Kamala Harris: When I Enter Office "I Will Repeal" the TCJA

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Posted by Adam Sabes on Tuesday, June 25th, 2019, 10:57 AM PERMALINK

Democrat senator and presidential candidate Kamala Harris said "When I enter the oval office," she would repeal the Tax Cuts and Jobs Act. Harris made the statement via tweet on Monday night.

Harris wrote:

"Trump said he was going to protect workers, that he was going to support them, and lift them up. Instead, he passed a tax bill that benefitted the top 1% and the biggest corporations in our country. When I enter the Oval Office, I will repeal the Trump trillion- dollar tax scam."

This is at least the fourth time that Harris has called for a repeal of the TCJA.

On Twitter, Americans were eager to call her out, saying that the TCJA helped them.

"I’m nowhere near the 1% and the tax bill has benefitted me well, No complaints from me. Proof you’re only pandering the Same crap that have been spewed for years. I’ll be honest, it’s this type of talk that made me switch parties about 20 years ago. I love my job, benefits etc," said one person on Twitter.

Another Twitter user said "I’m a dad of 8. I don’t make six figures. The tax cuts helped me this year. Why would you want to do that to us?"

Harris continues to mislead audiences about the GOP tax cuts, which benefited every income group in every congressional district

Harris is guilty of what the New York Times has described as “a sustained – and misleading – effort by liberal opponents of the law to brand it as a middle-class tax increase.”

Photo Credit: DAEWOO KANG

Senate Should Reject Legislation to Weaken Pharmaceutical Patents

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Posted by Alex Hendrie on Tuesday, June 25th, 2019, 9:00 AM PERMALINK

Later this week, the Senate Judiciary Committee is expected to markup several pieces of legislation related to pharmaceutical patents. 

During this markup, it is likely that two pieces of legislation would be considered that will badly damage the U.S. system of property rights and medical innovation.

The first piece of legislation, the “Affordable Prescriptions for Patients Act,” would create unintended consequences to the development of new medicines and the patent system broadly. The legislation as introduced on May 9, 2019 creates two new terms – product hopping and patent thicketing.

These terms were defined so broadly under the legislation that they would impact innovators that play by the rules, not just bad actors:

  • “Product hopping” is defined as attempts to block generic entry through the creation of new healthcare delivery efficiencies. However, in many cases, these efficiencies create substantial value to patients that improve quality of life, are more convenient or efficient to administer, or come with fewer side effects.  They are not intended in any way to block generic competition. Moreover, new innovations do not extend the patent protection for the original product.
  • “Patent thicketing” is defined as efforts by manufacturers to obtain multiple patents in order to create long-term monopolies. This definition is so broad that it ignores the need of manufacturers to protect their innovations with patents. In addition, patents are not given out freely – they are granted by the U.S. Patent and Trademark Office for novel and non-obvious inventions. In addition, patents only provide a right to the claimed invention and once it expires, generic competition can enter the market.

Recent media reports indicate that the bill’s sponsor Senator John Cornyn (R-Texas) is revising the legislation to more narrowly target bad actors and protect innovators that are playing by the rules.

According to Bloomberg, the new version may narrow the existing vague standards in order to curb unnecessary lawsuits and may give the Food and Drug Administration, rather than the Federal Trade Commission, jurisdiction over enforcement.

This is a positive development and Senator Cornyn should be commended for his willingness to carefully consider this complex issue.

It is also expected that the “No Combination Drug Patents Act,” introduced by Senator Lindsay Graham (R-SC), will be considered during the markup. This legislation should be rejected. 

Like the Cornyn legislation, this proposal would attempt to curb so-called patent thicketing. This legislation creates a “presumption of obviousness” for new innovations (a new dosage, method of administration, or formulation) to an existing drug or biologic.

This would presume certain new innovations as obvious meaning the patent is not valid. Patents for new improvements such as allowing a medicine to be taken orally instead of injected, or a new version of the drug that may reduce side effects would be denied under this standard. 

It is important to note that where a new innovation qualifies for patent protection, there is no prolonged patent life for the old version and generic entry into the market place is unaffected by the improvement.

While new innovations improve quality of life for patients, the legislation provides no allowance for patent protection.

It is also unclear how this presumption would be enforced or how an innovator could challenge the presumption.

Patents play an important role in the healthcare system and should be protected. Developing new medicines is a costly and uncertain process and the patent protection system is key to ensuring that costs can be recouped and risks can be taken.

