POLITICO is Wrong: Open Competition Laws Complement "Buy American"


Posted by Justin Sykes on Friday, May 19th, 2017, 4:56 PM PERMALINK

POLITICO Influence’s article released today falsely claims Americans for Tax Reform’s letter urging Congress to allow for an open and competitive bidding process in infrastructure projects contravenes President Donald Trump’s pledge to “Buy American.” 

The story from POLITICO Influence wholly mischaracterizes the idea of “Open Competition” which would actually complement President Trump’s Buy American pledge by increasing the number of American firms that can compete for publicly funded infrastructure projects and in doing so would increase taxpayer savings that could be used toward achieving the President’s trillion dollar infrastructure-plan.

It is too often the case that outdated or protectionist policies restrict what types of materials may be used in publicly funded infrastructure projects. This has the effect of preventing new and innovative materials that are often more cost efficient, and the American firms that produce them, from bidding on public infrastructure contracts. As a result the cost of U.S. infrastructure projects can be artificially inflated, costing taxpayers and the country as a whole.

By allowing Open Competition in infrastructure projects more American firms will be able to compete and in turn offer increased savings to American taxpayers in line with President Trump’s Buy American plan. 

 

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Highest-Paid Governor Thinks Taxpayers are Freeloaders

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Posted by Elizabeth McKee on Friday, May 19th, 2017, 11:35 AM PERMALINK

The highest-paid governor in the nation, California Governor Jerry Brown, thinks opponents of his $52 billion dollar gas tax hike are “freeloaders.”

The statement comes in response to California Assemblyman Travis Allen’s efforts to keep taxpayer dollars in the hands of the individual. The assemblyman has spearheaded a movement to delay the implementation of a $52 billion tax increase, demanding that the tax first be subject to a ballot measure.

Governor Brown, who makes over $190,000 per year ($52,685 more than the average gubernatorial salary), had harsh words for the assemblyman and his supporters in a speech last week.

The Orange County Register reports:

“The freeloaders — I’ve had enough of them,” Brown said, adding that the approved tax and fee hikes bring those charges to the level they were 30 years ago if adjusted for inflation. “They have a president that doesn’t tell the truth and they’re following suit.”

At 38 cents per gallon, Californians currently pay the seventh highest gas taxes in the country. Beginning November 1, that figure is set to increase by over 30%. At the same time, vehicle registration fees will increase by up to $175.

Brown continued, “Roads require money to fix. Republicans say there’s a magic source of money — it doesn’t exist . . . You want to borrow money and pay double? Or do nothing? Or take money from universities?”

Roads do require money to fix, as Californian taxpayers are well aware. A recent study by the Reason Foundation reveals California spends a stunning $419,090 per state-controlled mile of highway; in comparison, South Carolina spends just $35,286.

Still, throwing money at a problem is not a substitute for good governance. Despite immense transportation spending, a 2016 study by the national transportation research group TRIP finds that only 21% of California roads are in good condition. The Reason Foundation ranks California 42nd in the nation in highway performance and cost-effectiveness.

In fact, a report by the California State Auditor accuses the California Department of Transportation of having weak cost controls that create “opportunities for fraud, waste, and abuse.” The report exposes:

“[T]he maintenance division never implemented a budget model (model) that it paid $250,000 to develop in 2009. Use of that model would have allowed the maintenance division to identify the resources needed to maintain highways . . . although the maintenance division never implemented its model, the division has been reporting to the Legislature that it is using this sophisticated model.”

Not subject to the increased gas taxes will be bicyclists, who utilize California’s roadways but do not pay for their maintenance. California allocates $7.2 million annually to the Bicycle Transportation Authority, which builds and maintains bike lanes and ensures secure bicycle parking. Yet, according to Governor Brown, overtaxed motorists are the “freeloaders.”

California Assemblyman Matthew Harper writes, “Our roads are in terrible shape, but it is not because of a lack of funding, it is because many in Sacramento would rather grab more money than spend what they already have.”

Meanwhile, Governor Jerry Brown is content to blame California’s crumbling infrastructure on the “freeloading” taxpayer. Brown expects that, in the end, Californians will support his $52 billion tax hike. “Maybe people like gravel roads, but I don’t think so.”

