Kansas Senate Three Votes Shy of Passing Largest Tax Increase in State History

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Posted by Miriam Roff on Monday, February 27th, 2017, 4:50 PM PERMALINK

Kansas lawmakers recently passed a $1.1 billion tax increase that was vetoed by Gov. Brownback last week. The Kansas House subsequently overrode the veto with a vote of 85-40, but the override fell three votes short in the state senate, preventing the largest tax hike in state history from going into effect.  

Had the legislature been able to override Gov. Brownback’s veto, Sunflower State residents would have seen their personal income tax burden increase as much as 18 percent. The income tax exemption that was enacted in 2012 for over 330 thousand farmers and job creators in the state would have also been eliminated.

“This punitive, retroactive tax increase on Kansas workers and families would have cut Kansans’ pay almost immediately,” Gov. Brownback said in a statement after the effort to override his veto died in the senate. “We will continue to work with legislative leadership to develop a balanced budget. I encourage them to find savings in the state’s budget before asking Kansans to find savings in theirs.”

Eric Stafford, a vice president of the Kansas Chamber, also noted in written testimony to Kansas lawmakers that the 2012 tax cuts need more time to spur economic growth.

“We know the tax cuts have attracted businesses to Kansas and now we’re looking to change the rules on them just a few short years later,” he wrote.

This bill came on the heels of the 2015 record tax hikes—which hit the state’s most vulnerable populations the hardest by slapping higher taxes on cigarettes and increasing the sales tax burden. Unfortunately, had the senate found the votes to override Gov. Brownback’s veto last week, Kansas residents would have been hit with another round of job-killing, income-reducing tax hikes.

As noted by Senator Ty Masterson, a Republican who voted against the override, this bill failed because “it was not for the people of Kansas.”

“This bill is to take from the people of Kansas to make our decision-making on spending easier,” Sen. Masterson said shortly before the Senate voted.

Kansas lawmakers now head back to the drawing board to look for a way to rectify their $1.1 billion overspending problem.

“Raising taxes is what lawmakers do instead of reforming government,” said Grover Norquist, president of Americans for Tax Reform. “After being hit with 20 federal Obamacare tax increases, and a round of state tax hikes in 2015, the last thing individuals, families, and employers across Kansas need is for lawmakers to pile on with further state tax hike. I urge lawmakers to put spending in line with available revenues without taking more hard-earned income from Kansas taxpayers.”  

 

 

 

Photo Credit: 
Doug Kerr

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Flashback: In Obama’s First Address to Congress He Lied About Obamacare Tax Hikes on Middle Class

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Posted by Toni-Anne Barry on Monday, February 27th, 2017, 4:20 PM PERMALINK

During President Trump’s first joint address to Congress he will discuss his plan to fix much of the damage caused by his predecessor’s policies. During the early months of Obama’s presidency, the American people heard many promises that, to say the least, were never followed through. When Obama was making his first joint address to Congress ATR compiled the top five false claims made by the newly elected president. Most notably, Obama promised that no American family making less than $250,000 would see any form of tax increase.

What Obama promised: “If your family earns less than $250,000 a year, you will not see your taxes increased a single dime. I repeat: not one single dime.”

What actually happened: Obamacare imposed 20 new or higher tax hikes, many of which directly hit low and middle income Americans. It implemented taxes such as the medicine cabinet tax that has caused millions of Americans to be unable to use their pre-tax Flexible Spending Account or Health Savings Accounts to purchase over the counter medicine. Over ten years this tax has cost FSA and HSA users $6.7 billion.

10 million Americans have also felt the burden of the Obamacare chronic care tax. Prior to Obamacare Americans with high medical expenses were allowed an income tax deduction if their expenses exceeded 7.5 percent of their adjusted gross income. This tax has increased the threshold from 7.5 percent to 10 percent, making it harder for families to receive this deduction. This tax will cost Americans a whopping $40 billion over ten years.

Obamacare also famously imposed the individual mandate tax ranging from a minimum of $695 for an individual to $2,085 for a larger household.

