Ryan Ellis

To Support Women, Repeal Obamacare


Posted by Mattie Duppler, Ryan Ellis on Tuesday, April 8th, 2014, 12:52 PM PERMALINK


Democrats are observing Equal Pay Day today by promoting new regulations that make labor more expensive and less flexible, restricting employment opportunities for women. Proponents of the Paycheck Fairness Act ignore the fact that actions taken by Washington exacerbate economic inequality - in fact, Obamacare includes 20 new or higher taxes, a handful of which hit women particularly hard.

1. Obamacare Individual Mandate Non-Compliance Tax:  Starting this year, anyone not buying “qualifying” health insurance – as defined by President Obama’s Department of Health and Human Services – must pay an income surtax to the IRS. Millions of women have already lost their health plans because they were not "qualified" under Obamacare. While the Obama Administration has exempted its Big Business friends from this tax, the individual mandate tax grows for individuals and families each year it is in effect, amounting to at least 2.5 percent of adjusted gross income by 2016.

2. Obamacare Flexible Spending Account Tax:  The 30 - 35 million Americans who use a pre-tax Flexible Spending Account (FSA) at work to pay for their family’s basic medical needs face a new Obamacare cap of $2,500. Before Obamacare, the accounts were unlimited under federal law. This is a very visible tax hike for women, who are most likely to be the primary health care decision makers in their families. This is especially true for mothers of special needs children. Nationwide there are several million families who use FSAs to pay for special needs education, which can cost tens of thousands of dollars. This Obamacare tax provision will limit the options available to these families. 

3. Obamacare High Medical Bills Tax: Before Obamacare, Americans facing high medical expenses were allowed a deduction to the extent that those expenses exceeded 7.5 percent of adjusted gross income (AGI).  Obamacare now imposes a threshold of 10 percent of AGI.  Therefore, Obamacare not only makes it more difficult to claim this deduction, it widens the net of taxable income.

4. Medicine Cabinet Tax. Since January of 2011, Americans have not been able to purchase over-the-counter medicines from their Flexible Spending Accounts or Health Savings Accounts. Women often rely on over-the-counter medicines to get themselves and their families through the colds, fevers, and aches and pains of daily family life. To raise taxes on busy Moms makes absolutely no sense.

5. Obamacare 10 Percent Excise Tax on Indoor Tanning: This Obamacare tax increase has the distinction of being the first to go into effect (July 2010). This petty, burdensome, nanny-state tax affects both the business owner and the consumer  Industry estimates from the Indoor Tanning Association show that 30 million Americans visit an indoor tanning facility in a given year, and over 50 percent of salon owners are women.  There is no exception granted for those making less than $250,000 meaning it is yet another tax that violates Obama’s “firm pledge” not to raise “any form” of tax on Americans making less than this amount.

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Joint Letter in Support of H.R. 1874, the "Pro-Growth Budgeting Act"

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Posted by Ryan Ellis on Thursday, April 3rd, 2014, 2:58 PM PERMALINK


ATR and nearly two-dozen other free market coalition partners today sent a joint letter of support to the U.S. House of Representatives.  We stand in united support behind H.R. 1874, the "Pro-Growth Budgeting Act of 2013."  The House is scheduled to consider this legislation on Friday.  The full text of the letter can be found here.  Below is the text and the signers:
 

On behalf of the taxpayers, citizen activists, and ordinary Americans we represent, we urge you to support and vote for H.R. 1874, the “Pro-Growth Budgeting Act of 2013.”  The House of Representatives will vote this week on H.R. 1874, and we urge all Members to vote “aye.”
 
H.R. 1874 would require the Congressional Budget Office (CBO) to prepare a dynamic budgetary analysis of each major-sized bill or resolution considered by Congress.  This dynamic analysis, to be written alongside the conventional “static” budget score, would take into account macroeconomic changes resulting from the legislation.  In addition, the dynamic analysis would show budgetary changes over a 30-year window, as opposed to the static score’s 10-year window.
 
H.R. 1874 requires the dynamic analysis to describe the potential economic impact of the bill or resolution on major economic variables, including real gross domestic product (GDP), business investment, the capital stock, employment, interest rates, and labor supply.  Also to be accounted for would be the potential fiscal effects of the measure, including any estimates of revenue increases or decreases resulting from changes in GDP.  

