Free Trade is Good for American Businesses and Families


Posted by Natalie De Vincenzi on Thursday, September 22nd, 2016, 10:00 AM PERMALINK


Free trade is critical to the American economy and is an essential component to guaranteeing a high standard of living for all Americans.  Free trade cuts and reduces tariffs – taxes on trade – and other barriers to global commerce. Fewer barriers on American exports means less money taken by foreign governments out of the pockets of workers and business owners seeking to trade overseas. Fewer barriers on imports into the U.S. results in more competition and access to a greater range of products at lower prices for consumers across the country.

Although both Presidential candidates have spoken negatively about trade, they are mistaken. Free trade is a positive, not negative force. In a letter to members of Congress, ATR together with 35 conservative, free-market groups urged Members of Congress to continue advocating for free trade policies that benefit the American economy.

Since Adam Smith published Wealth of Nations in 1776economists have universally supported free trade. In the past, tariffs were the chief source of federal revenues. However, these taxes on trade have inhibited economic growth and produced serious economic consequences. Conversely, cutting them has led to economic prosperity. Today, more than 1 in 5 American jobs are tied to trade, and these workers earn 16 percent more than jobs in industries not tied to trade.

While the concept of trade is sound, the execution is not always perfect. The 12 member Trans-Pacific Partnership (TPP) contains more than 18,000 tax cuts on American exports and will benefit consumers and businesses, but also contains flaws that may undermine property rights. These issues should be addressed before the agreement moves forward.

Under U.S. law, medical innovators have access to 12 years of exclusivity, while TPP grants as little as five years. The 12 year protection exists for a reason -- it was legislated by Congress following careful consideration of the extensive development costs associated with medicines.

Similarly, TPP explicitly excludes the tobacco industry from the use of investor-state dispute settlement (ISDS), a “neutral, international arbitration procedure, ”designed to act as a safeguard to ensure that countries do not skirt their responsibilities toward free, open trade.

Despite these flaws, TPP will produce significant economic growth.  A recent report by the International Trade Commission found that TPP will increase U.S. exports by $57.2 billion annually by 2032 and increase overall U.S. real income by $57.3 billion annually over the same period.

The fact is, free trade is pro-growth, pro-business, and pro-American. Members of Congress should freely support and defend free trade.

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EU State Aid Cash Grab Threatens Rule of Law and Investment

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Posted by Natalie De Vincenzi on Thursday, September 22nd, 2016, 10:00 AM PERMALINK


The recent European “illegal state aid” ruling threatens to upend business certainty and existing international tax rules, and reduce business investment. The ruling, which forces Apple to retroactively pay Ireland $14.5 billion plus interest also shortchanges the American people and threatens the prospects for tax reform.

European Commissioner for Competition Margarethe Vestager has justified this decisions as a way to stop “cozy” relationships and break “unfair competition.”  Clearly though, this is a case of money hungry EU bureaucrats clawing back more revenue after the fact.

The ruling has  caused universal condemnation from American business leaders, Congressional Republicans and Democrats, and the Treasury Department who have all raised concerns that the EU investigations will set a precedent allowing international bodies to override the sovereignty of individual countries.

Both Apple and Ireland have announced that they will appeal this decision and both claim they did nothing wrong. In fact, there are no accusations that the arrangement constituted tax dodging, but rather than not enough tax was paid.

This ruling and those to come threaten to set a precedent for the European Union to take aim at other U.S. companies doing business abroad and leaves them vulnerable to having the same treatment. The EU is set to continue its investigations into American businesses like Amazon and McDonalds, which could open the door to similar action from other countries and international bodies:

“Absent reversal, other countries outside the EU will interpret the decision as acceptable governmental behavior and will put all companies with cross-border investments –including EU-headquartered companies – at risk of having their assets expropriated by foreign governments seeking extra revenue or seeking to punish a successful foreign competitor.”

This is far from hypothetical and is already happening. Officials from EU member countries are already eyeing their “fair share” of the $14.5 billion and just last week Japan ordered Apple to pay $118 million in back-taxes.

