A Valentine’s Day Gift to Consumers: Dumping the U.S. Sugar Program

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Posted by James Morrone on Friday, February 12th, 2016, 4:13 PM PERMALINK

Once a year millions of happy, and not so happy, couples use Valentine’s Day as an excuse to be romantically cliché and thoughtful to loved ones. A part of this annual custom is to buy little chocolates and candies to exchange, in addition to the obligatory bouquet of flowers of course. However, with each passing year the price of these delectable treats grows, and like the tip of Cupid’s arrow, rips a hole right through consumer’s wallets.

The common consensus, stores hike up the prices to meet demand. However this consensus for the most part is wrong, as the increasing price for candy is actually a result of Uncle Sam’s love affair with crony capitalism. For years protectionist policies under the U.S. Sugar Program have driven up the cost of sugar in an effort to protect a favored few sugar producers from competition.

Unfortunately, the U.S. Sugar Program is a relic of a past age that has somehow managed to stay alive in an ever globalizing and dynamic economy. This New Deal Dinosaur was originally put in place to quell a farmer’s revolt as the economy crashed in 1929. As time progressed, sugar producers got multiple protections like price supports, import quotas, incredibly generous subsidies, and a ridiculous program known as the “Feedstock Flexibility Program.” The Feedstock program forces the federal government to buy back unsold sugar from producers at a loss, adding insult to injury. 

Currently the average couple this Valentine’s Day is paying more for sugary goodness than they should be. As a result of the U.S. Sugar Program, there is a large differential between the wholesale costs of domestic sugar when compared to that of the world.  In fact, American sugar costs more than twice that of the world price of sugar. For instance in 2015 the price of sugar hovered around 33 cents per pound, while the world price was a mere 15 cents per pound

This kind of self-inflicted protectionism only does damage to consumers and the American companies that the make the sweets we love to consume. The prices have even forced a breakup between the U.S. and some in the confection industry. 

In fact over the last decade, 22% of candy making jobs have left the country in search of cheaper sugar. One of the more well-known American companies, LifeSavers, left the United States and moved to Canada to take advantage of cheaper sugar prices, taking with it over 600 jobs. 

Leave it to Uncle Sam to show just how much the federal government loves American taxpayers and consumers by the exorbitant amount of money they waste for our “benefit”, it’s really romantic. The reason being, according to a CBO report, that in the next ten years, the program will cost the taxpayer at least $115 million.  If the government were to dump this protectionist program, the average household would save at least $30 dollars per year.  More money to buy cheaper candy, a win-win by all accounts.

Not all relationships last forever, this is a truth we all know, so this relationship between consumers and government inflated sugar prices needs to end. It was good in the beginning, but times have changed and we need to move forward. It may be hard at first, but it will be better for both of us. It isn’t me, it’s you.    


Photo credit: Barb Steinacker

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Meanwhile, in the States...

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Posted by Emily Leayman on Friday, February 12th, 2016, 3:50 PM PERMALINK

Arkansas: Legislature considers canceling grocery tax cuts.

Arizona: House committee passes tax credit for a concealed carry permit

California: With Panthers Super Bowl loss, Cam Newton owes $159,200 in California taxes.  Lawmakers propose 15 percent tax on marijuana.

Colorado: Super Bowl-winning Broncos owe California thousands in taxes too. State earns record revenues from marijuana tax.

Connecticut: Gov. Dannel Malloy (D) calls for end to car tax.

Florida: Gov. Rick Scott (R) and Senate clash over property tax rates.

Illinois: Gov. Bruce Rauner (R) and some legislators push for downsizing, tax relief.

Indiana: Gas and cigarette tax increases head to the Senate.

Kansas: House bills look to increase property tax for education funding.

Louisiana: Budget cuts, tax hikes are center of Gov. John Bel Edwards’ special address.

Maryland: Annapolis City Council proposes 25-cent-per-ride fee on Uber and Lyft.

Minnesota: Gov. Mark Dayton (D) asks for $6 million in parental leave for all state employees.

Missouri: Budget subcommittee votes to eliminate budget increase for University of Missouri in light of protests.

New Jersey: Lawsuit claims NJ Dunkin Donuts collected an extra $4 million on non-taxable items. Gov. Chris Christie (R) says he will not raise the gas tax.

New Mexico: Budget concerns raise the question of adding a food tax. Legislature kills a bill that would have increased low-income family tax credits and eliminated capital gains tax deductions.