Patents are not absolute – while they prevent competitors from bringing an exact duplicate to market, they do nothing to prevent the development of similar medicines. In fact, there are numerous cases of strong competition between different products designed to treat the same disease.

The strong patent system is why the U.S. is a world leader in medical innovation. This benefits the entire country – more than 4.7 million jobs and $1.3 trillion in economic output is supported directly or indirectly by the pharmaceutical industry. 

Disincentivizing medical innovation could lead to long-term shortages, increase costs to the healthcare system, and harm the development of the next generation of medicines including biologics. As lawmakers consider legislation reforming the patent system, they should be sure to consider the immediate and long-term damage these reforms could have on the U.S. patent system.

Photo Credit: Prayitno

Senate HELP Committee Should Reject Importation Proposals

Posted by Alex Hendrie on Tuesday, June 25th, 2019, 9:00 AM PERMALINK

Later this week, the Senate Health, Education, Labor, and Pensions (HELP) Committee is expected to markup legislation related to surprise medical billing and healthcare transparency.

This markup is a positive step forward in protecting patients, reducing costs, and making the healthcare system less opaque.

During the markup, it is expected that proposals to allow the importation of prescription medicines into the U.S. will be offered.

These amendments should be rejected.

Importation of medicines results in the importation of socialist, market distorting price controls. These importation proposals do not address the root cause of high prices, will allow unvetted, potentially dangerous medicines into the U.S. and will harm American innovation.

Importation Has Long Been Championed by the Far-Left: Importation will allow drugs from countries with socialized medicine is. This policy has long been supported by U.S. Senator Bernie Sanders and opposed by proponents of free markets and limited government. 

While importation may sound like a reasonable free market solution, it is actually a clever ploy to trick proponents of limited government into supporting socialist policies that would jeopardize the development of the next generation of life-saving, life-improving medicines.

Importation is Not the Solution to High Prices: The U.S. represents one-third of the market for medicines in the developed world, but pays for as much as 70 percent of the costs, according to the President’s Council for Economic Advisors.

Importation would do nothing to solve this problem. Instead, it would only siphon off drugs from other markets and exacerbate the true problem – foreign countries freeloading off American innovation.

Other countries have lower prices because they impose heavy handed government price controls and other regulations. This limits access to medicines and suppresses innovation. 

This is not hypothetical – of the 290 new medical substances that were launched worldwide between 2011 and 2018, the U.S. had access to 90 percent. By contrast, the United Kingdom had 60 percent of medicines, Japan had 50 percent, and Canada had just 44 percent. The reference pricing policies used in Europe delay new drugs coming to market by an average of 14 months, according to one study.

Importation Schemes Are Potentially Dangerous to Consumers: The Food and Drug Administration has long expressed concern over allowing the importation of medicines. Agency officials have repeatedly stated there is no way to assure the safety, authenticity, or effectiveness of imported drugs, or whether the drugs are from the country the packaging claims it to be.

Attempting to construct such a system would be a bureaucratic nightmare and will be incredibly costly to taxpayers. This is not a partisan issue -- every single Commissioner of the FDA and every HHS Secretary in the past 18 years has acknowledged allowing importation of price-controlled medicines is dangerous.

Importation Would Threaten the U.S. Role as a Leader of Medical Innovation: The U.S. is a leader in medical development with more than half of pharmaceutical / biotech research being conducted in this country.

This research supports numerous high paying jobs, leading to a stronger economy. Conversely, creating barriers to innovation will threaten these jobs and hurt the economy.

Currently, it costs more than $2.6 billion and takes 10 - 12 years to develop a drug, conduct clinical trials, and obtain Food and Drug Administration (FDA) approval for each drug that makes it onto the market.

This innovation directly benefits the U.S. in the form of high-paying jobs, a stronger economy R&D, and access to more life-saving medicines.

Dem Senator: Carbon tax may fund "relocation for workers" due to "significant dislocation impacts."

Posted by Adam Sabes and John Kartch on Tuesday, June 25th, 2019, 6:30 AM PERMALINK

Democrat Senator Chris Coons (D-Del.) has been trying to convince Sen. Mitt Romney (R-Utah) to impose a massive carbon tax on the American people that will raise the cost of heating and cooling, grocery bills, transportation, and other basic functions of life.