These are only some of the tax hikes that all Americans have been burdened with since Obamacare has taken effect. All 20 tax increases have culminated in a $1 trillion net tax increase on the American people. A far cry from Obama’s adamant assurance that no American family outside of the top 2 percent would feel the effects of a tax increase.

You can read the full list of Obamacare tax hikes here.

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Norquist Praises House GOP Tax Plan


Posted by Hannah Daniel on Monday, February 27th, 2017, 4:02 PM PERMALINK

 

On Monday ATR president Grover Norquist appeared on C-SPAN’s Washington Journal to discuss the House GOP tax plan along with Adam Posen, the president of the Peterson Institute. Outlining the key points of the proposed Republican plan, Norquist highlighted the pro-growth elements that House leaders have included in the blueprint.

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List of Obamacare Tax Hikes

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Posted by John Kartch on Thursday, February 23rd, 2017, 6:57 PM PERMALINK

It is time to repeal each and every one of Obamacare's tax increases. The 20 Obamacare tax hikes are a $1 trillion net tax increase on the American people. The full list is below:

Individual Mandate Non-Compliance Tax: Anyone not buying “qualifying” health insurance – as defined by the Obama-era Department of Health and Human Services -- must pay an income surtax to the IRS. In 2014, close to 7.5 million households paid this tax. Most make less than $250,000. The Obama administration uses the Orwellian phrase “shared responsibility payment” to describe this tax.   

For tax year 2016, the tax is a minimum of $695 for individuals, while families of four have to pay a minimum of $2,085.

 

Households w/ 1 Adult

 

Households w/ 2 Adults

Households w/ 2 Adults & 2 children

 

2.5% AGI/$695

 

2.5% AGI/$1390

2.5% AGI/$2085

A recent analysis by the Congressional Budget Office (CBO) found that repealing this tax would decrease spending by $311 billion over ten years.

Medicine Cabinet Tax on HSAs and FSAs: Since 2011 millions of Americans are no longer able to purchase over-the-counter medicines using pre-tax Flexible Spending Accounts or Health Savings Accounts dollars. Examples include cold, cough, and flu medicine, menstrual cramp relief medication, allergy medicines, and dozens of other common medicine cabinet health items. This tax costs FSA and HSA users $6.7 billion over ten years.

Flexible Spending Account Tax: The 30 - 35 million Americans who use a pre-tax Flexible Spending Account (FSA) at work to pay for their family’s basic medical needs face an Obamacare-imposed cap of $2,500. This tax will hit Americans $32 billion over the next ten years.

Before Obamacare, the accounts were unlimited under federal law, though employers were allowed to set a cap. Now, parents looking to sock away extra money to pay for braces find themselves quickly hitting this new cap, meaning they have to pony up some or all of the cost with after-tax dollars. Needless to say, this tax especially impacts middle class families.

There is one group of FSA owners for whom this new cap is particularly cruel and onerous: parents of special needs children.  Families with special needs children often use FSAs to pay for special needs education. Tuition rates at special needs schools can run thousands of dollars per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. This Obamacare tax increase limits the options available to these families.

Chronic Care Tax: This income tax increase directly targets middle class Americans with high medical bills. The tax hits 10 million households every year. Before Obamacare, Americans facing high medical expenses were allowed an income tax deduction to the extent that those expenses exceeded 7.5 percent of adjusted gross income (AGI). Obamacare now imposes a threshold of 10 percent of AGI. Therefore, Obamacare not only makes it more difficult to claim this deduction, it widens the net of taxable income. This income tax increase will cost Americans $40 billion over the next ten years.

According to the IRS, approximately 10 million families took advantage of this tax deduction each year before Obamacare. Almost all were middle class: The average taxpayer claiming this deduction earned just over $53,000 annually in 2010. ATR estimates that the average income tax increase for the average family claiming this tax benefit is about $200 - $400 per year.

HSA Withdrawal Tax Hike: This provision increases the tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.