Not only do these developments impact business certainty and rule of law, the rulings come at the expense of U.S. taxpayers. Money that is stolen from American businesses under the guise of illegal state aid is no longer available to be brought back to the U.S. economy to be reinvested in jobs and the economy.

As noted by Senate Finance Chairman Orrin Hatch (R-Utah) these investigations illustrate why the U.S. desperately needs pro-growth tax reform. American Companies are already struggling to compete because we have the highest corporate tax rate in the developed world – 39 percent, compared to the average in the developed world which is just 25 percent. In addition, our tax code subjects our businesses to double taxation – once when it is earned overseas and once when it is brought back to the U.S.

This system of double taxation – which is used by just six of 34 developed countries – has resulted in more than $2 trillion in after tax U.S. income being stranded overseas. This is just one consequence of the out-of-date tax code, and it should be fixed in pro-growth tax reform.

When this happens, lawmakers should repatriate double taxed income at a rate of just over 5 percent, which when done in the 2000s resulted in $320 billion returning to the country that was reinvested in the economy, in higher wages, and in federal revenues. Now, with more than two trillion stranded overseas, the time is ripe for another round of repatriation that can finance pro-growth tax reform.

EU officials have shown they are aggressively targeting US businesses through state aid investigations.  These efforts should signal that the U.S. desperately needs tax reform so that American businesses can once again compete in the global economy and not be at the will of bureaucrats from other countries.

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Theophilos Papadopoulos

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Bill Clinton Says Cut the Corporate Rate, Hillary Says No

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Posted by Alexander Hendrie on Wednesday, September 21st, 2016, 4:28 PM PERMALINK


Former President Bill Clinton today called for reducing the U.S. corporate income tax rate to a globally competitive rate. Clinton is wise to do to so because America has the highest tax rates for businesses in the developed world. Lowering business taxes to a globally competitive rate will allow our businesses to compete against foreign competitors and put a stop to corporate inversions and foreign acquisitions of American assets.

As reported by CNBC, Clinton called for the rate to be lowered to be closer to the average of the developed world:

"I was the president who urged it to be raised to 35 percent, but when I did it, it was precisely in the middle of OECD countries. It isn't anymore."

In contrast, Hillary Clinton has suggested there is no need to lower the corporate rate. Advisor Neera Tanden recently suggested that Hillary would oppose any effort to lower the corporate income tax rate because “the U.S. has been doing pretty well when it comes to competitiveness."

This position puts the campaign far outside the mainstream of both Democrats and Republicans including President Barack Obama and Speaker Paul Ryan who have called for lowering the 35 percent federal income tax rate to a more globally competitive rate. Democrats have called for a lower rate as part of a net tax increase, while Republicans cut taxes for all families and businesses.

“Bill Clinton has staked out the obvious commonsense position that we can’t compete with a 35 percent rate,” said Grover Norquist, president of Americans for Tax Reform. “Most Democrats want a rate cut as but only as part of a large net tax increase. Hillary not only wants a massive tax increase, she is opposed to a rate cut. She is wildly to the left on this issue.”

Rather than reduce the extremely high, uncompetitive corporate tax rate, Hillary has proposed an “exit tax.”  The term “exit tax” is used by the campaign itself. Her campaign document describing this proposal says it will impose an $80 billion tax increase.

The Clinton campaign has called for at least $1 trillion in higher taxes including a $275 billion tax hike through unspecified “business tax reform.” Her campaign has failed to release specific details on these proposals so the true Clinton net tax hike figure is likely much higher than $1 trillion

Clinton’s refusal to acknowledge and address America’s high business tax rates will ensure that America’s competitiveness problem remains unresolved.


Chart by Strategas Research Partners using Tax Foundation and OECD data

As shown in the chart aboveAmerica’s corporate income tax rate is close to 15 percent higher than the average in the developed world. The tax rate has barely changed since tax reform was passed 30 years ago in 1986.  At the time, we lowered our rate to 39 percent – below the developed average of 44 percent. Since then, other countries have cut their rates aggressively.

