ATR Supports H.R. 1051, the Halt Tax Increases on the Middle Class and Seniors Act

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Posted by Natalie De Vincenzi on Thursday, February 16th, 2017, 12:14 PM PERMALINK

One of the many Obamcare tax hikes was an income tax increase that increased the threshold at which Americans could deduct out of pocket medical expenses.  Prior to Obamacare, this threshold allowed Americans to deduct any out of pocket medical expense that exceeded 7.5 percent of their annual adjusted income, but Obamacare raised this threshold to 10 percent. This increase has a large effect on many including the elderly who typically have high medical expenses and the least flexibility in their income. 

Representative McSally (R-AZ) has introduced legislation, H.R. 1051, the Halt Tax Increases on the Middle Class and Seniors Act, to put a stop to these Obamacare tax increases and provide much needed tax relief for seniors and the middle class. Last year, the legislation passed with bipartisan support with a vote of 261-147 and as such, it should have no problem being passed again this year. Americans for Tax Reform supports this legislation and urges all members of Congress to support it as well. See the letter here or below: 

February 16, 2017

The Honorable Martha McSally
United States House of Representatives
510 Cannon House Office Building
Washington, D.C. 20515

Dear Congresswoman McSally,

I write in support of H.R. 1051, the Halt Tax Increases on the Middle Class and Seniors Act, legislation to stop Obamacare’s 2017 tax increases on out of pocket medical expenses and provide tax relief to Americans.  This piece of legislation easily passed in the last Congress with large bipartisan support and will most likely pass again with widespread support.

Seniors and the middle class bear the brunt of Obamacare’s tax increases. Prior to passage of Obamacare, Americans could deduct out of pocket medical expenses that exceed 7.5 percent of their adjusted annual income.  10.2 million families used this tax provision in 2012 with an average of under $8,500 in medical expenses claimed. More than half of the families that used this provision made less than $50,000 per year.

Thanks to Obamacare, this threshold increased to 10 percent for most families, and on January 1, 2017 it also increased for seniors. This tax hike represents President Obama once again violating his “firm pledge” against “any form of tax increase” on any American earning less than $250,000.

Typically, the elderly have the costliest medical expenses and require greater medical care. In addition, they typically no longer have an influx of income, instead relying on their savings. Obama’s tax increase from 7.5 to 10 percent will have a ringing effect on seniors, who often no longer have an influx of income. 

H.R. 1051 stops this tax increase on seniors and reinstates the older, lower threshold for medical expenses for all Americans. This tax hike represents yet another way Obamacare has hurt American families, who were already struggling to receive the medical care they need.

Americans for Tax Reform supports the Halt Tax Increases on the Middle Class and Seniors Act and urges all members of Congress to support and co-sponsor this important legislation to relieve Obamacare’s tax burden on the middle class and seniors.

Onward,

Grover G. Norquist
President, Americans for Tax Reform

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Congress Should Dump the U.S. Sugar Program this Valentines Day.

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Posted by Daniel Uzi Frydman on Tuesday, February 14th, 2017, 1:30 PM PERMALINK

This Valentine’s Day, consumers will spend an average of $136.57 on gifts and sweets for that special someone. For these millions of love struck candy consumers, a few extra dollars in their pockets would make it an even sweeter time of year. Yet the heartbreaking truth is that the cost of purchasing that box of chocolates or candy hearts this year is artificially high thanks to the not so sweet U.S. Sugar Program.

The U.S. Sugar Program is a relic of the Great Depression, and since its inception in 1934 the program has mutated into a crony capitalistic monster, with U.S. taxpayers, consumers, and manufacturers footing the bill for this costly and backwards program.

The Sugar Program is the antithesis of free-market policy as it provides a plethora of sweetheart deals to a small handful of big sugar producers, including generous taxpayer backed subsidies, price floors, and import quotas. As a result of these sweetheart deals for Big Sugar, taxpayer costs have gone up, jobs have been destroyed, and American consumers have received only heartburn from increased prices.