Ohio: A budget request for a $5 million new Cleveland Browns facility is withdrawn.

Pennsylvania: Gov. Tom Wolf (D) asks for more taxes in next year’s budget proposal.

Tennessee: Hall Tax repeal advances to the Senate.

Utah: Legislators strike down tampon tax repeal.

West Virginia: Legislature overrides Gov. Earl Ray Tomblin’s veto to make West Virginia the 26th right-to-work state and repeal the prevailing wage. Report finds $55 million in food stamp benefits are spent out of state.


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ATR Supports The Common Sense Nutrition Disclosure Act

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Posted by Justin Sykes on Friday, February 12th, 2016, 9:13 AM PERMALINK

Americans for Tax Reform today expressed support for H.R. 2017, “The Common Sense Nutrition Disclosure Act”, being offered by Rep. McMorris Rodgers (R-Wash.). H.R. 2017 would stand in stark contrast to the White House menu-labeling law, the language of which is overly broad, and increases the regulatory burden and compliance costs through enhanced bureaucratic red tape. 

The Common Sense Nutrition Disclosure Act would amend the Federal Food, Drug, and Cosmetic Act to revise the nutritional information that restaurants and retail food establishments must disclose. Doing so would protect restaurants and related businesses of all sizes from the ever-growing regulatory burden created by the President and the Food and Drug Administration (FDA). 

In 2015 the FDA released expansive new regulations in a one-size-fits all regulatory approach that will have a disproportionate impact on smaller, and medium sized businesses. Under the new regulations, the FDA created a broad and expansive new definition of “menu” that requires any food industry related materials that contain a photo of an item and a phone number to be considered a menu.

The compliance costs inherent in this expanded definition will be too much for smaller and medium size restaurants and related businesses to absorb. These increased costs have led some larger restaurants and chains to advocate in support of the FDA rules, as the increased compliance burden will likely offer a competitive advantage. 

Americans for Tax Reform believes Congress should work towards increased and fair competition in the market place, and urges lawmakers to support H.R. 2017. Doing so will ensure that the FDA and Obama Administration’s costly policies do not create a crony capitalistic regime that disadvantages small, medium, and growing businesses in the industry.    


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Austin City Council Votes to Force Ridesharing Services Out of Town

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Posted by Dennis Cakert on Thursday, February 11th, 2016, 5:36 PM PERMALINK

Austin City Council voted 8 - 2 to reject a ridesharing initiative supported by over 65,000 citizens. The initiative is now scheduled for a public vote on May 7th.  

The vote is a slap in the face to local organizations Austin Music People, ATX Safer Streets and The Old Austin Neighborhood Association who spearheaded opposition to a hostile ordinance passed in December that would chase ridesharing services out of town.

The December ordinance requires all ridesharing drivers to submit fingerprint background checks to the FBI and carry a company logo on their personal vehicles. It also imposes a one percent revenue tax on ridesharing services and an additional one percent revenue tax if they fail to meet certain safety standards. Uber and Lyft said these rules are inhospitable and plan to leave the city if they are enacted.

Not wanting to lose a coveted means of transportation, petitioners gathered well over the required 20,000 signatures to demand city council consider their initiative. The petitioner’s ordinance prohibits fingerprinting drivers, limits fees to one percent and does not require drivers to put company logos on their personal vehicles.

Austin City Council’s rejection of the grassroots petition now puts the ordinance to a city wide vote on May 7th. The city will redirect $800,000 worth of taxpayer dollars away from other funds to cover the cost of the special election. 

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The rape of the taxpayer continues while local/state/federal governments waste money.
Time for a tax revolt, starve the beast. There are no jails big enough to jail us all.

The U.S. Senate Voted to Permanently Ban Internet Access Taxes

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Posted by Michael Eyerman on Thursday, February 11th, 2016, 5:22 PM PERMALINK

The U.S. Senate has overwhelmingly voted to permanently ban Internet Access Taxes. The prohibition was included in a larger customs bill that passed with a vote of 75-20. Now, the bill and the internet access tax ban will be sent to President Obama for his signature.

The Internet Tax Freedom Forever Act ensures that Americans’ internet access will never be taxed by state or local governments. Since 1998 the ban has been reauthorized over half-a-dozen times.

By voting today to permanently ban internet access taxes, Congress has ensured that Americans all around the country can have access to broadband internet without a fear of burdensome prices.

