Has your elected official signed the Taxpayer Protection Pledge?

CLICK HERE TO SEE IF YOUR LEGISLATORS HAVE SIGNED!

Corporate Inversions Caused by High U.S. Tax Rate on Companies


Posted by Ryan Ellis on Friday, July 18th, 2014, 12:17 PM PERMALINK


There's a lot in the news this week about "corporate inversions."  That's when a U.S. company with a foreign subsidiary becomes a foreign company with a U.S. subsidiary.

Not surprisingly, Congressional Democrats are out demonizing these companies for daring to look out for their shareholders, employees, and customers.  What you won't hear many Democrats talk about is why these companies feel compelled to do an inversion in the first place.

In a word, it's all about the U.S. corporate tax rate, plus a few other details.

The U.S. has the highest tax rate on businesses in the developed world.  Our corporate tax rate (including states) is 39.1 percent.  Flow-through firms face an even higher rate, approaching 50 percent depending on their state.

Compare this to business taxes overseas, which average about 25 percent in the developed world.  

Each of our major trading partners--Canada, Mexico, Japan, the United Kingdom, Germany, and France--have business tax rates lower than ours.  There are also minor trading partners (Ireland and the Netherlands being good examples) who have significantly lower rates and have been attracting capital recently.

Combine this with the fact that the U.S. has a worldwide tax regime (exposing our companies' profits earned abroad to potential double taxation) and painfully slow cost recovery tax rules, and you have created an atmosphere where corporate inversions become very attractive.

If you want to reverse this trend, there's only one way to really do it--lower the tax rate that businesses pay.  At the very least, companies here should not face a tax rate higher than the 25 percent average rate they would face elsewhere in the developed world.

More from Americans for Tax Reform

Top Comments

ToddTexas

Better yet, reduce it to a flat 10% and the economy of the US will immediately start picking up. Caution though...the reduction of that rate must NOT be offset by citizens paying the difference...like it works here in Texas. Texas, despite what's reported, is NOT a low tax State.


DC Council Approves Historic Tax Cuts


Posted by Alexander Bobroske on Thursday, July 17th, 2014, 4:35 PM PERMALINK


Earlier this week the DC Council voted 12-1 to override Mayor Vincent Gray’s budget veto. The budget vetoed by Mayor Gray includes historic tax cuts not been seen by DC residents in 15 years. Americans for Tax Reform applauds the DC City Council for restoring this much needed tax relief for District residents.

The budget includes triggers for tax cuts if revenue targets are met, providing tax relief for District employers and residents. Key provisions of the plan include the following:

  • Middle class taxpayers (making between $40,000 and $350,000) will see their top marginal tax rate drop from 8.5 percent to 7 percent next year and then 6.5 percent the year after that.
  • Those earning up to $1 million will see their top rate fall from8.95 percent to 8.75 percent.
  • Increase of standard deductions and person exemptions.
  • Childless low-income workers will see their Earned Income Tax Credit increase from 40 to 100 percent of the federal credit.
  • The business tax will drop from 9.975 to 9 percent in 2016, 8.5 percent by 2018, and finally to 8.25 percent by 2019. This places DC business taxes in line with Maryland’s.
  • Death tax threshold will increase from $1 million $5.25 million to match the federal death tax exemption threshold.

 

The $225 million tax cut is offset partially by the $67 million in new revenue from expansion of the sales tax base, leaving the majority of tax relief facilitated by spending restraint in the $10.6 billion budget, down from $12.85 billion in FY 2014.

There has been a lot of uproar over the alleged yoga tax included in the budget. But District yogis should fear not. There is no special wellness tax going into effect; the new tax plan merely applies the local sales tax to yoga and gym glasses, along with other previously exempt services. The amount of income tax cut far exceeds higher sales tax collections that this base broadening will generate. This newly increased disposable income will allow Washingtonians to afford even more yoga sessions.

The DC Council should be commended for clamping down on Mayor Gray’s expensive pet projects, such as his citywide streetcar service plans. Former mayor and current councilmember Marion Barry recently stated that taxpayers would have to pay $2,000 to subsidize each ride on the only existing streetcar line, a line which is yet to open even after years of planning and construction.