But it looks like Romney is wisely steering clear of Coons' harmful bill, based on comments Coons made on a DC stage last week.

Coons admitted the tax will raise household energy costs and said the carbon tax dollars extracted from the American people may fund "relocation for workers" due to "significant dislocation impacts."

Coons said his upcoming bill is "likely to be Democrat only."

Coons said:

"So just broadly speaking, the bill that Senator Flake and I introduced in the last Congress was a complete rebate bill. The bill that I am introducing soon in the Senate, which is at this point, likely to be Democrat only, takes significant pieces of the revenue, and invests it in infrastructure construction, in clean energy R&D, and in transition effects. Recognizing that a rapid transition away from a carbon-intensive manufacturing and extraction community in states -- like for example, West Virginia, or Kentucky -- will have significant dislocation impacts. And the political reality is that in order to get support for an industry-wide and an economy-wide carbon fee, we will likely invest, have to invest proactively in retaining and retraining in the impacts on the local economy that both go to individual households in terms of strengthening their ability to afford higher energy costs and in skills, and potentially even relocation for workers."

Coons shared a stage with the one congressional Republican foolish enough to endorse a carbon tax: Florida congressman Francis Rooney. Rooney twisted the knife by saying: "There is not a constitutional right necessarily to get a job where you are."

Rooney's bill -- H.R. 763 -- imposes a large, continually ratcheting national energy tax, allowing politicians to raise taxes without ever having to vote. It would raise taxes on Social Security benefits and require a large bureaucracy to implement and run. The well-funded carbon tax group pushing Rooney's bill -- Citizens' Climate Lobby -- was caught on tape admitting carbon tax cost and complexity is "something that we at CCL can tend to soft-pedal."

It's no wonder 75 conservative groups wrote a letter to congress stating: "We oppose any carbon tax."

See also:

75 Conservative Groups: "We oppose any carbon tax."

Carbon Tax Bill Would Raise Taxes on Social Security Benefits

Carbon Tax requires bureaucracy to distribute 295 million monthly "dividend" payments

Caught on Tape: Citizens' Climate Lobby admits carbon tax complexity is "something that we at CCL can tend to soft-pedal"


ATR Releases Letter Urging Congress to Make the CFC Look-Thru Rule Permanent

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Posted by Alex Hendrie on Monday, June 24th, 2019, 9:59 AM PERMALINK

In a letter to Members of the Senate Finance Committee, ATR President Grover Norquist urged Congress to maintain America’s competitiveness in the global economy by making permanent the Controlled Foreign Corporation (CFC) look-thru rule, which is set to expire on January 1, 2020.

The CFC look-thru rule is a key factor in maintaining a globally competitive tax code. First put in place in 2006, the CFC look-thru rule allows U.S. foreign subsidiaries to avoid double or additional taxation when transferring assets or capital between countries. As the letter explains, allowing this provision to expire will harm American businesses and competitiveness:

“Allowing the expiration of this provision will subject American businesses to additional taxation when they are seeking to redeploy business earnings from one CFC to another. The majority of America’s foreign competitors do not face additional taxation when redeploying capital, so this provision is key to ensuring U.S. businesses are on a level playing field.”

Making the CFC look-thru rule permanent will build on the success of the TCJA, which moved toward a ‘territorial tax system’ where certain types of foreign earnings by American companies were exempt from double taxation.

The full letter can be found here and is below:

Dear Chairman Grassley, Ranking Member Wyden, and Members of the Senate Finance Committee:

I write in support of a permanent Controlled Foreign Corporation (CFC) Look-Thru Rule.

The CFC look-thru rule is a key component of a modern, globally competitive U.S tax system and    should be made permanent, or at the very least, extended. However, if lawmakers fail to act soon, the CFC look-thru rule will expire effective January 1, 2020.

Allowing the expiration of this provision will subject American businesses to additional taxation when they are seeking to redeploy business earnings from one CFC to another. The majority of America’s foreign competitors do not face additional taxation when redeploying capital, so this provision is key to ensuring U.S. businesses are on a level playing field.

The CFC look-thru rule was first enacted in 2006 under IRC section 954(c)(6). It exists as an exception to Subpart F base erosion rules which are designed prevent a business from improperly shifting passive income (rents, royalties etc.) to low tax jurisdictions. Under this provision, any income designated as Subpart F income would be subject to full U.S. corporate tax. The look-thru rule exempts payments from Subpart F when these payments are between two U.S. foreign subsidiaries in different countries.

