Trump Plan Lays the Groundwork for Biggest Tax Cut in American History

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Posted by Elizabeth McKee on Monday, May 22nd, 2017, 12:26 PM PERMALINK

President Trump released a proposal for “2017 Tax Reform for Economic Growth and American Jobs,” which he labels the “biggest individual and business tax cut in American history.” In its current state, the plan enumerates a series of principles that would reduce the tax burden on American workers and generate new economic growth. In the coming months, the president will work with lawmakers to develop these principles into comprehensive, pro-growth legislation.

Elements of the plan, such as eliminating the death tax, reducing the business tax to 15% and simplifying the tax code, represent the cornerstone of Republican fiscal policy. These policies will make the United States a competitive business environment, end the pattern of stagnation that has been plaguing US economic productivity, and create new federal revenues generated by economic growth. According to the Congressional Budget Office, increasing economic productivity by just 1% over the next decade will strengthen the economy and create $3.15 trillion in additional federal revenue.

These principles represent an encouraging first step toward comprehensive tax reform, but there is room for improvement before Trump’s finalized legislation is unveiled.

First, although Trump’s plan does not directly address full business expensing, allowing businesses to immediately recover costs must be a crucial element of tax reform. If businesses were able to immediately deduct the full value of their capital investments, they would face increased incentives to acquire new machinery and expand productive capabilities.

The Tax Foundation models the effects of expensing over the next decade, reporting:

The model estimates that expensing increases the nation’s stock of plant, equipment and buildings by nearly $4 trillion, an increase of over 14 percent. The added capital raises worker productivity. Wages are about 4 percent higher, and hours worked about 1 percent higher, representing nearly a million full time equivalent jobs. These income gains from growth generate added federal revenues in the long term.

This policy would unleash a new era of investment and economic growth, and help Trump to live up to his campaign promise of bringing back American manufacturing.

Second, tax reform will be most successful if it is permanent. Permanency in tax policy creates a culture of certainty that allows business owners to establish clear expectations for the future. Grover Norquist, in a statement to the House Ways and Means Committee, explained, “Certainty means a business owner can plan ahead to invest without concern for their ability to afford the investment and cash flows in the future.”

While members of Congress may still be deliberating on tax reform, the American people are ready for action. According to a poll released by Fox News, 73% of Americans and 61% of Democrats want to see tax reform passed this year. The president plans to galvanize this popular support by hosting roundtables, traveling the country, and bringing industry experts to Washington.

The Trump administration’s dedication to tackling tax reform reflects an historic moment in the course of the United States economy. The GOP must seize this opportunity by enacting tax policies that will restart economic growth and improve the business climate for American entrepreneurs. 

 

Photo Credit: Gage Skidmore

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FCC Chairman for the Grover Norquist Show: Repealing Title II Regulations

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Posted by Demri Scott on Monday, May 22nd, 2017, 11:44 AM PERMALINK

On May 18, FCC Chairman Ajit Pai kick started the regulatory process of repealing Title II regulations on Internet Service Providers. Despite decades of a bipartisan light touch regulatory approach, championed by the Clinton Administration, the FCC under the Obama Administration imposed Title II regulations in 2015 through a 1934 law intended to reign in the Ma Bell monopoly, “treating the internet like a utility.” As a result, Title II regulations have stifled growth and innovation from small and large providers within the market.

Grover Norquist, President of Americans for Tax Reform, recently interviewed Pai on his fight to repeal Title II regulations, his nomination process, the recent history of the FCC and the future of 5G.

“The biggest [decision under the Obama administration’s purview of the FCC] was net neutrality,” Pai explained. “The FCC was heading down one path, a more relatively free market path, and after [President Obama’s] instruction in 2014, the agency took a very different road and imposed utility style regulations on the internet which I’ve called ‘ a solution that wouldn’t work for a problem that really didn’t exist’”

Pai then goes on to explain the crippling effects of Title II regulations on the internet.

“If you want your internet to run as well as your water company or the DC metro, congratulations, [Title II is] a regulatory framework that does that. But if you want the internet to be free and open, if you want people to invest in building out networks further and increasing competition, you want the free market approach that started under President Clinton… that light touch regulatory approach was proven to succeed for the better part of two decades.”

The fight to repeal Title II regulations, led by Chairman Pai, has only just begun with the start of the public commenting period that will end on August 16. This will be followed by a decision by the FCC on whether to repeal Title II regulations on Internet Service Providers.

