Obama Debt Panel Plans<br> $2.4 Trillion in Post-Election Tax Hikes
ATR has been saying for months that the Simpson-Bowles Obama "debt commission" is merely a ruse to push a tax hike plan after the election. Now, according to published reports in the Wall Street Journal, that seems to be the case:
Sacrosanct tax breaks, including deductions on mortgage interest, remain on the table just weeks before the deficit commission issues recommendations on policies to pare back with the aim of balancing the budget by 2015.
The tax benefits are hugely popular with the public but they have drawn the panel’s focus, in part because the White House has said these and other breaks cost the government about $1 trillion a year.
At stake, in addition to the mortgage-interest deductions, are child tax credits and the ability of employees to pay their portion of their health-insurance tab with pretax dollars. Commission officials are expected to look at preserving these breaks but at a lower level, according to people familiar with the matter.
Let's take this at face value, and assume that these are the "$1 in tax hikes for every $3 in spending cuts" promised by Bowles and supported by Senator Judd Gregg (R-N.H.) What's the income tax hike envisioned here?
For that, we turn to the "tax expenditure" section of the President's budget. Here's the results (all figures are five-year scores from FY 2011-2015):
- Mortgage interest deduction: $638 billion
- Child tax credit: $60 billion (this is only the revenue loss, not the outlays)
- Exclusion for employer-provided health insurance: $1.054 trillion (plus $613 billion in higher FICA taxes)
So, altogether we're talking about a five-year tax hike in the neighborhood of $2.4 trillion. This is a pretty good proxy for the ten-year CBO/JCT score given the fact that the report says these will be curtailed, not eliminated.
Getting rid of these tax credits and deductions might be a good idea in the context of revenue-neutral (or tax-cutting) comprehensive tax reform--but that's not what's on the table here. This is a pure tax hike, plain and simple. There's no doubt that the government would spend all the new money, as well. We'd end up with higher taxes and higher spending, just like after the 1982 and 1990 budget deals.
Norquist Statement Urging Support of Betsy DeVos Nomination
ATR President Grover Norquist sent the following letter urging senators to approve the nomination of Betsy DeVos as Secretary of Education:
On behalf of Americans for Tax Reform, I write you to urge your committee and the full United States Senate to approve the nomination of Betsy DeVos to become the Secretary of Education.
Betsy DeVos has been a leader in providing innovative solutions to bring higher quality education to children throughout the United States who are most lacking in educational options and opportunity.
As chairperson of the American Federation for Children, Mrs. DeVos assisted organizations and lawmakers in dozens of states to promote and adopt policies to enable students, particularly from high-need communities, to have equal access to schools that best meet their educational needs.
Thanks in part to Mrs. DeVos, more than half the states have tax policies that encourage charitable donations to scholarship funds to help students from low-income families, or encourage support for students with disabilities, or enable parents to choose schools that best meet the needs of their children. More than 40 states now have charter school laws.
The specific approach of education tax credits to encourage increased charitable support for scholarship funds has been especially effective in providing children from low-income families a financial pathway to attend a quality school – something that upper income parents already can provide for their children. At present, 17 states have a donation tax credit law for scholarships, which serve as models for Congress to consider adopting nationally so that many more children can be empowered to attend schools that will provide the education they need and deserve.
Thanks to the leadership and encouragement of Betsy DeVos, there are millions of students who have an education that puts them on a quality-of-life trajectory to become productive citizens.
It is this kind of national leadership that has made a positive difference in the lives of so many students that warrants your approval for Betsy DeVos to become the next Secretary of Education.
President, Americans for Tax Reform
Rep. Emmer's "CREATE Jobs Act" Will Fix America's Competitiveness Problem
Congressman Tom Emmer (R-MN) recently introduced H.R. 533, the Corporate Rate Equality and Trade Empowerment (CREATE) Jobs Act. This innovative legislation lowers the corporate tax rate to a globally competitive level so American businesses are able to compete in the global economy. ATR urges all members of Congress to support and co-sponsor Rep. Emmer’s bill.
