Grover Norquist: Tax Reform Should Be Permanent


Posted by Hannah Daniel on Thursday, April 6th, 2017, 10:59 AM PERMALINK

ATR President Grover Norquist appeared on CNBC’s Power Lunch Wednesday along with Larry Kudlow. Norquist emphasized the idea that all tax reform should be permanent, such is the House GOP tax plan.

Norquist said:

“The House has put together a plan which is coherent, I think it’s fine. It always could be improved, also could be badly damaged if they go in the wrong direction. But it would be a permanent tax reduction. So the question we have to ask is, do you stay within the bounds of what allows you to make it a permanent tax reform, permanent reduction in taxes, so that you can do it with fifty-one votes in the senate, otherwise nothing happens. There are no Democrat votes for any tax increase any time in the next twenty-five years, but at least the next twenty-five months. So you really want to ... make it permanent.”

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West Virginia House Moving Towards Tax Relief in Final Days of Session

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Posted by Paul Blair on Wednesday, April 5th, 2017, 1:26 AM PERMALINK

In recent weeks, several iterations of tax reform have been debated in the West Virginia House and Senate aimed at broadening the base and lowering rates.

This week, the House Finance Committee amended Senate Bill 484, which now accomplishes many of the original stated goals of the House effort on tax reform, an effort that fell short just a week ago – with one major difference. Unlike the House's first stab at this, the new version achieves net tax reductions as a sales tax rate cut is phased in beginning next year. Last week's plan without amendments would have been a $215 million tax increase over 3 years.

The amended Senate Bill 484 bill does raise revenue in year one, to the tune of $137 million generated as a result of expanding the application of the sales tax to telecommunications services, several personal services such as barbering and hair washing, and some forms of contracting services. That base broadening and new revenue, however, is more than offset in future years as a statewide sales tax cut is phased in. These rate cuts are required as a matter of law and should be counted as offsets for the immediate revenue increase. Here’s what the amended SB 484 achieves, according to estimates provided by members of the House Finance Committee and Deputy Revenue Secretary:  

Year                State Sales Tax Change        Revenue Impact

July/Oct’ 17   Base broadening                   $137 million in new revenue

July, ‘18          Rate cut from 6% to 5.5%    $98.5 million tax cut

July, ‘19          From 5.5% to 5.25%             $206 million tax cut

Through 2019, this law would result in a net tax cut of more than $167 million dollars. The sales tax rate reductions in future years are not merely promises; they are requirements if SB 484 passes that would take a new law passed by the House and Senate and signed by the Governor to prevent their implementation. As such, ATR considers the reductions to be adequate offsets for the 2017 revenue hike. Legislators who have signed the Taxpayer Protection Pledge will not be in violation of that written commitment to taxpayers if they vote for SB 484, which moves in the right direction towards tax relief for West Virginia citizens.

The tax cuts don’t stop here, however. If sales tax revenues exceed the 2017 figures after 2019, a revenue trigger would kick in that further reduces the state sales tax in the year following higher tax collections. Here’s how that could look:

Year                State Sales Tax Change                Revenue Impact

July, ‘20          Rate cut from 5.25% to 5%          $258 million tax cut

July, ‘21          Rate cut from 5% to 4.75%          +$250 million tax cut

It’s important to note that these future tax cuts only take effect if future revenue collections exceed current collections (2017), after the phased-in tax cuts. As such, they are responsible caps on future spending should economic growth fuel increased consumption of goods and services in West Virginia.

This amendment was accepted by a 53 to 46 vote on Tuesday night and is up for a full vote in the House today. ATR applauds the work of the House Finance Committee and the effort to reduce the net tax burden on West Virginia taxpayers. ATR will update this post when an official revenue estimate is made available. 

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Norquist on Infrastructure: Time to Abolish Davis-Bacon

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Posted by Hannah Daniel on Tuesday, April 4th, 2017, 2:56 PM PERMALINK

ATR president Grover Norquist was a guest on Fox Business Network’s Varney & Co. today for a discussion of a variety of issues including infrastructure. Norquist praised the Trump approach on speeding up the permitting process for projects, and also made the case for why the cost-inflating Davis-Bacon Act needs to be abolished:

Norquist: “It’s not the amount of money that’s being spent, it’s how wisely or unwisely you spend it. Eight years to permit a road or to have to do an environmental study to widen a road as if caribou had moved into the fourth lane within the last six months -- this is nonsense. That permitting needs to be sped up and that’s what dramatically drops the cost of the new road, a wider bridge, pipelines, and so on.

