ATR Supports Legislation Block Granting Education Funds to the States

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Posted by Alexander Hendrie on Wednesday, May 10th, 2017, 3:30 PM PERMALINK

Representative Jim Banks (R-IN) has introduced a bill that would amend the federally funded Head Start program by providing block grants to the states for this education initiative to help at-risk students.  This legislation, the Head Start Improvement Act encourages increased innovation and efficiency to an old program that has failed to live up to its promises.

American taxpayers finance Head Start with $9 Billion dollars a year, yet as a long-term 2012 study by the Department of Health and Human Services notes, Head Start’s enrollees showed varied results in their improvement of language skills, literacy, math and overall school performance as compared to their non-Head Start peers.

This legislation adds increased flexibility to states, ensuring that taxpayer dollars will be spent more efficiently and lead to positive academic outcomes for students whose families fall below the poverty line.  

Americans for Tax Reform supports Rep. Banks’ legislation and urges all members of Congress to support it as well. Read the letter here or below. 

May 10, 2017

The Honorable Jim Banks
United States House of Representatives
509 Cannon House Office Building
Washington, D.C. 20515

Dear Congressman Banks:

I write in support of H.R. 1921, The Head Start Improvement Act. This legislation block grants federal funds to the Head Start program to the states for education. By giving states increased flexibility over how they administer this program, your legislation encourages increased innovation and efficiency to a program that has failed to live up to its promises. All members of Congress should support this important legislation.

The Head Start program was created to provide comprehensive early childhood education services to children in families who fall below the poverty line. While the aim of the program was to ensure that these children do not begin kindergarten at an academic disadvantage, the success of the Head Start program has been mixed.

As noted in a 2012 study published by the Department of Health and Human Services, Head Start’s enrollees showed varied results in their improvement of language skills, literacy, math and overall school performance as compared to their non-Head Start peers.

Currently, taxpayers across the country spend nearly $9 billion a year on Head Start, yet states must often accede to top-down Washington control.

H.R. 1921 will improve the program by providing flexible grants that states can tailor to address the distinctive needs of their students. While the bill maintains the current level of funding, the increased flexibility to states ensures that taxpayer dollars will be spent more efficiently. In turn, this would further mitigate the academic barriers facing the children and families.

Given the finite federal resources available for this program, it is crucial they are spent efficiently. The Head Start Improvement Act does this by ensuring states are able to use funds in the most appropriate way possible. Members of Congress should have no hesitation supporting and co-sponsoring this important legislation.

Onward,

Grover G. Norquist
President, Americans for Tax Reform

 

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Lawmakers Should Oppose Efforts to Increase Taxes on Carried Interest Capital Gains

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Posted by Alexander Hendrie on Wednesday, May 10th, 2017, 1:00 PM PERMALINK

A long-term goal of Democrat politicians is increasing the capital gains tax.

Often, the Left claims that the capital gains tax is a loophole that should be closed. What they really mean is they want to increase the capital gains tax from its current rate of 23.8 percent to 43.4 percent, so it is taxed as ordinary income (The 39.6 percent individual rate plus the Obamacare 3.8 percent net investment income tax).

At other times, they aim to incrementally increase the tax on capital gains. One of their favorite targets is carried interest capital gains. Just last week, Senator Tammy Baldwin (D-WI) introduced legislation that would increase taxes on carried interest.

This is bad policy. Increasing taxes on carried interest capital gains would reduce investment and savings, and hurt the economy. In addition, it would raise a miniscule amount of revenue and take the tax code in the wrong direction. Lawmakers should reject Senator Baldwin’s misguided proposal.

There is a widespread misconception that treating carried interest as a capital gain is a loophole. The truth is, carried interest is identical to all other capital gains and there is little justification for treating it as ordinary income. Carried interest is the share of an investment partnership allocated to the investor. These partnerships occur when individuals with capital and individuals with expertise pool their resources together.

Those who derive income from carried interest capital gains don’t have some special deal – they pay the same capital gains rates as everyone else. All income from a partnership is derived from a long-term investment in a business or real estate and so all income is treated as a capital gain.

Increasing taxes on carried interest capital gains would raise a miniscule amount of revenue. According to the Joint Committee on Taxation, taxing carried interest as ordinary income would raise just $19.6 billion over the next decade, a drop in the bucket compared to the projected $41.7 trillion that the Congressional Budget Office estimates will be raised over that time frame.

Increasing taxes on carried interest capital gains would have negative economic impacts. When accounting for effects on the economy, the Tax Foundation estimates revenue from taxing carried interest as ordinary income would fall to just $13 billion due to negative macroeconomic effects.