Finally, H.R. 1874 requires the dynamic analysis (or a technical appendix to it) to specify the economic and econometric models used, sources of data, relevant data transformations, as well as any explanation necessary to make the models comprehensible to academic and public policy analysts.
 
It’s high time for CBO to begin to use dynamic analysis on a more consistent basis.  It’s absurd to continue to pretend that large fiscal bills have no changes to macroeconomic factors, which in turn influence the spending and tax effects of the legislation itself.  If Members want to willfully ignore these realities, they can always retreat to the incomplete analysis found in the static score.  But Congressmen should have an informed opinion when they vote.  The color provided by a dynamic analysis is an essential component of that informed opinion.

 

Grover Norquist, Americans for Tax Reform
Mike Needham, Heritage Action for America
Brandon Arnold, National Taxpayers Union
William Gardner, Americans for Prosperity
Larry Hart, American Conservative Union
Tom Schatz, Council for Citizens Against Government Waste
Jim Martin, 60 Plus Association
David Williams, Taxpayers Protection Alliance
Gregory T. Angelo, Log Cabin Republicans
Tim Lee, Center for Individual Freedom
Andrew Moylan, R Street
Wayne Crews, Competitive Enterprise Institute
Phil Kerpen, American Commitment
Palmer Schoening, Family Business Coalition
Chuck Muth, Citizens Outreach
Mario Lopez, Hispanic Leadership Fund
Jeff Kropf, Oregon Taxpayers Coalition
Stephen DeMaura, Americans for Job Security
Roseann Siderits, COAST 

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The Secret Plan to Kill Free Trade


Posted by Ryan Ellis on Thursday, March 27th, 2014, 2:40 PM PERMALINK


Suwalki Conference. Polish delegates at left, ...

Suwalki Conference. Polish delegates at left, Lithuanian at right (Photo credit: Wikipedia)

Over the past hundred or so years, there’s been a global movement toward free trade.  A simple search on Wikipedia shows dozens and dozens of bilateral and multilateral trade agreements that nations have entered into since the Second World War.  The trend is clear–we’re moving toward a world without taxes on imports; that is, a world without tariffs.  There’s an emerging threat to this progress, though, and it’s showing up in a very unlikely place.

Click here to read more.

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ATR Supports H.R. 4158, SIGMA Act of 2014

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Posted by Ryan Ellis on Monday, March 10th, 2014, 11:41 AM PERMALINK


Americans for Tax Reform is proud to support H.R. 4158, the "Special Inspector General for Monitoring the ACA (SIGMA) Act of 2014," sponsored by Congressman Pete Roskam (R-Ill.)

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.

H.R. 4158 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.  H.R. 4158 is a necessary step to get there.

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Updated: ATR's Comprehensive Guide to the Camp Tax Reform Draft


Posted by Ryan Ellis on Wednesday, February 26th, 2014, 7:59 PM PERMALINK


Update: an earlier version of this document did not take into account the outlay effects of the Camp draft on its net revenue score. The Camp draft is a net tax cut and a net spending cut.
 
House Ways and Means Committee Chairman Dave Camp (R-Mich.) today released his anticipated comprehensive tax reform discussion draft. Chairman Camp and his staff are to be commended for putting pen to paper to produce a detailed tax reform plan.
 
However, the Camp draft would severely hamstring capital investment, unnecessarily damaging potential economic growth over the long run.
 
The Camp draft has many commendable elements, but other features are less compatible with a pro-growth model.  Many of the latter issues could be addressed (and no doubt would have been) had Camp not been constrained by arbitrary and inaccurate Beltway tax scoring conventions.
 
What the Camp Draft Gets Right:
 
-Dynamic growth effects make the country wealthier.  The Joint Committee on Taxation’s (JCT) first-ever “dynamic score” (that is, incorporating the macroeconomic effect of tax policy changes) shows that the Camp draft raises household income, increases labor force participation, grows private sector employment, and boosts real economic growth.
 
-Personal income tax top rate cut from 39.6 percent to 35 percent.  The plan replaces our current seven-bracket personal income tax structure with a simplified three-bracket model at lower rates across the board.
 