Survival of the Sugar Program is a result of the sweet subsidized life support taxpayers serve up every year. According to the Congressional Budget Office (CBO) the U.S. Sugar Program will cost taxpayers more than $138 million over the next 10 years in addition to the billions in annual hidden taxes American consumers pay at the grocery store.

In addition to taxpayer costs, such protectionist policies have created artificially high domestic sugar prices for consumers. In August of 2015, U.S. sugar prices were ¢33.13 per pound, more than double the world price of ¢15.57. It is estimated American families pay an average of $125, or a total of $2 billion, in higher grocery prices and taxes annually because of the program. While artificially high prices and restricted competition bode well for producers, domestic manufacturers alternatively have been discarded like an empty candy wrapper.

Domestic sugar-using manufacturers competing globally, but purchasing domestic sugar at a rate roughly twice that of the global price, are dealt a severe disadvantage and have had to either cuts jobs or move their business abroad. The U.S. Department of Commerce estimates that for every one sugar-growing job saved by the Sugar Program, approximately three manufacturing jobs are lost. Over a 13-year period, domestic sugar-using industries have seen a 17 percent decline in employment, amounting to an annual loss of nearly 10,000 jobs in the U.S. food industry.

When it comes to winners in this sticky situation, it is not American consumers but a handful of domestic sugar producers,- unless you also count international competitors. Where the American consumer and manufacturer have suffered, less than 4,500 producers have prospered. To put it simply, the U.S. Sugar Program is forcing American consumers and taxpayers to pay artificially higher prices for sugar and sugar related products in order to subsidize and protect a small number of sugar producers from free-market competition.   

It has been almost a century since the great depression, and it is high time Congress reforms this rotten relic. As the 115th Congress begins discussions over the coming 2018 Farm Bill, lawmakers should look to trim the unnecessary fat that is the U.S. Sugar Program. Doing so will not only protect the 600,000 U.S. jobs in food industries that use sugar, but will reduce the harm to taxpayers and give consumers a much needed break on Valentine’s Day for years to come.

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Johnson Introduces Bill Urging Obamacare Repeal

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Posted by Marc Dupont on Tuesday, February 14th, 2017, 12:00 PM PERMALINK

Michigan State Representative Steven Johnson (R) recently introduced House Resolution 13, a state resolution calling on Congress to begin the process of repealing Obamacare.

HR 13 has been referred to the House Committee on Health Policy. By approving HR 13, Michigan would send an important message to Washington to repeal Obamacare, along with the 20 tax increases included within.

“I applaud Rep. Johnson for his leadership on this important issue,” said Grover Norquist, president of Americans for Tax Reform. “Big government local politicians like New York City Mayor Bill de Blasio frequently tell Congress what they would like them to do. As such, it’s important for pro-taxpayer state legislators to also make their voice heard in Washington, which Michigan can do by passing Rep. Johnson’s resolution.”

Other states are expected to introduce similar resolutions in the coming weeks urging Congress to repeal and replace Obamacare. As Congress tends to this issue over the coming weeks, Americans for Tax Reform encourages all states to follow Michigan’s lead in sending this important message to Washington.

Click here for a list of all 20 tax increases included in Obamacare. 

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ATR Joins Coaliton Urging Durbin Amendment Repeal

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Posted by Justin Sykes on Friday, February 10th, 2017, 9:49 AM PERMALINK

Americans for Tax Reform this week joined a coalition of free market organizations urging House Financial Services Committee Chairman Jeb Hensarling to maintain provisions repealing the Durbin Amendment in the Financial CHOICE Act moving forward.

The Durbin Amendment was enacted as part of the Dodd-Frank Act and was touted as a benefit to consumers. However, since enactment the Durbin Amendment has failed to deliver the promised benefits to consumers, and has instead led to reduced access to traditional banking services and driven up the number of "unbanked" Americans. 

The coalition letter states, "The burdensome costs of the Durbin Amendment, like so many other ill-conceived regulations born of Dodd-Frank, have become fully clear with the passage of time. This gives the 115th Congress a crucial to opportunity to enact reform...We therefore urge you you to keep the provision repealing the Durbin Amendment in the new version of the bill." 

