Ryan Ellis

ATR Supports Bill Appointing Inspector General for Obamacare

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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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ATR Supports Anti-Fraud Reforms in EITC

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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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House Should Pass Permanent Partial Expensing Tax Relief

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

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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"

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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

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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"

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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

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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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ATR Urges All Members of Congress to Co-Sponsor Bill to Kill Death Tax

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Posted by Ryan Ellis on Wednesday, May 28th, 2014, 12:01 PM PERMALINK


It's rare that a bill introduced in the House of Representatives attracts a majority of the chamber as co-sponsors.  Yet we're on the verge of that happening with regard to H.R. 2429, the "Death Tax Repeal Act of 2013," sponsored by Congressman Kevin Brady (R-Tex.).  

The bill currently has 217 co-sponsors, one short of a majority of the whole House.  Every Member of Congress--especially those who want to be on the side of taxpayers--should become a co-sponsor of this bill.

The death tax's time, if it ever had one, is over.  It collects less than one-half of one percent of all federal revenues.  It's given rise to a death tax avoidance industry army of accountants, lawyers, estate planners, actuaries, and others who profit from its existence.  It's a double- or even triple-tax on savings and investment.  It's time to end the death tax immediately.

Furthermore, the House has not voted on death tax repeal since 2005.  That's a full decade since the last time Members of Congress have had to go on record opposing or supporting the death tax.  Getting a majority of the House behind repeal is a powerful argument that it's high time for that vote to take place again.

All Members of Congress should co-sponsor H.R. 2429 today.  Kill the death tax.

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Healthcare.Gov to Cost Taxpayers over $1 billion

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Posted by John Kartch, Ryan Ellis on Monday, May 19th, 2014, 4:00 PM PERMALINK


Healthcare.gov, the federal Obamacare website, will cost taxpayers over $1 billion, according to congressional testimony submitted by HHS nominee Sylvia Mathews Burwell.

In response to questions from Sen. Lamar Alexander (R-Tenn.) Burwell noted that $834 million had already been obligated to the glitch-prone website as of Feb. 28, with “a need for approximately $200 million” more from taxpayers through Fiscal Year 2015.

The full responses from Burwell are as follows:

Question: What has been the total cost of creating healthcare.gov to date? What has been the total cost of “fixing” healthcare.gov? Please include a detailed accounting of all costs associated with this website, including (but not limited to) salaries and expenditures, contractor costs, and training.

Answer: “It is my understanding that as of February 28, 2014, CMS has obligated a total of approximately $834 million on Marketplace-related IT contracts and interagency agreements. These expenditures include the website and the systems that support enrollment through the Marketplace, such as the data services hub as well as other supporting IT infrastructure, including cloud computing, to support Marketplace IT development.”

Question: What financial outlays are expected for fixing the backend of healthcare.gov? Please include a detailed estimate of future costs for fixing and maintaining the website, including (but not limited to) salaries and expenditures, contractor costs, and training.

Answer: “The President’s Budget reflects a need for approximately $200 million for all Marketplace-related IT in FY 2015, some of which is funded through user fees. Much of this amount reflects ongoing operational and maintenance costs of HealthCare.gov, as well as continued development."

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