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Ryan Ellis

19 Free Market Groups Support Blackburn-Flake Obamacare Delay Legislation


Posted by Ryan Ellis on Friday, September 13th, 2013, 12:02 PM PERMALINK


A number of free market groups today threw their weight behind legislation to delay the (upcoming) worst parts of Obamacare for one year, and to suspend all tax increases in Obamacare for one year.

The legislation has been introduced in the House by Congressman Marsha Blackburn (R-Tenn.) as H.R. 2809.  In the other body, Senator Jeff Flake (R-Ariz.) has companion legislation, S. 1490.

Delayed provisions would include: the individual and employer mandates; the Medicaid expansion; the Obamacare exchanges, and the dozens of new powers Obamacare gives to the IRS.

Suspended taxes (there are 20 new or higher taxes in Obamacare) include: the 3.8 percent surtax on savers and investors; tax hikes on HSAs and FSAs; the "medicine cabinet tax"; the "high medical bills tax"; the medical device tax, and a host of others.

Full text of the letter can be found here.

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ATR Supports Tax Equity for Cannabis Dispensary Employers


Posted by Ryan Ellis on Thursday, September 12th, 2013, 9:56 AM PERMALINK


It's a basic principle of taxation that the code should not pick winners and losers or discriminate unfairly against certain classes of taxpayers. 

That principle is being violated today for a newly legalized industry--cannabis dispensaries.  Unlike any other business type in the country, these firms and these firms alone are not free to deduct "ordinary and necessary" business expenses like wages, equipment, and rent.  H.R. 2240 fixes this quirk of tax law and restores fairness for these employers.

ATR today released a study explaining this issue and the policy solution for it.  ATR also sent a letter to Capitol Hill urging co-sponsorship of H.R. 2240.

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Are Credit Unions an Example of Bad Tax Policy?


Posted by Ryan Ellis on Thursday, September 5th, 2013, 3:15 PM PERMALINK


This week in Politico, a food fight broke out with banks tossing some volleys at credit unions.  The banks claim that credit unions are the beneficiaries of unfair tax treatment, and that this tax treatment should be eliminated as part of comprehensive tax reform.  Are they correct?

How are credit unions taxed?  Credit unions, unlike banks, are not set up as for-profit entities.  They are organized in specific areas, or for specific workforces, etc. as a type of non-profit.  There are 7000 credit unions with just under 100 million members.  Because they are non-profit, credit unions don't face entity level taxation.

So does that mean credit unions escape taxation?  No.  Credit unions plow their earnings back as benefits to members. That means credit union members get higher interest paid to them on savings deposits, and lower interest rates quoted to them for mortgages, car loans, and other debt.

In turn, the members end up paying more taxes on the interest received, and lose out on deductions for mortgage interest and business loans compared to their banking neighbors.  The net effect for federal coffers is pretty close to a wash.

In a way, credit unions are to flow-through businesses (partnerships, S-corporations, etc.) as banks are to C-corporations. 

So the question is not whether or not taxes get paid, but merely the incidence.  Banks face tax incidence primarily at the source level.  Credit unions face taxation primarily at the customer level.  It's simply two different business models with two different ways of imposing taxes.

How much does the government say it loses in taxes by not taxing credit unions at the entity level?  According to the "tax expenditure" report cited in the news article, this is about $2 billion per year.

That's probably over-stating it.  Almost certainly, the government is not counting the higher-than-bank-customer taxes paid by credit union members for the reasons stated above.

But even ignoring this, $2 billion is simply not a large tax item.  The context is that there are $1.2 trillion (with a "t") in annual tax preference items.  It's a small fraction of a percent of what's at play.

Why did such a small and arguably policy-correct tax item end up in the press?  Simple.  Businesses in Washington, DC like to publicly throw each other under the bus to gain a perceived advantage.  That's clearly what banks are doing here.

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ATR Supports H.R. 2927, the "No Taxation Without Verification Act"


Posted by Ryan Ellis on Friday, August 2nd, 2013, 4:56 PM PERMALINK


ATR is very supportive of H.R. 2927, the "No Taxation Without Verification Act," sponsored by Cong. Gus Bilirakis (R-Fl).  All Members of Congress should co-sponsor this common sense legislation.

