Ryan Ellis

ATR Will Rate a Vote Against<br> Moving to Proceed to Reid Health Bill


Posted by Ryan Ellis on Wednesday, November 18th, 2009, 12:33 PM PERMALINK


This week, the United States Senate will be voting on a motion to proceed to consideration of Senate Majority Leader Harry Reid’s (D-Nev.) healthcare bill.  This bill would increase taxes by hundreds of billions of dollars over the next decade, saddle future generations with another unfunded entitlement, and destroy private sector health insurance.

A vote to proceed with this deeply-flawed legislation is tantamount to a vote in support of the bill.  A VOTE IN FAVOR OF THE MOTION TO PROCEED IS A VOTE IN FAVOR OF THE BILL.

For that reason, Americans for Tax Reform WILL RATE a vote against moving to proceed in our annual “Hero of the Taxpayer” Congressional scorecard.

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ATR Supports H.R. 3905, <br>"The Estate Tax Relief Act of 2009"


Posted by Ryan Ellis on Friday, November 13th, 2009, 5:43 PM PERMALINK


Americans for Tax Reform sent the following letter today to Congressman Kevin Brady (R-TX):

On behalf of Americans for Tax Reform, I am pleased to support H.R. 3905, “The Estate Tax Relief Act of 2009.”  While it falls short of our goal of full death tax repeal, it remains a tax cut relative to current law.

As you know, the death tax is scheduled to be reduced to a rate of “0” in 2010, only to shoot up to 55 percent in 2011.  Full repeal of the death tax remains the goal.  However, should full repeal not be possible, the next priority for taxpayers must be to avoid a tax increase relative to current law.

H.R. 3905 is a death tax cut relative to current law.  The bill calls for a ten-year, phased in reduction of the death tax rate—from 45 percent in 2009 to 35 percent in 2019.  Furthermore, the death tax exclusion rises from $3.5 million in 2009 to $5 million in 2019 (indexed to inflation after that).  This would be a permanent cut in the death tax, and moves closer to full repeal than current law would.

H.R. 3905 would score as a net tax cut relative to current law, which assumes a 55 percent death tax rate and a $1 million exemption level—permanently.  Repeal of the death tax would be preferable to H.R. 3905, but this bill is superior to current law after 2010.

I look forward to continuing to work with you and our other allies on Capitol Hill to fully repeal the death tax.

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Outline of House GOP Alternative<br> To Pelosi-Rangel-Obama Health Bill


Posted by Ryan Ellis on Tuesday, November 10th, 2009, 5:01 PM PERMALINK


Last week, ATR endorsed the House GOP alternative to H.R. 3926, the Pelosi healthcare bill.  Below are the major provisions of this alternative:

219 pages (compared to 1990 pages for House Democrat bill, H.R. 3926)

Uses the word “shall” 362 times (as opposed to 3,424 times in the House Democrat bill)


Major Provisions

  • HSA improvements, including:
  1. Saver’s credit can be used for HSA contributions
  2. HSA funds can be used to pay for insurance
  3. Greater coordination between HSA administrators and insurance companies
  4. HSA funds can be used for medical expenses incurred after insurance is bought but before HSA is opened 
  • Let individuals purchase health insurance across state lines (a.k.a. “Shadegg bill”) 
  • Association health plans (AHPs) to allow businesses and other groups to pool together across state lines to purchase coverage 
  • Medical malpractice tort reform 
  • Improve state high risk pools to give hard-to-insure people a place to buy affordable insurance 
  • Give cash rewards to states who find ways to lower health insurance premium cost growth 
  • Allow auto-enrollment for health plans at work 
  • Allows companies to incentivize wellness programs 
  • Ends federally-controlled comparative effectiveness research 
  • Beefs up fraud enforcement in Medicare and Medicaid 
  • Abortion funding restriction and conscience clause protection
  • Gives increased patent benefits to follow-on biologics


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JCT Says That Pelosi-Care Could<br> Send the Uninsured to Prison