America’s corporate income tax rate is close to 15 percent higher than the average in the developed world. The tax rate has barely changed since tax reform was passed 30 years ago in 1986. At the time, we lowered our rate to 39 percent – below the developed average of 44 percent. Since then, other countries have cut their rates aggressively.
32 of the 35 developed countries have reduced their corporate rates since 2000. Only the U.S. and Chile have higher corporate tax rates than they did in 2000. Our high rate makes it difficult, if not impossible for our businesses to compete with competitors that have much lower rates Canada (26.3 percent), the United Kingdom (20 percent), and Ireland (12.5 percent).
The CREATE Jobs act would address this inequity by reducing the U.S. corporate rate to five points below the OECD average and creating a process by which the U.S. rate is regularly reviewed to ensure economic competitiveness.
The current high U.S. rate not only hurts American competitiveness, it has real world implications for the economy. The high rate has resulted in close to 50 American businesses leaving the country through an inversion in the past decade, according to data compiled by Democrats on the Ways and Means Committee. The uncompetitive code has also resulted in a net loss of more than $700 billion in assets that have been acquired by foreign competitors according to a report by Ernst and Young.
By creating a system that creates a competitive corporate tax rate, Rep. Emmer’s CREATE Jobs Act ensures that the U.S. again becomes a leader in the global economy and it stays there. Members of Congress should support and pass H.R. 533 to help provide a much needed booster shot to the economy.
The letter can be read here.
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ATR Supports Rep. Renacci's "Fiscal State of the Nation" Resolution
ATR today sent a letter in support for H.Con.Res.8, the Fiscal State of the Nation Resolution, introduced by Congressman Jim Renacci (R-Ohio) along with 34 other members of the House of Representatives.
This bipartisan resolution will require the Comptroller of the United States to provide an official report on the financial status of the United States to a joint session of Congress.
Financial statements for the United States are already compiled, but are too complex and too long. As a result, important information on the federal government’s assets, liabilities, revenues, expenses, and sustainability of programs are often ignored or missed by Members of Congress, the media, and the public.
The full letter can be read here.
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ATR Supports the Health Savings Act of 2017
Americans for Tax Reform recently sent a letter supporting H.R. 35, the Health Savings Act of 2017 sponsored by Congressman Michael Burgess (R-Texas). By making important improvements to HSAs this commonsense legislation gives individuals and families the ability to make the best decision for their medical needs.
The incoming Congress is committed to reform our health care system by repealing and replacing Obamacare as well as implementing reforms that put patients first and are fiscally responsible. The Heath Savings Act of 2017 will expand the limits of HSAs, helping to ensure patient-centered healthcare reforms by keeping costs low and allowing Americans to make decisions that fit their needs.
ATR support the Health Savings Act of 2017 and urges all members of congress to vote is support of this commonsense legislation.
The letter can be read here.
ATR Joins Coalition Urging Confirmation of Scott Pruitt as EPA Head
Americans for Tax Reform this week joined over 20 other free market organizations in sending a letter to U.S. Senators supporting and urging confirmation of Attorney General Scott Pruitt as Administrator of the Environmental Protection Agency (EPA). Highlights from the letter are below with a PDF of the full letter.
"Attorney General Pruitt has consistently fought for Oklahoma families and communities and has been a stalwart defender against federal intrusion into state and individual rights. Notably, Mr. Pruitt led a multi-state effort opposing the EPA's unlawful attempt to take over the nation's electricity grid under section 111(d) of the Clean Air Act," the letter states.
In addition to Mr. Pruitt's work fighting Obama's Clean Air Act overreach, the letter also cites that, "Attorney General Pruitt has stood up for states, families, and the Constitution by opposing the Administration's unconstitutional regulatory overreach through the re-definition of the waters of the United States."
Both the Clean Power Plan and Waters of the U.S. Rule infringe state sovereignty, impede the Constitution, and will have far reaching negative impacts on jobs, income, and economic prosperity across America if they are allowed to move forward.