31 of the 34 OECD countries have reduced their corporate rates since 2000. Only the U.S. and Chile have higher corporate tax rates than they did in 2000. Our high rate makes it difficult, if not impossible for our businesses to compete with competitors that have much lower rates Canada (26.3 percent), the United Kingdom (20 percent), and Ireland (12.5 percent).

This inaction has resulted in close to 50 American businesses leaving the country through an inversion in the past decade, according to data compiled by Democrats on the Ways and Means Committee. America has also lost an additional $179 billion worth of assets through acquisitions by foreign competitors, according to a report by Ernst and Young.

Clearly there is a need to reduce business taxes, both to reduce the burden on American businesses and to allow them to compete with foreign competitors. Bill Clinton clearly understands this issue, but Hillary Clinton’s plan would only make the tax code more complex and burdensome for American businesses.

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Hillary in 1993: Let's Double the Gun Tax

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Posted by John Kartch on Tuesday, September 20th, 2016, 5:11 PM PERMALINK


Today Americans for Tax Reform released more evidence of Hillary Clinton’s long held desire to impose new and higher gun taxes. 

ATR's HighTaxHillary.com previously exposed her 1993 endorsement of a new 25 percent national retail sales tax on guns.

But unreported since 1993 is Clinton’s support for a doubling of the current federal excise tax on guns. In a closed-door meeting, she told then-Rep. Mel Reynolds (D-Ill.) that his bill to double the tax was a “great idea."

As reported by the Chicago Tribune on March 19, 1993:

Rep. Mel Reynolds said Thursday that Hillary Rodham Clinton was "very enthusiastic" about his proposal to increase the federal excise tax on guns as a way of raising revenue for health care.

Clinton said "she thought it was a great idea, something she agreed with," the Chicago Democrat reported after a 25-minute meeting with the first lady at his office. 

The article added:

Reynolds proposed legislation last month that would boost the current 10 percent excise tax on handguns and 11 percent tax on all other firearms to 20 percent and 21 percent, respectively.

The bill didn’t go anywhere. But Clinton’s support for a doubling of the gun tax is another disturbing sign of her deep seated hostility to the Second Amendment.

Her disdain is evident in the video footage of her endorsement of a 25 percent national retail sales tax on guns. In sworn congressional testimony, Clinton is seen nodding fiercely as she is asked about it.

Her response: “I am all for that.” 

She added: “I am speaking personally, but I feel very strongly about that.”

 

In her 2016 primary campaign, Clinton relentlessly attacked Bernie Sanders for his 1990s gun votes, staking out a position to the left of Sanders on gun control. Her own 1993 endorsement of the 25 percent national retail sales tax on guns was widely reported at the time.

From the Associated Press on Oct. 1, 1993:

Sen. Bill Bradley, D-N.J., picked up Mrs. Clinton's support for his idea of slapping stiff taxes on ''purveyors of violence:'' a 25 percent sales tax on guns and $2,500 license fees for gun dealers.

''Speaking personally ... I'm all for that,'' said the first lady. But she stressed she was just speaking for herself.

''Well, let me say that there is no more important personal endorsement in the country today, and I thank you very much,'' said a pleased-as-punch Bradley.

Here’s the Washington Post on Oct. 1, 1993:

"I'm all for it," she declared in a response to a suggestion by Sen. Bill Bradley (D-N.J.) that the Congress should impose a 25 percent sales tax on handguns to "tax directly the purveyors of violence."

On Sept. 30, 1993, NBC Nightly News reported the incident as follows:

Others urge a hefty sales tax on guns, and much higher fees for gun dealers. Today, they got a powerful ally.

Ms. HILLARY CLINTON: I'm all for that. I just don't know what else we're going to do to try to figure out how to get some handle on this violence.

The Bill Clinton White House made it clear that Hillary's 25 percent gun tax endorsement was hers and hers alone, as shown by the Oct. 1, 1993 White House press briefing transcript:

Q: "Do you know if the President supports the First Lady's endorsement of an idea yesterday by Senator Bradley that there be a 25 percent tax on the sale of guns in America?"

WH Press Secretary Dee Dee Myers: "Well, as you know, she was expressing her opinion."

