Ryan Ellis

Charlie Rangel Looking at a VAT<br> to Pay for Government Health Care Plan

Posted by Ryan Ellis on Tuesday, June 16th, 2009, 7:42 PM PERMALINK

House Ways and Means Chairman Charlie Rangel (D-NY) today became the latest Beltway politician to float a value-added tax (VAT) as an additional tax to pay for health care (link requires subscription):

Among the revenue options appears to be a value-added tax, or a levy on each stage in the development of a product and bringing it to market. "It's a point of discussion," said Ways and Means Select Revenue Measures Subcommittee Chairman Richard Neal, D-Mass. "To say there's any consensus would be misleading," he said.

Rangel would not say whether he favored that approach, only that "it's been put on the table." He said his preference was not important relative to that of panel members and the Caucus.

President Bill Clinton floated a value-added tax to fund his healthcare overhaul effort in 1993, but it landed with a thud in Congress. The tax is considered among the most regressive because it falls heaviest on the poor.

Estimates by the Tax Policy Center put the revenue gained at as much as $50 billion annually from a mere 1 percent VAT, however, and backers argue the health coverage gained will offset higher consumer costs.

The retail industry opposes a VAT, arguing it will further depress auto and home sales and prolong the recession. National Retail Federation tax counsel Rachelle Bernstein called it "the absolute wrong thing to do in this troubled economy."

Rep. Allyson Schwartz, D-Pa., said, "I do have some concerns about creating a new tax," particularly on necessities like food and clothing, although she said there was some support on the panel for a new tax on sugary sodas. She said there was less support for increasing alcohol taxes.

Rep. Sander Levin, D-Mich., said he disliked the idea of a VAT. "I think at this point everything's on the table, including some bad ideas -- and that's one of them," he said.

You might recall that President Obama floated the idea over the Memorial Day recess.

It's coming...

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ATR Supports H.R. 690,<br> "MOBILE Cell Phone Act of 2009"

Posted by Ryan Ellis on Monday, June 15th, 2009, 2:43 PM PERMALINK

PDF version of this letter

The Honorable Sam Johnson
U.S. House of Representatives
Washington, DC 20515

Dear Congressman:   

On behalf of Americans for Tax Reform, I express my strong support for H.R. 690, the “Modernize Our Bookkeeping In the Law for Employee's (MOBILE) Cell Phone Act of 2009.”  I would urge all Members of Congress to co-sponsor and support this common sense modernization of our tax code.

Congress has chosen to list several items in the tax code as “listed property.”  These items—most namely computers and automobiles—can be provided by an employer, but the employee must disclose any personal use of the items, and pay taxes on what is essentially an in-kind wage.

When Congress added on cell phones as listed property in 1989—some twenty years ago—these products were very different than they are today.  Bulky, cumbersome, and expensive, they more resembled a modern laptop than a modern Blackberry.  The per-employee cost of office coffee is likely higher today than the per-employee cost of a cell phone personal device.

Put simply, the intent of Congress (to limit a lucrative fringe benefit given to high-flying executives) is painfully out of date.  No one today views iPhones, Blackberries, or other personal electronic devices as “luxuries.”  Rather, they are an inexpensive and convenient way for employees to be in 24-hour contact with work.  Any personal use of these devices—a line which gets grayer every year—is not significant, and not worth the extensive recordkeeping and meddlesome tax payments of the listed property rules.

The House passed a bill last year that would remove cell phones from listed property, and the Joint Tax Committee scored this tax relief at a mere $237 million over ten years.  For the nuisance and enforcement costs this provision creates, everyone involved should view the “cost” as little more than a rounding error, and your bill as a common-sense update of the original intent of Congress two decades ago.

Grover G. Norquist

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Obama's PAYGO Plan Means<br> Automatic Tax Hikes

Posted by Ryan Ellis on Wednesday, June 10th, 2009, 3:37 PM PERMALINK

President Obama yesterday submitted a plan for PAYGO to return.  Under his plan, the Administration would track all tax and entitlement spending throughout the year.  At the end of the year, if the net effect of all tax and entitlement legislation increased the deficit over the next decade, there would be an across-the-board cut in entitlement spending.

Sounds ok, right?  Not really.  This is a trap, and Obama, et al are hoping that well-meaning limited government conservatives will walk right into it.

Congress would never, ever let there be an indiscriminate, across-the-board entitlement spending cut.  In order to avoid this scenario, Congress will always raise taxes at least as much as they increase entitlement spending. 

In other words, this PAYGO proposal would give a built in excuse to raise the short- and long-term cost of government AND practically require Congress to raise taxes to "pay for" it.  And we can forget about cutting taxes anytime soon.  We would need to either raise taxes somewhere else, or do the politically-unthinkable (cut entitlement spending).

It's kind of like the Doomsday Device from Dr. Strangelove.  Only in this case, the inevitable outcome of action would not be nuclear war, but something almost as bad--a tax increase.

Maybe the motto should be, "how I learned to stop worrying and love tax hikes."

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Cost of Hiring a Federal Bureaucrat<br> Getting More Expensive for Taxpayers

Posted by Ryan Ellis on Wednesday, June 10th, 2009, 3:13 PM PERMALINK

The cost of hiring and retaining a federal bureaucrat may be going up for taxpayers.