The bill provides a very simple protection for taxpayers: no tax or fee (or hike in taxes) can be implemented until the Treasury Secretary can certify with 100 percent no-fraud assurance that those applying for Obamacare exchange subsidies are accurately reporting their employer status, employee income level, and health care status.

In July 2013, the Obama Administration announced that those applying for Obamacare exchange subsidies would be doing so on "the honor system."  This means that someone, innocently or not, could receive a much bigger exchange subsidy than they are entitled to.  The "honor system" would accept as given answers to questions like: "does your employer offer qualifying, affordable health insurance at work?"; "what is your income level?"; and various questions about health status.

Should the exchange subsidy be bigger than what it should have been, the taxpayer could be on the hook for paying back the difference to the IRS.  In the case of a taxpayer who made an honest mistake or was bullied into signing up by an Obamacare "navigator," this burden will be doubly-unfair. 

H.R. 2927 prevents all this.  It would effectively stop the rushed "honor system" exchange subsidy in its tracks.  Unless and until taxpayers are protected from fraudulent or merely errant claims being made, they should not fear that their tax dollars are being used badly.  H.R. 2927 is a good step toward delaying the "not ready for prime time" Obamacare law.

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25 Conservative Leaders Support Getting IRS Out of Obamacare


Posted by Ryan Ellis on Thursday, August 1st, 2013, 6:00 AM PERMALINK


22 leaders of free market groups sent the following open letter (full PDF) to the House of Representatives today:


Dear Congressmen:


We, the undersigned organizations and free market leaders write in united support of House efforts this week to get the IRS out of Obamacare.
 
The House will consider a measure on Friday sponsored by Congressman Tom Price (R-Ga.) to remove the IRS from any role in the implementation of the Obamacare law.  
 
It’s a basic belief of most Americans that patients, families, and doctors—not IRS bureaucrats--should be making health care decisions.  While this has always been the case, its importance has been heightened in recent months by the uncovered political targeting by the IRS of Tea Party and other free market groups.  The IRS should not be anywhere near people’s medical decisions until this black cloud of political scandal has been lifted.
 
Unfortunately, the GAO reports that the IRS has no fewer than 47 powers to implement Obamacare.  That’s 47 too many.  Allowing the IRS to enforce Obamacare is opening up the door to more abuse, more targeting, and more harassment of American citizens.  The myriad of new taxes the IRS will impose under the guise of health care reform will destroy jobs, stifle economic growth, and impede medical innovation in this country.
 
With Obamacare coming fully online in 2014, now is the time to stop the IRS from becoming a full partner in our families’ healthcare decisions.  House efforts to prevent this from happening are welcome and all Members of Congress should support these efforts.
 


Sincerely,

Grover Norquist, Americans for Tax Reform
Dean Clancy, Freedom Works
Al Cardenas, American Conservative Union
Amy Kremer, Tea Party Express
Jenny Beth Martin, Tea Party Patriots
Heather Higgins, Independent Womens’ Voice
Steven J. Duffield, Crossroads GPS
Brandon Arnold, National Taxpayers Union
Colin Hanna, Let Freedom Ring
Jim Martin, 60 Plus Association
Grace-Marie Turner, Galen Institute
Phil Kerpen, American Commitment
Penny Nance, Concerned Women for America
Sally Pipes, Pacific Research Institute
Ken Hoagland, Restore America’s Voice
John Tate, Campaign for Liberty
Peter Ferrara, National Center for Policy Analysis
Ari Winkour, Harbour League
Gregory T. Angelo, Log Cabin Republicans
Mark Schiller, MD, Doctor-Patient Medical Association
Betsy McCaughey, Ph.D, author of Beating Obamacare
David Williams, Taxpayers Protection Alliance
Brian Baker, Ending Spending
David Wallace, Restore America’s Mission
Kathryn Serkes, Take Back Washington

(Signatures are for information purposes only).

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Obama Calls for Higher Tax Rates on Small Employers Than on Giant, Multi-National Corporations


Posted by Ryan Ellis on Tuesday, July 30th, 2013, 2:04 PM PERMALINK


In a speech today, President Obama will call on Congress to cut the corporate tax rate to 28 percent, and pay for it by eliminating some tax preferences for companies.  While this may appear like a good thing, it's actually part of a larger pattern of this president siding with giant, well-funded companies with DC lobbyists instead of Main Street small employers.