“Davis-Bacon, Davis-Bacon, Davis-Bacon has got to go. Why throw money into something when you know a quarter to a third of it is being misdirected for political purposes? Many states have ended their mini Davis-Bacons. West Virginia recently did, Wisconsin recently did, that needs to be done in all fifty states, and certainly Washington needs to as well.”

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Commercial Space Win: Rocket is Successfully Reused

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Posted by Sarah Caplin on Tuesday, April 4th, 2017, 12:27 PM PERMALINK

Last week, Space Exploration Technologies (SpaceX) made history by successfully relaunching one of their previously used Falcon 9 rockets back into space. The rocket took off from Cape Canaveral, Florida, sent a communications satellite into orbit, and safely landed on one of SpaceX’s drone ships floating in the Atlantic Ocean. This mission was a significant milestone that could dramatically lower the cost of space technology.
 
Until now, rockets have almost all been single-use. Once the fuel is expended, a rocket will plummet back to Earth, resulting in the destruction of extremely expensive equipment that costs tens of millions of dollars to build. It has been likened to scrapping a 747 jet after one flight, which would make air travel impossibly expensive.
 
SpaceX CEO Elon Musk appeared on the company’s live stream shortly after the landing and spoke about the accomplishment. “It means you can fly and refly an orbital class booster, which is the most expensive part of the rocket. This is going to be, ultimately, a huge revolution in spaceflight,” he said.
 
The last major attempt at a reusable spacecraft was NASA’s Space Shuttle. However, the promised ultra-low cost of the space shuttle never materialized. With more private companies developing space technology, there is more competition for innovation, which in turn leads to faster growth within the field.
 
This success highlights the recent rapid technological development in the private sector. 
 
The lower costs and developing technologies will lead to many opportunities, including the potential to vastly improve the global communications industry. A wide range of broadband and communications services could be provided for residential, commercial, institutional, government and professional users worldwide at a significantly lower rate and broader range. 
 
SpaceX entered the aerospace market with a goal that is commonly shared between those in the private sector: lower the price to compete aggressively for market share. The successful relaunching of the Falcon 9 is a major step in progressing that goal and revitalizing the aerospace industry by completing the economic cycle of lower costs as a result of competition and innovation.
 
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Open Competition Laws Save Taxpayers Millions

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Posted by Daniel Uzi Frydman on Tuesday, April 4th, 2017, 10:22 AM PERMALINK

Infrastructure policy has received a plethora of attention from the media and the Trump administration this year, following campaign promises to pass a large infrastructure package. As the Trump administration and lawmakers on Capitol Hill look to implement such a package this year it is important to take into account pro free-market and pro taxpayer laws being used in the states that can inform discussions on the federal level, such as “open competition laws.”

Currently a number of local governments impose “closed competition laws” as it relates specifically to water infrastructure projects. Such arcane laws have clogged up competitive markets by allowing only pre-determined materials to be used in water infrastructure projects, thus preventing innovative new products from competing for certain government contracts.

Closed competition laws as such result in government selected winners and losers. Unfortunately, the winners are not the taxpayers, rather the specific industries that the government has gifted with monopolies on government-approved materials, leaving taxpayers with a loss.

Taxpayer relief and improved infrastructure have proven achievable at the state and local level through the process of repealing and reforming existing closed competition laws, and replacing them with open competition laws. At its core, open competition laws allow for basic free market principles to flourish. Open competition laws could be used to breath new life into not just water infrastructure projects but could have wider application for infrastructure projects in general by enabling the use of less costly, and often times more effective infrastructure materials.

The positive effects open competition laws have had at the local level should give state and federal lawmakers new perspective when discussing infrastructure projects. Comparing the experience of various cities in Arkansas, North Carolina, and Michigan offers evidence as to the benefits open competition laws can have for taxpayers and government coffers.

In Arkansas the city of Fayetteville, where open competition laws are in place, saves taxpayers an average of $278,625 per mile on the cost of water infrastructure piping when compared to Hot Springs Arkansas which has closed competition laws. Fayetteville is not a lone example of open competition laws benefiting taxpayers.