This negative impact would be felt by pension funds, charities, and colleges that depend on investment partnerships as part of their savings goals. In addition, small businesses would find themselves increasingly shut out from investment money available to them from these partnerships.

Better policy would be reducing taxes on capital gains. Ideally, none of the income derived from a capital gain should be taxed as it is one of several layers of taxation in the existing tax code. This tax is levied on income that has already been taxed at the individual level and is then reinvested into the economy. This extra layer of taxation creates a bias against savings and suppresses productivity and new investment. In turn, this hinders the creation of new jobs, higher wages, and increased economic growth.

Capital gains taxes are already high. Over the past eight years, the top rate increased from 15 percent to 23.8 percent. A study by Ernst and Young placed the top U.S. integrated rate at 56.3 percent after accounting for the corporate tax, federal and state capital gains taxes, and the Obamacare net investment income tax. In contrast, the average integrated rate amongst nations in the Organisation for Economic Co-operation and Development and the five member BRICS countries sits at just 40.3 percent.

Rather than push for a tax increase on capital gains, lawmakers should look to reduce the tax to promote economic growth and end the distortions in the tax code.

 

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Senate HELP Committee Should Reject Importation of Price Controls

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Posted by Alexander Hendrie on Tuesday, May 9th, 2017, 4:00 PM PERMALINK

Members of the Senate Committee on Health, Education, Labor and Pensions will tomorrow consider S. 934, the FDA Reauthorization Act, legislation related to the FDA’s user fees over drugs and medical devices.

During consideration of this legislation, it is expected that socialist Senator Bernie Sanders (I-Vt.) will introduce multiple amendments calling for the importation of price-controlled prescription medicines. This is bad policy and should be rejected by all Senators on the HELP Committee.

Importation schemes are NOT the solution to lower prices and will NOT result in a more efficient healthcare system. Importation of prescription medicines instead forces the U.S. to adopt market-distorting price controls from other countries, which would disrupt U.S. innovation of life- saving and life-preserving medicines. 

Importation should not be confused with free trade and these proposals also open the door to deadly medicines flooding the market.

All Senators on the HELP Committee should reject importation proposals. 

Allowing the Importation of Prescription Medicines Is Not a Free Market Solution: Free trade means transparent prices with no tariffs, barriers, or price controls. Drug importation is the opposite of free trade.

Almost every country in the world has excessive price controls that hinder medical innovation and limit access. Foreign prices are often determined by politicians offering voters seemingly “cheap medicines.” In reality, price controls lead to shortages and rationing. Government price setting would do the same in the U.S. whether imposed directly or indirectly through importation.

Importation Would Threaten the U.S. Role as a Leader of Medical Innovation: The U.S. is a leader in medical development with more than half of pharmaceutical / biotech research being conducted in this country. This research supports numerous high paying jobs, leading to a stronger economy. Conversely, creating barriers to innovation will threaten these jobs and hurt the economy.

Currently, it costs more than $2.6 billion and takes 10- 12 years to develop a drug, conduct clinical trials, and obtain Food and Drug Administration (FDA) approval for each drug that makes it onto the market. In contrast, almost every country in the world has excessive price controls that hinder medical innovation. In these countries, prices are often determined by politicians offering voters seemingly cheap medicines. In reality, the world rides on U.S. research and taxpayers.

Importation Schemes Are Also Potentially Dangerous to Consumers: The FDA has stated there is no way to assure the safety, authenticity, or effectiveness of imported drugs, or whether the drugs are from the country the packaging claims it to be. Even attempting to construct such a system would be incredibly costly to taxpayers. In addition to drugs being adulterated, they could be deadly. The FDA has long expressed concern with the importation of medicines for these very reasons.

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List of Obamacare Taxes Repealed

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Posted by John Kartch on Thursday, May 4th, 2017, 6:11 PM PERMALINK

 

The American Health Care Act (HR 1628) passed by the House today reduces taxes on the American people by over $1 trillion. The bill abolishes the following taxes imposed by Obama and the Democrat party in 2010 as part of Obamacare:

-Abolishes the Obamacare Individual Mandate Tax which hits 8 million Americans each year.

-Abolishes the Obamacare Employer Mandate Tax. Together with repeal of the Individual Mandate Tax repeal this is a $270 billion tax cut.

-Abolishes Obamacare’s Medicine Cabinet Tax which hits 20 million Americans with Health Savings Accounts and 30 million Americans with Flexible Spending Accounts. This is a $6 billion tax cut.