-Virtually all taxpayers could fill out a simple, standard deduction tax form.  The percentage of taxpayers who don’t have to record itemized deductions would rise from 70 percent today to 95 percent under the Camp draft.  As a result of this and other simplifications, the Camp draft claims a reduction in the size of the tax code by fully one-quarter.
 
-Corporate income tax rate cut from 35 percent to 25 percent.  This is badly needed, as the United States has the highest corporate income tax rate in the developed world.  It moves the U.S. rate closer to the developed nation average, and closer to the rates imposed by our most important trading partners.
 
-AMT repealed.  Both the personal and corporate “alternative minimum taxes” (AMT) are repealed.  Thus, it is finally ended for millions of families the “heads the government wins, tails the taxpayer loses” parallel tax system originally imposed on a few hundred wealthy Americans.
 
-Moves U.S. system closer to territoriality.  The U.S. is virtually the only nation in the developed world which seeks to tax the income her taxpayers earn overseas.  This potential double-taxation puts U.S. employers at a global competitive disadvantage.  The Camp draft addresses this by shielding 95 percent of active trade or business income earned abroad from IRS taxation.
 
-Permanent small business expensing.  Small and medium-sized firms will be able to immediately deduct (“expense”) business assets (up to $250,000) purchased throughout the year.  The alternative is to force them to slowly-deduct (“depreciate”) these costs over several to many years.  ATR believes that all business expenses should be deducted in the year they are incurred.
 
-No more free rides for bloated state governments.  For years, state governments have hidden their costs of government from their taxpayers.  The federal tax code has allowed state and local income taxes to be deducted, and the interest on state and local debt to be excluded from income, making state government seem cheaper than it really is.  The Camp draft ends the deduction for state and local income tax, and denies the exclusion for municipal bond interest to top-bracket taxpayers.
 
-No IRS preparation of tax returns.  The Camp draft endorses the IRS “Free File” program which has benefited millions of taxpayers, and prevents a government takeover of tax preparation (which would give the IRS power to both calculate and assess taxes).
 
-Two Obamacare taxes are repealed.  Both the “medical device tax” (a gross receipts tax on makers of medical devices like pacemakers and wheelchairs) and the “medicine cabinet tax” (prevents over-the-counter medicines from receiving equal tax treatment) are repealed.
 
Where the Camp Draft Falls Short:
 
-The Camp draft nets out to a small tax increase in the scoring window.  According to the JCT, the Camp draft is a net tax increase of $3 billion over the first decade of implementation.  As the Camp draft is translated to “real bullets” legislation, taxpayers should expect this to be smoothed out to no higher than revenue-neutral.
 
-Capital gains and dividends tax rate rises.  Today, the top marginal income tax rate on capital gains and dividends is 23.8 percent.  Under the Camp draft, this rises to 24.8 percent.
 
-Camp draft moves the wrong way on business investment.  The Camp draft lengthens depreciation lives for business assets, moving in precisely the opposite direction of where tax reform should go.  All business inputs should be expensed the year they are incurred.  Under the Camp draft, a desk (for example) would have to be depreciated over twelve years as opposed to the current seven, and using a straight-line recovery instead of an accelerated one.  For residential real estate property, it’s even worse.  The Camp draft requires this property to be depreciated over 40 years, as opposed to today’s 27.5 years.
In addition, “bonus” depreciation and other special accelerated depreciation rules are repealed.
 
Intangible property also faces a lengthened recovery period, from 15 years today to 20 years in the Camp draft.  These should also be expensed the first year like any other business purchase.

To its credit, the Camp draft does allow the basis of depreciable property to be indexed to inflation.
 
-Business capital in the economy shrinks under the Camp draft.  As a result of tax increases on capital gains and dividends, and tax increases on business investment, the JCT dynamic score assumes that business capital will shrink.  This is highly problematic, since capital is the seed corn of future economic growth.  It’s true that labor force and consumption growth is big enough to overwhelm this effect at least in the shorter run, but no tax reform plan should be increasing the taxation of capital.  This was a big mistake from the 1986 Tax Reform Act, and it’s a big mistake here.
 
-Corporations get better tax rates than other companies.  The tax code should not pick winners and losers, especially when it comes to something like business entity formation choices.  Yet the Camp draft does precisely that.  Whereas corporations get a 25 percent rate, successful partnerships and S-corporations will face a 35 percent top rate (plus a 3.8 percentage point Obamacare surtax in most cases).  Additionally, manufacturers get a more favorable tax rate than other industries.
 