 

 

Photo Credit: NASA HQ Photo

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Inspector General: IRS Mispays 31% of its Employees

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Posted by Virginia Birkofer on Thursday, May 18th, 2017, 5:05 PM PERMALINK

The IRS failed to correctly pay 31% of employees according to a recent report by the Treasury Inspector General for Tax Administration (TIGTA). Based on their sampling, TIGTA estimates that the IRS overpaid more than 600 employees by approximately $4.2 million and underpaid more than 900 employees by approximately $2.7 million.

The analysis was based on a sample of 4,985 IRS employees who were promoted into management positions and received pay increases that exceeded 10 percent between January 2006 and November 2015.

The IRS attributes these payment errors to complexities associated with setting pay when employees transiently move between the pay system of managerial and non-managerial roles—common to the cyclical nature of taxes. As the report notes:

“Cumbersome and confusing rules for setting pay resulted in mistakes when calculating pay for employees moving between the GS pay system and the management pay system”

These “cumbersome rules” on promotions between positions are as follows:

  • An employee selected for a first-time permanent management position is eligible for a one-time 10 percent pay increase.
  • An employee who is promoted from a management level position to another higher level management position, may receive an additional 10 percent pay increase.
  • An employee with prior management experience or selected for a temporary promotion into a management position is eligible for an 8 percent pay increase.
  • An employee who is promoted to a similar position to one they previously held may be entitled to receive increases that exceed the 10 percent and 8 percent.

 

The Inspector General’s report noted that the IRS recognized these problems existed in 2013, but failed to address them until 3 years later when The Inspector General announced their audit.

The last question that remains unresolved is whether the payment errors can be attributed to simple incompetency on the part of the IRS or malicious intent to bolster the income of some employees over that of others.

 

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Photo in the Public Domain, link: https://en.wikipedia.org/wiki/File:IRSlogo.png

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New Internet Privacy Laws Are Not Necessary

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Posted by By Margaret Mire and Katie McAuliffe on Thursday, May 18th, 2017, 2:41 PM PERMALINK

New Hampshire legislators are considering an amendment they hope will “restore” Internet privacy rights.

This effort is in response to a recent Congressional vote to overturn what has been deceitfully described as a Federal Communications Commission (FCC) “privacy” rule.

Naturally, this clever marketing trick has left many concerned that Congress’ vote has given Internet Service Providers (ISPs) some new freedom to auction off their web search history and personal data.

But, that simply is not true.

For one, the FCC’s “privacy” rule never actually took effect – Internet privacy is the same as it was 3 months ago, 6 months ago, a year ago. And more importantly, the FCC’s “privacy” rule was not about privacy at all. The FCC used the hot button word “privacy” to distract from the fact that it was actually pushing a massive power grab.

In reality, the FCC, which has little experience policing Internet privacy violations, stripped enforcement authority away from the Federal Trade Commission (FTC), the agency with the most expertise in enforcing Internet privacy. More concerning is that the FCC took this bold action without the blessing of congress.

Undeniably, the FCC’s action was completely unjustifiable. The FTC punished bad actors in hundreds of privacy violations over the last decade. Its battle tested method combined sensitivity-based and harms-based approaches to protect your informational exchanges by focusing on what data was held, the level of data sensitivity, and how consumers would have been affected if the data were misused. This strategy protected consumers while still allowing for innovation.

The FCC’s ‘privacy’ rule, on the other hand, was overly burdensome and would have blocked innovation. Even worse, it zeroed-in on who held the data, not what the data were. Indeed, the FCC rules were applied only to ISPs, which is a pretty bizarre approach to take if protecting privacy is the true intention.

Compared to Websites, for example, ISPs see far less of what you do online. That is because over 70% of websites use https encryption. An ISP can only see which website you visit, not what you do on the websites. ISPs do not know your movie preferences, products purchases, email content, or anything of the like.

Contrary to claims made by the left, Congress did NOT functionally change how we interact with ISPs or websites. The FCC still has authority to bring enforcement actions against privacy violations perpetrated by ISPs, and new Chairman Ajit Pai, has vowed the agency will follow the FTC regime until FTC authority can be fully restored.

Further, federal laws that require your personal information remain protected have been and still are in place. The Gramm Leach Biley Act (GLBA), which governs financial information privacy, and the Health Insurance Portability and Accountability Act (HIPAA), which covers private health data, apply no matter who holds the data.