-Abolishes Obamacare’s Flexible Spending Account tax on 30 million Americans. This is a $20 billion tax cut.

-Abolishes Obamacare’s Chronic Care Tax on 10 million Americans with high out of pocket medical expenses. This is a $126 billion tax cut.

-Abolishes Obamacare’s HSA withdrawal tax. This is a $100 million tax cut.

-Abolishes Obamacare’s 10% excise tax on small businesses with indoor tanning services. This is a $600 million tax cut.

-Abolishes the Obamacare health insurance tax. This is a $145 billion tax cut.

-Abolishes the Obamacare 3.8% surtax on investment income. This is a $172 billion tax cut.

-Abolishes the Obamacare medical device tax. This is a $20 billion tax cut.

-Abolishes the Obamacare tax on prescription medicine. This is a $28 billion tax cut.

-Abolishes the Obamacare tax on retiree prescription drug coverage. This is a $2 billion tax cut.

As a presidential candidate in 2008, Barack Obama had promised repeatedly that he would not raise any tax on any American earning less than $250,000 per year. He broke the promise when he signed Obamacare. With the passage of the House GOP bill, tens of millions of middle income Americans will get tax relief from Obamacare's long list of tax hikes.

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Americans for Tax Reform Will Rate the Vote on AHCA, HR 1628

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Posted by Americans for Tax Reform on Thursday, May 4th, 2017, 10:00 AM PERMALINK

 

Americans for Tax Reform WILL RATE a vote for passage of the American Health Care Act as a pro-taxpayer vote
 

ATR urges a YES vote
 

“The American Health Care Act is a $1 trillion tax cut and a $1.1 trillion spending cut over the next decade. It's passage makes fundamental tax reform possible this year. The AHCA block grants Medicaid and expands Health Savings Accounts. It will ensure states are able to implement a healthcare system that best fits their needs. The bill is a giant step forward in lowering taxes and reforming our nation's health care system,” said Grover Norquist, president of Americans for Tax Reform.

The American Health Care Act (HR 1628) being voted on today abolishes the following taxes imposed by Obama and the Democrat party in 2010 as part of Obamacare:

-Abolishes the Obamacare Individual Mandate Tax which hits 8 million Americans each year.
 This is part of a $270 billion tax cut.

-Abolishes the Obamacare Employer Mandate Tax. This is part of a $270 billion tax cut.

-Abolishes Obamacare’s Medicine Cabinet Tax which hits 20 million Americans with Health Savings Accounts and 30 million Americans with Flexible Spending Accounts. This is a $6 billion tax cut.

-Abolishes Obamacare’s Flexible Spending Account tax on 30 million Americans. This is a $20 billion tax cut.

-Abolishes Obamacare’s Chronic Care Tax on 10 million Americans with high out of pocket medical expenses. This is a $126 billion tax cut.

-Abolishes Obamacare’s HSA withdrawal tax. This is a $100 million tax cut.

-Abolishes Obamacare’s 10% excise tax on small businesses with indoor tanning services. This is a $600 million tax cut.

-Abolishes the Obamacare health insurance tax. This is a $145 billion tax cut.

-Abolishes the Obamacare 3.8% surtax on investment income. This is a $172 billion tax cut.

-Abolishes the Obamacare medical device tax. This is a $20 billion tax cut.

-Abolishes the Obamacare tax on prescription medicine. This is a $28 billion tax cut.

-Abolishes the Obamacare tax on retiree prescription drug coverage. This is a $2 billion tax cut.

The AHCA Also Has Big League Spending Cuts:

Under AHCA, by 2021 federal spending on healthcare as a percentage of GDP is reduced from 6.9% to 6.3%. As time goes by, the spending reduction gets larger. See the first chart, below.

Under AHCA, by 2027 total federal spending as a percentage of GDP is reduced from 23.4% to 22.4%. See the second chart, below.

“In addition to abolishing Obamacare’s taxes, the AHCA reduces the total size of government permanently,” said Norquist.

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Ending Barriers to Trade with Cuba Will Benefit America

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Posted by Alexander Hendrie on Thursday, May 4th, 2017, 9:30 AM PERMALINK

While he has expressed opposition to trade policy that does not meet the best interests of the American people, President Donald Trump has also promised he will pursue a trade agenda that benefits the U.S economy and workers. One initial step the administration can pursue to meet this goal is to remove existing trade barriers with Cuba.

There are currently several restrictions on trade with Cuba that impede the ability of Americans to do business or even travel to the island. Removing these restrictions will open up opportunities for American workers and businesses and ultimately help create more jobs and higher wages.