The full letter can be found here.  

 

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Democrat Governor Jim Justice Proposes Largest Tax Hike in West Virginia History

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Posted by Paul Blair on Thursday, February 9th, 2017, 12:10 AM PERMALINK

In his State of the State Address Wednesday night, Governor Jim Justice (D-W.V.) proposed the largest tax hike in state history, increasing the sales and gas tax and creating a new Commercial Activities Tax. These proposals stand in stark contrast to his rhetoric on the campaign trail, where he spent nearly all of 2016 promising he would not raise taxes.

To suggest that Justice lied his way into office would be quite the understatement.

The state faces a $500 million overspending problem in the 2018 fiscal year, according to an estimate from the governor’s office. 

His proposal to raise the sales tax from 6 percent to 6.5 percent, when combined with a local average of an additional .2 percent would bring the West Virginia average total local sales tax to the second highest in the region, ahead of Virginia, Maryland, Pennsylvania, and Kentucky. This regressive tax increase would incentivize even more online and cross-border retail sales, a loss for small businesses that rely on competitive tax rates to keep residents in state for retail purchases. 

The proposal also included eliminating the sales tax exemption for advertising and an undisclosed list of sales exemption eliminations for services, a proposal that was defeated 92-2 in 2016 by the House. If passed, this base expansion and sales tax rate hike would constitute more than $180 million in annual tax hikes. 

The governor also proposed a 10 cent per gallon gas tax hike, which would bring the state gas tax burden from 33.2 cents per gallon to 43.2 cents per gallon, making it the second highest taxed in the region, behind only Pennsylvania. On top of the 18.4 cents federal excise tax, the total tax burden for a gallon of gas would rise to an astounding 61.6 cents per gallon. Such an increase would incentivize truckers and travelers to skip over the Mountain State when fueling up, on top of imposing a regressive hike on low and middle-income commuters who live in state.

The final significant tax hike proposed by Justice included the creation of a new gross receipts tax of .2 percent, representing a $214 million annual tax hike. This tax hike imposed on a business regardless of profits represents a massive step backwards in tax policy as it has long been recognized that these taxes are inefficient and cripple growth. That’s precisely why most states have eliminated these taxes, which were more popular a century ago.

One year after neighboring Kentucky imposed gross receipts tax in 2005 it was repealed when lawmakers realized the grave mistake they had made in disadvantaging some companies over others while damaging new businesses and depressing new investment. Is this Gov. Justice’s goal? To replicate the failure of Kentucky’s misguided tax that discouraged investment?  Read more from the Tax Foundation here. 

Additional tax and fee increases include:

  • Increase in DMV license fee from $30 to $50;
  • Increase in beer tax;
  • Increase in wholesale markup on liquor;

 

In total, Justice is proposing $450 million in tax and fee hikes while suggesting a spending cut of merely $26.6 million, which constitutes a rounding error in the context of this massive proposal to increase the burden of government on West Virginia taxpayers. 

Instead of taking a step back towards unworkable tax policies of the Great Depression, the legislature to embrace 21st century tax reform that has inspired growth in states like North Carolina. Broadening the base, lowering corporate, sales, and income tax rates can all be accomplished without imposing unaffordable tax hikes on Mountain State residents. The legislature would be wise to reject all of Jim Justice's tax hikes and take him at his word throughout his 2016 campaign that West Virginians "are hurting enough. We don't need to increase taxes."  

The state must focus on spending restraint and reforming the tax code to inspire, not inhibit economic growth. 

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DeVos Confirmation a Victory for Families Nationwide

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Posted by Rayanne Matlock on Tuesday, February 7th, 2017, 2:48 PM PERMALINK

With a historic tie-breaking vote from Vice President Mike Pence, Betsy DeVos was confirmed as Education Secretary early this afternoon.

The narrow victory comes after a persistent effort by Democrats to derail her confirmation. But this isn’t just a victory for Republicans or Betsy DeVos, this is a victory for all families across the United States.