Ten Percent Excise Tax on Indoor Tanning: The Obamacare 10 percent tanning tax has wiped out an estimated 10,000 tanning salons, many owned by women. This $800 million Obamacare tax increase was the first to go into effect (July 2010). This petty, burdensome, nanny-state tax affects both the business owner and the end user. Industry estimates show that 30 million Americans visit an indoor tanning facility in a given year, and over 50 percent of salon owners are women. There is no exception granted for those making less than $250,000 meaning it is yet another tax that violates Obama’s “firm pledge” not to raise “any form” of tax on Americans making less than this amount.

“Cadillac Tax” -- Excise Tax on Comprehensive Health Insurance Plans: In 2020, a new 40 percent excise tax on employer provided health insurance plans is scheduled to kick in, on plans exceeding $10,200 for individuals and $27,500 for families. According to research by the Kaiser Family Foundation, the Cadillac tax will hit 26 percent of employer provided plans by 2020 and 42 percent of employer provided plans by 2028. Over time, this will decrease care and increase costs for millions of American families across the country. 

Health Insurance Tax: In addition to mandating the purchase of health insurance through the individual mandate tax, Obamacare directly increases the cost of insurance through the health insurance tax. The tax is projected to cost taxpayers – including those in the middle class – $130 billion over the next decade. 

The total revenue this tax collects is set annually by Treasury and is then divided amongst insurers relative to the premiums they collect each year. While it is directly levied on the industry, the costs of the health insurance tax are inevitably passed on to small businesses that provide healthcare to their employees, middle class families through higher premiums, seniors who purchase Medicare advantage coverage, and the poor who rely on Medicaid managed care.

According to the American Action Forum, the Obamacare health insurance tax will increase premiums by up to $5,000 over a decade and will directly impact 1.7 million small businesses, 11 million households that purchase through the individual insurance market and 23 million households covered through their jobs. The tax is also economically destructive – the National Federation for Independent Businesses estimates the tax could cost up to 286,000 in new jobs and cost small businesses $33 billion in lost sales by 2023.

Employer Mandate Tax: This provision forces employers to pay a $2,000 tax per full time employee if they do not offer “qualifying” – as defined by the government -- health coverage, and at least one employee qualifies for a health tax credit. According to the Congressional Budget Office, the Employer Mandate Tax raises taxes on businesses by $166.9 billion over the ten years.

Surtax on Investment Income: Obamacare created a new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 for singles). This created a new top capital gains tax rate of 23.8% and increased taxes by $222.8 billion over ten years.

The capital gains tax hits income that has already been subjected to individual income taxes and is then reinvested in assets that spur new jobs, higher wages, and increased economic growth. Much of the “gains” associated with the capital gains tax is due to inflation and studies have shown that even supposedly modest increases in the capital gains tax have strong negative economic effects.

Payroll Tax Hike: Obamacare imposes an additional 0.9 percent payroll tax on individuals making $200,000 or couples making more than $250,000. This tax increase costs Americans $123 billion over ten years.

Tax on Medical Device Manufacturers: This law imposes a new 2.3% excise tax on all sales of medical devices. The tax applies even if the company has no profits in a given year. The tax was recently paused for tax years 2016 and 2017. It will cost Americans $20 billion by 2025.

Tax on Prescription Medicine: Obamacare imposed a tax on the producers of prescription medicine based on relative share of sales. This is a $29.6 billion tax hike over the next ten years.

Codification of the “economic substance doctrine”: This provision allows the IRS to disallow completely legal tax deductions and other legal tax-minimizing plans just because the IRS deems that the action lacks “substance” and is merely intended to reduce taxes owed. This costs taxpayers $5.8 billion over ten years.

Elimination of Deduction for Retiree Prescription Drug Coverage: The elimination of this deduction is a $1.8 billion tax hike over ten years.

$500,000 Annual Executive Compensation Limit for Health Insurance Executives: This deduction limitation is a $600 million tax hike over ten years.