Charlotte, North Carolina’s largest city, follows open competition laws for water infrastructure projects, whereas Raleigh, North Carolina’s second largest city adheres to closed competition laws. Just as Fayetteville enjoys the fruits of open competition, Charlotte saves taxpayers an average of $155,902 per mile of pipe when compared to Raleigh.

Finally, in Michigan, the cities of Monroe and Livonia join Fayetteville and Charlotte as cities that follow open competition laws, saving the cities of Monroe and Livonia an average of $114,154 per mile of pipe. Port Huron and Grand Rapids have closed competition laws and thus suffer from exponentially higher water infrastructure costs.

Successful adoptions of open competition laws by municipalities have spurred interest by states, with both Arkansas and South Carolina proposing bills that would implement open competition for the entire state. Other states such as Ohio and Michigan have also begun investigating the benefits of open competition.

This new wave of free market reforms not only save millions in taxpayers dollars on water infrastructure projects but also can be used to inform larger state and most importantly federal infrastructure discussions this year.

If open competition laws were implemented on the national level, the National Taxpayers Union estimates that would save taxpayers over $371 billion. This is significant as the American Water Works Association estimates that more than $1.3 trillion is needed for water infrastructure improvements in the coming decades.

With abundant savings that could be achieved at the state level, such open competition policies could have an extreme benefit at the federal level and not just with regard to water infrastructure projects. With a planned federal infrastructure package being negotiated this year, free-market pro-taxpayer policies such as open competition laws should inform lawmaker’s discussions.

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Maryland Fracking Ban Deprives State of Economic Growth and Savings

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Posted by Daniel Uzi Frydman on Monday, April 3rd, 2017, 2:40 PM PERMALINK

On March 27, 2017, the Maryland Senate passed legislation aimed at permanently banning the energy recovery method of hydraulic fracturing, commonly referred to as “fracking”, in all of Maryland. This is bad news for Maryland families and businesses as a statewide ban on hydraulic fracturing could deprive the state of future jobs, government revenue, and affordable energy that would result from energy production.

Currently there are no fracking operations in Maryland, so the state depends on natural gas safely produced in neighboring states. This is a victory for competing states as out of state businesses are supplying the demand for affordable energy in Maryland, but an economic missed opportunity for Maryland.

Research supports this missed opportunity as a 2012 study found natural gas drilling in Maryland could add over 1,800 jobs annually in the state as well as give a $85 million increase to labor income. Additionally, the study revealed that in-state natural gas expansion creates the potential for an economic boost of over $316 million to the Maryland economy.

Since 2006, there has been an 18 percent rise in the use of natural gas in Maryland, as the price of natural gas for consumers has fallen 26 percent. This has lead to hundreds in annual savings for Maryland households and businesses on energy costs. It is also the case that since 2006 Maryland’s energy-related emissions dropped by almost 40 percent as a result of increased natural gas use.

The combined savings from increased natural gas usage and potential increase in economic activity from allowing new energy production in the state are hard to ignore.

Consequently, the legislation proposed would deter any in-state incentives to start hydraulic fracturing operations in the future, which if allowed could likely reduce the price of natural gas for all Maryland consumers even further. In essence, this legislation prevents the possible creation of new energy production jobs in Maryland, while completely disregarding the rising demand for natural gas in the state.

Rising demand in Maryland creates a tempting opportunity for Maryland businesses to sprout up and provide resulting benefits to Maryland residents and businesses through affordable and reliable energy. Unfortunately, potential economic growth and the resulting benefits could be permanently destroyed if the Governor signs off on this misguided legislation.

Embracing the potential future benefits of safe hydraulic fracturing in Maryland would benefit state consumers and businesses. Thus, the only way to preserve the potential for growing energy jobs in Maryland and keep the cost of natural gas on the decline for consumers and businesses is to stop this misguided legislation.

Photo Credit: Thad Zajdowicz

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Indiana Senate Advances House-Backed Gas Tax Increase

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Posted by Miriam Roff on Monday, April 3rd, 2017, 11:13 AM PERMALINK

The Indiana Senate Tax and Fiscal Policy Committee voted last week to send HB 1002, which imposes a whopping 30 percent hike in the state’s gas tax, to the senate floor. Although key parts of the House’s plan remain intact, such as the gas tax increase and opening tolls on some interstates, the senate committee made the following amendments that will harm Indiana taxpayers:

  • Phases in the gas tax over the next two years
  • Decreases the total diesel tax increase from $0.10 to $0.06
  • Continues diverting the sales tax on gasoline to the general fund
  • Imposes new $5 tire fee
  • Imposes new $100 commercial license plate fee

 

The overwhelming support to increase the state’s gas tax coming from Indiana lawmakers stands in stark contrast to their behavior during the 2016 legislative session, for which they were deemed the “Most Conservative House of Representatives” in the country by the American Conservative Union. Since winning that award, however, Indiana lawmakers have changed course and decided they would rather raise taxes than reform state government.