A permanent CFC look-thru rule compliments the goals of the TCJA. During consideration of the Tax Cuts and Jobs Act in 2017, Congress preserved the CFC-look thru rule in recognition that U.S. tax should not be owed when an American company redeploys capital among foreign subsidiaries. However, lawmakers did not extend the provision, so it will expire effective 2020.

Tax reform made the U.S. more competitive by moving the tax code toward a territorial tax system. Multiple changes were made to the tax code including exempting certain types of foreign earnings from U.S. taxation and implementing several new international tax provisions such as Global Intangible Low- Tax Income (GILTI) and the Base Erosion Anti-Abuse Tax (BEAT).

Under the new system, certain types of foreign earnings repatriated back to the U.S. are exempt from double taxation, while other types of earnings are subject to the 10.5 percent GILTI rate or the 21 percent rate under Subpart F rules.

It is important to note that a permanent CFC look-thru rule does not give taxpayers a windfall or an opportunity to completely avoid taxation on foreign income – while the provision exempts qualifying payments from Subpart F taxation, these may still be subject to base erosion provisions like GILTI.

The CFC look-thru rule is a key pillar of a competitive, territorial tax system and should be made permanent. Failing to act will undermine the gains of the TCJA in making the U.S. tax code more competitive by unnecessarily imposing taxation on U.S. businesses when they seek to deploy capital from one country to another.

Thank you for your consideration. If you have any questions, please contact me or ATR’s Director of Tax Policy Alex Hendrie at 202-785-0266.


Grover G. Norquist
President, Americans for Tax Reform

Photo Credit: Guy Middleton

ATR Releases Letter Urging Congressional Action on Healthcare Tax Provisions

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Posted by Alex Hendrie on Monday, June 24th, 2019, 9:43 AM PERMALINK

ATR President Grover Norquist has released a letter to members of the Senate Finance Committee urging Congressional action on a number of healthcare tax provisions.

The letter urges the repeal or delay or certain healthcare taxes, like the Health Insurance Tax (HIT), the Medical Device Tax, and the Cadillac Tax, while calling for other provisions to be extended or made permanent, such as the Medical Expense Deduction and the Paid Family and Medical Leave Tax Credit.

Health Insurance Tax

The Obamacare health insurance tax is a tax on insurance premiums that disproportionately harms workers and small businesses. The letter cites analysis that estimates that implementation of the HIT will raise healthcare costs by $16 billion for families and Medicare advantage seniors in 2020 alone. Half of the HIT revenue is paid by workers making less than $50,000 a year and the tax will hurt up to 1.7 million small businesses. ATR urges the repeal of the Health Insurance Tax.

Medical Device Tax

The Medical Device Tax was a key funding mechanism of Obamacare and imposes a 2.3% excise tax on the sale of commonly used medical devices like X-Ray machines, MRI machines, hospital beds, and more. The tax was in effect from 2013 - 2015, before being suspended by Congress in 2016. When it was in effect, the tax reduced R&D spending by $34 million in 2013 alone, and led to the loss of 28,000 jobs. ATR urges the repeal of the Medical Device Tax.

Cadillac Tax

Another provision of Obamacare, the Cadillac Tax is a 40% excise tax on employer-based coverage plans which exceed $10,200 for individuals and $27,500 for families. This incredibly unpopular provision reduces quality and raises costs for health insurance. This tax applies to nearly every employer-provided plan in the country and will increase deductibles and co-pays for workers. The tax is set to go into effect in 2022. ATR urges the repeal of the Cadillac tax.

Medical Expense Deduction

This long-standing provision of the tax code allows for middle class families to deduct healthcare expenses that exceed a certain percentage of their adjusted gross income (AGI). Before Obamacare, this threshold was 7.5% of AGI and was claimed by more than 10 million families, whose average income was around $53,000 a year.

In 2010, Obamacare raised the threshold to 10% of AGI, and the letter estimates that this cost families $200-$400 per year. The TCJA restored the threshold to 7.5% of AGI for two years, but the 10% threshold was brought back at the start of 2019. ATR urges for a permanent threshold of 7.5% of AGI.

Paid Family and Medical Leave Tax Credit

The Republican Tax Cuts and Jobs Act established an employer tax credit for paid family and medical leave for 2018 and 2019. The credit applies if a company pays their employees at least 50% of wages through the leave. The credit starts at 12.5% of the paid wage and increases up to 25% of the wage if the employer pays full compensation during the leave. ATR urges and extension of the Paid Family and Medical Leave tax credit.