-“Chained CPI” means that households will face greater “bracket creep.”  The Camp draft imposes “chained CPI” (a slower growth metric for inflation) on the tax brackets and other tax provisions.  Over time, this will result in taxpayers moving into higher brackets faster than they would under regular inflation calculations.
 
-“Carried interest” capital gains tax hike.  Some investment partnerships generate capital gains which are paid to managing partners.  The Camp draft seeks to substantially tax this income not as the capital gains it actually is, but as ordinary income.  That’s a rate hike from 24.8 percent to 38.8 percent in a post-reform world.
 
-Business owners will pay taxes on “phantom income.”  One provision in the Camp draft which is very troubling is to move many companies from a “cash basis” of accounting to an “accrual basis” of accounting.  Oversimplified, this means that these companies will no longer pay taxes on income they receive in a tax year.  Rather, they will pay taxes on income they have billed out (but may not have yet actually received).  In many cases, the money might not be received for years, but the taxes are due in the present.  This new rule impacts white-collar partnerships and S-corporations who have gross receipts of at least $10 million.
 
-Energy and other companies will face taxes on phantom “LIFO” income.  Companies which have valued their inventories over the years using a “last-in, first-out” (LIFO) convention will have to pay taxes on the cumulative difference between LIFO and FIFO (“first-in, first-out”) inventory accounting.  This isn’t real income—it’s akin to asking taxpayers to pay back the mortgage interest deduction they’ve claimed on a home they’ve owned for many years.
 
-New “bank tax” on firms will be passed along to customers.  The Camp draft creates a new “bank tax” on financial services firms with more than $500 billion in assets.  The tax is an asset tax of 0.035 percent of financial assets at the firm.  It’s a basic principle of taxation that “companies don’t pay taxes—people do.”  That’s the case here.  This new bank tax will come out in the wash in higher ATM fees, fatter commissions for stock brokers, and more nickel and diming for average investors.
 
 

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House Prepares to Pass "Taxpayer Bill of Rights"


Posted by Ryan Ellis on Monday, February 24th, 2014, 12:13 PM PERMALINK


I have a piece up in Forbes today which talks about plans the U.S. House of Representatives has this week to pass two bills which, combined, form a kind of "Taxpayer Bill of Rights."  You can read the full article here.  Below is an excerpt:

What these bills have in common is that they guarantee for taxpayers basic rights most Americans would say should be automatically expected.  The IRS is a potentially-dangerous arm of federal power.  It’s important that the natural accretion of bureaucratic leverage native to agencies like the IRS be checked with strong protections for ordinary, everyday taxpayers.

These two bills together can accurately be called a “Taxpayer Bill of Rights” because they mirror what’s protected in the actual Bill of Rights.  The First Amendment to the Constitution protects freedom of speech and freedom of religion.  The Sixth Amendment grants all Americans the right to a speedy trial.  Those themes are evident in both bills.

The House’s actions this week are a reminder to the IRS that they are subject to the same restraints on government power that the Founding Fathers imposed on the rest of the federal leviathan.

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Is It Fair to Say Obamacare Will Result in 2.5 Million Fewer Jobs?


Posted by Ryan Ellis on Friday, February 7th, 2014, 1:48 PM PERMALINK


Earlier this week, ATR released a study which illustrated one possible state distribution of how many fewer jobs (full-time or equivalent) Obamacare would result in.  The methodology was simple: The Congressional Budget Office estimated that the national figure for this is 2.5 million by 2024, so we simply distributed that by state based on the state's labor force relative to the country's labor force.  That invited a fact check today from the Washington Post.  Below is our rebuttal:

What did CBO actually say?  The CBO study in question comes from the 2014 Budget and Economic Outlook report released in February 2014.  The salient section says:

The reduction in CBO’s projections of hours worked represents a decline in the number of full-time-equivalent workers of about 2.0 million in 2017, rising to about 2.5 million in 2024. Although CBO projects that total employment (and compensation) will increase over the coming decade, that increase will be smaller than it would have been in the absence of the ACA. The decline in fulltime-equivalent employment stemming from the ACA will consist of some people not being employed at all and other people working fewer hours; however, CBO has not tried to quantify those two components of the overall effect.  The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in businesses’ demand for labor, so it will appear almost entirely as a reduction in labor force participation and in hours worked relative to what would have occurred otherwise rather than as an increase in unemployment (that is, more workers seeking but not finding jobs) or underemployment (such as part-time workers who would prefer to work more hours per week).