 


Conservative Coalition: Free File Is the Solution to Tax Complexity

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Posted by Alexander Hendrie on Thursday, February 23rd, 2017, 3:00 PM PERMALINK

ATR President Grover Norquist today led a coalition of 19 free market groups urging Treasury Secretary Steven Mnuchin to support making the Free File tax preparation program permanent.

The current complexity of the tax code makes it difficult – if not impossible – for taxpayers to file on their own. Free File is critical to addressing this complexity. The program is an innovative public-private solution to tax complexity that has served more than 40 million taxpayers and saved $1.3 billion in preparation costs since its inception.

It is also a far superior method of dealing with tax complexity than the alternative – having the IRS file taxes for individuals. This would be a clear conflict of interest and would empower the IRS – an agency that already struggles to fulfill its existing responsibilities to taxpayers – with even broader power over the paychecks of American families.

The full letter can be found here or below.

February 23, 2017

The Honorable Steven T. Mnuchin
United States Treasury Secretary
Department of the Treasury
1500 Pennsylvania Avenue, N.W.
Washington, DC 20220

Dear Secretary Mnuchin: 

On behalf of the undersigned conservative, free market organizations, we write in support of making the Free File tax preparation program permanent in 2017.

The Free File system is an innovative public-private solution to tax complexity that has served more than 40 million taxpayers and saved $1.3 billion in preparation costs since its inception. The program offers 70 percent of taxpayers, or those making less than $64,000, access to electronic filing software provided by leading private companies free of charge.

Today, it is difficult or impossible for most taxpayers to file their own taxes. The tax code is more than 75,000 pages long and contains over 2.4 million words. This complexity forces American families and businesses to spend more than 8.9 billion hours and $400 billion complying with the code every year.

Free File is critical to addressing this complexity. The program has frequently been reauthorized since it was introduced in 2008, and has enjoyed bipartisan support in Congress.

Despite the success of this program, some, like Senator Elizabeth Warren (D-Mass.) have called for the program to be eliminated based on the notion that the government should have sole responsibility over tax preparation. In place of making Free File permanent, she has called for having the IRS file taxes for individuals as their solution to tax complexity.

This would be a mistake and would empower the IRS – an agency that already struggles to fulfill its existing responsibilities to taxpayers – with even broader power over the paychecks of American families. Having taxpayers receive a bill from the IRS would also be a huge conflict of interest given the agency already assesses tax liability for taxpayers.

In addition, it would require an increase in IRS manpower due to complexity associated with an expanded responsibility. Given the existing complexity in the code, it would be difficult – if not impossible – for everyday taxpayers to know if they were paying the right amount of taxes under this scenario.

The Free File program has been a clear success in ensuring taxpayers are able to comply the absurdly complex tax code and is a vastly superior solution to having the IRS file taxes for Americans. We urge you to make Free File permanent in 2017.

Sincerely,

Grover Norquist
President, Americans for Tax Reform

Dan Schneider
Executive Director, American Conservative Union

Phil Kerpen
President, American Commitment

Dan Weber
President, Association of Mature American Citizens

Norm Singleton
President, Campaign for Liberty

Jeff Mazzella
President, Center for Individual Freedom

Tom Schatz
President, Council for Citizens Against Government Waste

Katie McAuliffe
Executive Director, Digital Liberty

George Landrith, President
Frontiers of Freedom

Mario H. Lopez
President, Hispanic Leadership Fund

Tom Giovanetti
President, Institute for Policy Innovation

Allen Gutierrez
National Executive Director, The Latino Coalition

Seton Motley
President, Less Government

Colin Hanna
President, Let Freedom Ring

Charles Sauer
President, Market Institute

Pete Sepp
President, National Taxpayers Union

Karen Kerrigan
President & CEO, Small Business & Entrepreneurship Council

David Williams
President, Taxpayers Protection Alliance

Berin Szoka
President, TechFreedom

Cc:

The Honorable Donald J. Trump
President of the United States
1600 Pennsylvania Avenue
Washington, D.C. 20500

The Honorable Kevin Brady
Chairman, Committee on Ways and Means
U.S. House of Representatives
1102 Longworth House Office Building
Washington, D.C. 20515

The Honorable Orrin G. Hatch
Chairman, Committee on Finance
U.S. Senate
219 Dirksen Senate Office Building
Washington, D.C. 20510

 

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ATR Supports IP Guidelines Coalition

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Posted by Celeste Arenas on Thursday, February 23rd, 2017, 2:24 PM PERMALINK

Americans for Tax Reform joined a coalition of over 70 groups urging the 115th Congress to protect intellectual property rights for every American innovator. In this letter, they put forth a set of guidelines and principles that will enable the Trump Administration to uphold, protect and enforce intellectual property protections.

