The Americans for Tax Reform Foundation today released the 2021 International Trade Barrier Index. Singapore, New Zealand, and the Netherlands scored the top spots for trade liberalization. While India, Algeria, and China ranked the worst for deploying the most protectionist trade barriers. Due to Brexit, the UK is the most improved moving from 8^th to 4^th as it implements its own tariff schedule reducing trade barriers between it and the rest of the world. 

Trade barriers on the rise 

The TBI measures the direct and indirect trade barriers imposed by 90 countries affecting 84% of the world’s people and 95% of world GDP. The 2021 edition records a global .5% increase in the use of trade barriers from the first edition in 2019. 

Western Europe, as a region, leads the world in open trade. Yet the region was held back by a large number of new digital trade barriers that impose cross-border data restrictions, content moderation, and limit the scope of intermediary liability.  Only India, Indonesia, and China impose more digital trade restrictions than the European Union.  

Barrier-free trade is associated with beneficial social and economic outcomes. The Index finds countries with lower trade barriers experience more prosperity, economic freedom, and human development; while countries with higher trade barriers perceive greater rates of corruption, abuse of the press, and illicit trade. 

The United States largely maintained its restrictive trade profile, improving slightly from 54^th to 51^st mainly due to nominal reductions in non-tariff measures as a response to COVID-19. Yet the U.S. position as a global rule maker may be in jeopardy as the UK, China, the European Union, and each the 90 countries in the TBI on average signed at least one additional trade agreement granting comprehensive market access and cementing new rules. China also improved its score by reducing its average applied MFN tariff rate. 

India increased use of trade barriers to maintain the last spot on the Index. Not only did India increase its MFN average applied tariff rate; at the start of the COVID pandemic India had one of the world’s highest tariff rates on medicines and medical equipment and during the pandemic India added the most restrictive non-tariff barriers on medical equipment and vaccines.  

Only six countries with a combined population of 142 million people enjoy the highest level of barrier-free trade, with a TBI score below 3.0 Meanwhile, 13 countries remain in the “highly protected” range with TBI scores above 5.0, where 3.8 billion people have severely limited access to barrier-free trade.  

Philip Thompson, author of the Index remarked “it is people who trade, and when barriers are in the way it’s harder to source material, respond to consumer preferences, and create win-win exchanges to recover from a pandemic.”  

The Index includes eight case studies from leading free-market think tanks around the world that examine harms trade barriers impose from the availability of affordable housing in Sri Lanka to diversion of legitimate market activity to criminal syndicates in the illicit market.  

• Mercosur and the Automobile Industry: Trade Diversion and Protectionism in the Southern Cone; By Pedro Raffy Vartanian & Vladimir Fernandes Maciel, the Mackenzie Center for Economic Freedom, Brazil 
• South Africa’s Next Steps for Trade Liberalization, By Christopher Hattingh, Free Market Foundation, South Africa 
• Benefits of Bilateral and Multilateral Free Trade Agreements; By Natalia Gonzalez & Tomas Flores, Libertad y Desarrollo, Chile 
• The Effects of Pre-Shipment Inspections (PSI) on Food Trade in Indonesia; By Kukuh Sembodho & Arumdriya Murwani, Center for Indonesian Policy Studies, Indonesia 
• Protectionist Tariffs Compromising Sri Lanka’s Middle-Income Earners’ Right to Shelter; By Sathya Karunarathne & Aneetha Warusavitarana, Advocata, Sri Lanka 
• The Illicit Trade of COVID-19 Items: Poor Trade Enforcement as a Barrier to Access; By Giorgina Agostini, Rowan Saydlowski, & Philip Thompson, Property Rights Alliance, U.S.A 
• The Proliferation of Digital Trade Barriers Threatens Innovation, Free Trade; Competition, and Free Speech; By Philip Thompson & Andreas Hellmann, Americans for Tax Reform, USA 
• Lessons in High Tobacco Taxes and Smuggling in the Philippines; By Bienvenido S. Oplas, Jr., President, Minimal Government Thinkers, Philippines 

The executive summary of the International Trade Barrier Index can be found [here] and the interactive website is [here]

Tomorrow, the Senate Judiciary Committee will be holding a markup on S. 2428, The False Claims Amendments Act of 2021, legislation introduced by Senator Chuck Grassley (R-Iowa) and Patrick Leahy (D-Vt.). This bill would flip due process on its head by modifying the burden of proof in False Claims Act (FCA) cases so that companies would be required to prove their innocence, instead of requiring the government to prove its own case against defendants. Lawmakers should reject this proposal.

Specifically, the legislation requires defendants to disprove the plaintiff’s contention with a heightened “clear and convincing” standard of proof. In this way, the defendant’s burden to prove their innocence is higher than the plaintiff’s burden of proof to prove the defendant’s guilt. To make matters worse, this would apply retroactively to any FCA case that is pending on the date of enactment.  

