. It has raised the cost of healthcare for millions of Americans, cost countless more their jobs and created thousands of complex and unnecessary regulations. Obamacare also contains dozens of tax increases so repealing the law will reduce the taxes of American families.

Americans deserve a healthcare system that provides them with affordable and efficient care, not one that is overly complex and leads to uncertainty. This legislation will help give Americans the healthcare system that they need and deserve.

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rhzszm

Repeal. Impeach. Lock up in prison.

How did American turn into a country where the "middle class" is dependent on government programs?

fr0thing

Repeal Obamacare now!

Marcus Landon

The "free market" is a God-awful predicate for an effective health care system. Health care SHOULD be a basic civil right enjoyed by every citizen. We should be able find some way to make it affordable, and eliminate the MANY BILLIONS wasted on insurance carriers who do nothing to contribute to better health care. Medical school should be 100% free (paid for by government) for the BEST & BRIGHTEST. Doctors should enjoy special perks, but no M.D. should make more than $1 million a year. If your prime focus is financial reward, do not become a doctor!


ATR Supports Bill Improving 529 College Savings Plans


Posted by Ryan Ellis on Monday, February 2nd, 2015, 3:19 PM PERMALINK


The U.S. House of Representatives will soon vote on H.R. 529, a bill to improve 529 college savings plans. ATR supports this legislation and urges members to vote for it.

529 savings plans help middle class families achieve the American dream. These plans allow parents to invest after-tax earnings into a plan that collects interest, and can later be spent tax-free on their children’s college education. As of 2014, an average of $21,000 has been invested in nearly 12 million accounts.

The proposed legislation, introduced by Representative Lynn Jenkins (R-Kan.), will make several important improvements to 529s. The bill allows computers to be purchased using funds drawn from an account, streamlines the paperwork burden, and allows money withdrawn from a 529 to be redeposited without penalty if a student withdraws from school due to illness or for other personal reasons.

Today, a college education is as important as it has ever been. H.R. 529 will strengthen college savings plans to help ensure that a college education remains an affordable and realistic goal for middle class families.

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Obama Budget Creates Second Death Tax

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Posted by Ryan Ellis on Monday, February 2nd, 2015, 10:41 AM PERMALINK


The Obama budget calls for a stealth increase in the death tax rate from 40% to nearly 60%. Here's how it works:

Under current law, when you inherit an asset your basis in the asset is the higher of the fair market value at the time of death or the decedent's original basis. Almost always, the fair market value is higher.

Under the Obama proposal, when you inherit an asset your basis will simply be the decedent's original basis.

Example: Dad buys a house for $10,000.  He dies and leaves it to you. The fair market value on the date of death is $100,000. You sell it for $120,000. Under current law, you have a capital gain of $20,000 (sales price of $120,000 less step up in basis of $100,000). Under the Obama plan, you have a capital gain of $110,000 (sales price of $120,000 less original basis of $10,000).

There are exemptions for most households, but this misses the larger point: the whole reason we have step up in basis is because we have a death tax. If you are going to hold an estate liable for tax, you can't then hold the estate liable for tax again when the inheritor sells it. This adds yet another redundant layer of tax on savings and investment. It's a huge tax hike on family farms and small businesses.  

It's like a second death tax (the first one has a top tax rate of 40% and a standard deduction of $5.3 million/$10.6 million for surviving spouses). Conceivably, an accumulated capital gain could face a 40% death tax levy and then a 28% capital gains tax on what is left. Do the math, and that's an integrated federal tax of just under 60% on inherited capital gains.

"The national death tax dates to World War I. Most states have abolished their state death tax. They know the death tax is simply yet another layer of taxation on the life savings of Americans," said Grover Norquist, president of Americans for Tax Reform. "Heck, Sweden abolished its death tax a decade ago. The world has learned from failure and moved on. Obama thinks he is being left-wing.  He is just showing his age."
 

See Also: 
Obama Budget: Highest Cap Gains Tax Since 1997

The Obama Budget's Double Taxation of U.S. Employers

Photo Credit: 
GlynLowe.com

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Churchillis1

Death and taxes. The only promise a liberal makes that he can keep. Death and taxes.

Gino Schafer

Then they get to combine 2 of their favorite things into one, a death tax!

John (magnum)

What if 20 Million Illegal Aliens Vacated America ?

Tina Griego, journalist for the Denver Rocky Mountain News wrote a column
titled, "Mexican Visitor's Lament".