Clinton’s gun tax endorsements are especially troubling considering the recent imposition of gun taxes in Seattle, Cook County in Illinois, and the Commonwealth of the Northern Mariana Islands, a U.S. territory.

Seattle imposes a tax of $25 per gun, as well as an ammunition tax of two or five cents per round. The taxes have already driven gun dealers out of the city. Cook County imposes a $25 per gun tax and a one cent to five cent tax per round of ammunition. The Northern Mariana Islands imposes a $1,000 per gun tax. Yes, one thousand dollars per gun. The governor there says the tax should serve as a “role model” for U.S. states.

“Hillary and the Left are now seeking to tax the Second Amendment out of existence,” said Grover Norquist, president of Americans for Tax Reform. "Over the many years, Hillary has endorsed every available effort to limit gun ownership by American citizens through taxes, regulations, and executive orders. One senses a pattern."

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THOUGHTCRIMINAL2084

A 25% "tax" on a Constitutional Right. How much will the "tax" be on the First Amendment?


Koskinen's IRS May Still Be Targeting Conservative Groups

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Posted by Alexander Hendrie on Tuesday, September 20th, 2016, 2:11 PM PERMALINK


IRS Commissioner John Koskinen will appear before the House Judiciary Committee to defend himself against impeachment charges following his role in the Lois Lerner targeting scandal.

 
 

Koskinen was appointed to lead the IRS after promising to bring transparency and openness to the embattled agency. He has failed.

Serious internal control flaws mean the IRS may still be unfairly selecting Americans for an audit “based on an organization’s religious, educational, political, or other views,” according to a pair of reports released by the Government Accountability Office (GAO) last year.

 

As GAO notes, certain deficiencies increase the risk of unfair audit selection based on a taxpayer's First Amendment rights. As the report finds:

“The control deficiencies increase the risk of selecting organizations for audit in an unfair manner—for example, based on an organization’s religious, educational, political, or other views.”

GAO audited Wage & Investment (W&I) and Small Business/Self-employed (SB/SE) divisions in response to a request from House Ways & Means Committee members led by Chairman Kevin Brady (R-Texas) and Oversight Subcommittee Chairman Peter Roskam (R-Ill.).

These requests were made in response to IRS targeting conservative groups. This targeting resulted in just one conservative non-profit being granted tax exempt status over a three year period.

As Chairman Brady and Roskam note, selection flaws mean the IRS is failing to apply tax law in a fair and equitable manner. The Ways & Means Committee summarized the findings of each report, as found below:

GAO Report on Small Business/Self Employed Unit

  • GAO found that the IRS does not have strong internal controls and did not have consistent procedures for documenting audit selection decisions, which increases the risk of unfair audit selection.
  • GAO concluded that “the lack of strong control procedures increases the risk that the audit program’s mission of fair and equitable application of the tax laws will not be achieved.”


GAO Report on Wage & Investment Unit

  • Similar to the other business units, GAO found that the Wage & Investment unit did not always document how cases were selected for audit.
  • GAO found that the IRS did not provide support for changes in selection processes and procedures.
  • GAO also found that the IRS does not conduct continuous reviews of its audit selections, and instead only reviews it once a year.
  • GAO concluded that internal controls should be strengthened to “provide greater assurance that W&I is fulfilling its mission to select tax returns with fairness and integrity.”
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Koskinen’s IRS: Meet the Shredder that Destroyed Lois Lerner’s Hard Drive

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Posted by Americans for Tax Reform on Tuesday, September 20th, 2016, 11:55 AM PERMALINK


IRS Commissioner John Koskinen will appear before the House Judiciary Committee to defend himself against impeachment charges following his role in the Lois Lerner targeting scandal.

 

Koskinen was appointed to lead the IRS after promising to bring transparency and openness to the embattled agency. He has failed.

Lois Lerner’s hard drive met its end in the amoral maw of an AMERI-SHRED AMS-750 HD shredder, according to testimony submitted last year by the Treasury Inspector General for Tax Administration.