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ATR Commends the Florida Senate on Civil Asset Forfeiture Reform

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Posted by Krista Chavez on Thursday, February 11th, 2016, 4:59 PM PERMALINK

Florida Senate Bill 1044 passed the Senate Judiciary Committee today with a 5-2 vote today. The proposal would attempt to fix Florida’s lax civil asset forfeiture rules in favor of stricter protections for property rights and due process. State law enforcement receives close to $20 million per year in confiscations through asset forfeiture thanks in part to some of the weakest protections against arbitrary forfeiture in the nation. Currently, agencies are not required to report the amount of assets seized leading to a blurred system that violates citizens’ rights.

Under the new law, law enforcement would be required to have a conviction of a crime and proof that the property in question was connected to the crime for assets to be seized. The legislature should now take up forfeiture reform and take their place among the states willing to put their residents first.

Read the full endorsement below:

Dear Chairman Diaz,

State legislatures across America have been changing their laws concerning the controversial practice of “civil asset forfeiture.” Now, Florida has an opportunity to be a national standard-bearer on due process protections. Americans for Tax Reform is proud to endorse SB 1044—a bipartisan bill that would secure the property rights of Floridians from arbitrary seizures from overzealous authorities.

Florida has some of the weakest protections for property in the nation—leading to a staggering $20 million per year in confiscations through asset forfeiture. Since agencies are not required to report the actual amount of assets seized, the full amount is unclear.

This is unacceptable.

Agencies should not have the ability to fund themselves by confiscating the property of innocent individuals. The founders established Fifth Amendment due process protections for this very reason.

Civil asset forfeiture is the kind of system which undermines the trust between hardworking law enforcement and their communities. By leaving the door open to arbitrary abuse, mutual trust between communities and the men and women tasked to protect them is compromised. In a country based on the rule of law, no one should fear that they could be deprived of their property without the opportunity to defend themselves.

Furthermore, the perverse incentive created by civil forfeiture encourages law enforcement to profiteer from the communities rather than fight crime as they were meant to do.

Senate Bill 1044, written by senators Jeff Brandes, Joe Negron, and Jeff Clemens allows for asset forfeiture but under the necessary conditions required to protect the rights of the innocent. The new law would require both a conviction of a crime and proof that the property in question was connected to the crime for assets to be seized and appropriated.

I encourage the both the committee and the legislature to support SB 1044. Civil asset forfeiture was an old idea poorly implemented and damaging to both police departments and communities. With this legislation, Florida can be considered a national leader in due process and civil rights. If you have any questions, please contact ATR’s criminal justice manager Jorge Marin at jmarin@atr.org.


Grover G. Norquist                                                    


Americans for Tax Reform      

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Free Trade Agreements Should Promote Strong IP Protections

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Posted by Alexander Hendrie on Thursday, February 11th, 2016, 3:00 PM PERMALINK

Last week, U.S. Trade Representative Michael Froman signed the Trans-Pacific Partnership trade agreement, a largely symbolic act that is just one step on the long road toward ultimate approval of the agreement by Congress. While free trade is ultimately a good, there are several alarming provisions in the agreement that must be fixed as Congress continues considering the TPP.

For one, the weak biopharmaceutical intellectual property protections could create a global economy where property rights do not receive the sufficient protection. In its current form, the agreement grants biopharmaceuticals just five years of exclusivity, far below the 12 years that the U.S. grants.

This 12 year figure is not one plucked out of thin air, but was legislated by Congress following careful consideration of the extensive development costs associated with medicines.

It costs researchers an average of $2.6 billion and over ten years to take a new medicine through the pre-approval period.  And the costs don’t end there. The countless regulations and mandates in the post-approval periods cost over $20 billion every year.

Despite these steep costs, strong IP protections allow the U.S to remain a leader in innovative new medicines. In 2014 alone, pharmaceutical firms spent over $51 billion on research, while over 50 new drugs entered the market. But in order to maintain this rate of innovation, companies are faced with a delicate balance to ensure they are able to finance new research and development.

Ensuring IP rights are promoted and protected should not be solely a U.S. interest, because it will benefit all TPP partners.  

IP allows local, innovators to flourish by putting them on equal footing with foreign industries and ensuring they receive just reward for any creation. With more innovation & competition, everyone gains.

Indeed, free trade is a positive force as it eliminating barriers to global commerce through removing discriminatory tariffs, trade quotas, and regulations.This means less money taken by foreign governments out of the pockets of American workers and business owners. And it means more competition and access to more products at lower prices for consumers across the country.