I interviewed Mexican journalist Evangelina Hernandez while visiting Denver
last week. Hernandez said, "illegal aliens pay rent, buy groceries, buy
clothes. What Happens to your country's economy if 20 million people go
away?" Hmmm, I thought, what would happen?

So I did my due diligence, buried my nose as a reporter into the FACTS I
found below.

It's a good question it deserves an honest answer. Over 80% of Americans
demand secured borders and illegal migration stopped. But what would happen if
all 20 million or more vacated America ? The answers I found may surprise you!

In California , if 3.5 million illegal aliens moved back to Mexico, it would
leave an extra $10.2 billion to spend on overloaded school systems, bankrupt
hospitals and overrun prisons. It would leave highways cleaner, safer and less
congested. Everyone could understand one another as English became the dominant
language again.

In Colorado , 500,000 illegal migrants, plus their 300,000 kids and
grandchildren would move back 'home', mostly to Mexico ... That would save
Colorado an estimated $2 billion (other experts say $7 billion) annually in
taxes that pay for schooling, medical, social-services and incarceration costs.
It means 12,000 gang members would vanish out of Denver alone.

Colorado would save more than $20 million in prison costs, and the terror
that those 7,300 alien criminals set upon local citizens. Denver Officer Don
Young and hundreds of Colorado victims would not have suffered death,
accidents, rapes and other crimes by illegals.

Denver Public Schools would not suffer a 67% dropout/flunk rate because of
thousands of illegal alien students speaking 41different languages.. At least
200,000 vehicles would vanish from our grid locked cities in Colorado . Denver
's 4% unemployment rate would vanish as our working poor would gain jobs at a
living wage.

In Florida , 1.5 million illegals would return the Sunshine State back to
America , the rule of law, and English.

In Chicago, Illinois , 2.1 million illegals would free up hospitals,
schools, prisons and highways for a safer, cleaner and more crime-free
experience.

If 20 million illegal aliens returned 'home', the U.S. Economy would return
to the rule of law.Employers would hire legal American citizens at a living
wage. Everyone would pay their fair share of taxes because they wouldn't be
working off the books. That would result in an additional $401 Billion in IRS
income taxes collected annually, and an equal amount for local, state and city
coffers.

No more push '1' for Spanish or '2' for English. No more confusion in
American schools that now must contend with over 100 languages that degrade the
educational system for American kids. Our overcrowded schools would lose more
than two million illegal alien kids at a cost of billions in ESL and free
breakfasts and lunches.

We would lose 500,000 illegal criminal alien inmates at a cost of more than
$1.6 billion annually. That includes 15,000 MS-13 gang members who distribute
$130 billion in drugs annually would vacate our country.

In cities like L.A. , 20,000 members of the ' 18th Street Gang' would vanish
from our nation. No more Mexican forgery gangs for ID theft from Americans! No
more foreign rapists and child molesters!

Losing more than 20 million people would clear up our crowded highways and
gridlock. Cleaner air and less drinking and driving American deaths by illegal
aliens!

America 's economy is drained. Taxpayers are harmed. Employers get rich.
Over $80 billion annually wouldn't return to the aliens' home countries by cash
transfers. Illegal migrants earned half that money untaxed, which further
drains America 's economy which currently suffers an $1 7 trillion debt.

At least 400,000 anchor babies would not be born in our country, costing us
$109 billion per year per cycle. At least 86 hospitals in California , Georgia
and Florida would still be operating instead of being bankrupt out of existence
because illegals pay nothing via the EMTOLA Act. Americans wouldn't suffer
thousands of TB and hepatitis cases rampant in our country-brought in by
illegals unscreened at our borders.

Our cities would see 20 million less people driving, polluting and grid
locking our cities. It would also put the 'progressives' on the horns of a
dilemma; illegal aliens and their families cause11% of our greenhouse gases.

Over one million of Mexico's poorest citizens now live inside and along our
border from Brownsville, Texas to San Diego, California in what the New York
Times called, 'colonias' or new neighborhoods. Trouble is, those living areas
resemble Bombay and Calcutta where grinding poverty, filth, diseases, drugs,
crimes, no sanitation and worse.

They live without sewage, clean water, streets, roads, electricity, or any kind
of sanitation.