Photo Credit: Pictures of Money

ATR Opposes Retroactive Changes to the Alternative Fuels Mixture Credit

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Posted by Alex Hendrie on Monday, June 24th, 2019, 9:00 AM PERMALINK

ATR President Grover Norquist wrote in opposition to retroactive changes to the Alternative Fuels Mixture Credit in a letter to members of the Senate Finance Committee. 

ATR supports efforts to repeal or make all extenders permanent as part of a broader goal to lower tax rates across the board. When extenders are repealed or made permanent, it creates certainty for taxpayers and businesses.

ATR also believes that extenders should be dealt with prospectively instead of retroactively, because law-abiding taxpayers should not be penalized for following the law based on reasonable statutory interpretations.

[Read the Full Letter Here]

Based on these two principles, ATR opposes retroactively changing the Alternative Fuels Mixture Credit as proposed in The Tax Extender and Disaster Relief Act of 2019 (S. 617). As the letter notes:

“…this legislation retroactively disallows taxpayers blending butane with gasoline from claiming the AFMC. This is bad policy that interferes with ongoing litigation, denies taxpayers due process, and creates potentially arbitrary and unfair outcomes. ATR opposes this change and urges Congress to instead consider changes to the AFMC prospectively.”

Prior to the AFMC’s expiration on December 31, 2017, several taxpayers claimed the credit for blending butane with alternative fuels, and the IRS has denied these claims. Retroactively changing the AFMC to disallow these claims is bad tax policy. As the letter explains:

“Tax policy is based on consistency, certainty, and fairness. Taxpayers routinely make decisions based on a reasonable interpretation of the law with the expectation that the future changes to the law will not be applied looking backwards.

Retroactively changing the tax code punishes taxpayers based on activity that has already occurred.

Legislation that retroactively changes the AFMC would violate this principle by affecting claims from past tax years.

This would also set the precedent that Congress can disallow taxpayers from claiming other provisions in the future and undermines confidence in the tax system.”

AFMC claims by taxpayers that blended butane with traditional fuels are currently being adjudicated in court. By retroactively disqualifying taxpayer AFMC claims, Congress would interfere with ongoing litigation. If Congress disagrees with the outcome of the litigation, it should change the law on a prospective basis.

Instead of interfering with ongoing litigation and retroactively disallowing tax credits to law-abiding taxpayers, Congress should modify the credit prospectively if lawmakers take issue with butane qualifying for the AFMC. Read the full letter here.

Photo Credit: Robert Geiger

Biden: "On Day One, I Will Move to Eliminate Trump's Tax Cuts."

Posted by Adam Sabes on Sunday, June 23rd, 2019, 2:04 PM PERMALINK

2020 Democratic presidential candidate Joe Biden said he would "move to eliminate" the Tax Cuts and Jobs Act on his first day in office if elected.

"And folks, on day one, I will move to eliminate Trump's tax cuts," Biden said during the South Carolina Democrat Convention on Saturday.

[Click here for video]

This is at least the eighth time that Biden has threatened to repeal the TCJA.

Biden’s promise to repeal the tax cuts is a promise to raise taxes. If the tax cuts were repealed:

  • A family of four earning the median income of $73,000 would see a $2,000 tax increase.
  • A single parent (with one child) making $41,000 would see a $1,300 tax increase.
  • Millions of low and middle-income households would be stuck paying the Obamacare individual mandate tax.
  • Utility bills would go up in all 50 states as a direct result of the corporate income tax increase.
  • Small employers will face a tax increase due to the repeal of the 20% deduction for small business income.
  • The USA would have the highest corporate income tax rate in the developed world.
  • Taxes would rise in every state and every congressional district.
  • The Death Tax would ensnare more families and businesses.
  • The AMT would snap back to hit millions of households.
  • Millions of households would see their child tax credit cut in half.
  • Millions of households would see their standard deduction cut in half, adding to their tax complexity as they are forced to itemize their deductions and deal with the shoebox full of receipts on top of the refrigerator.

In South Carolina, where Joe Biden spoke, households with the median income of $50,570 received an average tax cut of around $1,341 according to a recent Tax Foundation report.