FCA cases are taken up when the government suspects a company has falsely billed the government, over-represented the amount of a delivered product, or under-stated an obligation to the government.  

Adopting this new evidentiary standard ignores the views of an unanimous Supreme Court. Universal Health Servs. v. U.S. ex rel. Escobar explained that the FCA materiality element is “demanding” and “rigorous” because of its potentially penal application, detailing that the FCA “is not ‘an all-purpose antifraud statute’ or a vehicle for punishing garden-variety breaches of contract or regulatory violations.”   

In this case, the Court required the government to prove that the alleged false claim “went to the very essence of the bargain,” but imposed no additional burden on defendants in these cases. Imposing a higher burden of proof for defendants than for plaintiffs in these cases is the opposite of what the SCOTUS attempted to achieve in Escobar. 

While this amendment makes it more difficult for companies to defend themselves, it also shifts the cost of government discovery to defendants. It would require defendants to pay the government’s attorney fees and discovery costs unless the defendant proves that the information sought is “relevant, proportionate to the needs of the case, and not unduly burdensome.” As the National Law Review notes, this would “effectively require defendants to pay for the costs of government discovery in nearly every case because of the practical impossibility of proving a negative – the absence of an undue burden on the government.”  

The Grassley-Leahy bill would establish an evidentiary standard that is antithetical to both the aforementioned 2016 SCOTUS case and the principles which guide the function of our court system. If lawmakers are serious about protecting defendants’ presumption of innocence, a principle core to this country’s judicial system, they should reject this legislation. 

Today, Americans for Tax Reform led a coalition letter in opposition to Senator Elizabeth Warren's (D-Mass.) Stop Wall Street Looting Act, which is being reintroduced in the wake of the Senate Banking Economic Policy Subcommittee's upcoming hearing titled “Protecting Companies and Communities from Private Equity.”

Senator Warren's bill would increase taxes, hurt private investment, eliminate jobs, and threaten the lifesavings of countless Americans. ATR's letter was signed by 20 other organizations.

You can read the letter below or here:

October 19, 2021

Dear Senators Warren & Kennedy, 

We are writing to express our concern about the upcoming hearing in the Senate Banking Economic Policy Subcommittee titled “Protecting Companies and Communities from Private Equity.” More specifically, we are strongly opposed to legislation like Senator Warren’s Stop Wall Street Looting Act, which would increase taxes, stifle private investment, eliminate jobs, and threaten the life savings of Americans across the country. We urge the Committee to reject this legislation and any similar legislation that would harm workers, retirees, and pensioners. 

It appears that Senator Warren is using this subcommittee hearing as an opportunity to reintroduce and highlight her Stop Wall Street Looting Act, a dangerous bill that could crush thousands of businesses at a time when the economy is still trying to recover from the COVID-19 pandemic. The bill is concerning for a number of reasons: 

• Tax increases on investment: By sharply raising taxes on long-term capital gains, the bill would dampen returns of universities, startup ventures, and pensioners. Raising taxes on carried interest is part of a long-running campaign by some to raise taxes on all capital gains investment. A recent study found that raising taxes on carried interest could eliminate up to 4.9 million jobs and cost pension funds up to $3 billion per year. The bill also creates a 100% surtax on certain fees and denies legitimate interest deductions for disfavored private companies.   
    
• Imposes new mandates: The bill penalizes private investment based entirely on the ownership structure of the underlying businesses. The legislation would impose new and onerous legal liabilities on private investors and managers that do not exist for other investors, including through a radical rewrite of the bankruptcy code. These liabilities would make it exceedingly difficult to invest in struggling businesses.   
    
• Penalizes workers & retirees: These new regulations would make it harder for pension funds to generate stronger returns for the teachers, fire fighters and public-sector workers whose retirements depend on the performance of these investments. The bill could also cost investors as much as $3.36 billion each year, with almost half of the loss accruing to pension fund retirees.   
    
• Eliminates jobs: Senator Warren’s legislation would erase anywhere from 6 to 26 million jobs from the American economy and reduce federal, state and local tax revenue by as much as $475 billion each year, according to a study by the United States Chamber of Commerce. 

As we have seen time and time again throughout history, when you tax and overregulate an activity, you get less of it. Unfortunately for workers and retirees across the country, the result of the Stop Wall Street Looting Act would hurt the livelihoods of the 11.7 million workers directly employed by private equity-backed companies. 

In 2019, when Senator Warren introduced the Stop Wall Street Looting Act, the Wall Street Journal noted that “every policy she proposes would increase government control over the private economy.” Unfortunately, the newest version of the bill stays the course. Instead of attacking private sector employers with legislation like the Stop Wall Street Looting Act, we urge the Subcommittee to focus on solutions that will empower workers.