Listen to the rest of Chairman Pai’s interview here: 

 

Photo Credit: Gage Skidmore

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In Support of Rand Paul and the REINS Act (S.21)

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Posted by Matthew Adams on Monday, May 22nd, 2017, 9:45 AM PERMALINK

A new regulatory killer will soon make its way to the Senate floor.

Sen. Rand Paul’s (R-Ky.) "Regulations from the Executive in Need of Scrutiny Act" (REINS Act) made it through committee this week, putting our ever-growing bureaucratic behemoth in its sights. 

The REINS Act would reassert Congressional authority over governmental agencies and organizations by requiring every new regulation that will have an annual economic impact over $100 million dollars to be authorized by Congress.

As of late, Congressional Republicans have utilized the Congressional Review Act (CRA) to eliminate Obama era regulations. Signed by President Bill Clinton in 1996, the CRA gives the legislative branch the ability to overrule regulations set by executive agencies. However, Democrats have scrutinized its use, arguing that its current use is not how it was intended. This May, Sen. Corey Booker (D-N.J.) has gone as far as introducing a bill that would repeal the CRA. 

Regardless, the REINS Act sole purpose is to put an end to reckless bureaucratic nonsense, continuing the efforts made by Congress in the past few months. It would undoubtedly reign in the overbearing regulatory mess by mitigating needless spending and opening up our economy to a freer and more productive atmosphere. Between the cost of the regulatory burden, and its negative impact on the free market, the REINS Act is a common sense solution to shrinking the size of government.

Accompanying the REINS Act is the Regulatory Accountability Act which is much less extensive, but takes a step in the right direction, requiring federal agencies to run cost/benefit analyses on new regulations. A floor vote is expected soon.

Photo Credit: Gage Skidmore


POLITICO is Wrong: Open Competition Laws Complement "Buy American"


Posted by Justin Sykes on Friday, May 19th, 2017, 4:56 PM PERMALINK

POLITICO Influence’s article released today falsely claims Americans for Tax Reform’s letter urging Congress to allow for an open and competitive bidding process in infrastructure projects contravenes President Donald Trump’s pledge to “Buy American.” 

The story from POLITICO Influence wholly mischaracterizes the idea of “Open Competition” which would actually complement President Trump’s Buy American pledge by increasing the number of American firms that can compete for publicly funded infrastructure projects and in doing so would increase taxpayer savings that could be used toward achieving the President’s trillion dollar infrastructure-plan.

It is too often the case that outdated or protectionist policies restrict what types of materials may be used in publicly funded infrastructure projects. This has the effect of preventing new and innovative materials that are often more cost efficient, and the American firms that produce them, from bidding on public infrastructure contracts. As a result the cost of U.S. infrastructure projects can be artificially inflated, costing taxpayers and the country as a whole.

By allowing Open Competition in infrastructure projects more American firms will be able to compete and in turn offer increased savings to American taxpayers in line with President Trump’s Buy American plan. 

 

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Highest-Paid Governor Thinks Taxpayers are Freeloaders

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Posted by Elizabeth McKee on Friday, May 19th, 2017, 11:35 AM PERMALINK

The highest-paid governor in the nation, California Governor Jerry Brown, thinks opponents of his $52 billion dollar gas tax hike are “freeloaders.”

The statement comes in response to California Assemblyman Travis Allen’s efforts to keep taxpayer dollars in the hands of the individual. The assemblyman has spearheaded a movement to delay the implementation of a $52 billion tax increase, demanding that the tax first be subject to a ballot measure.

Governor Brown, who makes over $190,000 per year ($52,685 more than the average gubernatorial salary), had harsh words for the assemblyman and his supporters in a speech last week.

The Orange County Register reports:

“The freeloaders — I’ve had enough of them,” Brown said, adding that the approved tax and fee hikes bring those charges to the level they were 30 years ago if adjusted for inflation. “They have a president that doesn’t tell the truth and they’re following suit.”

At 38 cents per gallon, Californians currently pay the seventh highest gas taxes in the country. Beginning November 1, that figure is set to increase by over 30%. At the same time, vehicle registration fees will increase by up to $175.

Brown continued, “Roads require money to fix. Republicans say there’s a magic source of money — it doesn’t exist . . . You want to borrow money and pay double? Or do nothing? Or take money from universities?”

Roads do require money to fix, as Californian taxpayers are well aware. A recent study by the Reason Foundation reveals California spends a stunning $419,090 per state-controlled mile of highway; in comparison, South Carolina spends just $35,286.