It appears that Washington’s business tax climate has become so onerous that even the DC Council realizes the status quo is unacceptable.  ATR applauds the DC Council members for overriding Mayor Gray’s veto of much-needed tax relief. After being hit with over 20 federal tax hikes signed into law by President Obama over the last four years, Washingtonians need tax relief at the local level now more than ever.

More from Americans for Tax Reform

Top Comments


Sen. Vitter’s Environment and Public Works’ Staff Skewer New EPA Regulation


Posted by Cassandra Carroll on Thursday, July 17th, 2014, 10:58 AM PERMALINK


The EPA’s long-thwarted attempts to grab more power for itself by redefining what “waters of the US” means under the Clean Water Act may finally pay off, to the misfortune of industry, farmers and private individuals nationwide.  Under the new WOTUS rule proposed by the EPA, their jurisdiction would be expanded to include such bodies of water as roadside, irrigation and stormwater ditches, as well as all waters in floodplains and riparian areas (with it being conveniently left up to the EPA to decide if an area floods often enough to be called a floodplain). Just as troublingly, whether or not a body of water has a “significant nexus” to a jurisdictional body of water would be decided at the EPA’s discretion on a case-by-case basis rather than there being clear criteria in the proposed rule. This could very easily lead to the EPA claiming jurisdiction over almost any non-trivial body of water, giving them the ability to impose more exorbitant fines on more individuals and businesses and crush business growth and development under the weight of new costly and time-consuming permits.

The EPA hasn’t even bothered to be honest when addressing the concerns of the people who know they’d be affected by this new rule, as you can see in this thorough and necessarily merciless fact-check by Sen. David Vitter’s (R-LA) Environment and Public Works staff. The release can be read in its entirety here (http://www.epw.senate.gov/public/index.cfm?FuseAction=Minority.Blogs&ContentRecord_id=4d7c5f5b-0344-5b3e-c202-08364c217428and is excerpted below

EPA claims that the proposal:

  • Does not regulate new types of ditches
    • But the rule says: For the first time, the proposed rule explicitly includes ditches unless they fall within one of two exceptions based on location and flow. Many ditches throughout the country will be unable to meet the rule’s limited exemption provision and thus will become subject to federal Clean Water Act (CWA) jurisdiction under the rule, contrary to the Agencies’ claims.
       
  • Does not regulate activities on land
    • But the rule says: Under the CWA federal jurisdiction extends to “navigable waters” which are defined as the “waters of the United States.”  Water bodies deemed “waters of the United States” are subject to permitting mandates, federal enforcement mechanisms, mitigation procedures, and citizen suits. A wide variety of activities on land require permits when they impact a “water of the United States” including, home building and construction, agriculture, ranching, and mining.  The CWA does not provide a guaranteed right to a permit and if an applicant is denied, that individual or business will be unable to move forward with the planned project, thus allowing the EPA and Corps to essentially dictate the list of permissible land use activities afforded a particular landowner.
       
  • Does not apply to groundwater
    • But the rule says: The rule claims to exclude groundwater, but language in the rule also states a waterbody may be a “water of the United States” if it has a “shallow subsurface hydrological connection” to other jurisdictional waters. This language suggests that Agencies may intend to use groundwater as a basis for CWA jurisdiction.
       
  • Does not affect stock ponds
    • But the rule says: If a stock pond is natural or used for purposes other than those listed by EPA, the stock pond could be considered a “water of the United States.” The rule says that ponds are exempt only if they are “artificial” and used “exclusively” for stock watering, irrigation, settling basins, or rice growing.
       
  • Does not require permits for normal farming activities, like moving cattle
    • But the rule says: More farming activities will require CWA permits under the agencies’ interpretive rule for normal agricultural activities. Included in the interpretive rule is a “prescribed grazing” requirement, so that if the federal government doesn’t like the way a rancher grazes cattle, they can force the rancher to either obtain a Clean Water Act permit or pay up to $37,500 per day in fines.
       
  • Does not regulate puddles
    • But the rule says: The actual text of the rule is so sweeping that virtually any wet area could potentially be considered a “water of the United States.”  Under the rule, small and isolated waterbodies may be considered a “water of the United States” when, in combination with other similarly situated waters, they have a significant nexus to a traditional navigable water.  This provides no effective limit to federal regulatory authority and will encourage litigious environmental groups to sue property owners no matter the supposed intentions of EPA.  In fact, certain environmental groups are already using the rule’s language to bring citizen suits based on the broad authority provided, and there’s little reason to doubt that puddles could attract abusive litigation in the near future if the rule is finalized.