The New York Times reported them to be America's new ' Third World ' inside
our own country.Within 20 years, at their current growth rate, they expect 20
million residents of those colonias. (I've seen them personally in Texas and
Arizona ; it's sickening beyond anything you can imagine.)

By enforcing our laws, we could repatriate them back to Mexico . We should
invite 20 million aliens to go home, fix their own countries and/or make a
better life in Mexico . We already invite a million people into our country
legally more than all other countries combined annually. We cannot and must not
allow anarchy at our borders, more anarchy within our borders and growing
lawlessness at every level in our nation.

It's time to stand up for our country, our culture, our civilization and our
way of life Interesting Statistics!

Here are 13 reasons illegal aliens should vacate America, and I hope they
are forwarded over and over again until they are read so many times that the
reader gets sick of reading them:

1.. $14 billion to $22 billion dollars are spent each year on welfare to
illegal aliens. (that's Billion with a 'B')

2.. $7.5 billion dollars are spent each year on Medicaid for illegal aliens.

3.. $12 billion dollars are spent each year on primary and secondary school
education for children here illegally and they still cannot speak a word of
English!

4.. $27 billion dollars are spent each year for education for the
American-born children of illegal aliens, known as anchor babies.

5.. $3 Million Dollars 'PER DAY' is spent to incarcerate illegal aliens.
That's $1.2 Billion a year.

6.. 28% percent of all federal prison inmates are illegal aliens.

7.. $190 billion dollars are spent each year on illegal aliens for welfare
& social services by the American taxpayers.

8.. $200 billion dollars per year in suppressed American wages are caused by
the illegal aliens.

9.. The illegal aliens in the United States have a crime rate that's two and
a half times that of white non-illegal aliens. In particular, their children,
are going to make a huge additional crime problem in the US ...

10. During the year 2005, there were 8 to 10 MILLION illegal aliens that
crossed our southern border with as many as 19,500 illegal aliens from other
terrorist countries.Over 10,000 of those were middle-easternterrorists.
Millions of pounds of drugs, cocaine, meth, heroin, crack, Guns, and marijuana
crossed into the U.S. from the southern border.

11. The National Policy Institute, estimates that the total cost of mass
deportation would be between $206 and $230 billion, or an average cost of
between $41 and $46 billion annually over a five year period and nbsp;

12. In 2006, illegal aliens sent home $65 BILLION in remittances back to
their countries of origin, to their families and friends.

13. The dark side of illegal immigration: Nearly one million sex crimes are
committed by illegal immigrants in the United States !

Total cost a whopping $538.3 BILLION DOLLARS A YEAR!!


Obama Budget: Highest Cap Gains Tax Since 1997

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Posted by Ryan Ellis on Monday, February 2nd, 2015, 8:03 AM PERMALINK


President Obama's budget calls for a hike in the capital gains and dividends tax rate from 23.8% today (20% plus 3.8% Obamacare surtax) to 28% (including the Obamacare surtax).

The capital gains tax has not been that high since President Clinton signed a rate cut in 1997.  

It would represent a massive hike in the rate since Obama took office. When he was sworn in, the rate was 15%. He proposes to nearly double it to 28% in the twilight of his administration.

"Bill Clinton signed Republican legislation reducing the capital gains tax from 28% to 20%. The economy strengthened," said Grover Norquist, president of Americans for Tax Reform. "During his presidency Barack Obama has increased the capital gains tax from 15% to 20%, then from 20% to 23.8% and now he wants to increase it again to 28%. As a result Obama's 'recovery' has been the weakest since 1960. Obama has a sluggish economy and a very slow learning curve."

***

See also:

Obama Budget Creates Second Death Tax​ 

The Obama Budget's Double Taxation of U.S. Employers 

Photo Credit: 
Peter Howe

More from Americans for Tax Reform

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Robbie Marciniak

Thanks for more facts Ryan. I love Grover Norquist's letter to Congress about repatriating overseas money and allocating to the Highway Trust Fund. Let's let capital gains drive the economy. They should be treated as a golden goose, not a chicken dinner!

Guest

28% is what Reagan set capital gains rates at in the 1980s and we recovered from Carter years stagflation and the 1982 recession, but when Obama raises the rates to the same number it becomes the sole reason for a slow recovery? I don't buy it


CBO Still Refuses to Score Obamacare, Ignores 15 Tax Hikes in Healthcare Law

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Posted by Ryan Ellis on Tuesday, January 27th, 2015, 12:29 PM PERMALINK


The Congressional Budget Office (CBO) this week released their annual Budget and Economic Outlook which sets the budget baselines and estimates for the whole year.

