Dodd-Frank is Crushing Small Businesses and Startups in America

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Posted by Justin Sykes, Johnathan Sargent on Thursday, October 20th, 2016, 2:47 PM PERMALINK

After 6 years, Dodd-Frank’s legacy is hindering American innovation. Since its passage, the Dodd-Frank Act has unleashed an onslaught of large and complex regulations. Because of these regulations the growth of American small businesses and startups has hit an all-time low. In a report by Third Way, these regulations are examined as a primary factor for this phenomenon.

The Third Way report found that while new businesses have played a historically large role in U.S. job creation, trends show that in recent years there has been a growing gap in borrowing opportunities for small businesses and startups. Contrast this with the fact that lending to large businesses has surged in recent years. Such trends can be tied to the fact that small banks are being forced to either consolidate or shutter their operations as a result of Dodd-Frank regulations.   

The impact of Dodd-Frank regulations on small businesses and startups begins with their effect on small banks, such as community banks. Dodd-Frank regulations have led to higher compliance costs, which are economically disastrous for smaller banks because they lack the vast resources that their larger competitors possess. According to a study by the Mercatus Center, 90 percent of banks stated that compliance costs have increased since 2010. The report by Third Way highlights that such community and small banks “bear a disproportionate regulatory burden.”

Because of these increased compliance costs, small banks are reducing the number of services that they provide. It is also the case that as community banks close due to skyrocketing compliance costs and other regulatory factors, sources of credit for small businesses are simply no longer available. This has led to a decrease in small business lending in the U.S.

For instance, since 2008 lending to small businesses has decreased by 15%, while lending to big businesses has increased by 35%. According to a 2015 Small Business Credit Survey, small business applicants were successful 76% of the time at small banks, versus 58% of the time at large banks. Thus as community banks close or consolidate, small business lending dries up. 

Small businesses are then left with no other option than to seek loans from lager banks, which cannot provide the same level of personalized service and competitive rates that community and small banks can provide. Ironically, as a result of Dodd-Frank, many large banks have also been forced to eliminate loans that after the financial crisis would be seen as too “risky”. For the most part, this means eliminating loans to businesses with less than $2 million in revenue, or alternatively eliminating loans less than $100,000 altogether.

This lack of access to credit has led to a reduction in the amount of startup firms in the U.S. In 1980, firms in their first year accounted for 13% of all companies, yet since 2010 that rate has dropped to roughly 8%. According to a 2015 survey by Federal Reserve banks, small businesses and startups are finding it increasingly difficult to obtain needed credit. The survey found that 63% of microbusinesses (firms with annual revenue under $100,000) and 58% of startups (firms less than two years old) were unable to realize their funding needs.

It is apparent that the onerous regulations imposed by Dodd-Frank have contributed to the decrease in startups and reduced access to credit for small businesses. This phenomenon not only hinders economic growth in the U.S., but impacts consumers as small businesses and startups are often leaders in product innovation. For those supporting Dodd-Frank, this should be a wake up call that it is time to look to much needed reforms that will encourage small business growth and innovation, instead of deterring innovation and competition in the market.

 Photo Credit: Ian Lamont

Politicians in USA’s Second Wealthiest County Push “Meals Tax”

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Posted by William Sleiman on Thursday, October 20th, 2016, 1:42 PM PERMALINK

Politicians in the nation’s second wealthiest county are looking impose a “Meals Tax” on anyone who eats food.

The Meals Tax is being pushed by the Fairfax County, Virginia Board of Supervisors. The proposed Meals Tax would impose a 4% sales tax on all ready-to-eat foods on top of an already existing 6% state wide sales tax on such foods. On November 8, Fairfax County voters will be asked to vote YES or NO.

The Board of Supervisors does not have authority to implement a meals tax unless given approval by voters. The Meals Tax would apply to all ready-to-eat foods, which include restaurant meals and beverages, food and beverage at hotels, food truck purchases, hot dog stands, meals at coffee shops, and prepared foods at grocery and convenience stores.