Sen. Vitter and the EPW Republicans have been actively engaged with EPA and the Corps since the “waters of the U.S.” rule was released. They have been concerned with how the rule would impact the economy and affect private property rights.

Visit epw.senate.gov for more information

More from Americans for Tax Reform

Top Comments

tcp53

The Democratic Party has become, unfortunately, the OFFICIAL Party of tyranny...


The Battle of Tech Apps and the Government


Posted by Kelly Macfarland on Thursday, July 17th, 2014, 10:12 AM PERMALINK


The battle between technology applications such as Uber and Lyft and the state governments is well-known and well-publicized. The standard David and Goliath story: the government sees that the applications are more successful than the government-run cabs as the applications are more innovative in how they make the applications to be fun to use and easier to get around. Thus, the government is using everything at their disposal in order to prevent people from using Uber & Lyft over their cabs. According to the Franklin Center for Government & Public Integrity, this is occurring currently in New Mexico, and Watchdog.org reporter Rob Nikolewski has covered the scuffle.

"In New Mexico, Nikolewski has covered the current standoff between ride- sharers and the state’s Public Regulation Commission (PRC). In June the PRC voted 3-2 to deny a request from Uber for a certificate to provide “specialized passenger service” and allow them to operate. But the ride sharing companies continued to give rides in defiance of regulators and despite the PRC filing a cease and desist order on Lyft in May."

Due to the demand by the public, the PRC caved two weeks later, directing its staff to draft a proposal to allow companies such as Uber & Lyft to operate in New Mexico. We will know for sure though, once the final vote occurs. New Mexico isn’t the only state that is having this reaction. Virginia has also taken similar reaction in preventing the companies from operating. Watchdog.org Virginia Bureau’s Kathryn Watson revealed in a report that there was significant history with taxicab industry and lobbying and campaign donations in Virginia.

"Since 1996, the Virginia Taxicab Association has donated nearly half a million dollars to Virginia politicians and has retained four registered lobbyists as of May 2014."

States are looking for any reason to stop Uber & Lyft’s operations from saying they are “operating illegally” to “protecting the public from riding in the car with strangers”. The back and forth between the state government vs. the application companies is an interesting one, as it’s showing two major discussion points. Firstly, what a monopoly like the cab companies will do when their power is challenged. And secondly, each state is beginning to define what free market means in each state, include what the lines are.

To read full article click here.

Photo Credit: 
Steve Rhodes

More from Americans for Tax Reform

Top Comments


Proposed Business Flat Tax Promising for New Hampshire


Posted by Alexander Bobroske on Wednesday, July 16th, 2014, 2:46 PM PERMALINK


The New Hampshire Center for Economic Policy recently unveiled a proposal to consolidate multiple state business taxes into a single Business Flat Tax (BFT). One gubernatorial candidate, Andrew Hemingway (R), has decided to make this revenue-neutral restructuring of the New Hampshire tax code a center point in his plan to revitalize the state’s economy.

The plan put forth by Hemingway and the New Hampshire Center for Economic Policy eliminates the 8.5 percent Business Profits Tax, the 5.5 percent Medicaid Enhancement Tax and restructures the Business Enterprise Tax to a 2 percent flat rate while cutting the Interest and Dividends Tax from 5 percent to 2.3 percent.

Meanwhile, not-for-profits, such as universities and hospitals, and state government would be subject to the tax for the first time. A 2006 report estimates almost 100,000 are employed by not-for-profits, a huge tax base. If these two loopholes were closed for the current business enterprise tax, the tax rate would fall from 0.75 percent to 0.55 percent.

Americans for Tax Reform supports this effort to simplify and reduce taxes on businesses while also curbing government’s cost for tax collection. If this proposal were enacted, the compliance cost for business is greatly reduced. The proposed businesses flat tax can be filled out on a post-card sized sheet and all business establishments are treated equally, regardless of organizational structure.

Another benefit of this proposal is that savings and investment are exempt from the BFT. This makes it theoretically possible for a business to pay no tax if all revenue was invested.