Americans for Tax Reform supports all the work Mr. Pruitt has done to fight these instances of overreach and others, and urges Senators to support his confirmation as EPA Administrator.
Photo credit: Gage Skidmore
Amendments to Obamacare Repeal Resolution Aim to Delay and Distract
The Senate is expected to soon vote on S.Con.Res.3, a budget resolution providing for repeal of Obamacare. This “repeal resolution” is step one in undoing the legacy of broken promises under the Barack Obama presidency which have led to higher healthcare costs, cancelled plans, lost doctors, and more than one trillion ($1,000,000,000,000) in tax increases which hit American families and small businesses.
This is a huge win for taxpayers, and should be supported by all Senators. During consideration of the repeal resolution, it is expected that Senators will also offer a number of amendments during consideration of the repeal resolution with the aim of distracting and delaying the process. One example of this is a series of introduced amendments that call for the importation of market distorting price controls on prescription medicines.
Members of the Senate should vote “no” on any importation amendments – and many of the other amendments expected to be offered during consideration of the repeal resolution. The purpose of this budget resolution is to allow for an expedited process to repeal Obamacare through budget reconciliation. More time wasted on amendments threatens the entire process of repealing Obamacare.
Importation schemes are not the solution to lower prices or a more efficient healthcare system. Instead, they would disrupt the system of medical innovation and increase long-term costs through the domino effect of fewer life-saving and life-preserving medicines. These amendments are simply an attempt by some Senators to play political games by proposing a seemingly free market way to reduce prescription drug prices.
The truth is, allowing importation of prescription medicines is not pro-free trade. Almost every other country in the world has excessive price controls on medical innovation. Prices are not determined by the free market but by politicians offering voters seemingly cheap medicines. In turn, allowing importation of a drug also means for the importation of the price controls.
This is the opposite of free trade. Free trade means transparent prices with no tariffs, barriers, or price controls. The U.S. is one of the few countries that allow drug prices to be (mostly) set by the free market, and is also a leader in medical innovation. Reversing this trend by allowing ill-thought out importation policies will hurt American innovators which pour billions of dollars each year into creating new innovative medicines that result in substantial long-term savings for our healthcare system.
The Senate will soon vote on a repeal resolution that will lead to a giant tax cut for American families and small businesses. This is a huge win.
Members should not dilute or threaten this win by passing amendments that slow or endanger the process, especially those that promote dangerous, anti-free market policies like importation of price controls on prescription medicines.
Email Privacy Act Reintroduced in Congress
On Monday, January 9th, 2017 Kansas Rep. Kevin Yoder (R-KS) and Rep. Jared Polis (D-CO) reintroduced the Email Privacy Act. This bipartisan bill will plug a loophole that allows civil and criminal investigative agencies the ability to bypass Fourth Amendment protections of our online content.
The Email Privacy Act would update the Electronic Communications Privacy Act (ECPA) of 1986 to underline that all a warrant is required in order to search Americans’ online communications, regardless of when the email was crafted. ECPA contains an unintended loophole that allows the government to search any email older than 180 days stored on a third-party server, such as Google Mail, Yahoo Mail or Apple’s iCloud, without a warrant.
Grover Norquist, President of Americans for Tax Reform strongly argued in favor of the Email Privacy Act legislation. "American privacy was the big winner when the House passed the Email Privacy Act! They send the bill to the Senate after a 419 -0 vote. If the Senate concurs the government will need a warrant to read your e-mails—just as they have always needed a warrant to read your snail mail.”
Katie McAuliffe, ATR’s Federal Affairs Manager and Executive Director of Digital Liberty said,
“Passage of the Email Privacy Act was a large bipartisan effort and a major victory in securing American’s digital privacy. Updating the Electronic Communications Privacy Act is absolutely necessary in order to secure the privacy of emails and other items stored in the Cloud.”