The people of Fairfax County would ultimately pay a 10% tax on meals and prepared foods. For a $50 meal people will pay an additional $5 just because they ate food. And don’t get fooled into thinking it is just a meals tax, it is a food tax. It will impose a tax on grocery and convenience items like roasted chickens, deli foods and salads, and any beverage sold with the food.

Everyone who eats prepared food, regardless of their tax status and whether they pay income or property taxes, will be forced to pay this tax. Not only are people going to be double and even tripled taxed, but it is also going to hit lower and middle income households the hardest.

The Meals Tax is also a threat to tourism and small businesses. Tourism is a major contributor to the economy and job base of Fairfax County. Tourism spending in Fairfax County for 2014 reached over $2.85 billion. Within the entire Commonwealth of Virginia, Fairfax County is the #2 contributor of expenditures to Virginia's tourism industry. Visitors to Fairfax County directly supported almost 30,000 local jobs. These local tourism jobs have combined earnings of $601 million. The county predicts that one-third of the revenues of this tax will be paid by non-county residents. Tourism revenues could be threatened and small businesses will be affected. This is a real threat to the tourist industry in Fairfax and could push these tourists to other parts of Virginia or other states altogether.

Instead of governing correctly, the county board is shaking down residents for any loose change they haven’t already taxed. County leaders need to be more efficient and wiser with spending rather than demanding more money. County leaders have already raised taxes on Fairfax County residents by $100 million by raising property taxes and want to raise the total to $200 million on the taxpayers of Fairfax County all within a year. The Fairfax County budget has increased by $1 billion in the last four years. More than half of the $7.5 billion budget already goes to education. County leaders need to spend responsibly instead of asking for $70 million more through a tax hike that hurts the people who need the money the most. The fact that Fairfax County spends almost $13,000 per student per year shows there is a problem with efficiency and effectiveness of education spending.

The people of Fairfax County have an important decision to make on November 8. If the Meals Tax passes, it will be another stepping stone for Fairfax County leaders to keep overspending, and residents will pay the price.

Photo Credit: Tax Credits



Five Tax Takeaways from the Debate

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Posted by John Kartch, Laurens ten Cate on Thursday, October 20th, 2016, 10:46 AM PERMALINK

Five key tax points to consider from last night’s debate:

Hillary is open to a payroll tax on ALL Americans of any income level: Hillary mentioned her support for lifting the payroll tax cap. And back in January at an Iowa forum Hillary said she would sign a payroll tax hike on all Americans of all income levels. She said so in a high-profile venue but the press has not focused on it. Here’s the key video excerpt:

Moderator: “Democrats have introduced a plan [Family Act] that Senator Sanders supports that you’ve come out against because it is funded by a payroll tax. If that were to reach your desk as President, would you veto it in order to make good on your tax pledge?”

Hillary Clinton: “No. No.”

The payroll tax increase she green-lighted would hit all wages under $118,500. And last night, she green-lighted a payroll tax increase on those making above $118,500. Nobody at any income level is safe from her payroll tax desires.

Hillary has already admitted she would violate her $250,000 tax pledge: Hillary said: “I have said repeatedly throughout this campaign: I will not raise taxes on anyone making $250,000 or less.Americans for Tax Reform has debunked this claim multiple times already. Her own words (see payroll tax item above) and actions run contrary to her oft-repeated pledge. She has also endorsed a steep soda tax, which Bernie Sanders called her out on, saying: "Frankly, I am very surprised that Secretary Clinton would support this regressive tax after pledging not to raise taxes on anyone making less than $250,000. This proposal clearly violates her pledge.”

Clinton has also refused to support repeal of the seven tax hikes in Obamacare that directly hit Americans making less than $250,000.

Hillary’s gun taxes are a threat to the Second Amendment: During the discussion on the Supreme Court, Hillary slammed the Second Amendment community. Her hostility runs deep. She is on video strongly endorsing a 25% national gun tax and also endorsed a doubling of the existing federal excise tax on guns in 1993. These taxes are a direct threat to the Second Amendment. Anti-gun Democrats continue the push to impose gun taxes after doing so recently in Seattle and Illinois.