For example, 21 of the 61 representatives who voted for HB 1002 broke their Taxpayer Protection Pledge, a written commitment elected officials make to their constituents to oppose and vote against any and all efforts to increase taxes. Indiana representatives also included a $1-per-pack cigarette tax increase in their budget proposal ( HB 1001)— a move that not only seeks to balance the budget off of the backs of low-income consumers, but also relies heavily on an unstable and declining source of revenue. Fortunately for taxpayers, senate legislators axed this part of the proposal.  

Although the state senate nixed the tobacco tax increase, an increase in the state’s gas tax is close to being on its way to Gov. Eric Holcomb’s desk.

Members of the Indiana House and Senate claim transportation is a top priority for them, but their push for a tax hike indicates otherwise. Lawmakers who claim tax hikes are needed for transportation are admitting that said transportation projects are actually their lowest priority. Were that not the case, they would not have funded everything else in the budget first.  

The fate of the full gas tax increase will be decided when the full Indiana Senate votes on HB 1002 this week. Indiana taxpayers have been hit with 20 federal tax increases over the last eight years. We’ll soon find out if lawmakers in Indianapolis are going to pile on with more job-killing tax hikes at the state level. One thing is clear, Indiana lawmakers don’t deserve to win any more awards for conservatism.    

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IRS Handbook Still Includes Rule Allowing Agents to Target Conservatives

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Posted by Elizabeth McKee on Friday, March 31st, 2017, 1:21 PM PERMALINK

At a conference before the American Bar Administration in May 2013, Lois Lerner unleashed a political uproar by admitting the IRS unjustly targeted conservative organizations filing for tax-exempt status. Nearly four years after Lerner’s admission, the institutional mechanisms that allowed the IRS to target right-leaning groups have not been remedied. A study released by the Cause of Action Institute reveals Rule 7.29.3, which allowed the IRS to unjustly scrutinize groups based on their political viewpoints, is still a part of the IRS handbook.

Rule 7.29.3 of the Internal Revenue Manual advises tax law specialists to develop “Sensitive Case Reports” for certain groups requesting tax-exempt status that are “likely to attract media or Congressional attention.” According to Cause of Action’s study:

“The dangers in this approach are manifold. First, by focusing on media or congressional attention instead of looking at the merits of an application under the law, the IRS automatically politicizes the process in an attempt to avoid potential embarrassment, all at the expense of taxpayer rights. Second, the vague and open-ended standard used by the IRS allows partisan officials to selectively delay and obstruct those applications receiving higher scrutiny without a way to hold the officials accountable for their decisions. Third, given the power of the president to influence media coverage, no overt collusion or decision is necessary for the opponents of an administration to receive extra IRS scrutiny as a matter of course.”

The rule, which was adopted on July 14, 2008, led to the creation of a “Be on the Lookout List” (BOLO) in 2010. The list advised agents to flag applications that referenced "Tea Party," "Patriots" or "9/12 Project,” advocated education about the Constitution or the Bill of Rights, criticized how the government was being run, or that lobbied to “make America a better place to live.”

In June 2016, the IRS released a list of 426 organizations that were selected for increased scrutiny based on the criteria laid out in the BOLO. Of these, 60 have the word “tea” in their name, 33 include the word “patriot,” 30 include the number “912,” and eight refer to the Constitution.

The BOLO created unnecessary hurdles that blocked the applications of flagged organizations. During the three-year period between 2009 and 2012, only one conservative political advocacy group was approved for tax-exempt status.

When questioned about the targeting of organizations with a conservative viewpoint, Lois Lerner blamed the scandal on two unnamed “rogue agents” in the IRS’s Cincinnati office; however, we now know that institutional procedures within the IRS allowed and supported the agency’s attack on conservative organizations. In July, Judicial Watch released documents revealing that “top Washington IRS officials, including Lois Lerner and Holly Paz, knew that the agency was specifically targeting ‘Tea Party’ and other conservative organizations two full years before disclosing it to Congress and the public.”