By ending the discriminatory, over-the-top FCC law, Congress took the first step in rectifying FCC overreach. Congress signaled that the FTC is the proper agency to police Internet privacy. This should be considered a win for consumers and innovation, not a loss.

While it may be tempting for lawmakers to pass a state privacy law in response to this “loss of privacy” narrative, New Hampshire citizens would be best served by resolving to follow the FTC rules without new legislation in order to maintain consistent privacy protections across the internet – from ISPs to web services to apps.

Katie McAuliffe is Federal Affairs Manager at Americans for Tax Reform & Executive Director of Digital Liberty. Margaret Mire manages state tech and telecom policy at Americans for Tax Reform.

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ATR Statement in Support of Restoring Internet Freedom

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Posted by Americans for Tax Reform on Thursday, May 18th, 2017, 2:16 PM PERMALINK

Washington, D.C. – Today, Thursday May 18th, The FCC voted on a Notice of Proposed Rule making entitled, Restoring Internet Freedom.

The following can be attributed to Grover Norquist, President of Americans for Tax Reform:

"Under the Obama Administration Title II was pushed through without transparency and without economic analysis. This time, under chairman Ajit Pai, the process is transparent and includes economics. This time we are doing it the right way."

The following can be attributed to Katie McAuliffe, Executive Director of Digital Liberty:

“We are encouraged that, not only was this notice presented transparently, but will also inject actual economic analysis into the FCC’s decision making.  The Obama Era Open Internet Order was called an ‘economics free zone’ by the FCC’s own economists.  By establishing the Office of Economics and Data within the FCC, Chairman Pai has shown dedication to preforming real cost-benefit analysis on this, and all FCC proposals going forward.

As has been said many times before and was stated today on the Senate floor by Senators John Thune (R-SD) and Roger Wicker (R-Miss.), this is an area for Congress to decide.  The Telecommunications industry is now 16% of our economy – roughly the same amount as healthcare.  Regulation of this sector should not be decided by unelected bureaucrats.”

Learn more about Title II regulation of the Internet here:

 

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2017 Must Be The Year of Pro-Growth Tax Reform

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Posted by Alexander Hendrie on Thursday, May 18th, 2017, 10:00 AM PERMALINK

Over the past decade, the economy has struggled at just two percent GDP growth as the country has experienced the worst recovery in the modern era.  While the post-World War II average remains at three percent GDP growth per year, the Congressional Budget Office projects that under current policies, two percent growth will continue into the next decade.

Even as the unemployment rate has stabilized in recent years, labor force participation has continued to drop, indicating that the economy remains weak.  Because of this lackluster recovery, families have lost an average of $8,600 in annual income, according to one estimate. 

One reason for the stagnant economy is the fact that the U.S. tax code is outdated, uncompetitive, and complex. The current code restricts the growth of new jobs, increases the cost of capital, and discourages innovation.

It has been more than 30 years since the tax code was reformed, and in that time, the world has changed drastically. Other countries have updated their tax codes and lowered their rates, while the U.S. system has barely changed.

The uncompetitive code means that businesses are unable to compete in the global economy. For instance, our uncompetitive code enables foreign competitors to acquire assets at a far greater pace than American businesses.

Over the past decade, U.S. companies have suffered a net loss of almost $200 billion in assets. Conversely, if the corporate rate was 25 percent (the average rate in the developed world), one report estimates U.S. businesses would have instead experienced a net gain of $600 billion in assets over the same period. 

Tax reform is the only way to reverse these trends and enact policies that benefit the economy. ATR President Grover Norquist recently submitted a statement for the record before the House Ways and Means Committee hearing entitled ‘How Tax Reform Will Grow Our Economy and Create Jobs Across America.’ The recommendations are below and the full paper can be found here.