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 2 million of them are corporations.  These businesses tend to be the largest companies in the world.

Even a 28 percent 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 Canada, Mexico, the United Kingdom, or Germany.  The new rate would still be higher than the developed nation average of 25 percent.

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 just raised their tax rate in two pieces.  The first is when he allowed the fiscal cliff to happen, which raised the top income tax rate from 35 to 39.6 percent.  The second is when he imposed a uniform small business tax for Medicare of 3.8 percent on successful companies.  Taken together, this means that most employers face a top rate of close to 44 percent, plus state taxes.

Why does President Obama want to cut tax rates for giant, multi-national corporations, but was content to raise them on Main Street small employers?  It's a good question, but this is now part of a pattern.  Earlier in July, President Obama announced that he was giving large employers a one-year reprieve from Obamacare's employer mandate.  However, small employers and families would still have to face the individual mandate on schedule in 2014.  Again and again, this president sides with big business against small employers.

The bottom line?  President Obama thinks it's a good idea for multi-national, giant corporations to pay a 28 percent tax rate while Main Street small employers pay a 44 percent rate.  That's not fair, and it's not tax reform.

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ATR Supports S. 1085, the "Small Business Tax Certainty and Growth Act of 2013"


Posted by Ryan Ellis on Thursday, July 18th, 2013, 3:00 PM PERMALINK


Earlier this year, Senator Susan Collins (R-Maine) introduced S. 1085, the "Small Business Tax Certainty and Growth Act of 2013."  It is very pro-small employer, pro-growth legislation, and all senators should consider becoming co-sponsors.

In particular, the bill is to be commended for moving toward a permanent expansion of small business expensing and an extension of 50% bonus depreciation.

Under the post-fiscal cliff deal, small business expensing ("Section 179 expensing") was expanded for 2013 only.  S. 1085 would make an expanded small business expensing regime permanent.  Under the bill, a business could annually expense up to $800.000 in new business equipment purchases (indexed for inflation in future years). 

Additionally, the post-fiscal cliff bill allowed all businesses (not just smaller ones) to expense up to half of all business purchases in 2013, subjecting the rest to depreciation.  This allowance would be extended for one year under S. 1085.

Absent an expensing policy, medium-sized and larger businesses are required to slowly-deduct ("depreciate") the cost of these assets over several years.  For example, a computer must be deducted slowly over a five-year period.  Some assets, like buildings, have to be depreciated over periods as long as 40 years.

This should not be.  All purchases should be treated equally.  If a business purchases a box of paper clips, it can be written off the first year.  But if it purchases a desk, it takes seven years to recover the cost.  This distorts business decisions by changing the tax treatment of purchases.  In addition, denying a full deduction for capital expenditures serves to bias the tax code away from investment and in favor of consumption.  The tax code should treat all decisions equally.  A deduction delayed is a deduction denied, especially when inflation is a factor.

S. 1085 goes a long way toward correcting this imbalance, and points in the right direction on how tax reform should also treat business purchases.

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ATR Supports New Taxpayer Bill of Rights


Posted by Ryan Ellis on Monday, July 15th, 2013, 4:09 PM PERMALINK


Congressman Peter Roskam (R-Ill.) has introduced a series of bills that would level the playing field between the IRS and ordinary taxpayers.  Together, they would revolutionize the relationship that everyday citizens have with their government.  ATR is supportive of each of these legislative initiatives, and would urge co-sponsorship of them. 

The family of bills includes:

H. Res. 280, the "Taxpayer Bill of Rights Resolution of 2013."  This resolution sets out basic principles that everyone of good will should be able to get behind: taxpayers have a right to be informed, to be assisted, to be heard, to appeal, to have certainty, to have a basic right to privacy, to confidentiality, to fair representation, to a fair and just tax system, and to pay no more than the correct amount of tax. 

H.R. 2530, the "Taxpayer Transparency and Efficient Audit Act."  This bill ensures that taxpayers are in timely and substantial contact with the IRS during an audit, and importantly ends any unresolved audit open for a full year.

H.R. 2531, the "Protecting Taxpayers from Intrusive IRS Requests Act."  This gets to the heart of the "BOLO crisis," where the IRS targeted Tea Party groups and others on the Right for heightened non-profit application scrutiny.  The IRS would no longer normally be able to ask non-profit applicants questions regarding their religious, political, or social beliefs.