Posted by Ryan Ellis on Friday, November 6th, 2009, 4:53 PM PERMALINK


This interesting nugget from the House Ways and Means Committee GOP staff:

Today, Ranking Member of the House Ways and Means Committee Dave Camp (R-MI) released a letter from the non-partisan Joint Committee on Taxation (JCT) confirming that the failure to comply with the individual mandate to buy health insurance contained in the Pelosi health care bill (H.R. 3962, as amended) could land people in jail.  The JCT letter  makes clear that Americans who do not maintain “acceptable health insurance coverage” and who choose not to pay the bill’s new individual mandate tax (generally 2.5% of income), are subject to numerous civil and criminal penalties, including criminal fines of up to $250,000 and imprisonment of up to five years.

When confronted with this same issue during its consideration of a similar individual mandate tax, the Senate Finance Committee worked on a bipartisan basis to include language in its bill that shielded Americans from civil and criminal penalties.  The Pelosi bill, however, contains no similar language protecting American citizens from civil and criminal tax penalties that could include a $250,000 fine and five years in jail.

According to the Congressional Budget Office the lowest cost family non-group plan under the Speaker’s bill would cost $15,000 in 2016.

So if you're a working family struggling to make ends meet, you either have to come up with $15,000 or potentially face jail time.

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Obama Endorses Healthcare Bill<br> That Breaks His Own Tax Pledge


Posted by Ryan Ellis on Friday, November 6th, 2009, 4:38 PM PERMALINK


During his campaign, President Obama made a “firm pledge” not to raise “any form” of taxes on families making less than $250,000 per year. Yet, he has just endorsed H.R. 3962, which does just that. Here’s how: 

Health Insurance Mandate Taxes on Working Families
 
·        Individual Mandate Excise Tax (Page 296): If an individual fails to obtain qualifying coverage, he must pay an income surtax equal to the lesser of 2.5 percent of modified adjusted gross income (MAGI) or the average premium. MAGI adds back in the foreign earned income exclusion and municipal bond interest. There is no exception for families making less than $250,000.
 
·        Employer Mandate Payroll Tax (Page 275): If an employer does not pay 72.5 percent of a single employee’s health premium (65 percent of a family employee), the employer must pay an excise tax equal to the following schedule:
 
Payroll Tax Rate
Average Payroll Size
N/A
<$500,000
2%
$500,000-$585,000
4%
$585,000-$670,000
6%
$670,000-$750,000
8%
$750,00<
 
Small business owners pay their taxes on their owners’ personal tax returns. Since this provision does not exempt business owners making less than $250,000 per year, this employer mandate tax will violate President Obama’s promise in some cases.
 
Tax Hikes on Healthcare Spending Accounts
           
·        Cap on Flex-Spending Account (FSA) contributions at $2500 (Page 325): Currently, the contribution level is unlimited
 
·        Medicine Cabinet Tax (Page 324): Americans would no longer be able to purchase over-the-counter medicines with their FSA, Health Savings Account (HSA), or Health Reimbursement Arrangement (HRA)
 
·        Increase in the Non-Qualified HSA Distribution Penalty from 10% to 20% (Page 326): This makes HSAs less attractive, and paves the way for HSA pre-verification
 
There are 30 million Americans with FSAs. About 8 million Americans have an HSA. Virtually all of them make less than $250,000 per year. These are clear tax hikes on these families
     
Making Legal Tax Deductions Not So Legal
 
·        Codification of the “Economic Substance Doctrine” (Page 349): Empowers the IRS to disallow a perfectly legal tax deduction or other tax relief merely because the IRS deems that the motive of the taxpayer was not primarily business-related. 
 
There is no exception for families making less than $250,000 per year.
 
If President Obama is serious about his tax pledge, he should immediately renounce the bill.

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ATR Supports House GOP Alternative<br> To Pelosi-Rangel-Obama Health Bill


Posted by Ryan Ellis on Friday, November 6th, 2009, 1:41 PM PERMALINK


ATR sent a letter today to House Republican Leader John Boehner (R-Ohio) endorsing the House GOP alternative to Pelosi-care.  Click here to read the full text of that letter.  Click here for a CBO score of the proposal.  Click here for talking points and other background on the alternative.