In the 114th Congress (2015-2016) the House voted 419-0 to pass the legislation, but the bill stalled in the Senate Judiciary Committee after amendments were offered that privacy advocates said would give the civil and criminal investigative agencies even more "unwarranted" surveillance power than the status quo.
Both House Judiciary Committee Chairman Bob Goodlatte (R-VA) and Ranking Member John Conyers (D-MI) are original cosponsors of the bill. Representatives Doug Collins (R-GA), Will Hurd, (R-TX), Ted Poe (R-TX), Susan DelBene (D-WA), Jerrold Nadler (D-NY), and Judy Chu (D-CA) have also joined as original cosponsors of the bill.
Indiana Republican House Speaker Bosma Pushing for Gas Tax Hike Again
New Year, New Me? Not if you’re Indiana House Speaker Brian Bosma (R-88). For the second year in a row, the Speaker is pushing a hike in the state’s gas tax.
House Republicans unveiled a series of tax hikes last Wednesday in an effort to raise about $800 million in new funds for the state’s transportation infrastructure over the next two years. The plan would not only slap Indiana taxpayers with a 10 cents per gallon gas tax hike but it would also index the tax to inflation, and increase the special fuel and motor carrier surcharge tax.
From the new revenue generated, the state would allocate roughly $300 million in new dollars to state roads in fiscal year 2018 and between $480 million and $540 million the following year. The proposal would also redirect the remaining 4.5 cents of the sales tax on gasoline that is currently diverted to the general fund to the state highway fund, starting in 2019.
The proposal also imposes a new annual $15 fee on every vehicle registered in the state and a $150 per-year fee on electric vehicles. These taxes are projected to generate $92 million per year and would be allocated to local roads.
As detailed above, the proposed solutions to the state’s transportation needs are only focused on raising taxes and not reforming government or reallocating currently collected resources. By allowing the gas tax rate to increase automatically every year, lawmakers are placing tax hikes on autopilot and are stripping from the budget process the responsibility and accountability that come with annual decisions about tax rates.
Second, gas tax revenue will continue to be diverted to the state’s general fund until 2019. If transportation funding were truly a priority, lawmakers would immediately use gas tax revenue for its intended purpose: roads. Legislators would also permanently codify the earmarking of gas tax revenue to new and existing transportation projects.
Third, the gas tax is not a user fee. Consumers must be presented with a choice of either purchasing the service from the government (by paying the fee) or purchasing the services from a private business in order to qualify as a true user fee. Because anyone who purchases gasoline in Indiana is forced to pay the tax, they are not considered user fees. Gas tax increases are tax increases in the same way that income and sales tax increases are. Road tolls, however, are an example of user fees. Tolls are user fees because commuters have the option of using the roads they are imposed upon or not.
Now that hardworking Hoosier families can finally afford to fuel their cars and heat their homes, legislators should not strip them of economic opportunity by making gas increasingly unaffordable. Reasonably and low-priced gasoline allows people to spend more money on groceries and other necessities, including long-term investment savings. Americans for Tax Reform will closely monitor this issue as it develops in the coming weeks and working to educate taxpayers of where their legislator stands on tax hikes and government reform.
ATR Urges Passage of S.Con.Res.3, The Obamacare Repeal Resolution
Passage of Repeal Resolution is First Stage in Passing A Trillion Dollar Tax Cut
Congress is expected to soon vote on S.Con. Res. 3, a budget resolution providing for repeal of Obamacare. The “repeal resolution” is step one in undoing the legacy of broken promises under the Barack Obama presidency which have led to higher healthcare costs, cancelled plans, lost doctors, and more than $1 trillion in tax increases which hit millions of middle class families.
All members of the House and Senate should vote “yes” on the repeal resolution. The record of Obamacare is one of broken promises and failed policies. Poll after poll has shown the law is unpopular with the American people. Republicans campaigned on repealing Obamacare and this resolution will allow them to fulfill that promise.
Members of the Senate should also vote “no” on the numerous amendments expected to be offered during consideration of the repeal resolution. The purpose of this budget resolution is to allow for an expedited process to repeal Obamacare through budget reconciliation. These amendments will slow down the process and are largely an attempt for members to play political games.