 

In 2011, after an IRS-contracted Hewlett Packard technician serviced Lerner's laptop and determined the hard drive "more than likely crashed due to an impact of some sort," and after a different technician in the IRS Criminal Investigation Division noted there was “some scoring on the top platter of the drive,” the hard drive made its way to a recycling facility in Florida operated by the Federal Bureau of Prisons.

The testimony states:

“We determined by obtaining the certificate of destruction dated April 16, 2012, interviews with the facility manager, and a search of the facility, that this shipment of hard drives was destroyed using an AMERI-SHRED AMS-750HD shredder. TIGTA agents observed the shredder in operation and noted that the shredder cut the inserted hard drives into quarter-sized pieces, and according to the facility manager, those pieces are then sold for scrap.”

Video footage of the 7.5 horsepower, 2,700-lb. shredder in action can be found here

Photo Credit: 
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Koskinen's IRS Failed to Search Five of Six Locations for Lois Lerner Emails

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Posted by Alexander Hendrie on Monday, September 19th, 2016, 5:04 PM PERMALINK


IRS Commissioner John Koskinen will appear before the House Judiciary Committee to defend himself against impeachment charges following his role in the Lois Lerner targeting scandal.

Koskinen was appointed to lead the IRS after promising to bring transparency and openness to the embattled agency. He has failed.

The IRS failed to search five of six possible sources of electronic media for Lois Lerner’s emails, according to documentation released by the House Oversight Committee in July 2015.

Over the course of investigations into the Lois Lerner targeting scandal, Commissioner John Koskinen repeatedly assured Congress that he would provide all of Lois Lerner’s emails. But based on testimony from the Treasury Inspector General for Tax Administration (TIGTA), this did not occur. The agency’s ineptness -- or corruption -- resulted in 24,000 Lerner emails being lost when they were “accidently” destroyed. 

According to TIGTA official Timothy Camus, the IRS had six possible sources to search for Lois Lerner’s emails:

“The hard drive would have been a source, Blackberry source, backup tapes a source, the backup tapes for the server drives and then finally the loaner lap tops.”

When asked how many of these sources the IRS searched, Camus was unable to say for certain whether the IRS had searched for any. While Camus did acknowledge that agency employees initially checked her hard drive, it appears that more could have been done to recover data from this source. Instead, all data was deemed unrecoverable after a brief search:

“We’re not aware that they searched any one in particular. They did – it appears they did look into initially whether or not the hard drive had been destroyed, but they didn’t go much further than that.”

The agency’s refusal to conduct due diligence in its search for Lerner’s emails meant that 1,000 emails were not found until TIGTA searched backup tapes. When asked why the IRS did not give these emails to Congress, Camus said it was because the agency never looked for them in the first place:

“To the best we can determine through the investigation, they just simply didn’t look for those emails.”

Commissioner Koskinen stated that the IRS took “extraordinary efforts” to recover any emails, but this is clearly not the case. Years after the investigations into the Lois Lerner targeting scandal began, the agency’s unprecedented obstruction has meant Americans are no closer to the truth.

Photo Credit: 
Becky McCray, https://www.flickr.com/photos/bjmccray/

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Jim Irish

The solution to the gross malfeasance of the IRS is not to reform the federal agency but to dismantle it brick by brick and then adopt a Fair Tax.

chiefpontiac

There is no such thing as a lost email. These systems are redundant just in case there is a system crash. And, as a last resort there are digital backup tapes that are used to store information. Also, whichever company was used as a spam filter, they have copies of everyone's emails as well...So this lame idea that emails can be lost is an insult to everyone's intelligence, even the low information Democrat Party voter...

jim mayer

So let's see, TruePundit reports "Documents appear to implicate State Dept. in cover-up on Clinton emails" Get that? An entire Government Agency committing crime to shield one of their own.

Here they report IRS is guilty of corruption to protect one of their former power abusers.

At DOJ, Loretta Lynch kisses the ring in Phoenix and promises the one who hired her that she would protect the Queen at any cost.