Hemingway noted, “In order to make New Hampshire more competitive both nationally and globally, we must restructure out tax rates.” Simplifying and flattening New Hampshire’s business tax code will give the state a huge advantage against its regulation heavy neighbors like Massachusetts.

Both Hemingway and his primary opponent, George Lambert, signed the Taxpayer Protection Pledge, a written commitment to New Hampshire voters to oppose and veto any and all efforts to raise taxes. Revenue-neutral tax code restructuring, such as Hemingway’s is consistent with this important commitment to taxpayers.

Photo Credit: ***Karen

More from Americans for Tax Reform

Top Comments


COGC & ATR support the Access to Court Challenges for Exempt Status Seekers Act


Posted by Emma Raymond on Wednesday, July 16th, 2014, 10:42 AM PERMALINK


Today, Americans for Tax Reform President Grover Norquist and Cost of Government Center's Executive Director Mattie Duppler sent a letter to Senator Coats in support of his bill the Access to Court Challenges for Exempt Status Seekers Act (ACCESS). The bill aims to limit some of the authority the IRS has in determining which organizations are eligible for 501 (c)(4) status. In part the letter reads:

An ongoing investigation has revealed the IRS unfairly targeted conservatively aligned organizations from 2010 to 2013. Within that time, right-leaning groups that applied for 501 (c)(4) status faced more scrutiny than their liberal-leaning counterparts, including receiving requests for identification of group donors. Some of these groups waited upwards of two years for the IRS to act on their applications while the agency drew out its investigation.


Under the current law, groups seeking 501 (c)(4) designation are entirely at the mercy of an overreaching federal agency. The IRS should not have the authority to decide which organizations have the right to fully exercise their first amendment rights. The recent revelations about how the IRS has abused this power in the past have demonstrated that the agency has too much latitude to restrict Americans' participation in the public sphere. The ACCESS bill will limit this power by allowing groups seeking (c)(4) status the same recourse available to groups applying for (c)(3) status. After nine months, groups would be able to advocate for themselves in Tax Court if the IRS takes too long to act on their applications.


This bill provides necessary oversight of IRS actions and is an important step towards reigning in an agency that has overstepped its bounds for too long. We urge your colleagues to support your bill, the Access to Court Challenges for Exempt Status Seekers Act.

To read the whole letter, click HERE.

Photo Credit: 
Ashley Fisher

More from Americans for Tax Reform

Top Comments


House Votes to Keep Internet Tax Free


Posted by Miriah Olzweski on Tuesday, July 15th, 2014, 4:44 PM PERMALINK


Today the House of Representatives passed legislation to forever abolish taxation of Internet access and abusive electronic commerce tax rates.  The Permanent Internet Tax Freedom Act (PITFA), H.R. 3086 provides a permanent ban to any duty on Internet access from state and federal governments and implements nondiscriminatory rates on e-commerce products and services.

In November, the Internet Tax Freedom Act , implemented in 1998, expires. This Act, which was created to prevent heavy tax burdens from federal and local governments and prohibit biased taxation of e-commerce, has been reauthorized three times. Passage of Permanent Internet Tax Freedom Act shows that the House is concerned about protecting constituents from money-hungry politicians.

The legislation now moves to the Senate. The Internet tax moratorium in the Senate has 50 co-sponsors, But some big government senators think the solution to this problem is another temporary extension, believing a future tax on Internet access could be a lucrative source of revenue.

Americans were not born yesterday.  Without a permanent ban, Americans will see greedy state governments taking advantage of an opportunity for new revenue and worse, an opportunity to dip into our digital lives. Further, they could also see prejudiced tax rates on e-commerce, which are set at an average sales tax rate of 17 percent, 12 percent on video services, and 7 percent on general sales tax.

The Internet has flourished because elected officials have largely kept the government out. The Senate now must pass the Internet tax moratorium to keep it that way.

 

Photo Credit: Steve Rhode

More from Americans for Tax Reform

Top Comments


Federal Tax Revenues Set Record Through June; Feds Still Running $385.8B Deficit


Posted by Terence P. Jeffrey on Tuesday, July 15th, 2014, 4:17 PM PERMALINK


Federal tax revenues continue to run at a record pace (in inflation-adjusted dollars) in fiscal 2014, as the federal government’s total receipts for the fiscal year closed June at an unprecedented $2,258,565,000,000 according to the Monthly Treasury Statement.