Here is an excerpt of our letter:

Congratulations on your introduction of an amendment in the nature of a substitute to H.R. 3962, the House Democrat government healthcare plan.  Your plan doesn’t increase taxes, won’t saddle future generations with trillions in debt, and leaves the government out of the doctor-patient relationship.

In particular, I wanted to commend you for two aspects of the bill: letting families purchase health insurance across state lines, and the improvements made to health savings accounts (HSAs).

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UPDATE: List of Tax Hikes in House Dem<br> Health Bill Updated for<br> Managers' Amendment


Posted by Ryan Ellis on Friday, November 6th, 2009, 11:31 AM PERMALINK


Employer Mandate Excise Tax (Page 275): If an employer does not pay 72.5 percent of a single employee’s health premium (65 percent of a family employee), the employer must pay an excise tax equal to 8 percent of average wages.  Small employers (measured by payroll size) have smaller payroll tax rates of 0 percent (<$500,000), 2 percent ($500,000-$585,000), 4 percent ($585,000-$670,000), and 6 percent ($670,000-$750,000).

Individual Mandate Surtax (Page 296): If an individual fails to obtain qualifying coverage, he must pay an income surtax equal to the lesser of 2.5 percent of modified adjusted gross income (MAGI) or the average premium.  MAGI adds back in the foreign earned income exclusion and municipal bond interest.

Medicine Cabinet Tax (Page 324): Non-prescription medications would no longer be able to be purchased from health savings accounts (HSAs), flexible spending accounts (FSAs), or health reimbursement arrangements (HRAs).  Insulin excepted.

Cap on FSAs (Page 325): FSAs would face an annual cap of $2500 (currently uncapped). 

Increased Additional Tax on Non-Qualified HSA Distributions (Page 326): Non-qualified distributions from HSAs would face an additional tax of 20 percent (current law is 10 percent).  This disadvantages HSAs relative to other tax-free accounts (e.g. IRAs, 401(k)s, 529 plans, etc.)

Denial of Tax Deduction for Employer Health Plans Coordinating with Medicare Part D (Page 327): This would further erode private sector participation in delivery of Medicare services.  Managers' amendment delays until 2012

Surtax on Individuals and Small Businesses (Page 336): Imposes an income surtax of 5.4 percent on MAGI over $500,000 ($1 million married filing jointly).  MAGI adds back in the itemized deduction for margin loan interest.  This would raise the top marginal tax rate in 2011 from 39.6 percent under current law to 45 percent—a new effective top rate.

Excise Tax on Medical Devices (Page 339): Imposes a new excise tax on medical device manufacturers equal to 2.5 percent of the wholesale price.  It excludes retail sales and unspecified medical devices sold to the general public.

Corporate 1099-MISC Information Reporting (Page 344): Requires that 1099-MISC forms be issued to corporations as well as persons for trade or business payments.  Current law limits to just persons for small business compliance complexity reasons.  Also expands reporting to exchanges of property.

Repeal in Worldwide Allocation of Interest (Page 345): Repeals the worldwide allocation of interest, a corporate tax relief provision from the American Jobs Creation Act.  Original bill merely delayed for nine years

Limitation on Tax Treaty Benefits for Certain Payments (Page 346): Increases taxes on U.S. employers with overseas operations looking to avoid double taxation of earnings.

Codification of the “Economic Substance Doctrine” (Page 349): Empowers the IRS to disallow a perfectly legal tax deduction or other tax relief merely because the IRS deems that the motive of the taxpayer was not primarily business-related.

Application of “More Likely Than Not” Rule (Page 357): Publicly-traded partnerships and corporations with annual gross receipts in excess of $100 million have raised standards on penalties.  If there is a tax underpayment by these taxpayers, they must be able to prove that the estimated tax paid would have more likely than not been sufficient to cover final tax liability.