Buried in Appendix B of the report is CBO's attempt to provide an updated score of Obamacare. But that's not what they did.  They only scored the "coverage provisions" of the law, ignoring some fifteen tax increases which are also a part of Obamacare and its cost to taxpayers.

Here's what the report says about its half score:

"Those estimates address only the insurance coverage provisions of the ACA and do not reflect all of the act’s budgetary effects. Because the provisions of the ACA that relate to health insurance coverage established entirely new programs or components of programs and because those provisions have mostly just begun to be implemented,CBO and JCT have produced separate estimates of the effects of the provisions as part of the baseline process. By contrast, because the provisions of the ACA that do not relate directly to health insurance coverage generally modified existing federal programs (such as Medicare) or made various changes to the tax code, determining what would have happened since the enactment of the ACA had the law not been in effect is becoming increasingly difficult. The incremental budgetary effects of those noncoverage provisions are embedded in CBO’s baseline projections for those programs and tax revenues, respectively, but they cannot all be separately identified using the agency’s normal procedures. As a result, CBO does not produce estimates of the budgetary effects of the ACA as a whole as part of the baseline process."

This is just another version of "we can't score it anymore" that CBO Director Doug Elmendorf (and his Gruber-gate methodology on Obamacare) has become known for.

List of tax hikes ignored in the CBO half-score of Obamacare

-3.8 percent surtax on investment income
-Hike in top Medicare payroll tax rate to 3.8 percent
-Medicine cabinet tax
-Additional surtax on health savings account (HSA) distributions
-Cap on flexible spending accounts (FSAs)
-Medical device tax
-High medical bills tax
-Tanning tax
-Tax on employer retiree drug coverage in Medicare
-Charitable hospital tax
-Pharmaceutical manufacturers tax
-Health insurance tax
-Tax on executive compensation in the health sector
-"Black liquor" tax hike
-Codification of "economic substance doctrine"

All these tax increases can be read about in detail here.

All this is simply not credible.  The Joint Tax Committee (JCT) produced all sorts of revenue estimates in the larger CBO report.  JCT projects how much the death tax will collect each and every year for the next ten years, for example.  It claims to know how much the federal government will collect in gas taxes.  Is it believable that JCT could not also project how much a dozen or so Obamacare tax provisions will generate?

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disqus_Cc3PcBrXQA

Yeah, I don't feel like doing my job either. Anyways, if I did I would just anger the boss by projecting losses as far as the eye can see . . .

Only in Federal Bureaucracy Land is that kind of attitude even considered employable.

JapaneseRamenNoodle

Obamacare: Created behind closed doors...by extreme partisans...without dissenting opinions...ignoring doctors...spread by lies...glossed over by media propaganda...rushed through Congress...deemed "passed" through unprecedented partisan Congressional action...continued to be defended with lies...glossed over by media Liberals...and helping few Americans while costing more than the actual people ($$$-wise) that it helps.

It is the worst piece of legislation in U.S. history.

Texgal1

..and the left is so proud of it that they proclaim it "the law of the land." Lie of the Land is more accurate.


As Senator, Obama Voted to Make 529 College Savings Plans Permanent

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Posted by John Kartch, Ryan Ellis on Monday, January 26th, 2015, 10:21 AM PERMALINK


On August 3, 2006, then-Senator Barack Obama voted to make the current tax treatment of 529 college savings plans permanent.

President Obama’s recently proposed tax plan, however, reverses this vote on 529 plans.

The vote on H.R. 4 — the Pension Protection Act of 2006 — took place in the second session of the 109th Congress, vote #230.

H.R. 4 made permanent the 529 plan expansion in the otherwise temporary 2001 Bush tax cut package (the Economic Growth and Tax Relief Reconciliation Act of 2001 — EGTRRA). The vote for H.R. 4 enshrined into permanent law the current tax-free growth of these college savings plans if used for tuition and fees. The 529 provision was in Section 1304 of the legislation.

The Obama administration has now proposed raising taxes on 529 plans, reversing the vote Senator Obama took in 2006. The administration now criticizes 529 plans as “upside down,” and “ineffective."