Still, throwing money at a problem is not a substitute for good governance. Despite immense transportation spending, a 2016 study by the national transportation research group TRIP finds that only 21% of California roads are in good condition. The Reason Foundation ranks California 42nd in the nation in highway performance and cost-effectiveness.

In fact, a report by the California State Auditor accuses the California Department of Transportation of having weak cost controls that create “opportunities for fraud, waste, and abuse.” The report exposes:

“[T]he maintenance division never implemented a budget model (model) that it paid $250,000 to develop in 2009. Use of that model would have allowed the maintenance division to identify the resources needed to maintain highways . . . although the maintenance division never implemented its model, the division has been reporting to the Legislature that it is using this sophisticated model.”

Not subject to the increased gas taxes will be bicyclists, who utilize California’s roadways but do not pay for their maintenance. California allocates $7.2 million annually to the Bicycle Transportation Authority, which builds and maintains bike lanes and ensures secure bicycle parking. Yet, according to Governor Brown, overtaxed motorists are the “freeloaders.”

California Assemblyman Matthew Harper writes, “Our roads are in terrible shape, but it is not because of a lack of funding, it is because many in Sacramento would rather grab more money than spend what they already have.”

Meanwhile, Governor Jerry Brown is content to blame California’s crumbling infrastructure on the “freeloading” taxpayer. Brown expects that, in the end, Californians will support his $52 billion tax hike. “Maybe people like gravel roads, but I don’t think so.”

 

 

Photo Credit: NASA HQ Photo

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Inspector General: IRS Mispays 31% of its Employees

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Posted by Virginia Birkofer on Thursday, May 18th, 2017, 5:05 PM PERMALINK

The IRS failed to correctly pay 31% of employees according to a recent report by the Treasury Inspector General for Tax Administration (TIGTA). Based on their sampling, TIGTA estimates that the IRS overpaid more than 600 employees by approximately $4.2 million and underpaid more than 900 employees by approximately $2.7 million.

The analysis was based on a sample of 4,985 IRS employees who were promoted into management positions and received pay increases that exceeded 10 percent between January 2006 and November 2015.

The IRS attributes these payment errors to complexities associated with setting pay when employees transiently move between the pay system of managerial and non-managerial roles—common to the cyclical nature of taxes. As the report notes:

“Cumbersome and confusing rules for setting pay resulted in mistakes when calculating pay for employees moving between the GS pay system and the management pay system”

These “cumbersome rules” on promotions between positions are as follows:

  • An employee selected for a first-time permanent management position is eligible for a one-time 10 percent pay increase.
  • An employee who is promoted from a management level position to another higher level management position, may receive an additional 10 percent pay increase.
  • An employee with prior management experience or selected for a temporary promotion into a management position is eligible for an 8 percent pay increase.
  • An employee who is promoted to a similar position to one they previously held may be entitled to receive increases that exceed the 10 percent and 8 percent.

 

The Inspector General’s report noted that the IRS recognized these problems existed in 2013, but failed to address them until 3 years later when The Inspector General announced their audit.

The last question that remains unresolved is whether the payment errors can be attributed to simple incompetency on the part of the IRS or malicious intent to bolster the income of some employees over that of others.

 

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New Internet Privacy Laws Are Not Necessary

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Posted by By Margaret Mire and Katie McAuliffe on Thursday, May 18th, 2017, 2:41 PM PERMALINK

New Hampshire legislators are considering an amendment they hope will “restore” Internet privacy rights.

This effort is in response to a recent Congressional vote to overturn what has been deceitfully described as a Federal Communications Commission (FCC) “privacy” rule.

Naturally, this clever marketing trick has left many concerned that Congress’ vote has given Internet Service Providers (ISPs) some new freedom to auction off their web search history and personal data.

But, that simply is not true.

For one, the FCC’s “privacy” rule never actually took effect – Internet privacy is the same as it was 3 months ago, 6 months ago, a year ago. And more importantly, the FCC’s “privacy” rule was not about privacy at all. The FCC used the hot button word “privacy” to distract from the fact that it was actually pushing a massive power grab.

In reality, the FCC, which has little experience policing Internet privacy violations, stripped enforcement authority away from the Federal Trade Commission (FTC), the agency with the most expertise in enforcing Internet privacy. More concerning is that the FCC took this bold action without the blessing of congress.