Sincerely,

Grover Norquist
President, Americans for Tax Reform

Phil Kerpen
President, American Commitment

Krisztina Pusok, Ph. D.
Director, American Consumer Institute

Brent Wm. Gardner
Chief Government Affairs Officer, Americans for Prosperity

Ryan Ellis
President, Center for a Free Economy

Andrew F. Quinlan
President, Center for Freedom and Prosperity

Jeffrey Mazzella
President, Center for Individual Freedom

Tom Schatz
President, Council for Citizens Against Government Waste

Iain Murray
Vice President, Competitive Enterprise Institute

Matthew Kandrach
President, Consumer Action for a Strong Economy

Adam Brandon
President, FreedomWorks

George Landrith
President, Frontiers of Freedom

Garrett Bess
Vice President, Heritage Action for America

Andrew Langer
President, Institute for Liberty

Seton Motley
President, Less Government

Tom Hebert
Executive Director, Open Competition Center

Bryan Bashur
Executive Director, Shareholder Advocacy Forum

Saulius “Saul” Anuzis
President, 60 Plus Association

Jim Martin
Founder/Chairman, 60 Plus Association

Karen Kerrigan
President & CEO, Small Business & Entrepreneurship Council

David Williams
President, Taxpayers Protection Alliance

CC: Full Senate Banking Committee 

Senate Democrats are pushing a carbon tax that would increase the cost of gasoline and household electricity bills in order to raise revenue for President Biden’s multi-trillion dollar tax and spend blowout, a clear violation of Biden’s pledge to not raise any form of tax on anyone making less than $400,000 per year.

According to reporting from Politico this morning, the new push for a carbon is facilitated by Sen. Kyrsten Sinema (D-Arizona), whose opposition to other proposed tax increases has caused her Democrat colleagues to come up with additional options to pay for their progressive wish list.

Democrats are reportedly considering a carbon tax that starts around $20 per ton and ramps up every year thereafter. The Congressional Budget Office has previously estimated that a $20 per ton carbon tax would increase taxes by $1.2 trillion over a decade while the center-left Tax Policy Center found a $20 per ton carbon tax reduces the pre-tax income of households in the lowest income quintile by nearly one percent.

However, Sen. Sinema has a long and consistent voting record opposing all forms of a carbon tax, as Americans for Tax Reform documents below. If Sen. Sinema were in fact to support a carbon tax, it would be a clear reversal of her Congressional voting record to date.

Below are five instances Sen. Sinema voted against a carbon tax and the regulation of carbon emissions.

1.  2013 – Sinema votes to block the Obama Administration from unilaterally implementing a carbon tax.

In 2013, Sinema was one of twelve House Democrats voting in support of an amendment to the REINS Act (Regulations From the Executive in Need of Scrutiny Act of 2013) that required the Administration to receive approval from Congress before implementing a carbon tax.

Notably, the amendment backed by Sinema inserted language into the bill that stated, “as a tax on carbon emissions increases energy costs on consumers, reduces economic growth and is therefore detrimental to individuals, families and businesses, the REINS Act includes in the definition of a major rule, any rule that implements or provides for the imposition or collection of a tax on carbon emissions.''

2.  2016 – Sinema votes in support of Steve Scalise’s anti-carbon tax resolution

As a member of the House of Representatives in 2016, Sinema voted in support of Republican Whip Steve Scalise’s anti-carbon tax resolution. Sinema was one of six House Democrats that joined with House Republicans in support of  H.Con. Res.89, which stated “a carbon tax will fall hardest on the poor, the elderly, and those on fixed incomes,” and “a carbon tax will increase the cost of every good manufactured in the United States.”

3.  2018 – In the midst of her Senate campaign, Sinema again votes in support of the Scalise anti-carbon tax resolution

In July of 2018, while she was in the heat of a tight election for her current Senate seat, Sinema again voted in support of Republican Whip Steve Scalise’s anti-carbon tax resolution. Sinema was one of seven Democrats that joined with House Republicans in support of H.Con.Res.119 which stated “a carbon tax will mean that families and consumers will pay more for essentials like food, gasoline, and electricity,” and “American families will be harmed the most from a carbon tax.”

4.  April 2021 – Sen. Sinema introduces legislation to prevent the regulation of livestock emissions

Sen. Sinema and Sen. John Thune (R- South Dakota) introduced legislation in April to prevent the EPA from regulating carbon and methane emissions from livestock production.

“Cutting unnecessary regulations frees Arizona cattlemen from costly permit fees and keeps prices affordable for Arizona families,” said Sinema in a press release accompanying the introduction of her legislation.

A carbon tax would be levied on agricultural emissions, including those from livestock production and require regulation from the EPA.  

5.  August 2021 – Sen. Sinema votes to prohibit new methane requirements on livestock

In August, Sinema voted in favor of an amendment to “establish a deficit-neutral reserve fund relating to prohibiting or limiting the issuance of costly Clean Air Act permit requirements on farmers and ranchers in the United States or the imposition of new Federal methane requirements on livestock.”

Americans for Tax Reform opposes any effort to impose a carbon tax and urges Sen. Sinema to maintain her long and consistent record opposing a carbon tax.