Some points of the letter are extracted below.

Intellectual property deserves the same protection as physical property:

“The Founding Fathers recognized the importance of IP in Article 1, Section 8 of the Constitution: “To promote the Progress of Science and useful Arts, by securing for limited times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”

“IP rights are not regulations—they are property rights that, when combined with the freedom to contract, facilitate markets.”

Intellectual property rights are vital for free speech, economic growth and consumer protection:

“Strong IP rights go hand-in-hand with free speech as creators vigorously defend their ability to create works of their choosing, free from censorship." 

"IP rights create jobs and fuel economic growth, turning intangible assets into exclusive property that can be traded in the marketplace… IP-intensive industries added $6.6 trillion to the value of GDP in 2014, equal to 38.2 percent of total GDP. In a knowledge based global economy, America’s ability to remain a world leader in creativity and innovation depends on strong protection of IP."

"IP rights protect consumers by enabling them to make educated choices about the safety, reliability, and effectiveness of their purchases.”

Online intellectual property must be protected on the internet:

“Protecting IP and internet freedom are both critically important and complementary—they are not mutually exclusive. A truly free internet, like any truly free community, is one where people can engage in legitimate activities safely, and where bad actors are held accountable.”

Our letter urges the federal administration to uphold the Founding Fathers’ vision for American innovation that is protected and facilitated through sound intellectual property protections.

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Tax Reform: A Century of Setbacks

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Posted by Elizabeth McKee on Thursday, February 23rd, 2017, 10:45 AM PERMALINK

 

Adherents of Americans for Tax Reform are sure to recognize some of the more important moments in the history of American tax policy. Readers are sure to be familiar, for example, with the ratification of the 16th Amendment in 1913, which allowed for the creation of a federal income tax. Starting off in 1913, income taxes were, by modern standards, incredibly low, with a top income bracket of 7% for those individuals earning more than $500,000 per year. In 2013 dollars, that would be the equivalent of a maximum 7% income tax rate for people earning $11,595,657 or more. At that time, the tax code was only 400 pages in length - an easy read for anyone who cared to put in the time.

So what changed? How did we end up with the 75,000 page regulatory behemoth that rears its ugly head every April to - mentally and financially - exhaust American families? The transformation can be traced back to the Revenue Act of 1917. Now approaching its centennial anniversary, the act sought to finance American involvement in World War I. This ground-breaking legislation ratcheted up tax rates in every income bracket, with a new top tax rate set at 67%.  After the war ended, taxes never returned to their pre-war levels, and by 1952, the country’s top earners were paying 92% of their income to the federal government. In addition, the Revenue Act of 1917 introduced a steep “corporate excess profits tax” on companies that made more than 8% of their revenues in profits. In 1917 - 1918, the size of the IRS more than doubled, employing 9,600 workers. Today, 85,000 people are employed by the IRS.

In 1913, arguing against the ratification of the 16th Amendment, Virginia delegate Robert E. Byrd predicted:

A hand from Washington will be stretched out and placed upon every man’s business; the eye of the Federal inspector will be in every man’s counting house . . . The law will of necessity have inquisitorial features, it will provide penalties, it will create complicated machinery. Under it men will be hailed into courts distant from their homes. Heavy fines imposed by distant and unfamiliar tribunals will constantly menace the tax payer. An army of Federal inspectors, spies and detectives will descend upon the state . . .