In October 2016, EdChoice released results from a national survey polling American families about educational options for their children. They found that just 28 percent of parents prefer to send their children to a public school, while a combined 69 percent of parents prefer alternative forms of education. Currently 83 percent of students attend a public school and 17 percent receive other forms of education, so it's clear many parents want more educational options for their children.

It is well-known that Betsy DeVos is a champion of school choice, an effort she has dedicated much of her life to. School choice is a movement to provide all parents, including families in low income households or children with exceptional needs, with the means to give their children the education they deserve. No child deserves to have the quality of their education dictated by their zip code.

Education choice programs include vouchers, tax-credit scholarships, and education savings accounts. All are commendable programs, but ESAs are newer to the education choice arena and are viewed by many as the most significant education policy reform. All of these programs allow parents, who otherwise wouldn’t be able to afford it, to pay for alternative forms of education for their children.

The 2016 election showed that educational freedom is a priority for voters and their families. Of the 121 state-level candidates supported by the American Federation for Children, a pro-school choice organization chaired by DeVos until her selection was announced, 108 won their elections.

It is clear that the one-size-fits-all policies prescribed by the federal government have not worked to improve education in the United States. As evidenced by her support for school choice, DeVos recognizes that the best way to improve education is to give the power back to the states. Or better yet, give it to the parents.

There has never been a better time for states to expand school choice. Thanks to the election, 2017 is poised to be a banner year for efforts in states from coast to coast to empower parents and students with education savings accounts, vouchers and other programs that increase school choice.

Congratulations, Betsy DeVos. Please make education great again! 

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Correcting Misconceptions About the Border Adjustable Cash-Flow Business Tax

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Posted by Alexander Hendrie on Tuesday, February 7th, 2017, 9:00 AM PERMALINK

The House Republican “Better Way” tax reform blueprint proposes a desperately needed overhaul of the tax code. It has been more than 30 years since tax reform was last signed into law, and it is past time this outdated code was updated.

On both the individual side and business side, the plan reduces taxes across the board. In addition, the plan calls for much needed simplification, and implements numerous pro-growth policies. Specifically, the blueprint transforms the current corporate income tax to a cash-flow business tax through the implementation of full business expensing, the creation a territorial system of international taxation, and adding a border adjustability component.

While the plan is extremely pro-growth, border adjustability has been subject to mischaracterization and confusion. While it may sound to some like a tariff or a Value-Added Tax, it contains important differences with both. Instead, it should be viewed as an integral part of a modern, internationally competitive cash-flow business tax that replaces the cumbersome corporate income tax used today. 

Is Border Adjustability A New Tax?
Although some have described the border adjustability component of the cash-flow business tax as a new, one trillion dollar tax on imports, this is a complete mischaracterization. While the border adjustability component raises revenue, it should not be viewed in isolation, but as a base broadener that facilitates lower rates for all businesses.

Border adjustability should also be considered in the context of the many, pro-growth changes in the Better Way plan, and as part of a system that equalizes the taxation of American businesses relative to foreign competitors. It is a dramatic tax cut for businesses and consumers relative to our existing system of taxation, as the plan creates a new, low rate for corporations of 20 percent and a 25 percent rate for pass-through entities.

The House plan reduces taxes on small businesses and corporations by about $4 trillion through reductions in marginal rates and by allowing immediate expensing of new business investments, which greatly exceeds the $1 trillion raised by border adjustability. In total, the plan reduces taxes by $2.4 trillion on a static basis, according to estimates by the Tax Foundation. Through the many pro-growth policies, the plan also leads to increased household income of almost 9 percent after economic feedback.

How Does Border Adjustability Work and Why is it Needed?
Under the border adjustability system, the costs associated with products exported from the US are fully deductible from the cash-flow tax, and the costs associated with products imported into the US are not deductible from the cash-flow tax.