This week, the U.S. House of Representatives passed H.R. 626, the "Federal Employees Paid Parental Leave Act." This bill would give federal employees up to four weeks of paid (that is, by taxpayers) parental leave for the birth or adoption of a child.

How generous of Congress with our money.

What this bill would do (and it has yet to pass the Senate) is to increase the cost of hiring a federal bureaucrat.  Based on my calculations from May, it costs between $2 million and $11 million to hire a federal employee for a working career.  Isn't that enough?  How much more do taxpayers need to pay for each federal bureaucrat?

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Double-Taxing U.S. Firms on Foreign Profits<br> Would Cost Economy 2.2 Million Jobs

Posted by Ryan Ellis on Monday, June 8th, 2009, 4:55 PM PERMALINK

A repeal of the rules governing the way the United States taxes the foreign earnings of U.S. companies could have dramatically adverse effects on U.S. jobs and investment and leave U.S. companies less competitive in global markets, according to a new economic report released today.

report, authored by Robert J. Shapiro, a former Clinton Administration economic official, and Aparna Mathur, a Research Fellow at the American Enterprise Institute, found that as many as 2.2 million American jobs could be affected by a repeal, or effective repeal, of  "tax deferral."

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Half of America Strongly Opposed to<br> VAT to Pay for Socialized Medicine

Posted by Ryan Ellis on Tuesday, June 2nd, 2009, 3:01 PM PERMALINK

Half of Americans are opposed to any sort of sales tax (including a VAT) to pay for government-controlled health insurance, according to Rasmussen.  Only 18 percent support a national sales tax at all, but:

There is more support for the concept if sales tax revenue is used to provide health insurance for all Americans. In that scenario, 40% favor a national sales tax and 49% are opposed.

Democrats strongly support a national sales tax to provide universal health insurance coverage. Republicans are opposed by a three-to-one margin, and those not affiliated with either major party are opposed two-to-one.

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Only One in Three Americans<br> Supports Higher Taxes on Soda

Posted by Ryan Ellis on Tuesday, June 2nd, 2009, 2:39 PM PERMALINK

According to a new poll out today from Rassmussen, only 34 percent of Americans--one out of three respondents--think that taxing sugared soda beverages is a good idea.

Senate Finance Committee Chair Max Baucus (D-MT) floated the idea before the Memorial Day break, along with dozens of other tax hike ideas.

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Supermajority Opposes Taxing<br>Employer-Provided Health Benefits

Posted by Ryan Ellis on Tuesday, June 2nd, 2009, 2:12 PM PERMALINK

According to a new Rasmussen Poll, people are not too keen on changing around the tax treatment of employer-provided health insurance coverage:

The survey also found that just 11% favor taxing health insurance benefits provided by employers. Seventy-seven percent (77%) are opposed. On this point, Republicans, Democrats, and unaffiliated voters share broadly similar views.

All of which, of course, begs the obvious question: why would anyone want to touch this tax benefit?  Why not simply cut taxes elsewhere to equalize the tax treatment of health insurance?


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ATR Resurrects Anti-VAT Caucus

Posted by Ryan Ellis on Monday, June 1st, 2009, 4:00 PM PERMALINK

Americans for Tax Reform has re-invigorated our Anti-VAT caucus.  There are currently 45 Congressmen and 2 Senators in the caucus.  ATR is inviting every elected official to join, as reported today in Roll Call.

The following letter was sent to all Congressmen and Senators urging them to join:

President Obama and Congressional Democrats have proposed a series of tax hikes on the American people to pay for government-run health care.  Just after Memorial Day, they floated a plan for a value-added tax (VAT) in the Washington Post.    Americans for Tax Reform maintains a list of anti-VAT Congressmen and Senators known as the “Anti-VAT Caucus.”  I am writing you today to give you the opportunity to join this pro-taxpayer, Anti-VAT caucus.  The Anti-VAT caucus currently has 43 Congressmen and 2 Senators, and we’re looking to grow the list quickly over the next several weeks.  This caucus has no meetings to attend and no dues to pay.  All you need to do is sign up.  Contact Jacob Feldman at ATR (jfeldman@atr.org) to do so, and he will sign you up right away.

In Europe, a small VAT was first enacted in 1967.  At that time, Europe and the United States both confiscated about $.27 out of every dollar of national income.  Since the introduction of the VAT in Europe, its average tax take has gone from 27% to 41%, nearly a 50% increase in just four decades.  There is currently a minimum VAT requirement of 15% to be a member of the European Union, and an average VAT rate of 20%.  Meanwhile, the VAT-less United States still taxes at about the same level as it did in 1967.

The experience of Europe should teach us that the imposition of a VAT, even in the pursuit of very worthy ends, is too often the precursor to bigger government.  It is simply too easy for politicians to raise a tax that is hidden from citizens.

A VAT is not like a national retail sales tax.  A sales tax is a line-item on a cash register receipt, and is easily known by the consumer: a very effective check on raising the sales tax rate.  A VAT, on the other hand, is embedded in the final cost of the goods sold, and is hidden to the consumer.  The VAT is applied at every stage of consumption, from wholesale to retail.  It is passed along until it literally becomes as much an inherent and cloaked component in the price as transportation or raw materials.  As a result, countries that have adopted a VAT have been sorely tempted to raise the rate over time.

That’s why I urge you to join the Anti-VAT caucus today, to let your constituents and the American people know that you think a VAT is a bad idea for America.

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