Deny Cellulosic Biofuel Producer Tax Credit to “Black Liquor” Resulting from Wood Pulp in Paper Production (Managers’ Amendment Page 14)

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List of New Tax Hikes in<br> "Managers' Amendment" to H.R. 3962


Posted by Ryan Ellis on Thursday, November 5th, 2009, 7:11 PM PERMALINK


When the House considers H.R. 3962 Saturday, it will be slightly modified from the original version which was introduced.  These slight changes are called the "managers' amendment."  For those who want to read this 42-page addition to the bill (which should officially put it over the 2000-page mark), click here.  If you want to see the revised JCT score, click here

To see the tax roster that this is supplementing, click here.

Of most interest to taxpayers is the list of new or modified tax increases in the amendment.  Here they are (all are on page 14 of the managers' amendment):

  • The effective date of the provision denying deductions for costs allocable to part D subsidies (Sec. 534 of the bill) would be delayed for two years, until tax years beginning after 2012. 
  • As introduced, Sec. 554 of the bill would have delayed the implementation of the worldwide interest allocation rules by nine years – until 2020.  Under the manager’s amendment, the scheduled implementation of these more taxpayer-favorable rules would be repealed entirely. 
  • The manager’s amendment also includes a new provision (new Sec. 555 of the bill) making modifications to the current-law cellulosic biofuel producer credit (IRC Sec. 40(b)(6)).  This provision appears to exclude “black liquor” – a by-product of the pulp-making process – from eligibility for this credit, while making certain other fuels (e.g., algae) eligible.  We hope to be able to provide further information about this provision tomorrow.

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BREAKING: Joint Tax Committee:<br> One-Third of Surtax Revenue<br> Will Come from Small Employers


Posted by Ryan Ellis on Thursday, November 5th, 2009, 1:37 PM PERMALINK


Americans for Tax Reform has obtained a copy of private correspondence between the Joint Tax Committee and Congressional staff.

Click here to read the whole letter.

The key piece of news is that the JCT--the official Congressional tax scorekeeper--has said that one-third of the tax revenue raised by the 5.4 percent surtax in H.R. 3962 will come out of the bank accounts of small business employers.

Not "the rich."  Not someone else.  Main street small businesess, who employ one out of every three Americans with a job.

This is consistent with our analysis earlier this week that the surtax will be assesed on 57 percent of partnership and S-corporation profits.

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ATR Will Double-Rate a Vote Against<br> H.R. 3962, House Dem Healthcare Bill


Posted by Ryan Ellis on Thursday, November 5th, 2009, 12:57 PM PERMALINK


On Saturday, the U.S. House of Representatives is scheduled to vote on H.R. 3962, a bill which will raise taxes by nearly $200 billion per year and impose a government-controlled healthcare system.

Americans for Tax Reform is strongly opposed to this legislation, and will be double-rating a vote against H.R. 3962 in our annual “Hero of the Taxpayer” Congressional scorecard.  Furthermore, because support for H.R. 3962 is a violation of the Taxpayer Protection Pledge, any Member of Congress voting for it will be automatically-ineligible to receive any keyvote award from ATR this session. 

There are literally dozens of reasons to oppose what the Wall Street Journal termed “the worst bill ever.”  ATR is most focused on the 14 new tax hikes in the bill.

The worst tax hike in the bill is a new 5.4 percent surtax which will fall most heavily on small business profits.  This new job-killing tax is the equivalent of creating a new top tax rate of 45 percent (not indexed for inflation).  The JCT has reported that one-third of the revenue collected from this tax will come from small business income.  57 percent of partnership and Subchapter-S corporation profits will see this tax hike. 

There’s also a new tax on Americans who choose not to purchase health insurance.  This 2.5 percent tax, along with several others, is a direct violation of President Obama’s repeated promise not to raise “any form” of taxes on families making less than $250,000 per year.
   
ATR WILL DOUBLE RATE A VOTE AGAINST H.R. 3962, THE HOUSE DEMOCRAT HEALTH BILL

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