Americans trading with the island will also serve as the best ambassadors of freedom to help liberate the people of Cuba from the failed socialist regime.

To be clear, any government guarantees of loans, taxpayer finance, or special deals to the regime should be a non-starter. Even so, free and open trade as well as open travel with Cuba should be promoted. 

There are currently three pieces of legislation in Congress that would reduce unnecessary barriers to commerce – legislation to lift the travel ban, to remove private financing restrictions on agriculture, and to lift the trade embargo. Each of these pieces of legislation should be supported and passed by members of Congress.

Remove Private Financing Restrictions on Agricultural Trade

H.R. 525, the Cuba Agricultural Exports Act, introduced by Congressman Rick Crawford (R-AR) and S.275, the Agricultural Export Expansion Act, introduced by Senator Heidi Heitkamp (D-N.D.), remove needless private financing restrictions that exist under the Trade Sanctions Reform Act (TSRA).

Promoting market access for American agriculture will directly lead to more jobs and higher wages. In recent years, American farmers have lost nearly $1 billion in sales due to the existing Cuba financing restrictions. This legislation expands trade with Cuba to the benefit of American workers while also keeping safeguards in place to ensure that no taxpayer funding is given to the Cuban regime.

Lifting the Trade Embargo

The Cuba Trade Act (H.R. 442/S.1543), introduced by Congressman Tom Emmer (R-MN) and Senator Jerry Moran (R-KS) allows America’s private-sector industries to export goods and services to Cuba.

Again, this change will benefit American workers and the economy. As noted by a 2010 study by Texas A&M University, lifting the trade embargo could increase the sale of U.S. goods by $365 million and create 6,000 new jobs.

To ensure that American interests are protected, this legislation safeguards U.S. taxpayers in the event that a Cuban entity defaults on lines of credit.

Lifting the Travel Ban

The Freedom to Travel to Cuba Act (H.R. 351/S.299) introduced by Congressman Mark Sanford (R-S.C.) and Senator Jeff Flake (R-AZ) lifts the travel ban on Cuba that exists under TSRA.

There is no need for a travel ban to remain in effect. Cuba remains the only country in the world to which the U.S. government prohibits tourist travel. This should end.

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ATR Joins Coalition Urging Repeal of BLM Methane Rule (H.J. Res. 36)

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Posted by Justin Sykes on Wednesday, May 3rd, 2017, 2:55 PM PERMALINK

Americans for Tax Reform (ATR) this week joined a coalition of free market organizations urging Senate lawmakers to pass H.J. Res. 36, a resolution providing for congressional disapproval of the Bureau of Land Management's (BLM) rule relating to "Waste Prevention, Production Subject to Royalties, and Resource Conservation" more commonly referred to as the BLM's "Methane Rule." 

The BLM Methane Rule is a product of federal regulatory overreach, released in the eleventh hour by the Obama Administration that served only to preserve the former President’s legacy at the expense of responsible U.S. energy production. BLM not only lacks the statutory authority to enact the Methane Rule, but the rule is also duplicative and wholly unnecessary. 

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

"The American people expect you to promote pro-growth policies that support affordable energy, jobs, and economic freedom. The BLM methane rule is not one of those policies...[and] must be undone, and the CRA is the ideal method for doing so. We ask the Majority Leader to bring this resolution to the floor and urge all Senators to vote yes."

Full text of the letter can be found here.

 

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Senator Flake's "Opportunity in Federal Construction Act" Will Stop Wasted Taxpayer Dollars

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Posted by Natalie De Vincenzi on Tuesday, May 2nd, 2017, 9:30 AM PERMALINK

Senator Jeff Flake (R-Ariz.) will soon introduce the “Opportunity in Federal Construction Act,” legislation that requires federal construction projects to use a more accurate wage determination process.

Because of the Davis-Bacon Act, the federal government is forced to pay contractors working on federally funded construction projects flawed and unrealistic prevailing market wages. This legislation fixes this oversight and ensures taxpayer dollars are more wisely spent. As such, Senators should have no hesitation supporting this important legislation.

Under the Davis-Bacon Act, any federal construction project must pay their workers the prevailing wage of a locality as defined by the Wage and Hourly Division. Unfortunately, this measurement is severely flawed and drives up the cost of projects at taxpayer expense.

 On average, Davis Bacon wages are 22 percent above market rates resulting in construction costs that are 10 percent higher than comparable projects. Half of the wage rates that are determined by surveys are more than ten years old, and some even date back to the 1980s. Worse still, the Department of Labor Inspector General found a nearly 100 percent error rate in the accuracy of wage calculation.