This change is made to ensure American businesses are on a level playing field with foreign competitors, not so they have a protectionist advantage. America is the only nation without border adjustment among the 35-member Organisation for Economic Co-operation and Development (OECD) and the five country BRICS (Brazil, Russia, India, China and South Africa). The only other countries with a border adjustment include nations like North Korea, South Sudan, Iraq, Myanmar, and Western Sahara. 

[See the Full Map of Countries with and Without Border Adjustment Here]

Normally, when a product leaves a country the border adjustment mechanism adjusts rates downward, which is then offset when it enters the new country which border adjusts rates upwards. Neither country is imposing a tariff, rather they are taxing based on where the product is consumed.

Because the US does not have a border adjustment mechanism, American businesses that sell products overseas face an export penalty relative to transactions between two other countries with border adjustable systems. Similarly, foreign businesses selling in the U.S. receive an import tax break compared to transactions between two other developed nations.

Is the Border Adjustment Component A Tariff?
A border adjustment mechanism is not a tariff – it is administered through the tax code so it cannot be considered trade policy.

The differences between the two are far from technical. Implementing a border adjustment system is about treating exports and imports equally in the global economy. Implementing a tariff is about reducing imports from another country in a discriminatory way.

Border adjustability is trade neutral because the export portion and the import portion of the border adjustment are off-setting and equal in nature. Any revenue raised is dependent on the size of the country’s trade deficit or surplus. 

In the U.S. context, the border adjustment component of the cash-flow business tax raises a projected $1 trillion over a decade, but this is solely because of the U.S. trade deficit which totals roughly $500 billion every year. Every dollar worth of goods leaving the country cancels out one dollar worth of goods arriving in the country. A trade surplus would result in the component raising no revenue. 

Border adjustability is also likely compliant with the World Trade Organization –the global body governing international trade—because it is structured around an indirect, consumption based tax. The cash-flow business tax contains many components of an indirect tax such as the elimination of interest deductibility and allowing full business expensing to ensure it is compliant with global norms.

How Does the Cash-Flow Business Tax Differ From A Value-Added Tax?
The cash-flow, border adjustment tax in the House blueprint is not a VAT.

The most important difference between the two is that the House tax plan allows for a business to deduct any labor compensation, which is then taxed through the individual income tax. This ensures that taxation is transparent to voters and taxpayers. In contrast, VATs have a much broader base that includes all compensation paid to workers, which shields the true impact of the tax from those who pay it.

This difference addresses a key problem with the VAT – that it is hidden from taxpayers. 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. It is embedded in the final cost of the goods sold, and is hidden to the consumer. As a result, countries that have adopted a VAT can easily raise the rate over time to expand the size of government. The same cannot be said for the cash-flow border adjusted business tax.

 

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ATR Supports H.R. 523, The Debt Transparency and Accountability Act

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Posted by Natalie De Vincenzi on Tuesday, February 7th, 2017, 9:00 AM PERMALINK

Representative Kenny Marchant (R-Texas) has introduced the Debt Transparency and Accountability Act, H.R. 523. This legislation creates a clear framework for holding the administration accountable for any increase in the debt and requires the Treasury Secretary to produce options for reducing the debt. This bill passed in the last Congress with bipartisan support, so legislators on both sides of the aisle should have no problem in supporting this key piece of legislation.

This legislation requires the Treasury Secretary to appear before the House Ways and Means and the Senate Finance Committee between 21 and 60 days before it is anticipated that the debt limit will be reached. Specifically, the Secretary will be required to present a detailed report outlining the nation’s financial state while also proposing substantive reforms.

Firstly, the Secretary will be required to report on the current state of the debt (including historical levels of debt, current composition of debt, and future debt projections).

Secondly, this bill will require the administration to propose detailed proposals to reduce the debt in the short-term, medium-term, and long-term.

Thirdly, the legislation requires the administration to project how increasing the debt limit will affect future spending, debt service, and the strength and stability of the U.S. dollar as the international reserve currency.

Lastly, the Secretary will be required to report projections of the long-term sustainability of mandatory entitlement programs including Social Security, Medicare, and Medicaid. 

In addition, the legislation requires the Treasury Secretary to present progress reports on efforts to reduce the debt when returning to Congress to ask for future debt ceiling increases.