  • Tax Reform Should Reduce Taxes on Businesses
  • Tax Reform Should Reduce Capital Gains Taxes
  • Tax Reform Should Implement Immediate Full Business Expensing
  • Tax Reform Should Simplify the Code
  • Tax Reform Should Make Permanent Changes to the Code
  • Tax Reform Should Move to Territoriality for Businesses and Individuals
  • Tax Reform Should Kill the Death Tax and Gift Tax
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ATR Supports Senator Thune's INVEST Act

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Posted by Alexander Hendrie on Thursday, May 18th, 2017, 8:00 AM PERMALINK

Senator John Thune (R-S.D) yesterday introduced S. 1144, the Investment in New Ventures and Economic Success Today (INVEST) Act of 2017. This legislation simplifies accounting rules and reforms the tax code to help small and medium-sized business owners more quickly recover investments.

By accelerating cost recovery on property, equipment, inventory, and other common business investments, the INVEST Act would encourage new business growth and help existing businesses, including farms and ranches, expand their operations, create new jobs, and grow the economy.

Read the letter here or below. 

 

May 17, 2017

The Honorable John Thune
United States Senate
511 Dirksen Office Building
Washington, DC 20510

Dear Senator Thune:

I write in support of S.1144, the Investment in New Ventures and Economic Success Today (INVEST) Act of 2017. Your legislation offers important tax relief for small and medium businesses and startups in a way that encourages innovation, growth, and expansion. All Senators should support this important legislation.

For small and medium sized businesses, the complexity of the tax code creates unnecessary burdens and costs that impede innovation and the formation of capital. The past eight years has seen the worst economic recovery in the modern era. Today, 50 percent of small businesses fail five years after they first begin in part due to excessive rules and regulations that stifle growth.

These trends should be reversed through pro-growth tax policy that encourages investment and innovation. In turn, this reform will promote strong economic growth and the creation of new jobs and higher wages.

The INVEST Act does this in three ways.

First, the INVEST Act expands the ability of small businesses to immediately deduct the cost of investments by expanding Section 179 of the code, and making 50-percent expensing permanent. Section 179 allows small businesses to expense $500,000 worth of equipment purchases every year, with a phase out of $2.5 million. This legislation expands Sec. 179 so businesses can expenses $2 million in purchases every year, with a phase out of $5 million. For purchases above this threshold, the INVEST Act makes 50-percent “bonus” depreciation permanent, so businesses can immediately deduct half of the cost of new investments.

Moving the tax code closer to a cash-flow system, where business investments can be immediately expensed, is a crucial goal of pro-growth tax reform. While the best policy would be 100 percent, immediate full businesses expensing, the INVEST Act is significant progress in the right direction.

In addition to these changes, S. 1144 also shortens depreciation schedules for farm machinery and equipment, business vehicles, and acquired intangibles such as patents and copyrights, so that business owners can more quickly recover these costs.

Second, the legislation expands the ability of businesses to expense startup costs. Currently, businesses can deduct $5,000 worth of costs related to starting up their businesses. This legislation expands the limit to $50,000 and increases the phase out to $100,000. Businesses would also be able to recover the costs of any expenses outside of this limit over a ten year window.

Third, the INVEST Act increases the flexibility of businesses to use accounting methods that best suit their needs. Specifically, the INVEST Act increases the threshold for using cash accounting from $5 million to $15 million, simplifies inventory accounting so small and medium sized businesses can deduct these costs immediately, and expands the threshold for using the completed-contract method of accounting.

Simplifying the tax code and moving to a cash-flow system that allows business owners to immediately recover the cost of new investments are two key planks of pro-growth reform. If signed into law, the INVEST Act would lead to stronger growth, higher wages, and more jobs. All Senators should support this bill.

Onward,

Grover G. Norquist

President, Americans for Tax Reform

 

 

 

 

 

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Californians Now Regretting Gas Tax Hike

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Posted by Demri Scott on Tuesday, May 16th, 2017, 2:09 PM PERMALINK

It’s only one month after California state lawmakers passed the largest gas tax hike in state history, and Golden State taxpayers are already working to repeal it. A recall campaign against the gas tax is already underway. Led by state Assemblyman Travis Allen of Huntington Beach, paperwork was recently filed to begin collecting signatures to place a recall measure on the 2018 ballot.  

Signed into law on April 6 by Governor Jerry Brown, California’s SB 1 represents a ten-year, $52.4 billion tax hike that raises the gas tax by 12 cents per gallon, along with a rate increase on diesel gasoline by 20 cents per gallon. The bill also instituted vehicle licensing fee hikes ranging from $25 to $175, depending on the car. Proponents of the bill marketed it as a source of revenue for repairing roads in the state but failed to mention the bill provides more funding for public transit and bike lanes.