Undeniably, the FCC’s action was completely unjustifiable. The FTC punished bad actors in hundreds of privacy violations over the last decade. Its battle tested method combined sensitivity-based and harms-based approaches to protect your informational exchanges by focusing on what data was held, the level of data sensitivity, and how consumers would have been affected if the data were misused. This strategy protected consumers while still allowing for innovation.

The FCC’s ‘privacy’ rule, on the other hand, was overly burdensome and would have blocked innovation. Even worse, it zeroed-in on who held the data, not what the data were. Indeed, the FCC rules were applied only to ISPs, which is a pretty bizarre approach to take if protecting privacy is the true intention.

Compared to Websites, for example, ISPs see far less of what you do online. That is because over 70% of websites use https encryption. An ISP can only see which website you visit, not what you do on the websites. ISPs do not know your movie preferences, products purchases, email content, or anything of the like.

Contrary to claims made by the left, Congress did NOT functionally change how we interact with ISPs or websites. The FCC still has authority to bring enforcement actions against privacy violations perpetrated by ISPs, and new Chairman Ajit Pai, has vowed the agency will follow the FTC regime until FTC authority can be fully restored.

Further, federal laws that require your personal information remain protected have been and still are in place. The Gramm Leach Biley Act (GLBA), which governs financial information privacy, and the Health Insurance Portability and Accountability Act (HIPAA), which covers private health data, apply no matter who holds the data.

By ending the discriminatory, over-the-top FCC law, Congress took the first step in rectifying FCC overreach. Congress signaled that the FTC is the proper agency to police Internet privacy. This should be considered a win for consumers and innovation, not a loss.

While it may be tempting for lawmakers to pass a state privacy law in response to this “loss of privacy” narrative, New Hampshire citizens would be best served by resolving to follow the FTC rules without new legislation in order to maintain consistent privacy protections across the internet – from ISPs to web services to apps.

Katie McAuliffe is Federal Affairs Manager at Americans for Tax Reform & Executive Director of Digital Liberty. Margaret Mire manages state tech and telecom policy at Americans for Tax Reform.

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ATR Statement in Support of Restoring Internet Freedom

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Posted by Americans for Tax Reform on Thursday, May 18th, 2017, 2:16 PM PERMALINK

Washington, D.C. – Today, Thursday May 18th, The FCC voted on a Notice of Proposed Rule making entitled, Restoring Internet Freedom.

The following can be attributed to Grover Norquist, President of Americans for Tax Reform:

"Under the Obama Administration Title II was pushed through without transparency and without economic analysis. This time, under chairman Ajit Pai, the process is transparent and includes economics. This time we are doing it the right way."

The following can be attributed to Katie McAuliffe, Executive Director of Digital Liberty:

“We are encouraged that, not only was this notice presented transparently, but will also inject actual economic analysis into the FCC’s decision making.  The Obama Era Open Internet Order was called an ‘economics free zone’ by the FCC’s own economists.  By establishing the Office of Economics and Data within the FCC, Chairman Pai has shown dedication to preforming real cost-benefit analysis on this, and all FCC proposals going forward.

As has been said many times before and was stated today on the Senate floor by Senators John Thune (R-SD) and Roger Wicker (R-Miss.), this is an area for Congress to decide.  The Telecommunications industry is now 16% of our economy – roughly the same amount as healthcare.  Regulation of this sector should not be decided by unelected bureaucrats.”

Learn more about Title II regulation of the Internet here:

 

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2017 Must Be The Year of Pro-Growth Tax Reform

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Posted by Alexander Hendrie on Thursday, May 18th, 2017, 10:00 AM PERMALINK

Over the past decade, the economy has struggled at just two percent GDP growth as the country has experienced the worst recovery in the modern era.  While the post-World War II average remains at three percent GDP growth per year, the Congressional Budget Office projects that under current policies, two percent growth will continue into the next decade.

Even as the unemployment rate has stabilized in recent years, labor force participation has continued to drop, indicating that the economy remains weak.  Because of this lackluster recovery, families have lost an average of $8,600 in annual income, according to one estimate. 

One reason for the stagnant economy is the fact that the U.S. tax code is outdated, uncompetitive, and complex. The current code restricts the growth of new jobs, increases the cost of capital, and discourages innovation.

It has been more than 30 years since the tax code was reformed, and in that time, the world has changed drastically. Other countries have updated their tax codes and lowered their rates, while the U.S. system has barely changed.

The uncompetitive code means that businesses are unable to compete in the global economy. For instance, our uncompetitive code enables foreign competitors to acquire assets at a far greater pace than American businesses.