Hillary has no tax reform plan: There is overwhelming consensus among Republicans and Democrats agree that the tax code is way too complicated and that tax reform is required to simplify the IRS tax code. Hillary is an outlier. She has not offered a comprehensive tax reform plan and never speaks about the need for structural tax reform. The only thing she offers is tax hikes, and lots of them.

Hillary continues her dishonesty about the progressive nature of the tax code: Once again during the debate Hillary Clinton mentioned that she wants to: “have the wealthy pay their fair share.” She is once again being dishonest about the current tax structure in the United States of America. The tax code in the US is already steeply progressive. According to recent data from the CBO, the top 20 percent of households pay 88% of federal income taxes and 69% of total federal taxes.

Hillary Clinton continues her disingenuous comments about her tax plan and America’s tax plan. She will raise taxes on all Americans. Tax Policy Center recently released a report admitting that Clinton’s tax plan offers no income tax rate reduction for any American of any income level. No rate reduction for any business or any individual, regardless of size.

Clinton’s overall tax plan raises taxes by $1.4 trillion. Americans for Tax Reform is tracking all of Clinton’s tax hikes at

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Marc Nozell,

Show Notes: Hillary Clinton's Tax Hike Plan

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Posted by Alec DiFruscia on Thursday, October 20th, 2016, 9:00 AM PERMALINK

In episode 63 of the Grover Norquist Show, ATR President Grover Norquist runs through the complete list of Hillary’s tax hikes: capital gains tax, death tax, and payroll tax just to name a few. Her tax hike plan will cost Americans over a trillion dollars, and hit middle class families the hardest. 


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Flashback: Hillary Said She Would Violate Her $250,000 Tax Pledge

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Posted by John Kartch on Wednesday, October 19th, 2016, 9:38 PM PERMALINK

Tonight Hillary Clinton tried to claim she won't raise any tax on any American making less than $250,000. But Hillary’s own statements indicate she will break this promise:

Payroll tax hike -- When asked if she would break her pledge by signing a payroll tax increase on all Americans if such legislation reached her desk, Clinton confirmed she would break the pledge. These remarks took place in Iowa at a major forum on Jan. 12, 2016. Here’s the key video excerpt:

Moderator: “Democrats have introduced a plan [Family Act] that Senator Sanders supports that you’ve come out against because it is funded by a payroll tax. If that were to reach your desk as President, would you veto it in order to make good on your tax pledge?”

Hillary Clinton: “No. No.”

The payroll tax increase she green-lighted would hit all wages under $118,500.

Yes, you read that correctly. The legislation the moderator referred to is the Family Act, which raises taxes on all wages under $118,500.

Soda tax hike -- Hillary endorsed a steep soda pop tax in Philadelphia. This will cost soda purchasers an extra $2.16 per 12-pack. Bernie Sanders called out Hillary’s violation of her middle class tax pledge. Sanders said:

"Frankly, I am very surprised that Secretary Clinton would support this regressive tax after pledging not to raise taxes on anyone making less than $250,000. This proposal clearly violates her pledge.”

Sanders also said:

“The mechanism here is fairly regressive. And that is, it will be increasing taxes on low-income and working people.”

Obamacare taxes: Clinton has endorsed Obamacare, which has at least seven direct tax hikes on Americans making less than $250,000: the Obamacare individual mandate tax, two tax hikes on flexible spending accounts, two tax hikes on health savings accounts, an income tax increase on Americans facing high medical bills in a given year, and a 10 percent indoor tanning tax which has wiped out thousands of small businesses (mostly owned by women) since its imposition in 2010.

Just a “goal” -- When asked by George Stephanopoulos in December 2015 if her tax pledge was “a rock solid read-my-lips promise” she did not reply with a “yes.”

Instead she replied that it was merely her “goal.” Here’s the exchange:

George Stephanopoulos: “You are also saying no tax increases at all on anyone earning $250,000. Is that a rock solid read-my-lips promise?”