Passing the repeal resolution will allow members of Congress to pass the first of many tax cuts over the next four years by repealing the more than $1 trillion in higher taxes over a decade. Obamacare’s tax hikes directly hit middle class families, in violation of President Obama’s “firm pledge” not to raise any tax on any family earning less than $250,000 per year. Passing the repeal resolution will allow members of Congress the opportunity to pass the first of many tax cuts over the next four years by repealing these taxes.
The Obamacare law imposed taxes on Health Savings Accounts and Flexible Spending Accounts and imposed an income tax increase on Americans with high medical bills. Obamacare levied a new tax on health insurance, a tax on medical devices, a tax on employer provided care, a steep “indoor tanning tax” and even a tax for not buying “qualifying” government-mandated insurance.
Passing the repeal resolution will also allow Congress to undo a long list of wasteful subsidies including the risk corridor and reinsurance programs as well as the Prevention and Public Health slush fund. Each of these programs and agencies have seen billions in taxpayer dollars wasted on partisan activities at a time when the federal government already spends far too much.
Support for S.Con. Res. 3 is the first step toward enacting a conservative, patient-centered, fiscally responsible healthcare system and eliminating the broken promises, wasteful spending, and higher taxes of the Obama years.
I read the resolution and can't get past the budget increases of almost $1T/year. Am I missing something?
State Overspending May Be A Significant Problem for Vapers in 2017
As the 2017 legislative session kicks off in states across the country, three-fifths of states face overspending problems that will force serious discussions about currently collected tax revenue and future spending levels. More commonly but incorrectly referred to as budget shortfalls, states across the country face a conflict between anticipated revenue levels and out of control budget growth. It should come as no surprise to consumers of vapor products that this presents the threat of new product taxation in states where sin taxes have not yet been imposed.
Electronic cigarettes and vapor products are used by millions of consumers in the United States as a means to quit smoking combustible, or traditional cigarettes. The mounting evidence suggests that these smoking cessation products are at least 95 percent less harmful than cigarettes. That, however, hasn’t deterred lawmakers from targeting the growing multi-billion dollar industry and its consumers with tax hikes.
By sheer number of threats in recent years, vapor products have been the number one targets for tax hikes of any product or type of tax imposed by states, including cigarettes. And while lawmakers have succeeded at raising or phasing in more increases in state cigarette taxes (15 times since 2013), the imposition of entirely new sin taxes on vapor products in 6 states (plus once by voters) is a trend we at ATR will continue to monitor.
In each of the seven states that will impose an excise tax on vapor products in 2017, six came about as part of a tax package between 2012 and 2016 that also increased the state cigarette tax rate. The trend of considering tax increases on both products at the same time mirrors a national problem the vapor industry and its consumers face; the incorrect perception that the products are similar because vaping looks like smoking and thus a natural extension of a cigarette tax hike is an e-cigarette tax hike as well.
Until the emergence of vapor products, cigarettes were the number one targets of tax hikes in the states. Between 2000 and 2016, 48 states and the District of Columbia passed 135 state cigarette tax increases, five times the number of tax hikes passed on liquor.
Below is a summary of legislative tax changes imposed last year alone. As you can see, state tobacco tax hikes represent the second largest type of tax hike from FY17.
Cigarettes are a popular scapegoat for overspending and shortfalls because the taxes can bring in somewhat significant revenue quickly without much opposition from consumers, even if it the money may be short-lived, cause budget volatility, lead to black markets, and punitively punish the poor. Regardless, cigarettes remain a top target for tax-hungry politicians.
In an era (post-2010 GOP gains across the country) of opposition to broad-based tax increases (a win for most taxpayers), sin taxes are an easy target for politicians in tough economic times who wish to raise as much money as possible from as few voters opposed. Though misguided, it’s the reality. As such, with more than half of U.S. states facing overspending problems (shortfalls), 2017 may be a tough year for lawmakers, “sinful” product consumers, and small businesses across numerous industries.