H.R. 2532, the "Integrity Restoration Strategy (IRS) Act."  Building on what H.R. 2531 does, this bill would give the IRS 30 days to investigate a non-profit application, otherwise the application is automatically approved.  The IRS would have one year from passage of the bill to comply with inspector general audit recommendations, and would have to file quarterly reports to the Congress demonstrating that they've cleaned up their ways.

H.R. 2533, the "Stop Playing on Citizen's Cash (SPOCC) Act.  The IRS would be prohibited from holding any more taxpayer funded conferences (including those featuring Star Trek reenactments) until their inspector general and Congress has determined that the IRS can be trusted again to do so.

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Conservatives Support Obamacare Mandate Delay


Posted by Ryan Ellis on Monday, July 15th, 2013, 3:38 PM PERMALINK


The following joint letter was sent today by 17 prominent free market groups supporting House efforts this week to delay Obamacare's employer and individual mandates.  Here's a PDF of the letter.  The content and signers are below:

We, the undersigned organizations and individuals stand united in our support for a delay in Obamacare’s employer mandate and individual mandate.

On July 2, 2013, the Obama Administration announced a one-year delay in the employer mandate.  Changing any statute's effective date is in the purview of the U.S. Congress, not the Executive Branch.  While it is highly questionable whether the Obama Administration has the legal authority to delay the employer mandate, their admission that the Obamacare law is unworkable is all too accurate.

Unfortunately, this accommodation was provided only for Big Businesses.  We believe that individuals, small businesses, and families deserve at least the same reprieve from Obamacare’s costly mandates.  If the employer mandate can be delayed a year, so can (and should) the individual mandate, which adversely affects individuals, families and small business owners.

That’s why we’re supportive of efforts this week in the House of Representatives to delay for one year both the employer and individual mandates.

We view this effort as not only a matter of basic fairness, but part and parcel of our larger efforts to defund and repeal Obamacare.  We support full Obamacare repeal and full de-funding of Obamacare, as well as the mandate delay efforts the House is undertaking this week.

Sincerely,

 

Grover Norquist, Americans for Tax Reform

Dean Clancy, Freedom Works

Heather Higgins, Independent Women’s Voice

Jenny Beth Martin, Tea Party Patriots

Amy Kremer, Tea Party Express

Duane Parde, National Taxpayers Union

Grace-Marie Turner, Galen Institute

Phil Kerpen, American Commitment

John Tate, Campaign for Liberty

Jim Martin, 60 Plus Association

Colin Hanna, Let Freedom Ring

Penny Nance, Concerned Women for America

George Landrith, Frontiers of Freedom

Ken Hoagland, Restore America’s Voice

Kathryn Serkes, Doctor-Patient Medical Association

Christopher Wright, Obamacare Truth Squad

Chris Prandoni, Alliance for Worker Freedom

Alexandria Tea Party

Brian Baker, Ending Spending

Dr. Juliette Madrigal-Dersch, American Association of Physicians and Surgeons

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ATR Supports "Blank Slate" Tax Reform Approach If No Net Tax Hike, Consumption Base


Posted by Ryan Ellis on Wednesday, July 10th, 2013, 1:21 PM PERMALINK


Americans for Tax Reform sent the following letter to Senator Orrin Hatch (R-Utah) today expressing measured support for the "blank slate" approach to tax reform.  The full letter can be found here.  Below is an excerpt:

A revenue-neutral reform target is an absolutely essential precondition to any tax reform plan.  Tax reform should not be a stalking horse for a net tax increase.  Any tax reform plan should bring in no more tax revenue than the current system is projected to collect.  Any additional tax revenues should come as a result of faster economic growth from reform, not from legislated tax increases.  This was a key element of the 1986 Tax Reform Act.  219 congressmen and 39 senators have made this commitment to their constituents—in writing—before standing for election.  The Taxpayer Protection Pledge facilitates real, sustainable tax reform.

A comprehensive income tax base is the wrong starting point.  This income tax base double-taxes savings, biases in favor of debt over equity financing, and unfortunately is the starting point for the effort you’re undertaking here.  A more reasonable tax base to use would be one that taxes all consumed income once and only once.  The choice of tax base is absolutely critical to whether a tax reform plan maximizes economic growth or not.

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