Clinton: “Well, it certainly is my goal. And I’ve laid it out in this campaign. And it’s something that President Obama promised. It’s something my husband certainly tried to achieve. Because I want Americans to know that I get it.”

If she is serious about keeping the promise, the only acceptable answer to Stephanopoulos’ question is “Yes.” Instead she tipped her tax hike hand.

Also note Hillary’s reference to Bill Clinton’s and Barack Obama’s middle class tax pledges: both men broke their pledge upon taking office.

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The UN Wants to Tax Your Soda

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Posted by Anthony McAuliffe on Wednesday, October 19th, 2016, 1:50 PM PERMALINK

The UN’s World Health Organization (WHO) released a report recommending that all countries levy a steep excise tax on soft drinks of at least 20 percent. The proposal represents a dangerous new precedent whereby international organizations will encroach on national sovereignty by telling nations how to tax their own citizens. The recommendations further represent a restriction of choice on global citizens, as well as an ineffective way to combat the global issue of obesity. 

First, a one-size fits all solution for obesity will not work for every country, and sometimes may not work at all. For example, Mexico implemented a soda tax and saw an decrease in sales by 1.9%. However, the next year sales rose by .5%. In Finland, sales dropped the first year and then returned to prior levels the next year. Each country should be able to come up with its own solutions for its own citizens, without worrying about the UN pushing its own policy recommendations. 

Furthermore, an international organization telling nations how they should tax their own citizens directly encroaches on national sovereignty. These “recommendations” risk a full on policy proposal that might force nations to adopt this soda tax. While that has not been proposed as of yet, nations must continually push back against any perceived abuses by UN organizations to undermine national sovereignty

Additionally, international organizations, as well as national governments, should not be dictating certain diets for people. Part of the beauty of our nation, and indeed many across the world, is individual liberty and freedom of choice. People should be free to choose what kind of diet they want, whether that be a healthy diet, an unhealthy diet, or a balanced mix. While the WHO characterizes a soda tax as “key population-based policy interventions,” that is just fancy language for an encroachment on your individual liberties. 

Another issue involves fairness: a soda tax would disproportionately affect poor people. People with more money would still be able to afford soda, giving them the liberty to make a choice as to whether or not they will purchase it. People with little money, on the other hand, may no longer have the liberty and choice to consume soda. Furthermore, those with little money may still spend money on soda, but that would end up constituting a larger expense of an already limited budget. A regressive tax like this would be fundamentally unfair to those already economically disadvantaged. As Bernie Sanders said of the recently-imposed Philadelphia soda tax: "The mechanism here is fairly regressive. And that is, it will be increasing taxes on low-income and working people."

Rather than push high taxes that force people out of buying soda, governments could instead encourage education on a well-balanced diet complemented by exercise. In the U.S., soda consumption has dropped by 25% since the 1990s, but Americans are still obese. Most foods can cause obesity when eaten in excess, so is the solution to just start taxing everything? The WHO seems to forgo this option of education on a healthy style, instead choosing to favor forcing people to adopt a healthy lifestyle against their own free will. 

So is this a threat in the U.S.? Philadelphia is the first major city to adopt a soda tax, and others have tried but narrowly failed. City and state governments might feel emboldened by the UN recommendations, so soda tax laws could be on the ballot soon in several cities and states across the nation. Stay informed to protect your right to enjoy a soda at the normal price. 

Photo Credit: 
Mike Mozart

Worker’s Choice: A Solution That Benefits Everyone

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Posted by Rayanne Matlock on Tuesday, October 18th, 2016, 4:48 PM PERMALINK

Seventy percent of union members in Michigan agree that employees who choose to opt-out of union membership should represent themselves in negotiations with their employer. As it stands, current policy does not allow that to happen.

Michigan is seeking to change the norm with Worker’s Choice, introduced to the state legislature this year by State Rep. Gary Glenn, R-Midland. First championed by Mackinac Center for Public Policy’s Vincent Vernuccio, Worker’s Choice provides a simple solution that works for employees, unions and even employers in the public sector. The policy allows for employees to represent themselves in negotiations with their employer if they choose to opt out of union membership.