Clearly, there is need for reform. Senator Flake’s legislation addresses this issue by shifting the determination process to the Bureau of Labor and Statistics which has the capability to more accurately determine appropriate pay and already calculates wages for more than two million federal employees. To ensure wage determination is being implemented and reformed properly, the legislation also calls for a GAO report one year after implementation.

Ultimately, a more accurate wage determination process will save taxpayers billions in dollars and generate as many as 30,000 more construction jobs. This legislation is commonsense and should be supported by all Senators. 

 

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The Gift Tax Should Be Killed With the Death Tax

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Posted by Alexander Hendrie on Monday, May 1st, 2017, 3:30 PM PERMALINK

There is a consensus that pro-growth tax reform must include repeal of the death tax.

President Trump’s recently released tax plan repeals the death tax. So does the House Republican “Better Way” Tax Reform plan proposed by House Speaker Paul Ryan (R-Wis.) and Ways and Means Chairman Kevin Brady (R-Texas).

While this consensus is an excellent step in enacting pro-growth changes to the tax code, repeal of the death tax must also mean repeal of the gift tax. With the death tax gone, the gift tax is no longer necessary.

First enacted into law in 1924, the gift tax was intended as a backstop to prevent taxpayers from avoiding the death tax. Today, the gift tax and death tax remain linked – they share an asset threshold of $5.45 million, and both are applied at a 40 percent rate above that threshold.

Both are taxes on savings that a taxpayer has already paid taxes on at least once – through individual income taxes – and possibly other times.

Together, they collect very little revenue and suppress economic growth. In 2015, both taxes collectively brought in $19.2 billion. The federal government brought in a total of $3.25 trillion, so these taxes contributed less than 0.6 percent of all federal revenue. Even then, repealing the death tax and gift tax would produce strong growth that offsets most of this lost revenue. After macroeconomic effects, repeal of both taxes would reduce revenues by just $19 billion over the entire first decade due to more than $200 billion in higher income tax and payroll tax revenues, according to research by the Tax Foundation.

If the gift tax were left in place after repeal of the death tax, it would raise little, if any revenue because a taxpayer would simply wait to transfer their assets until they died. In contrast, repealing the gift tax along with the death tax would serve as a backstop to ensure the death tax is gone for good. If taxpayers believe the death tax will be reinstated, they can simply transfer assets to heirs before it takes effect.

While some argue that the gift tax also exists as a backstop for the income tax, this is not true. There are already rules in place to stop a taxpayer from transferring wealth to an heir. The “kiddie tax” subjects a child’s unearned income over $2,100 to a parent’s higher tax bracket.

This nullifies any tax benefit from transferring wealth to a child that would otherwise be in a lower tax bracket. Although the kiddie tax may cause other problems including complexity for families, its existence means there is no need to retain the gift tax. 

2017 should be the year that the death tax is finally repealed. With it, lawmakers should also be sure to repeal the gift tax. 

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Ohio Lawmaker Introduces State Resolution in Support of Federal Tax Reform

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Posted by Patrick Gleason on Monday, May 1st, 2017, 11:27 AM PERMALINK

Last week, the same week Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn unveiled the Trump administration’s tax plan, a resolution was introduced in the Ohio House of Representatives calling on Congress to pass federal tax reform that fixes the major flaws in the current code.

The Ohio resolution, introduced by state Representative Niraj Antani (R-Ohio), calls on Congress to overhaul the federal tax code in a way that, as both President Trump and congressional Republicans have proposed, reduces rates for individuals, families, and businesses.

“Tax-and-spend, nanny-state big city mayors like New York City’s Bill de Blasio frequently urge federal officials to enact anti-growth, big government policies,” Grover Norquist, president of Americans for Tax Reform, said. “As such, it’s imperative that federal lawmakers also hear from pro-growth, pro-free enterprise state lawmakers.”

If approved, Rep. Antani’s resolution would put the Ohio Legislature officially on the record calling upon the state’s congressional delegation to support and vote for rate-reducing federal tax reform of the sort that has been proposed by the White House and House Republicans.

"In Ohio we have cut taxes by $5 billion since Republicans regained control," Antani said. "However, our economic growth has now plateaued, and we need federal tax reform to take us to the next level." 

“I encourage Ohio legislators to support and vote for Rep. Antani’s pro-taxpayer resolution,” Norquist added. “By passing this resolution, Ohio lawmakers will send a strong message Congress that now is the time to fix our broken federal tax code and provide much needed relief to taxpayers.”

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