The Debt Transparency and Accountability Act creates a clear, yet comprehensive framework that any administration must follow to reduce federal debt when requesting a debt limit increase. By requiring the submission of a detailed report and comprehensive plan before Congress, H.R. 523 ensures that increasing the debt ceiling only occurs as part of a framework of serious proposals to reform the nation’s finances and chart a pathway toward fiscal responsibility. Americans for Tax Reform supports this legislation and urges all members of Congress to support or cosponsor this bill.

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ATR Releases Coalition Letter Opposing the Postal Service Reform Act (H.R. 756)

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Posted by Justin Sykes on Monday, February 6th, 2017, 1:34 PM PERMALINK

Americans for Tax Reform, joined by 23 free market organizations, today sent an open letter to Congress urging lawmakers to oppose H.R. 756, the “Postal Service Reform Act of 2017” introduced by House Government Oversight Committee Chairman Jason Chaffetz (R-Utah), and the Committee’s Ranking Member Elijah Cummings (D-Md.).

Since 2007, USPS has posted more than $50 billion in losses and faces $125 billion in unfunded liabilities, despite an estimated $18 billion annually in indirect subsidies.

While reforms are needed, the Postal Service Reform Act ignores basic needed reforms to USPS, and instead increases rates, shifts USPS’s financial burden onto the American public, and allows for the diversion of resources away from the core mission of mail delivery.

Read the full letter below or here:

February 6, 2017

Open Letter to Congress:

Protecting Taxpayers and Consumers from Increased Rates, Ill-advised Reforms, and Further Exacerbation of the U.S. Postal Service’s Financial Hardships – Opposing the Postal Service Reform Act of 2017

To Members of the U.S. Congress:

We, the undersigned organizations, representing millions of taxpayers and consumers nationwide, urge Congress to oppose H.R. 756, the “Postal Service Reform Act of 2017” introduced by House Government Oversight Committee Chairman Jason Chaffetz, and the Committee’s Ranking Member Elijah Cummings.

For years, the U.S. Postal Service (USPS) has suffered from operational and financial inefficiencies, and while reforms are needed, H.R. 756 misses the mark and may actually exacerbate the issues facing USPS.

The USPS enjoys a monopoly on the delivery of first-class and standard mail and is exempt from state and local sales, income, and property taxes. The USPS also has the power of eminent domain, is not subject to local zoning ordinances, and has borrowed billions from the Treasury at subsidized interest rates.

Despite such special treatment, which is estimated to be $18 billion annually in indirect subsidies, USPS’s financial health is continually waning. Since 2007, USPS has posted more than $50 billion in losses and faces $125 billion in unfunded liabilities. Much of this stems from USPS’s inability to adapt to changing markets, congressional impediments, and union quagmires.

Many of the reforms provided for in H.R. 756 lead USPS further away from the core mission of mail delivery, unfairly shift the Postal Service’s financial burdens onto the American public, and fail to address many of the underlying issues facing USPS.

Postal Rate Reforms and Increases. Chairman Chaffetz’s reform bill would allow the Postal Service to increase rates by 2.15 percent on monopoly products such as stamps. Monopoly products generate the bulk of USPS profits. Increasing rates will only reduce revenue and further drive more consumers away from USPS products and services. 

Diversion to Nonpostal Products and Services. Key provisions contained in H.R. 756 would allow the Postal Service to divert resources away from the core mission of mail delivery to providing nonpostal products and services to state, local, and tribal governments and federal agencies. The Act creates a “Chief Innovation Officer” tasked with managing the development and implementation of nonpostal products. While intended to generate new sources of revenue, such provisions are only a point of distraction, and will see the Postal Service further competing with private firms.

Postal Service Governance Reform. The USPS Board of Governors is comprised of nine members, not including the Postmaster General and Deputy Postmaster General, who are Presidentially appointed and confirmed by the Senate and serve seven-year terms. Since 2015, the Board of Governors has had only one Governor serving due to congressional hurdles. H.R. 756 would reduce the USPS Board of Governors from a nine-member board to a five-member board. This hollow reform does nothing to actually improve USPS governance, and instead reinforces the fact that most of the provisions in the bill are simply reforms for the sake of reforms, having no real impact on the status quo.     