“Jerry Brown’s decision to push through the largest gas tax increase in California’s history without the approval of voters demonstrated a complete disregard for ordinary Californians,” Allen said. “This ballot initiative will correct Brown’s failure and allow the people of California to decide for themselves if they want to raise their taxes.” The measure needs 365,880 signatures to go on the 2018 ballot.

While the effort to repeal California’s gas tax has months to go, one thing is clear: government overreach through excessive taxation will not go down without a fight.

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ATR Joins Coalition Urging Passage of the No Regulation without Representation Act

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Posted by Demri Scott on Tuesday, May 16th, 2017, 10:43 AM PERMALINK

Americans for Tax Reform (ATR) this week joined a coalition of free market organizations urging lawmakers to pass the No Regulation without Representation Act, a bill that codifies the requirement for businesses to be physically located in the state before they can be taxed or regulated.

The No Taxation without Representation Act follows decades of government overreach in taxing businesses physically outside the parameters of the state. These government regulations not only challenge state sovereignty, but make it more difficult for small businesses to grow in the market.

The coalition letter released this week and signed by ATR expresses the sentiment to lawmakers that:

“A number of worrisome legislative trends at the state level threaten to erode that foundation of federalism by empowering states to exercise power outside their borders. For example, bills that would dramatically expand authority to collect sales taxes, label restaurant menus, and even determine the appropriate size of chicken cages could impose undue economic burdens on citizens by government officials who are in no way accountable to them. If unchecked, such efforts could substantially harm interstate commerce”

The No Regulation without Representation Act will help ensure that states will have power to dictate their own policies without the backbreaking weight of regulations from other states. Doing so will help small businesses grow without overreach of the government. ATR supports this bill and urges all members of Congress to support and co-sponsor this important legislation. 

Full text of the letter can be found here.

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Lois Lerner Wants to Block Public Access to IRS Targeting Trial

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Posted by Elizabeth McKee on Monday, May 15th, 2017, 4:53 PM PERMALINK

Former IRS bosses Lois Lerner and Holly Paz want to forbid public access to their testimony in the IRS conservative group targeting case.

With Lerner as boss, during a three-year period from 2009 to 2012 only one conservative organization was able to obtain tax-exempt status. In 2010, the agency created a “Be on the Lookout List,” which advised agents to flag applications that referenced "Tea Party," "Patriots" or "9/12 Project.” A report by the Senate Finance Committee on the scandal noted, “We found evidence that Lerner’s personal political views directly resulted in disparate treatment for applicants affiliated with Tea Party and other conservative causes.”

Now, Lerner and Paz are petitioning the court to keep their testimony secret from the public.

As reported by the Cincinnati Enquirer:

Lois Lerner and Holly Paz both have argued in recent court filings that the threat to their lives outweighs the public's right to hear their testimony about how IRS employees in Cincinnati and Washington D.C. handled applications for tax-exempt status from tea party groups.

These claims by Lerner and her associates echo previous attempts on the part of the IRS to hide their involvement in the scandal. Previously, the IRS refused to release thousands of emails from Lerner’s server, used an instant messaging service to hide internal communications, and failed to search 5 of 6 possible sources of Lerner emails.

Conservatives will scarcely be surprised that, once again, Lerner is trying to keep her abuse of power quiet.

The public has a right to see the Lerner testimony. As noted by the Cincinnati Enquirer:

Edward Greim, an attorney for the tea party groups, said he's not permitted to discuss the brief he filed under seal, but said the allegations against the IRS are serious and the public has a right to know what happened. The tea party groups expect Lerner and Paz to shed light on the issue when they testify in sworn depositions.

"Generally, our position is that this is a matter of great public interest and there is no legal basis for sealing the depositions or the arguments about whether the depositions should be sealed," Greim said.

“Lois Lerner politicized her role as head of the IRS,” said Grover Norquist, president of Americans for Tax Reform. “Now she wants to keep it a secret as the facts come out. Her cover-up should have been stopped before 2012. Much to do and the world should see it.”

 

Photo Credit: US House of Representatives Committee of Oversight & Government Reform

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