After over 100 years of tax reform, Byrd’s words seem positively prescient. The long arms of the IRS reach into every home and business in America. Today, even the most ardent conservatives can scarcely dream of a 7% tax rate, where once only the nation’s wealthiest would ever be asked to pay such an exorbitant portion of their incomes. If the last 100 years have taught us anything, it’s that tax increases are rarely temporary. It’s time to put an end to the World War I revenue extraction mechanisms that continue to affect American households to this day.

Simplify the tax code. Lower the tax burden. Reign in the IRS.

 

 

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Four Ways Neil Gorsuch Could Affect Your Business

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Posted by Elizabeth McKee on Wednesday, February 22nd, 2017, 2:55 PM PERMALINK

On January 31, conservatives were heartened to hear of Trump’s nomination of Neil Gorsuch to the Supreme Court.  Gorsuch accepted his nomination by highlighting the importance of “impartiality and independence, collegiality and courage,” and his political viewpoints are conservative. Gorsuch aptly described the late Justice Antonin Scalia as a “lion of the law,” and previously Gorsuch has opposed requirements in Obamacare that mandate religious health care providers provide contraceptive services.

Neil Gorsuch’s political leanings and impeccable qualifications should come as welcome news to Donald Trump supporters, many of whom were deeply invested in the nomination of a new Supreme Court Justice. Forbes reports “21 percent of voters surveyed by the exit poll consortium of the five networks and the Associated Press on Election Day, said appointments to the Supreme Court were the most important factor in deciding their vote.” (This may mean something to you if you still believe in exit polls.)

Although Supreme Court cases dealing with social issues may be more widely-publicized and politicized than others, restoring balance to the Supreme Court through the selection of a new justice has the potential to affect every sector of American society. Supreme Court Justices serve on the court for life, and it’s impossible to predict exactly what cases could arise during Justice Gorsuch’s career. However, if Neil Gorsuch is confirmed to the Supreme Court in a timely manner, here are four cases that he might rule on that would affect American businesses.

1. Murr v. Wisconsin

The case of Murr v. Wisconsin deals with the ever-important issues of property rights and eminent domain and is scheduled to be argued in front of the Supreme Court in March of this year.  In brief, the case arose when the government, without the permission of the plaintiff, combined two of the plaintiff’s lots into one larger parcel that could no longer be developed or subdivided. The plaintiff argues that in this way, the government deprived the Murr family of half of the value of their land without just compensation. The Supreme Court’s decision on this issue could have an enormous impact on property owners, and perhaps even on the real estate market. The Cato Institute finds, “This destabilizes property owners’ reliance interests and discourages property investment. State and local governments across the country have been using the vagueness of Penn Central to facilitate taking private property without just compensation.”

2. TC Heartland LLC v. Kraft Foods

TC Heartland v. Kraft Foods centers on patent rights and the protection of intellectual property. Currently, patent cases can be tried in any district in the country – even those that have nothing to do with a case itself. This leads to a practice called “venue shopping,” and some courts may encourage patent suits to be filed in their district. Citing the Electronic Frontier Foundation, World IP Review reports “’One such court is the Eastern District of Texas, a rural area with almost no manufacturing, research or technology facilities, where more than one-third of all patent cases in the country were filed last year.’” The Supreme Court may decide to rule against such practices – a major development in the world of patent law.

3. Impression Products, Inc. v. Lexmark International, Inc.

The case of Impression Products, Inc. v. Lexmark International, Inc. also deals with patent rights, and deals with an essential question for any patent holder: if you sell a patented product – in the U.S. or abroad – does another company have the right to purchase, repurpose, and resell that product? Impression Products argues, “The first sale of the cartridges, either in the U.S. or abroad, exhausted Lexmark’s U.S. rights to exclude.” The Supreme Court is set to hear arguments for this case in March, and its decision may drastically affect the way American manufacturers do business.

4. House v. Burwell

House v. Burwell is an incredibly relevant case in today’s political climate and a direct challenge to Obamacare. The Washington Post reports, “In House of Representatives v. Burwell, the House challenged the legality of subsidies the Obama administration paid to insurers. Judge Rosemary M. Collyer ruled that the House as an institution had standing and that the payments were made without an appropriation.”