We recognize the need for reforming the U.S. Postal Service. However Chairman Chaffetz’s Postal Service Reform Act ignores basic needed reforms to USPS, and instead increases rates, shifts USPS’s financial burden onto the American public, and allows for the diversion of resources away from the core mission of mail delivery.

It is for these reasons that we ask members of Congress to oppose this legislation.  

Grover G. Norquist                                           
Americans for Tax Reform                                    

David Williams                                                
Taxpayers Protection Alliance                                                            

Jim Martin                                                        
60 Plus Association                                          

Phil Kerpen                                                    
American Commitment                                        

John M. Palatiello                                             
Business Coalition for Fair Competition                                                        

Norm Singleton                                                           
Campaign for Liberty                                             

Andrew F. Quinlan
Center for Freedom and Prosperity                                                                       

Jeffrey L. Mazzella                                            
Center for Individual Freedom                                   

Col. Francis X. De Luca                                                              
Civitas Institute                                                 
 

Tom Schatz                                                     
Council for Citizens Against Government Waste          

Chuck Muth                                                     
Citizen Outreach                                               

Katie McAuliffe                                              
Digital Liberty   

Adam Brandon
Freedom Works

George C. Landrith
​Frontiers of Freedom

Mario Lopez
Hispanic Leadership Fund

Sabrina Schaeffer
Independent Women's Forum

Andrew Langer
Institute for Liberty

Kory Swanson
John Locke Foundation

Seton Motley
Less Government

Willes K. Lee
National Federation of Republican Assemblies

Kevin Kosar
R Street Institute 

Karen Kerrigan
Small Business & Entrepreneurship Council

Ryan Alexander
Taxpayers for Common Sense

Judson Phillips
Tea Party Nation

 

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IRS Shortchanges Taxpayers $1.2 Million Due To Outdated Tech

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Posted by Sarah Caplin on Monday, February 6th, 2017, 10:00 AM PERMALINK

The IRS shortchanged taxpayers $1.2 million because they failed to address outdated computer systems, according to a report published by the Treasury Inspector General for Tax Administration (TIGTA).

Despite previous warning, the IRS failed to update computer program changes that were brought to their attention. After an extensive evaluation, TIGTA discovered multiple employee and processing errors within the IRS.

As a result of these errors, The IRS doled out $1.2 million less in a property tax credit than taxpayers were owed. As the report notes:

“The IRS incorrectly limited the Property Credit on 731 tax returns processed as of April 28, 2016, which caused these taxpayers to receive approximately $1.2 million less in credits than they were entitled to receive.”

Despite previous warning, TIGTA also found that computer programming errors are still causing some direct deposits to not convert to a paper check as required. As TIGTA noted:

“Our analysis of the 86 million deposit requests identified 5,605 deposit attempts totaling approximately $9.2 million that did not convert to a paper check as required.”

This is not an isolated incident. As the report notes, The IRS did not establish adequate processes to ensure that required documentation was associated and reviewed before processing claims and allowing credits:

“Our review also identified that employee errors resulting from the manual processing of these claims further delayed some taxpayer refunds. For example, TIGTA’s review of 6,300 electronically filed tax returns and 356 paper tax returns with Health Coverage Tax Credit claims totaling more than $20.8 million that were processed as of April 28, 2016, identified 450 (6.8 percent) returns that had a processing error.”

The IRS has proven itself to be inept with technology.  A 2015 report found that the agency was unable to upgrade all of its Windows workstations by the proper deadlines. In addition to this critical error, the IRS had not accounted for the location or migration status of approximately 1,300 workstations and upgraded only about one-half of its Windows servers in a five year time span. A separate report from 2016 found that the IRS wasted $12 million on an unusable email system because they purchased it without completing the required and necessary cost analysis.

 

 

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