Photo Credit: 
Steve Jurvetson

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Jeffrey L. Mcdonald

He voted yes to the 529 plan when he was in the Senate and he didn't know he would become president. It was a good plan then, he had 2 young girls and it was a good way to save for college, just like the millions of other Americans who put money in the plan also. Now that he's president he no longer has to worry about money because the American people will pay for his kids to go to college. If that doesn't show his thought are only about his family not the families of will have to save or get student loans for their kids to go to college. So he's saying I got mine screw the rest of you. obama is such a liar he forgot that he voted yes to the 529 plan as a senator and now it's ok to end the plan. He's going to say you can still use the plan if you want to but it's going to be taxed. What sense would it do to use it when you can put money in a plan where you can draw intrest.Just one more hit on the lower and middle class.

EGO

Shocking...the man that also said marriage was between a man and a woman.

guy

no i hope i am emboldening the p o s potus enemies


Delay of Water Settlements Needlessly Costing Taxpayers


Posted by Ryan Ellis on Saturday, January 24th, 2015, 9:38 PM PERMALINK


One of the main powers and responsibilities of Congress is to spend money. Often times this authority is abused and taxpayers end up burdened by the costs of wasteful spending on pet projects (earmarks) and needless programs that otherwise wouldn’t be approved. However, sometimes there are issues that are misrepresented.  Another responsibility of Congress is to finalize water rights settlements that have already been negotiated by Congress. This is an issue that that hasn’t gotten much attention but is costing taxpayers.  A Republican-controlled Congress may be able to move these settlements forward.

As Congress makes progress in taking care of these settlements, some may want to characterize these as earmarks.  While some have said these settlement agreements are tantamount to earmarks, that is not simply the case. The Taxpayers Protection Alliance (TPA) is fully aware of what constitutes an earmark in Congress and these are not even close. TPA has been exposing earmarks for years.  The latest expose of earmarks by TPA was the 293 earmarks hidden in the Defense appropriations bill worth more than $13 billion (click here for a full list).  The settlements reached by Congress regarding these water and land disputes are not earmarks and shouldn’t classified as such.

Indian water rights settlements are agreements that resolve certain legal claims that Native American tribes have with the United States government. The settlements that are entered into are ultimately agreed upon by Congress and various federal agencies with jurisdiction on these matters. The stated agreements “fulfill the federal government’s obligation to manage water resources held in trust on behalf of Native American tribes.”

The cost of this settlement process as opposed to the cost of protracted litigation is an easy choice for Congress and the other parties involved. During a hearing on this issue in March of 2012, former Sen. Daniel Akaka (D-Hawaii), then-Chairman of the Committee on Indian Affairs, noted in his opening remarks to the Committee that:

“Congress has approved over two-dozen water settlements in the past 35 years. Last Congress, we enacted legislation that settled the water rights for seven tribal nations. Collectively, these seven tribes spent nearly a century litigating their water rights in court before having their settlements approved by Congress. Can you imagine this? 

In determining water rights claims, a tribe and other stakeholders may pursue either litigation or negotiation. Negotiating to reach a settlement in Indian water rights claims is advantageous for all parties. It is cheaper, takes less time and is more flexible than litigation. Negotiations may also foster better working relationships between all parties. This can have positive outcomes for not only the tribes but for the surrounding non-Indian communities as well.”

Last year Congress passed, and President Obama signed, H.R.3716, the Pyramid Lake Piute Tribe – Fish Springs Settlement Act. This legislation brought to a close a long fought legal battle over water rights, and in the end spurred a new partnership that will economically benefit all parties involved at no cost to taxpayers.

Taxpayers shouldn’t be on the hook for additional costs due to the hold up of these agreements, and this is why the settlements reached should be allowed to proceed. Over the past few decades we have seen these types of settlements approved and move forward without delay, so there’s no reason to stop that progress now. Just one settlement being held up can add more legal costs paid for unnecessarily by taxpayers and also negatively impact the local parties involved who have done the hard work to come to a resolution that suits everyone.

TPA is always encouraged when Congress actually works together to get something done, because it happens so rarely. In this case, these are routine settlements that have been negotiated in good faith by all parties involved and there’s no need for further delay that leads to more costs for taxpayers simply under the guise of the false notion that they are earmarks. TPA will continue to look at this issue and press for fair and swift resolutions that reflect the spirit of the settlements as congress intends.

(This post originally appeared on the website of the Taxpayers Protection Alliance and is cross posted here with their permission).

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Will Obama's 529 Plan Tax Hike Also Hit Disabled Kids?