Admittedly, House v. Burwell is currently still in appellate court, and, depending on the decision of that course and the progress that Republicans make in “repealing and replacing Obamacare,” House v. Burwell may never reach the SCOTUS. However, even if this case is halted before it reaches the highest court of the land, the healthcare debate itself is not going away.

More cases regarding the government’s involvement in healthcare are guaranteed to arise in our lifetime, and it is essential that our new Supreme Court justice has a firm understanding of the role of government and a deep-seated respect for the Constitution. Neil Gorsuch, we hope, is just such a man.

 

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Coalition to Congress: Preserve Advertising Deduction in Tax Reform

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Posted by Alexander Hendrie on Wednesday, February 22nd, 2017, 2:00 PM PERMALINK

ATR President Grover Norquist today led a coalition of 12 free market groups urging Congress to maintain the advertising deduction in the tax code and implement immediate, full business expensing.

The House Republican "Better Way" tax reform blueprint makes important, pro-growth changes to the code, such as implementing full business expensing. As the coalition notes, this will streamline the tax code:

"Implementing full business expensing is also a way to stop the code from arbitrarily picking winners and losers. Existing rules create needless complexity, and force business owners to make decisions for tax reasons, instead of based on what is most economically beneficial."

At the same time, forcing advertising costs to be depreciated over several years will undo any improvement to the code, will hurt economic growth, and harm businesses across the country: 

"Restricting the ability to deduct advertising costs would be detrimental to local and national advertisers, broadcasters, print and online media, and other firms that rely on advertising as their primary source of income. Imposing higher costs on businesses would reduce their ability to create jobs, value, and economic growth."

The full letter can be found here or below. 

February 22, 2017

The Honorable Kevin Brady
Chairman, Committee on Ways and Means
U.S. House of Representatives
1102 Longworth House Office Building
Washington, D.C. 20515

The Honorable Orrin G. Hatch
Chairman, Committee on Finance
U.S. Senate
219 Dirksen Senate Office Building
Washington, D.C. 20510

Dear Chairmen Brady and Hatch:

On behalf of the undersigned organizations we write in support of immediate, full business expensing as a crucial concept in pro-growth tax reform. Under the current system of depreciation, business owners must deduct the cost of purchasing equipment over several years depending on the asset they purchase, as dictated by complex and arbitrary rules.

Replacing this system with full business expensing should be an integral part of creating a tax code that encourages growth, innovation, and a competitive economy. According to research by the Tax Foundation, implementing full business expensing would lead to 5.4 percent higher long-term GDP, would create more than 1 million full time jobs, and would increase after-tax income by 5.3 percent.

Implementing full business expensing is also a way to stop the code from arbitrarily picking winners and losers. Existing rules create needless complexity, and force business owners to make decisions for tax reasons, instead of based on what is most economically beneficial. Currently, there are two different systems of depreciation and investments can be depreciated over 3, 4, 5, 7, 10, 12, 14, 15, 20, 25, 27.5, 30, 35, 39, 40, or 50 years depending on the system used and the asset purchased. This makes no sense and is bad tax policy.

The House Republican “Better Way” blueprint released last year meets the goals of full expensing by implementing a “cash flow” system of taxation. Under this system US business receive a zero percent rate on any expense or investment made.

Regrettably, other tax reform proposals, like the “Tax Reform Act of 2014,” released by former Ways and Means Chairman Dave Camp went in the other direction. Not only did the plan lengthen depreciation schedules, it also took aim at specific business costs, like advertising expenses.

This is the wrong approach to tax policy and would undermine the gains from full business expensing. Congress should make the tax code as simple and fair as possible. That means treating all expenses equally, whether that means wages and other forms of compensation, travel, rent, advertising, etc. None of this is particularly exotic.

If Congress attempts to pick winners and losers by singling out certain industries, it will invariably create far more losers than winners. For instance, denying full expensing to advertising expenditures would negatively impact an industry that contributes $5.8 trillion in total economic output and is tied to 20 million jobs directly or indirectly.