With $323.646 billion in revenue coming into federal coffers in June alone, the federal government spent $253.127 billion, and ran a surplus for the month of $70.519 billion.

However, despite this one-month surplus, the government has still run a cumulative deficit of $385.855 billion in the first nine months of fiscal 2014. (The federal fiscal year  began on Oct. 1, 2013 and will end on Sept. 30, 2014.)

Record tax revenues through June 2014

In fiscal 2013, the federal government also ran a one-month surplus in June (amounting to $75.114 billion). However, it ended fiscal 2013 with a full-year deficit of $680.221 billion.

The White House Office of Management and Budget has estimated that in the full fiscal 2014, the federal government will collect $3.001721 trillion in taxes and spend $3.650526 trillion, while running a deficit of $648.805 billion.

The OMB has also estimated that, while running that deficit, the federal government will collect a record amount in inflation-adjusted tax revenues.

When adjusted for inflation (to constant 2014 dollars), the second-greatest federal tax haul through June was in fiscal 2007. By the end of June that year, the federal government had taken in approximately$2.232 trillion in total receipts in constant 2014 dollars.

The single largest source for the federal government’s record tax receipts in the first nine months of FY 2014 was the individual income tax, which brought the Treasury approximately $1.0458 trillion.

The second largest source was what the Treasury calls “Social Insurance and Retirement Receipts,” which includes the Social Security payroll tax, the unemployment insurance tax and other retirement taxes. This accounted for $784.479 billion in tax revenue.

The third largest source of federal revenue in the first eight months of fiscal 2014 was the corporation income tax, which brought in $235.018 billion.

As CNSNews.com has previously reported, federal tax revenues for fiscal 2014 set records through Februarythrough Marchthrough Tax Day,through April, and through May.

Editor's Note: This was originally posted earlier today at cnsnews.com and is republished here with permission.

 

More from Americans for Tax Reform

Top Comments


Export-Import Bank Places Huge Burden on Taxpayers (and more...)


Posted by Zoe Crain on Tuesday, July 15th, 2014, 1:52 PM PERMALINK


Kevin Mooney of the Daily Signal wrote an article detailing the massive financial burden the Export-Import Bank places on American taxpayers. He spoke with Americans for Tax Reform federal affairs manager Chris Prandoni.

Data compiled by the Western Energy Alliance shows federal leasing for oil and gas exploration on land has dried up as well. The end result of the Obama administration's energy policies at home and abroad is a "lose-lose" for taxpayers, Chris Prandoni, director of energy and environment policy at Americans for Tax Reform, told The Daily Signal. Prandoni says: 

"While President Obama's EPA was writing regulations that forced 300 American coal-fired power plants to close down, his Export-Import Bank conceded the importance of coal by financing overseas coal development. This lose-lose for the American taxpayer is particularly painful: Our electricity rates will increase as we pay countries to burn what we no longer can.

The Pittsburgh Post-Gazette ran an op-ed written by Americans for Tax Reform president Grover Norquist and director of state affairs Patrick Gleason regarding the conservative fight against excessive shared economy regulation. 

Now, despite the Democrats' urban dominance, cities may soon be up for grabs. That's because the party's refusal in most cases to embrace the innovative technology and disruptive businesses that have greatly improved city life presents a challenge to Democrats- and an opportunity for Republicans. 

Democrats face a tough choice. A big part of their base is the unions now facing off against such disruptive innovations as Uber, Lyft, Airbnb and charter schools. Do Democrats support the regulations pushed by taxi and other unions that help to protect the status quo but can also stifle competition? Or do they embrace innovative technologies and businesses that expand transportation options, create jobs and are increasingly welcomed by another key Democratic constituency: urban dwellers, particularly young urban dwellers?

Americans for Tax Reform international programs manager Lorenzo Montanari wrote an op-ed for Breitbart highlighting how new cigarette packaging regulations have failed in Australia and should be prevented in Ireland and the United Kingdom. 

The stated purpose of plain packaging is that once you take away tobacco companies' branding, people will be less inclined to buy their products. The results thus far appear to be the opposite. More than a year after Australia enacted the policy, studies by London Economics and renowned professors at the Universities of Zurich and Saarland (Switzerland and Germany) concluded it's not deterring adults nor adolescents from smoking. 