To preview the states where new vapor product taxes may be a real risk, I’ve compared the states with budget shortfalls (MultiState rundown here) to those that have passed a cigarette tax increase in recent years. In most cases, states that have passed a cigarette tax in the last four years are unlikely to do so again this year and new standalone vapor taxes will be rare, though possible.
Overspending problems aren’t the only things that cause tax hikes; some politicians are simply addicted to your money. As such, I’ve also included a number of states where budget discussions and the political climate lend itself to a real threat that a vapor product tax may be sent to the governor’s desk regardless of a stable budget outlook.
States with a defined overspending problem in 2017 where cigarette taxes have not been raised in the last four years (2012-2016), and the projected budget gap:
- Alaska: $4 billion;
- Colorado: $119 million;
- Delaware: $350 million;
- Illinois: greater than $10 billion;
- Indiana: $378 million;
- Iowa: $132 million;
- Maryland: greater than $175 million;
- Missouri: greater than $200 million;
- Nebraska: nearly $1 billion;
- New Mexico: $69 million;
- New York: $689 million;
- North Dakota: $310 million;
- Oklahoma: $868 million;
- Virginia: $861 million;
- Washington: $474 million;
- Wisconsin: $693 million;
- Wyoming: $156 million.
States with an undefined but possible shortfall and no recent cigarette tax hike:
- Montana – governor has already called for a tobacco tax hike;
- South Dakota;
- Texas: lackluster forecast.
States with a budget shortfall, cigarette tax hike in last four years, and possible vapor tax:
- Alabama: greater than $40 million;
- Connecticut: greater than $1.3 billion;
- Massachusetts: nearly $300 million;
- Oregon: $1.7 billion;
- Rhode Island: $112 million;
- Vermont: greater than $40 million.
States without a budget shortfall but possible vapor tax:
- Ohio – vapor tax proposed by current governor in prior years;
- Hawaii – the state with more tobacco bills annually than anywhere else.
States without a shortfall or reason to believe there will be a successful effort to impose a vapor tax in 2017 include Arizona, Arkansas, Florida, Georgia, Idaho, Kentucky, Maine, Michigan, Nevada, New Hampshire, New Jersey, South Carolina, Tennessee, Utah.
Summary, in case you skipped to the bottom: A lot of states have overspent tax dollars in recent years, quickly forgetting (or neglecting) the impact of slow recession-era growth on budgets and state governments. Unfortunately for consumers, targeted excise taxes on products like cigarettes and a misconception that vaping is smoking by another name has put consumers of life-saving products like electronic cigarettes in the crosshairs of the ever-present threat of tax increases at the state level.
Americans for Tax Reform opposes all tax increases as a matter of principle and will continue to monitor and fight efforts to subject life-saving products like vapor products to new and higher taxes.
Publisher's note: The assessments made in this post are based predominantly on the fiscal conditions of states in 2017. It is quite possible that additional states, like Utah and Nevada, will consider proposals to tax vapor products despite a nonexistent need to balance the state budget beyond projected tax collections and spending rates. It is also possible that states labeled possible threats will not consider excise taxes on vapor products as smarter alternatives such as spending restraint is considered instead. This map and post simply serves as a suggestion that where tax hikes are considered, history can be a strong but not guaranteed indicator of future outcomes.
If you’re interested in more information on 2017 state budget conditions, read the National Association of State Budget Officers most recent “Fiscal Survey of States.”
TAXES, TAXES TAXES.....cut welfare reform, food stamps division to able bodied workers from 21-50 years old and cut the national debt.....stop your budget wastes and government over-reach to cut costs...can't ANY of you learn from your past mistakes and failures? Put people to work doing something....picking up liter off the highways, helping out in community activities, clean up their own neighborhoods, paint houses, DO SOME WORK....stop the HANDOUTS TO MANY WHO CAN DO SOMETHING....and stop taxing, taxing, taxing the working middle class!!! WE ARE SICK OF IT!!!