So CBO says that 2.5 million full-time jobs (or the equivalent) will drop out of the labor force by 2024.

Does this mean 2.5 million people will be laid off?  No, and we never made this claim.  As CBO says above, the workforce will be 2.5 million job slots (or the equivalent hours) lighter under Obamacare as a result of a combination of layoffs, hours-worked reductions, and people leaving the workforce.

If people are leaving the workforce voluntarily, is that the same as a lost job?  Yes.  The claim is that Obamacare is shrinking the workforce.  People are "voluntarily" leaving the workforce only because Obamacare is making it prohibitive for them to keep working.  If they earn too much money, the tax credit associated with Obamacare phases out.  Or, they become ineligible for Medicaid.  There's a term for this: subsidizing people not to work.

It's obviously better for the economy if people are working and being productive.  By shrinking the labor force by 2.5 million full time (or equivalent) jobs in 2024, Obamacare is making these workers worse off.

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How Many Jobs Might Obamacare Cost Your State?


Posted by Ryan Ellis on Wednesday, February 5th, 2014, 11:14 AM PERMALINK


On Monday, the Congressional Budget Office (CBO) issued a report which shows that Obamacare will cost the economy the equivalent of 2.5 million jobs by 2024.  That's a lot of lost hours and paychecks, but we thought it would be interesting to extrapolate this number by state.  The Bureau of Labor Statistics tells us what percentage of all jobs each state has, so it's a simple matter to figure out how many jobs Obamacare might cost each state.  Here's the results:

State

Jobs

Alabama

            34,444

Alaska

             6,055

Arizona

            46,127

Arkansas

            21,695

California

          268,441

Colorado

            43,257

Connecticut

            30,015

Delaware

              7,827

District of Columbia

            13,313

Florida

          138,967

Georgia

            74,133

Hawaii

            11,290

Idaho

           11,586

Illinois

          106,067

Indiana

            54,087

Iowa

            27,784

Kansas

            25,010

Kentucky

            33,497

Louisiana

            35,701

Maine

            10,916

Maryland

            47,719

Massachusetts

            60,978

Michigan

            74,395

Minnesota

            50,855

Mississippi

            20,488

Missouri

            49,475

Montana

              8,153

Nebraska

            17,665

Nevada

            21,451

New Hampshire

            11,639

New Jersey

            71,661

New Mexico

            14,731

New York

          162,576

North Carolina

            74,469

North Dakota

              8,291

Ohio

            94,534

Oklahoma

            29,753

Oregon

            30,587

Pennsylvania

          104,731

Rhode Island

              8,529

South Carolina

            34,779

South Dakota

              7,669

Tennessee

            50,372

Texas

          204,989

Utah

            23,413

Vermont

              5,619

Virginia

            68,662

Washington

            53,445

West Virginia

            14,068

Wisconsin

            51,633

Wyoming

              5,319

Puerto Rico

            16,438

Virgin Islands

                 702

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ATR Opposes Shift to Accrual Basis Accounting in Tax System


Posted by Ryan Ellis on Friday, January 31st, 2014, 5:01 PM PERMALINK


Americans for Tax Reform today sent a letter to Senate Finance Committee Chairman Max Baucus (D-Mont.) and House Ways and Means Committee Chairman Dave Camp (R-Mich.) expressing opposition to moving toward "accrual" based accounting in our tax system. 

Below is an excerpt:

I write today to express concern with a provision which has appeared in each of your drafts for business tax reform.  The “cash to accrual” proposal would result in a substantial tax increase for tens of thousands of American business owners and significantly increase their recordkeeping burdens--not for any benefit to our economy and job creation, but for the sole purpose of paying for tax reform...this accounting shift does not advance the goals of tax reform, in fact, it is counterproductive.  It does not make the system simpler, but rather more complex.  It does not promote fairness, certainty or consistency.  It will be a drag on economic growth and job creation. It does not take away anything which is unanimously considered a loophole or preference item.  Thousands of American businesses and owners would pay a significant price to accomplish nothing.  This proposal should be dropped if we are looking for successful small- and medium-sized businesses to remain job creators in a post-tax reform world.