Unions present in a public sector workplace are required to represent all employees, whether they are dues-paying members or not. Unions claim that these employees who have opted out are “free-riding”, or receiving their services without membership.

On the flipside, employees aren’t free from union grasp either. Each employee is unique, and they all have different needs. These employees may be subject to working conditions not suitable for their lifestyle, and they can’t do anything about it.

Worker’s Choice solves both of these concerns by severing the relationship between nonmembers and unions, so that nonmembers can represent themselves should they desire different working conditions.

But the benefits don’t stop there.

As recently explained in an ATR op-ed on Worker’s Choice, employers have something to gain from the policy as well:

“Employers would benefit from Worker’s Choice because, by increasing the odds of employees appreciating their hours, salaries and other terms of employment, workplace morale and loyalty would likely increase.”

Lastly, even union members can benefit from Worker’s Choice. The policy would provide competition in the workplace between individuals representing themselves for better working conditions, and union members. This will incentivize unions to better represent their workers so as to retain union membership.

 Worker’s Choice is a fair policy that works for everyone. It would end unions’ concern that they are being taken advantage of, grant workers the freedom to negotiate on behalf of themselves and potentially make things better for union members and employers.

Read ATR’s full op-ed on Worker's Choice here

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Congress Must Stop Obamacare Bailouts

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Posted by Toni-Anne Barry, Alexander Hendrie on Tuesday, October 18th, 2016, 10:00 AM PERMALINK

Six years after it was signed into law, Obamacare is failing. Insurers are hiking premiums or leaving Obamacare marketplaces because they cannot make any money. Taxpayer financed co-ops are collapsing despite generous loan terms. Individuals on the exchanges are losing their plans and find their already limited healthcare choices narrowing.

The President should acknowledge that the law is broken and work to reform the system to lower costs, improve quality, and ensure all Americans have access to healthcare that best suits their individual needs. Instead, the Obama administration is pushing several taxpayer funded bailouts of the law through the risk corridor and transitional reinsurance programs.

In the past few years, the government has stolen a total of $8.5 billion in taxpayer dollars to illegally fund Obamacare through programs like reinsurance. If Congress fails to act, the law could provide more than $170 billion in corporate welfare payments to special interests.


Over 50 conservative groups have signed a coalition letter urging congress to stop the Obamacare bailouts. Congress must reassert their authority and stop the Obama administration from using taxpayer dollars to bail out the failed programs.

Reinsurance Bailout Costing Taxpayers $3.5 Billion: In order to disguise the costs to American families, the law has relied on a web of confusing spending programs, subsidies, and taxes. One program, known as transitional reinsurance imposed a fee on each individual with private health insurance to raise $25 billion, including $5 billion that would go back to taxpayers via the Treasury general fund.

In both 2015 and 2014, the program failed to take in the expected sums, so the Department of Health and Human Services (HHS) decided to illegally funnel funds to Obamacare insurers. As announced earlier this year, Obamacare insurance companies would receive $7.7 billion through the reinsurance program – $6 billion obtained from a fee on private health insurance and $1.7 billion taken from the Treasury general fund.

Because HHS did the same last year, a total of $3.5 billion has been stolen from taxpayers using the reinsurance program.

Section 1341 of Obamacare, which establishes reinsurance, explicitly allocates that taxpayer dollars “shall be deposited into the general fund of the Treasury of the United States and may not be used for the [reinsurance] program established under this section.”

Multiple legal opinions have concurred that the reinsurance bailout is illegal:

  • A opinion released by the Government Accountability Office (GAO) found that HHS was ignoring federal law by diverting funds from Treasury to Obamacare insurers.
  • Similarly, a memo released by analysts at the nonpartisan Congressional Research Service found that federal law “unambiguously” states funds must be deposited into the Treasury general fund.
  • Former White House Counsel C. Boyden Gray also called the diverting of funds “unlawful” and questioned how it could possibly withstand legal scrutiny.