Formal investigations into the scandal have been blocked at every turn by the IRS. In June 2014, IRS Commissioner John Koskinen testified before the House Ways and Means Committee that Lois Lerner’s hard drive had crashed and been destroyed; the American Center for Law and Justice notes that John Koskinen has contributed over $100,000 to the Democratic Party. Koskinen was later censured by the House Committee on Oversight and Government Reform, but retained his position as IRS Commissioner.

Four years ago, Senator Orrin Hatch asserted that more needed to be done in order to prevent tax audits from becoming a tool to undermine dissident political opinions. The senator declared, ““We need to have ironclad guarantees from the IRS that it will adopt significant protocols to ensure this kind of harassment of groups that have a constitutional right to express their own views never happens again.”

Despite Senator Hatch’s concerns, little has been done to protect political organizations from IRS targeting. Although they no longer use the BOLO, the rule that allows the IRS to subjectively target partisan organizations is still in full force. In January, Americans for Tax Reform reported that the IRS may still be targeting conservative groups. The Albuquerque Tea Party recently had their application for tax-exempt status denied by the IRS - seven years after they first applied.

According to Cause of Action’s study, amending the IRS handbook to abolish Rule 7.29.3 would be a relatively simple process. The study reports, “The IRS has the authority to change its internal policy at any moment, which means it can remove the problematic rules at its discretion. Doing so would eliminate the agency procedure that enabled the targeting scandal. To date, the agency has not made the required changes to its rules.” Until the agency removes Rule 7.29.3 from their handbook, the targeting of outspoken political organizations will remain an official component of standard IRS procedures.

 

 

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ATR Supports Bill to Make Tax Code More Equitable

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Posted by Natalie De Vincenzi on Thursday, March 30th, 2017, 4:28 PM PERMALINK

Congressman Curbelo (R-Fla.) and Congressman Blumenauer (R-Ore.) have introduced H.R. 1810, the Small Business Tax Equity Act of 2017, which will remove the inequities in the tax code that are biased against marijuana dispensaries claiming tax credits or deductions. Section 280E of the tax code prevents businesses with expenditures connected to illegal drug sales from utilizing deductions or tax credits.

However, in 28 states, D.C., and Guam, marijuana businesses are not considered illegal, yet are unfairly discriminated against by Section 280E. Because of this, marijuana businesses nationwide face income tax rates as high as 90%. This bill will remove marijuana businesses from the arbitrary measures of Section 280E and entitle them to the same deductions and credits any other legal business has. Americans for Tax Reform urges support for this bill. Please read the letter here or below. 

The Honorable Carlos Curbelo
United States House of Representatives
1404 Longworth House Office Building
Washington, D.C. 20515

The Honorable Earl Blumenauer
United States House of Representatives
1111 Longworth House Office Building
Washington, D.C. 20515

Dear Congressman Curbelo and Congressman Blumenauer,

I write in support of H.R. 1810, the Small Business Tax Equity Act of 2017, legislation which allows legal marijuana dispensaries to take common necessary business deductions under the tax code.

Under 280E of the tax code, marijuana businesses that are operating legally under state law in 28 states, D.C., and Guam are not allowed to deduct necessary business expenses like wages, equipment, and rent from taxable income.

This law was originally created in 1982 to stop drug dealers from taking tax credits and deductions. Today, it is hitting legal businesses across the country resulting in federal income tax rates close to 90 percent.

The Small Business Tax Equity Act addresses this with a simple and commonsense change – amending federal law so that Section 280E does not apply to legal businesses.

The fact is, marijuana businesses that are operating legally should be entitled to the same deductions and credits under the tax code as any other business.  Passage of the Small Business Tax Equity Act will remove the arbitrary and punitive measures of the tax code that treat legal marijuana businesses as illegal. All 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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Fox News: 73% of Americans Want Tax Reform

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Posted by Hannah Daniel on Thursday, March 30th, 2017, 3:59 PM PERMALINK

According to a survey conducted by Fox News released yesterday, 73% of Americans responded “yes” to the question, “Do you think the country’s tax system should be reformed this year?”.

In addition, the study found that 45% of Democrats think their taxes are too high, and 61% of Democrats want to see tax reform happen this year.

Fox News conducted this poll in conjunction with Anderson Robbins Research and Shaw & Company Research. The entire study is available here.

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