Over the past decade, U.S. companies have suffered a net loss of almost $200 billion in assets. Conversely, if the corporate rate was 25 percent (the average rate in the developed world), one report estimates U.S. businesses would have instead experienced a net gain of $600 billion in assets over the same period. 

Tax reform is the only way to reverse these trends and enact policies that benefit the economy. ATR President Grover Norquist recently submitted a statement for the record before the House Ways and Means Committee hearing entitled ‘How Tax Reform Will Grow Our Economy and Create Jobs Across America.’ The recommendations are below and the full paper can be found here.

  • Tax Reform Should Reduce Taxes on Businesses
  • Tax Reform Should Reduce Capital Gains Taxes
  • Tax Reform Should Implement Immediate Full Business Expensing
  • Tax Reform Should Simplify the Code
  • Tax Reform Should Make Permanent Changes to the Code
  • Tax Reform Should Move to Territoriality for Businesses and Individuals
  • Tax Reform Should Kill the Death Tax and Gift Tax
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ATR Supports Senator Thune's INVEST Act

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Posted by Alexander Hendrie on Thursday, May 18th, 2017, 8:00 AM PERMALINK

Senator John Thune (R-S.D) yesterday introduced S. 1144, the Investment in New Ventures and Economic Success Today (INVEST) Act of 2017. This legislation simplifies accounting rules and reforms the tax code to help small and medium-sized business owners more quickly recover investments.

By accelerating cost recovery on property, equipment, inventory, and other common business investments, the INVEST Act would encourage new business growth and help existing businesses, including farms and ranches, expand their operations, create new jobs, and grow the economy.

Read the letter here or below. 

 

May 17, 2017

The Honorable John Thune
United States Senate
511 Dirksen Office Building
Washington, DC 20510

Dear Senator Thune:

I write in support of S.1144, the Investment in New Ventures and Economic Success Today (INVEST) Act of 2017. Your legislation offers important tax relief for small and medium businesses and startups in a way that encourages innovation, growth, and expansion. All Senators should support this important legislation.

For small and medium sized businesses, the complexity of the tax code creates unnecessary burdens and costs that impede innovation and the formation of capital. The past eight years has seen the worst economic recovery in the modern era. Today, 50 percent of small businesses fail five years after they first begin in part due to excessive rules and regulations that stifle growth.

These trends should be reversed through pro-growth tax policy that encourages investment and innovation. In turn, this reform will promote strong economic growth and the creation of new jobs and higher wages.

The INVEST Act does this in three ways.

First, the INVEST Act expands the ability of small businesses to immediately deduct the cost of investments by expanding Section 179 of the code, and making 50-percent expensing permanent. Section 179 allows small businesses to expense $500,000 worth of equipment purchases every year, with a phase out of $2.5 million. This legislation expands Sec. 179 so businesses can expenses $2 million in purchases every year, with a phase out of $5 million. For purchases above this threshold, the INVEST Act makes 50-percent “bonus” depreciation permanent, so businesses can immediately deduct half of the cost of new investments.

Moving the tax code closer to a cash-flow system, where business investments can be immediately expensed, is a crucial goal of pro-growth tax reform. While the best policy would be 100 percent, immediate full businesses expensing, the INVEST Act is significant progress in the right direction.

In addition to these changes, S. 1144 also shortens depreciation schedules for farm machinery and equipment, business vehicles, and acquired intangibles such as patents and copyrights, so that business owners can more quickly recover these costs.

Second, the legislation expands the ability of businesses to expense startup costs. Currently, businesses can deduct $5,000 worth of costs related to starting up their businesses. This legislation expands the limit to $50,000 and increases the phase out to $100,000. Businesses would also be able to recover the costs of any expenses outside of this limit over a ten year window.

Third, the INVEST Act increases the flexibility of businesses to use accounting methods that best suit their needs. Specifically, the INVEST Act increases the threshold for using cash accounting from $5 million to $15 million, simplifies inventory accounting so small and medium sized businesses can deduct these costs immediately, and expands the threshold for using the completed-contract method of accounting.

Simplifying the tax code and moving to a cash-flow system that allows business owners to immediately recover the cost of new investments are two key planks of pro-growth reform. If signed into law, the INVEST Act would lead to stronger growth, higher wages, and more jobs. All Senators should support this bill.

Onward,

Grover G. Norquist

President, Americans for Tax Reform

 

 

 

 

 

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