Congress a duty to step in and block this illegal action. They can do so by passing the Taxpayers Before Insurers Act, legislation introduced by Congressman Mark Walker (R-N.C.) and Senator Ben Sasse (R-Neb.) that forces HHS to return the stolen $3.5 billion to taxpayers. This pro-taxpayer legislation forces the Obama Department of Health and Human Services to obey the law and return billions in funds to their rightful owner – the American people. If they fail to do so, the legislation strips HHS of billions in taxpayer funds.

Risk Corridors Settlements Will Cost Taxpayers Billions More: Like the reinsurance program, the risk corridor program was created as a “stabilization” program when Obamacare was passed into law. The program was designed to encourage insurers to take on higher risk individuals by transferring funds from insurers who made financial gains to those that posted losses. Because insurers were unable to make any money from operating on exchanges the program failed to work as expected.

For the 2014 season, insurance providers requested $2.87 billion in payments but the program took in $362 million, just 12.6 percent. Federal law requires the program to be budget neutral, so the federal government was unable to pay out the remaining $2.5 billion to insurers off the backs of taxpayers, as they attempted at the end of last year.

Despite this restriction, the Obama administration is now looking to pay out this money in their final days of office. The Center for Medicare and Medicaid Services (CMS) blatantly announced in a memo that it intends to circumvent federal law and the will of Congress by offering settling with insurance companies that have sued over the Risk Corridor program. The federal government will do this by offering them settlements from the Judgment Fund, which is outside the scope of Congressional appropriations.

Like the reinsurance bailout, there is no question this action is illegal. The Government Accountability Office has again said there is no legal justification. Their analysis shows that when a government agency cannot pay its dues, it must get funding through Congress. Even the Obama Department of Justice has said that insurers aren’t entitled to the billions that CMS wants to pay them. 

The law is clearly imploding. Rather than push bailouts to Obamacare at the expense of taxpayers, the administration should work with Congress to find fixes to the law.  

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Hillary Can’t Stop Stealing Furniture From the American People

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Posted by Laurens ten Cate on Tuesday, October 18th, 2016, 9:40 AM PERMALINK

Furniture owned by the American taxpayer keeps disappearing when Hillary is in charge

The FBI on Monday released a new batch of interview summaries related to the investigation into Clinton’s private email server during her tenure as Secretary of State. These so-called 302s were released under the Freedom Of Information Act (FOIA) and include some interesting new facts about Hillary Clinton’s scandal marred Secretary of State term.

As shown on page 44 of this FBI document, Hillary and her staff walked out with taxpayer-funded furniture and lamps and took them to her Georgetown home:

“Early in CLINTON’s tenure as Secretary of State, she and her staff were observed removing lamps and furniture from the State Department which were transported to her residence in Washington, D.C.”

This observation comes from an interview held on the September 2, 2015 with a Special Agent of Homeland Security Investigations (HSI). The agent also mentions that he does not know whether the items were ever returned after Clinton’s tenure as Secretary of State ended.

Helping herself to the public’s furniture seems to be a recurring theme in Hillary’s political career. When the Clintons transitioned out of the White House the Washington Post reported that the Clintons took with them nearly $200,000 worth of furniture, artwork, china and rugs.

They received these items initially as gifts to the White House and the donors obviously expected that they remain there. Like Joy Ficks, widower of the manufacturer of a table given during the 1993 White House redecoration project, told the Washington post that “it was meant for the White House, not the Clintons, and she thought it would stay there.”

Then White House chief usher Gary J. Walters told the Washington Post: "As far as we were concerned, they were government property," he said of all the gifts obtained for the $396,000 redecoration project.

The Post also notes:

This week, they [Clinton] agreed to return another set of gifts that had been donated to the White House in earlier years, including six items they had not previously disclosed as having been taken. These included the coffee table, the armoire, the gaming table and the wicker table that Walters has asked about a year ago.