But regrettably, there are several provisions in the TPP that go in the opposite direction – they create new burdensome regulations that restrict innovation, competition, and the free market by imposing new costs on business.

Another problem with the pacific trade deal is a provision excluding tobacco producers from access to investor-state dispute settlement (ISDS), a procedure that allows investors to seek arbitration and redress in a neutral court if a country is not meeting internationally agreed-upon and binding trade rules.

Opposition to this “carve-out,” as it is known, should not correspond to approval for smoking or tobacco.  This provision is needlessly discriminatory and should be removed because it creates the precedent for adding new regulations in an agreement that is supposed to be about going in the opposite direction.

Similarly, a provision removing the financial services from restrictions on forced data localization could hit U.S. interest hard. At worse, the provision will drastically reduce the ability of the industry to safeguard vital, sensitive data, while imposing unnecessary costs on American business.

Finally, while the agreement contains weak protections for IP, the aggressive labor regulations could very well increase the costs of trade, and hurt U.S. jobs and businesses.

Although the TPP is not the perfect free trade agreement, the fundamentals of the deal are good. It contains as many as 18,000 tax cuts on American exports, and over the next decade, will cut $15 billion in tariffs, which will significantly reduce government interference in international commerce.

This will lead to striking benefits for American families and businesses. In fact, the Peterson Institute for International Economics estimates the agreement could lead to as much as $131 billion in annual increased income through 2030, and increase annual exports by $357 billion.

The bottom line is that this agreement is too good an opportunity to pass up. But before this agreement is passed by Congress, it must be fixed.



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Cam Newton Takes a Tax Sack After the Super Bowl

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Posted by Sarah Feldpausch on Thursday, February 11th, 2016, 2:26 PM PERMALINK

As the Super Bowl weekend excitement fades and the Panthers have left California with a loss, at least one player takes a second hit. Since out-of-state athletes are levied with the ‘Jock Tax’, Cam Newton will pay $101,360 on his bonus of $51,000- effectively making his loss one championship ring and roughly $50,000. That’s a bad day.

The importance of understanding marginal tax rates and average tax rates plays into this seemingly odd mess for Cam Newton but also relates to the average taxpayer who travels for work and must comply with the heavy federal and state tax burdens. Let’s break it down.

Here’s an example from Dan Mitchell at the Cato Institute: Picture a taxpayer who earns $50,000 and pays $10,000 in tax. From this, we know the taxpayer’s average rate is 20%.

Consider these three simple scenarios with different marginal tax rates:

· Tax system A (Head tax)-$10,000 annual charge on all taxpayers. Under this system, our taxpayer gives the IRS $10,000 of his $50,000 income- making his average tax rate 20%. But what if he earns more than that? Any addition income over the first 10,000 will not be taxed. His marginal tax rate= 0%. In this scenario, the tax system does not discourage additional economic activity.

· Tax system B (Flat Tax)- flat rate of 20% on every dollar of income. Under this system, our taxpayer pays a 20% tax on every dollar of the $50,000 he made. Anything additional money made would still be taxed 20%.  His marginal tax rate= 20%. In this scenario, the tax system imposes a modest penalty on additional money earned.

· Tax system C (Personal exemption)- $40,000 personal exemption + 100% tax rate on all income over that level. Under this system, our taxpayer pays $10,000 of tax on $50,000 of income- average tax rate= 20%. His marginal tax rate= 100%. In this scenario, the tax system would destroy incentives for any additional money earned.

Back to Newton:

The marginal tax rate matters when evaluating tax systems and its effects. In Newton’s case, the Golden State tax system taxes out-of-state athletes by how many days they spend there and their earnings in addition to their total yearly income. The state is taxing Cam’s entire annual income based on the number of days he has worked in the state (Duty Days).

Being a professional athlete, he must play by the ‘Jock Tax’ rules and is taxed based on his yearly income.  To understand this tax, apply a duty day calculation.

Duty Days within the State      X     Player’s Salary

Total Duty Days of the Year      

There are about 206 total duty days during 2016 for the Panthers, which includes preseason, regular season, playoffs, and organized team activities, (Newton must attend or is fined $500,000). Seven of those days will be in California for the Super Bowl- making those days liable for the burden of California’s out-of-state athlete tax in addition to taxation on his entire income.

So while Cam Newton may have an average tax of 13.3% on his earnings in California, after the Super Bowl loss, Newton ‘won’ $51,000 and his net gain was taxed $101,360 for a marginal tax rate of 198.8%!