At FBI, James Comey's formerly esteemed reputation has finished circling the toilet bowl drain as he finds himself now trying to explain why he refused to pursue criminality so egregious, with a cache of damning evidence so overwhelming one might need to back a semi up to the courthouse steps to unload all of it.

Health Human Services Secretary Kathleen Sebelius is being paid for the rest of her life for creating a disaster... You know I could go on for hours.
This country is so depressed right now and they don't know why. The cognitive dissonance, the inability to recognize the unmistakable source of the problem.... is us, the voting public.

We are becoming a Godless people electing Godless people. The coming storm won't be a random act, we are bringing the rain down upon our own heads. Unfortunately, the rain will fall upon the righteous as well as the unrighteous.


Norquist: We Have Come “Too Far” to Let This Effort Die

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Posted by Krista Chavez on Monday, September 19th, 2016, 4:44 PM PERMALINK


Last week, Americans for Tax Reform President Grover Norquist and President and CEO of The Leadership Conference on Civil and Human Rights Wade Henderson co-authored an opinion article for National Review, stressing the opportunity with which Congress is presented to pass comprehensive, bipartisan criminal justice reform this year.

The 11 bills proposed in this criminal justice reform package offer responsible provisions to increase public safety, protect law enforcement, help crime victims, address issues with re-entry, and decrease the burden of taxpayers on upholding the prison system that is currently costly and ineffective.

They discussed the significance of Congress’s unique bipartisan support for the issue of criminal justice reform, citing sources that show about 70 percent approval for the initiative among both Republicans and Democrats. This figure depicted a win-win on both sides of the aisle in a controversial election year.

“Given all this success, you would say these policies have every chance of becoming law, right?” asked Norquist and Henderson. Unfortunately, they found that the issue is not that simple even though it should be.

Americans for Tax Reform, along with The Leadership Conference on Civil and Human Rights and the US Justice Action Network, called on Congress to step up and pass the single most bipartisan effort sitting on Capitol Hill.

Included in the reforms are important changes to intent standards in criminal law—a major policy priority for conservatives concerned with the overregulation of innocent every-day Americans.

“We have come too far to let a rare bipartisan effort like this die. Our country is ready to turn away from the discredited policies that exploded our prison populations and failed to give us the public safety we deserve. Our justice system should be a part of the solution to crime and its root causes. We can do better than using a one-size-fits-all sentencing regime that lumps nonviolent offenders with violent ones. And when some estimates have re-arrest rates for ex-offenders at 65 percent within three years, we cannot afford to continue the status quo. The reforms on the table would improve outcomes while ensuring that public safety is a top priority.”

Read the full article here, and urge your representatives in Congress to pass bipartisan criminal justice reform in 2016.  

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Good Fences Make Good Neighbors: The Mobile Workforce State Income Simplification Act


Posted by Katie McAuliffe on Monday, September 19th, 2016, 2:43 PM PERMALINK


On Friday, September 6th, Americans for Tax Reform sent a letter to Congressmen in support of the Mobile Workforce State Income Tax Simplification Act, HR 2315. ATR urges Congress to vote in favor of this bill to establish clear boundaries and presence standards based on a state’s physical border. As the digital world makes us increasingly more mobile, this bill will prevent states from taxing out-of-state residents.

The full letter can be found below, and here.

Dear Congressmen:

On behalf of American taxpayers, I write in support of the Mobile Workforce State Income Tax Simplification Act, H.R 2315, which establishes a clear and consistent physical presence standard for employee income tax reporting.

This legislation, introduced by Congressmen Mike Bishop and Hank Johnson, passed the House Judiciary Committee with a reported vote of 23 yeas and 4 nays.

It is important to establish a physical presence standard for the American workforce particularly as technology allows us to be even more mobile.  Establishing clear borders based on a state’s physical border will be even more important as technologies take us beyond telework and towards the possibilities of telemedicine and advanced education.

When an employee travels from one state to the next, there are varying rules throughout the 50 states as to when an employee’s income tax needs to be reported by an employer and paid by the employee.  

For example, Colorado will tax any income earned within the state if an individual has worked there at least one day.  Hawaii and Arizona require withholding for work that exceeds 60 days. Other states do not use a time requirement at all, but tax based on a specific dollar figure earned while in the state.