Full letter text

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Obama to Call for Business Tax Hike in SOTU Speech


Posted by Ryan Ellis on Monday, January 27th, 2014, 12:50 PM PERMALINK


In his State of the Union speech on Tuesday night, President Obama will propose a net tax increase on American employers.

Dusting off a “corporate tax reform” plan from his 2012 campaign, the President will propose raising taxes on all employers while cutting rates for only the largest companies. Here’s how the plan works:

The President’s plan is a net tax increase. According to reports, the “offer” President Obama is making is to raise net taxes on employers, and use some of the tax increase revenue windfall to pay for Democrat-aligned union construction projects. The Republican House would never support a net tax increase, and using the money to fund Big Labor (and, by extension, Democrat campaign coffers) is hardly a sweetener. 

This “new” plan simply dusts off an unserious 2012 Obama campaign document. Back in 2012, President Obama’s re-election campaign put out a brief and rhetorical “corporate tax reform” plan. It was largely ignored at the time by serious policy analysts, but the Administration has done nothing to develop it in the intervening two years. ATR did analyses of the plan in 2012 and 2013. The plan raises taxes on all American employers, but only gives partial rate relief to the largest multi-national companies.

The plan leaves much to be desired:

Cutting the corporate rate to 28 percent will only help very large companies. According to IRS data, 32 million businesses file tax returns every year. Fewer than two million of them are corporations. These businesses tend to be the largest companies in the world. While their tax rate is too high, most successful employers pay an even higher tax rate.

Most American employers don't pay the corporate income tax. Most companies in America file and pay taxes using the individual tax rates. President Obama has already raised the tax rate paid by successful small and medium-sized businesses (via the fiscal cliff and Obamacare’s Medicare payroll tax rate hike). Taken together, this means that most employers face a top rate of close to 44 percent, plus state taxes. This is even higher than the 39 percent corporate income tax rate faced by large corporate firms.

The President’s plan only cuts taxes for multinational corporations, while raising taxes on Main Street businesses. Why does President Obama think it's a good idea for multi-national, giant corporations to pay a 28 percent tax rate while Main Street small employers continue to pay a 44 percent rate? All businesses lose their existing deductions and credits, but only the largest companies get rate relief in exchange. That's not fair, and it's not tax reform.

Even a 28 percent corporate rate is too high. According to the OECD, a 28 percent federal corporate rate (more like 32 percent after state corporate income taxes are factored in) would still be higher than every one of our major trading partners except Japan and France. We would still have a higher corporate income tax rate than major trade partners like Canada, Mexico, the United Kingdom, or Germany. The new rate would still be higher than the developed nation average of 25 percent.

Doubles down on international double-taxation. The U.S. is one of the only countries left in the world which seeks to tax the worldwide income of her companies (on top of income taxes already paid overseas). The smart tax reform move would be toward a territorial system, where only U.S.-source income is taxed (as Obama's own jobs commission recommended). This could be transitioned into with a round of repatriation

Rather than embracing this common-sense and globally-accepted idea, the Obama Administration wants to make the double taxation worse by imposing a global minimum tax rate. They also want to take away several of the tax provisions in law today which make this international double-taxation regime bearable for many companies.

Raises the cost of capital across the board. The Administration plan lengthens depreciation lives, which discriminates against business investment. The proper policy is permanent full business expensing. Businesses should be able to deduct the cost of all business inputs in the year incurred. Lengthening depreciation lives (and, likely, amortization periods) uses inflation and the time value of money to steal these ordinary business deductions. A deduction delayed is a deduction denied. More importantly, it incents business to consume rather than to invest in new plant and equipment.

Raises taxes selectively on producers of American energy. For a plan that claims to abhor "picking winners and losers," the Administration outline sure does pick one loser--energy producers. It reads them out of the Section 199 exclusion, repeals LIFO, curtails legitimate cost recovery, and increases the double taxation of international income (a sore point for the industry). Why is it a good idea to raise the cost of energy for every American family?

It is ironic that an administration lately focused on income inequality would put forward a tax plan which provides rate relief only to the largest multinational companies while raising taxes on small businesses.

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