Restricting the ability to deduct advertising costs would be detrimental to local and national advertisers, broadcasters, print and online media, and other firms that rely on advertising as their primary source of income. Imposing higher costs on businesses would reduce their ability to create jobs, value, and economic growth.

Any serious, pro-growth tax reform package must include across-the-board, full business expensing. Any proposal that limits businesses’ current ability to deduct advertising costs, or other costs central to running a successful business, should be rejected immediately.

Sincerely,

Grover Norquist
President, Americans for Tax Reform

Pete Sepp
President, National Taxpayers Union

Steve Pociask
President, American Consumer Institute

Thomas Schatz
President, Council for Citizens Against Government Waste

Katie McAuliffe
Executive Director, Digital Liberty

George Landrith
President, Frontiers of Freedom

Mario H. Lopez  
President, Hispanic Leadership Fund

Tom Giovanetti
President, Institute for Policy Innovation

Allen Gutierrez
National Executive Director, The Latino Coalition

Karen Kerrigan
President & CEO, Small Business & Entrepreneurship Council

David Williams
President, Taxpayers Protection Alliance

Berin Szoka
President, Tech Freedom

 

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21 of 22 Indiana House Republicans Break Taxpayer Protection Pledge

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Posted by Miriam Roff on Friday, February 17th, 2017, 3:54 PM PERMALINK

Yesterday, the Indiana House of Representatives passed House Bill 1002, which imposes a whopping 34 percent increase in the state’s gas tax. Among the 61 representatives who voted for this massive tax hike were 21 Taxpayer Protection Pledge signees.

Despite claims that some legislators in Indianapolis have made, the $0.10 increase in the gas tax does not qualify as a user fee. It’s a blatant tax hike on hardworking Hoosiers.

Grover Norquist, president of ATR, noted in the Indy Star how state legislators who voted for this tax hike have betrayed their constituents:

“Most of the Republicans who are in the House and Senate promised their voters they would not raise taxes: some in writing, some in person. Did any of the Republicans thinking of voting for another tax hike on consumers say they would do this when they asked for their citizens’ vote in the last election? If not, why double cross their voters.”

Following the House vote, Norquist explained how Gov. Eric Holcomb can look to other Republican governors for an approach to tax and transportation policy that is preferable to the one taken by the Indiana House this week:

“Governor Pence opposed and defeated efforts to raise the gas tax in Indiana. Taxpayers certainly hope that Gov. Holcomb will be as strong a defender of taxpayer interests as Pence was/is. The tax and spend lobby obviously hopes that his inexperience will allow the lobbyists to beat him and raise taxes. If the governor wants more road money he could follow the path of Governor Christie of NJ and other states that have insisted that any gas tax be accompanied in the same bill with an income tax cut of greater size. If the advocates of a gas tax will not support an income tax cut to offset the gas tax—they just want higher taxes not more roads.”

As a friendly reminder to voters, the following Republican House lawmakers broke their pledge by voting for the gas tax hike this week:

Representative James Baird (R-44), Representative Robert Behning (R-91), Representative Timothy Brown (R-41), Representative Woody Burton (R-58), Representative Martin Carbaugh (R-81), Representative Robert Cherry (R-53), Representative Wes Culver (R-49), Representative Steven Davisson (R-73), Representative Jeff Ellington (R-62), Representative David Frizzell (R-93), Representative Robert Heaton (R-46), Representative Todd Huston (R-37), Representative Don Lehe (R-25), Representative Jim Lucas (R-69), Representative David Ober (R-82), Representative Jerry Torr (R-39), Representative Thomas Washburne (R-64), and Representative Cindy Ziemke (R-55).

Representative Tim Wesco (R-21) deserves kudos, as he was the only Pledge signer to uphold his commitment to voters by voting no on the gas tax increase yesterday.   

HB 1002 now heads to the Senate, where it will be voted on in the coming weeks. 

Photo Credit: 
Andrew Sorensen

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