While Newton is not your average employee, the real lesson to be learned here is that higher federal and state tax burdens can have a huge impact on employees in jobs that require travel. What about the athletic trainers that followed the Super Bowl to California? What about the referees that worked in the state for a number of days? It is important to understand the implications of an average tax versus a marginal tax as the latter determines the undue burden on the taxpayer. 

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ATR Supports Civil Asset Forfeiture Legislation in Maryland

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Posted by Krista Chavez on Thursday, February 11th, 2016, 11:00 AM PERMALINK

Last month, Maryland passed legislation to improve the state’s due process protections against the controversial practice of civil asset forfeiture. Now the Maryland State Senate is considering a new proposal to prohibit state law enforcement from Maryland State Senator Michael J. Hough (R).

Senator Hough presented S.B. 161 in the Judicial Proceedings committee on Thursday along with Sens. Jamie Raskin (D) and Bobby Zirkin (D). It would require criminal conviction and proof that the seized property was connected to the crime committed. The proposed reform also improves reporting standards of forfeited assets. 

Click here for the full endorsement, excerpt below:

"Dear Chairman Vallario,

State leaders from New Mexico, to Michigan, to North Carolina have been rolling back the confiscatory practice known as “civil asset forfeiture.” Now, Maryland is set to become a national standard in property rights protection. Americans for Tax Reform is proud to endorse SB 161—a bipartisan bill designed to ensure the protection of Fifth Amendment Rights for Marylanders...

"Civil asset forfeiture, like the overcriminalization of normal every-day activities and the use of excessive fines and fees casts a shadow of our nation’s police. The sad truth is that by leaving the door open to arbitrary abuse, the trust between communities and the men and women tasked to protect them is eroded. There is simply no justification for relying on men and women who have not been convicted of a crime to either fund the government or simply give up their property without proof of guilt...

"I encourage the both the committee and the legislature to support SB 161. Civil asset forfeiture was an old idea poorly implemented and damaging to both police departments and communities. With this legislation, Maryland can be considered a national leader in due process and civil rights. If you have any questions, please contact ATR’s criminal justice manager Jorge Marin at jmarin@atr.org."                                           

-Grover G. Norquist, President of Americans for Tax Reform

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Rep. Emmer's CREATE Jobs Act Will Ensure Competitive U.S. Tax Rates

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Posted by Alexander Hendrie on Thursday, February 11th, 2016, 10:01 AM PERMALINK

Earlier this week, Congressman Tom Emmer (R-MN) introduced H.R. 4518, the Corporate Rate Equality and Trade Empowerment (CREATE) Jobs Act. This innovative legislation will reform the corporate tax rate and allow the U.S. to better compete in the global economy. ATR urges all members of Congress to support and co-sponsor Rep. Emmer’s bill.

Currently, the U.S. corporate rate is the highest amongst the 34 country Organisation for Economic Development (OECD). At 39 percent, it far exceeds the OECD average rate of 25 percent, and is even further behind developed countries like Ireland, Canada, and the U.K. which have rates of 20 percent or less.

The CREATE Jobs act would fix this by reducing the U.S. corporate rate to five points below the OECD average and creating a process by which the U.S. rate is regularly reviewed to ensure economic competitiveness.

The legislation does this by creating a mechanism that ties the corporate rate to five points below the OECD average. Every five years, the corporate rate is reviewed, and in the event that other developed countries have further reduced their corporate rate, the U.S. rate is automatically reduced to five points below the new average. However, in order to protect American workers and businesses, this mechanism requires a vote of Congress if an increase in the OECD average would increase the U.S. rate.

The current high U.S. rate not only hurts American competitiveness, it has real world implications for the economy. For one, this high rate, when combined with the outdated worldwide system employed by the U.S. is the key reason corporate inversions occur.

In addition, as much as 75 percent of the cost of the corporate tax rate is passed on to labor. As a result, bringing the rate below the OECD average would have strong and immediate effects. A 20 percent U.S. corporate rate could create more than 600,000 jobs, increase GDP by 3.3 percent, and increase wages by 2.8 percent over the long-term, according to the Tax Foundation. 

By creating a system that creates a competitive corporate tax rate, Rep. Emmer’s CREATE Jobs Act ensures that the U.S. again becomes a leader in the global economy and it stays there. Members of Congress should support and pass H.R. 4518 to help provide a much needed booster shot to the economy. 

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John Garceau

How can we be sure the tax subsidy translates to jobs? Knowing Rep Emmer this is just another corporate handout.