Most individuals are not aware of the varying non-resident state income tax filing rules, and employers incur extraordinary expenses to comply with withholding requirements.  

This is especially difficult for those able to offer support in the event of a natural disaster. People with specialized skills - doctors, nurses, electricians, arborists, decontamination crews, etc. - are in high demand following these events.  These skills are not bound by location; they can mobilize to accelerate healing and repairs for a community after a disaster.

H.R. 2315 establishes a clear physical presence standard for cross-border work by keeping states from taxing most nonresident employees until the employee is present and working in the state for more than 30 days during the year.  This minimizes bureaucratic hurdles, allows employees to keep more of their own paycheck, and simplifies tax compliance.

I encourage Congress to support American workers with clear consistent tax collection boundaries based on a state’s physical borders. 

If you should have any questions regarding this issue please contact me, or Katie McAuliffe at kmcauliffe@atr.org or 202-785-0266.

Onward,

Grover G. Norquist

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Obama-touted Census Report Used “Redesigned Income Questions”

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Posted by Laurens ten Cate on Friday, September 16th, 2016, 11:44 AM PERMALINK


While campaigning for Hillary Clinton this week, President Obama announced new Census Bureau numbers on Median household income. A supposed 5.2% increase over 2015, the biggest increase in real wages (inflation adjusted) since 1967 when they started collecting this data

The release of these numbers seemed very convenient, less than two months before the election.The Census Bureau and Obama failed to mention a key fact buried in the footnotes of the 70-page report: They used “redesigned income questions” to skew the results in their favor, as shown below:


Americans expect that as a non-partisan entity the Census Bureau would put this information about their data collection methods in their press release, but that didn’t happen.

Also: The Bureau of Labor Statistics just released their new average weekly wages data from the first quarter of 2016 which reports a 0.5% yearly decrease in wages. What’s really going on here?

First of all it should be noted that the Census Bureau data is actually from 2015 while we are already at the end of the third quarter of 2016, and a lot has changed since then. The only group that actually has current data is Sentier Research. Sentier Research is a statistics research group that releases monthly reports on US incomes. They are founded and run by ex-Census Bureau statistics division employees.

The influential finance blog Zerohedge tipped us off that the census bureau actually redesigned some of the questions they use to measure the income. Their report footnotes state: “The 2014 CPS ASEC included redesigned questions for income and health insurance coverage. All of the approximately 98,000 addresses were eligible to receive the redesigned set of health insurance coverage questions."

Starting in 2014, the Census Bureau began to “collect the value of assets that generate income if the respondent is unsure of the income generated.” And the government started to use “income ranges” as a follow-up for “don’t know” or “refused” answers on income-amount questions. These changes are hidden quite deep in the footnotes of the original Census report.

What really made our alarm bells ring on the figure Obama used in his stump speech for Hillary was the new data from the Bureau of Labor Statistics on the weekly wage changes from the first quarter of 2016. Their report shows that 167 of the 344 largest counties had weekly wage decreases. The average of all 344 largest counties was a decrease of 0.5%!

The data from Sentier Research is monthly, with the most recent data release from July 2016. Gordon Green from Sentier Research was quoted by the New York Post as admitting that indeed the 5.2% figure seems correct but that since then it has slackened off significantly. Next to that, Gordon Green said that the gasoline prices were a huge factor for increases in median household income.

Gas that has dropped in price like a brick since 2014 might have been behind the high numbers in 2015. However, now that gasoline prices are rising slightly again these gains have evaporated. 

It seems that this 5.2% increase might be explained by just these changes. What's even worse however is the fact that current data shows a significant slowdown in growth. Even with the changed questioning.

As for the current data? The graph below shows the Real (adjusted for inflation) Median Household Income and Nominal income. We can see the upswing in 2015 which interestingly enough still does not go above the high in pre-recession 2008. After the 2015 upswing we already see the downward trend happening.
 

 

Obama’s claim to have “the most transparent administration in history” is again rendered laughable.

 
 
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