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Posted by Ryan Ellis on Friday, January 23rd, 2015, 11:37 AM PERMALINK


On top of everything else, it appears that President Obama’s 529 plan tax hike might also fall on–of all things–disabled children and the parents who save for them.

In the most embarrassing of all possible starts to 2015, President Obama’s administration appears to be in full retreat on their proposal to tax middle class college savings plans (known as “529 accounts“).  The final death blow to this reckless and politically suicidal assault on the American Dream came out yesterday when it was revealed by the Wall Street Journal that the Obamas made a $240,000 contribution to the 529 plans of their daughters back in 2007.  There’s nothing wrong with that, of course, but it is a tad hypocritical for Obama to want to deny the middle class their opportunity to save for their own children’s education, be the contributions ever so modest. Even the New York Times, of all outlets, is turning tail.

It can get even worse.

Back in December 2014, a little more than one month ago, President Obama signed into law the “Achieving a Better Life Experience (ABLE) Act,” which sailed through Congress.  It creates a brand new kind of 529 plan.  Traditional 529 plans are all about saving for college.  An ABLE account will be about saving for kids who will likely never get a “normal” college experience, or anything close to it.  Qualified expenses include things like disability education, housing, transportation, employment support, health and wellness, financial/administrative/legal costs, and even funeral fees.

Like other 529 plans, ABLE account contributions are made after-tax.  The money grows tax-free.  Provided the contributions and earnings are used for qualified disability expenses, withdrawals are tax-free.  They very much resemble Roth IRAs, except the savings intention here is disability costs and not retirement.

The Administration’s plan calls for all earnings distributions on 529 plans to be subject to ordinary income taxation, at rates as high as 39.6 percent.  Will this include the new type of 529 plan signed into law by President Obama just a month ago, the ABLE account?

If the Obama tax hike plan sweeps in ABLE accounts, they may never actually achieve liftoff.  Conventional 529 plans would “dry up” and die off, according to Joe Hurley of the 529 portal website savingforcollege.com. “States that are not able to retain sufficient assets in their 529 plans will have a difficult time keeping their plans open,” Hurley added.

Since ABLE accounts are only a little over a month old, none have actually been established yet by 529 sponsors (i.e., states).  If the tax treatment were to change, there would be no market for ABLE accounts and no incentive to invest resources in rolling them out for parents of disabled kids.

Even if ABLE accounts are excluded from the rest of the president’s tax hike plans for 529s, it would still kill them off.  Since ABLE accounts will only be offered in conjunction with the larger 529 accounts, the death of the latter necessarily means the stillbirth of the former.  It’s like shooting the horse and expecting the cowboy to keep riding.

Was all this done on purpose?  Did anyone in the Obama Administration raise their hand and say “wait, didn’t we just sign a 529 expansion–for disabled children–just before Christmas?”

Who knows?  My guess is “no.”  Considering how ill-conceived and botched this entire fiasco has been, crediting officials with thinking this deeply about the topic is a bridge too far.

Assuming that this 529 plan tax hike (including de facto ABLE account preemptive repeal) remains in the president’s budget, it will be fully fleshed out in the Treasury Department’s post-budget “Blue Book,” where all stupid tax ideas slouch toward Bethlehem, waiting to be born.  Only then will we find out for sure if some technocratic nimrods at the White House accidentally decided to tax the tax-free savings accounts of disabled children, or whether they were even more reality-addled and did it on purpose.

But can someone in the press please ask them between now and then?

Photo Credit: 
Joe Crimmings

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ATR Supports H.R. 310, the Taxpayer Transparency Act


Posted by Ryan Ellis on Thursday, January 22nd, 2015, 4:40 PM PERMALINK


Americans for Tax Reform supports the Taxpayer Transparency Act (H.R.310) and urges members of Congress to support this bill. The Taxpayer Transparency Act makes sure that the government is held accountable for spending taxpayer dollars for political purposes. This will foster increased transparency and government accountability, especially for government spending that promotes unpopular and broken laws.

Government accountability and transparency are nonpartisan ideals and requiring the government to disclose that their advertisements are being paid for by the taxpayers will let Americans know that they are the ones footing the bill.
 

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Rednecksrule

How do you feel about using taxpayer money to implement Obama's amnesty Norquist you tool? You favor Obama's amnesty don't you? You have no problem with taxpayers footing the bill for open door immigration jag off...


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