Not long after the Washington Post broke this story the Clintons had to return over $114,000 worth of these gifts. That wasn’t enough for Congress though, they requested an official investigation in this matter and a report was made in 2002 by the Committee on Government Reform.

The Committee found:

The committee also finds that the subcommittee’s investigation revealed startling information about retained gifts, valuation of gifts, missing gifts, legal rulings about gifts, and other findings”


“The fact that so many gifts were undervalued raises many questions. The fact that gifts were misplaced or lost shows sloppy management and maybe more. The fact that U.S. Government property was improperly taken is troubling.”

And lastly, most concerning:

“And, the fact that, after the former First Lady’s election to the U.S. Senate and before she was subject to the Congress’ very strict gift acceptance rules, the former First Family accepted nearly $40,000 in furniture gifts and the First Lady solicited nearly $40,000 in fine china and silver is at the very least disturbing.”

The fact that the Clintons steal everything they can is a recurring issue and lays bare deeper character flaws that show up in their tendency to promote extreme tax policies. As they don’t have a moral issue with taking what’s not theirs, opposition to their proposed tax hikes must seem absurd to them.

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School Choice 2.0: Why You Should Support Education Savings Accounts

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Posted by Rayanne Matlock on Monday, October 17th, 2016, 9:20 AM PERMALINK

On September 29th, the Nevada Supreme Court issued a landmark decision that upheld its Education Savings Account (ESA) program as constitutional. Passed by the Nevada legislature in 2015, these savings accounts are revolutionizing K-12 education by providing a marketplace for parents to choose where to send their children to school.

Americans nationwide are familiar with more than 15 tax-advantaged savings accounts that exist in healthcare, retirement and higher education. Relatively new are savings accounts for K-12 education, formally called Education Savings Accounts (ESAs).

This movement started with Arizona, the pioneer state of implementing Education Savings Accounts (ESAs) in 2011. This year, Arizona expects 2900 students to enroll in its Education Savings Account (ESA) program, up from 302 participants in 2013. In 2013, 71% of parents who had children enrolled in the program were satisfied with their ESA.

ESAs give parents the flexibility to tailor their child’s education to meet their needs. The program places the money that would normally be spent on a child in public school into an account that is given to the parents. Parents can then use that money to pay for school tuition at charter, private, and online schools.

Now, approximately 22 states have implemented or considered adopting their own version of ESAs. Five states currently have ESA programs in place.

Arizona, TennesseeFlorida, and Mississippi limit the program to students with special needs or military connections. While this is a great start, ultimately all students should have access to schools that best suit their needs. This is why Nevada has perhaps the most robust ESA program: all 450,000+ K-12 students in the state are eligible to register, no matter their circumstance.

While voucher programs, tax credit scholarships, charter schools and the like have done wonders in improving education, states with such programs in place should not stop there. Though ESAs and vouchers have some similarities, ESAs take school choice a step further: 

1.       ESAs do not operate as a use-it-or-lose-it concept

Like most state voucher programs, the allotted money for a child to attend public school is instead used towards tuition to attend a different school. In a voucher program, any extra money after paying tuition is given back to the state. But with an ESA program, parents get to keep the money left over.

2.       ESAs put parents in control

In most voucher programs, parents choose the school they want their child to go to and the state then transfers the money to the school of choice. But in most ESA programs, parents are given a special debit card or account and can pay school tuition directly. Not only that, but some schools decline to accept vouchers, limiting the school choices for parents.

3.       ESAs have flexible spending

Since any extra money in the voucher program goes back to the general education fund, it can only be spent on tuition. With ESAs, any money left over after paying tuition can be used for other school expenses. That includes textbooks, school supplies, some therapies, and even college savings accounts.

Parents know what’s best for their children, and education is no exception. While voucher programs are a great function of school choice, states with vouchers shouldn’t stop there. ESAs put parents in charge, can provide children from all economic backgrounds a quality primary education, and a chance at saving for college. An ESA program is a logical policy that expands school choice. 

For these reasons, Americans for Tax Reform urges all states in their 2017 legislative sessions to look at implementing an ESA program.


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