In fact, according to the tobacco industry's sales volume data, cigarette sales increased by 59 million sticks in Australia during the first year of plain packaging, offsetting a four year downward trend. The Australasian Association of Convenience Stores even reports that its members' sales grew by 5.4 percent. 

Jason Pye of United Liberty interviewed Americans for Tax Reform president Grover Norquist, who described free market reform opportunities at the state level: 

"We're opportunistic right now. Nothing is moving at the federal-level because you have gridlock between a Democratic president and a Republican House, and neither is going to let the other team do anything either useful or evil," said Norquist. "But in the 50 states, there are 24 states with united Republican control, so there's the opportunity there to do pension reform, tax cuts, [and] concealed carry. In the 13 blue states, there they're raising taxes rather than fix the pension system."

Bob Adelmann of the New American detailed the success of Kansas Gov. Sam Brownback's tax cuts. 

A close look at what is happening in the Kansas City metro area is revealing: From May 2011 through May 2011 (June numbers from the Bureau of Labor Statistics won't be published until July 18), almost three-fourths of job growth took place in Kansas City, Kansas. What's even more impressive, however, is that Kansas City, Kansas has one-fourth the population of Kansas City, Missouri: 145,000 compared to 476,000. As Will Upton modestly concluded in his blog at Americans for Tax Reform, "It is arguable that the 2012 spike [in employment on the Kansas side of town] was caused by businesses anticipating a better tax climate in Kansas after the 2012 tax cuts."

Photo Credit: 
Russ Walker

More from Americans for Tax Reform

Top Comments


The Return of the King: A King’s Ransom


Posted by Michael Smith on Tuesday, July 15th, 2014, 12:39 PM PERMALINK


The NBA’s prodigal son LeBron James is going home, announcing on Friday that he is taking his talents back to Cleveland.

The Cavaliers have signed on James with a 2-year deal worth $42.2 million; the going rate for the best player in basketball.

James, a four-time league MVP, has spent the last four seasons in Miami. In those four years, James and the Heat have played in four NBA championships, giving the King his first two rings. With the new contract, there is no doubt that Cavilers’ owner Dan Gilbert paid a king’s ransom to bring LeBron back home.

Four years ago, LeBron made ‘The Decision’ to leave his home state of Ohio for the warmer weather in South Beach to the dismay of Caviler fans. Hometown-hero turned villain is making his triumphant return as LeBron’s “relationship with Northeast Ohio is bigger than basketball.”

Surprisingly, James has never been the highest paid player on his team, but that doesn’t mean the King has ever been strapped for cash since entering the league as the first overall pick in the 2003 NBA draft. According to Forbes, LeBron has amassed over $450 million during his NBA career. The Star’s new contract will keep him in Cleveland through 2016 and will pay him handsomely for his basketball prowess. Last year, ATR calculated the highest paid athletes for 2013 after-taxes. LeBron was the second highest-paid, with earnings of $37,885,150 and federal income tax liability of a whopping $18,659,850.

When considering the tax implications of LeBron’s contract, it is important to note if James selects the tax-friendly state of Florida as his residency, or if he claims his 30,000 sq. ft. mansion in Akron as his home. Assuming that LeBron is an Ohio resident, below are his estimated tax liabilities on his new contract:

Est. Federal Tax Burden

Est. State Tax Burden

Est. City Tax Burden

Total Tax Liability

 

$18,314,800

$2,275,424

$844,000

$21,434,224

 

The Federal Income Tax Burden listed above is comprised of the 39.6 percent tax bracket and 3.8 percent Medicare Tax. For illustrative purposes, the marginal combined tax rate of 56.1 percent (which includes Federal, State, Medicare, and Local tax rates) is applied only to his contract salary and does not take into account his bonuses, endorsement, and other sources of viable income.


Over the life of the contract, LeBron will lose over half of his earnings to federal, state, and local taxes. At twenty-nine years-old, LeBron is entering the prime of his career in his quest to bring a championship to Cleveland. In the meantime, Uncle Sam is happy to collect on the King’s earnings.  

Photo Credit: Keith Allison

More from Americans for Tax Reform

Top Comments


hidden