As noted by the New York Times, thanks to the GOP tax cuts, “Most people got a tax cut.” The NYT also stated: “To a large degree, the gap between perception and reality on the tax cuts appears to flow from a sustained — and misleading — effort by liberal opponents of the law to brand it as a broad middle-class tax increase.”

The Washington Post also stated: “Most Americans received a tax cut.”

More examples of the benefits stemming from the tax cuts are shown in a recent H&R Block report, which states, “overall tax liability is down 24.9 percent on average.” In Biden’s home state of Delaware, the report found that residents received a 24.8% tax cut.

In South Carolina -- where he made his most recent threat to repeal the TCJA -- residents received a 23.2% tax cut.

Biden also lied to the American people when he ran for Vice President in 2008 when he repeatedly said he would not support any form of any tax that imposed even “one single penny” of tax increase on anyone making less than $250,000. Biden shattered that promise upon taking office.

See also:

Biden: “First thing I would do as President is Eliminate the President’s Tax Cut.”

Bernie Sanders claims people would be “delighted to pay more in taxes”

Biden: Tax Cuts Will be “Gone” If I’m Elected

Kamala Harris: I Will Repeal Tax Cuts “on day one”

Biden again says capital gains tax is “Much too Low”

Biden: Capital gains tax “much too low”

VIDEO: Five Times Biden has Threatened to Repeal Tax Cuts

Biden: “First thing I’d do is repeal those Trump tax cuts.”

Joe Biden broke his middle class tax pledge

“Mayor Pete” Calls for Steep Tax Hike on Homes and Businesses

Kamala Harris Vows Repeal of Tax Cuts “on Day One”

Biden: “When I’m President, if God willing I am, we’re going to reverse those Trump tax cuts.”

House Democrats Vote Against Middle Class Tax Cuts

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Posted by Tom Hebert on Friday, June 21st, 2019, 4:15 PM PERMALINK

House Democrats voted against several Republican proposals to permanently cut taxes for the middle class.

The Democrat-controlled House Ways and Means Committee debated four pieces of legislation this week with very little public notice. Republicans offered numerous pro middle-class amendments, but Democrats shot down every proposal.

Republicans offered amendments to make the Tax Cuts and Jobs Act’s middle-class tax cuts permanent. If adopted, these amendments would have meant a permanent: 

  • Doubled standard deduction: this expansion resulted in dramatic tax reduction for the 105,055,150 million taxpayers that took it before the passage of tax reform, a number that has only increased since the TCJA became law.
  • Doubled child-tax credit: this expansion benefited over 22 million American middle-class families that claim the child tax credit.
  • Individual rate cuts: a family of four earning the median income of $73,000 is seeing a federal tax cut of $2,000, while overall tax liability has dropped by almost 25 percent, according to a report from H&R Block.

All of these provisions have helped middle-class Americans, and Democrats were unanimous in opposing them.

Democrats also unanimously opposed repealing the Medical Device Tax, an Obamacare holdover that devastated the American healthcare system while it was in effect. The medical device tax was in effect from 2013 and 2015 but Congress has suspended the tax since 2016. When it was in effect, research indicates that the tax reduced research and development by $34 million in 2013 and disproportionately harmed companies with lower profit margins. This resulted in a loss of approximately 28,000 jobs.

Finally, Democrats unanimously voted against cutting taxes for Americans with high medical bills. Before Obamacare, families facing high medical bills could deduct expenses that exceeded 7.5 percent of their AGI. According to the IRS, approximately 10 million families took advantage of this deduction each year before Obamacare was signed into law. In 2010, the average taxpayer claiming the deduction earned just over $53,000 annually.

Obamacare increased the threshold to claim the medical expense deduction to 10 percent of AGI. The TCJA restored the pre-Obamacare 7.5 percent threshold, but House Democrats opted not to make that increased threshold permanent.

Every time Democrats had the opportunity to extend or make middle-class tax cuts permanent, they refused. The next time Democrats tell you that they are for cutting taxes for the middle class, remember this week’s votes.

Photo Credit: Gage Skidmore

Different Fates for Tax-Hiking Paid Family Leave in Maine, Vermont

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Posted by Steven Selleck on Friday, June 21st, 2019, 2:39 PM PERMALINK

The Vermont legislature wrapped up its 2019 session last month without giving final approval to House Bill 107, legislation that called for 12 weeks of state-mandate paid-leave after childbirth for all Vermont workers, men and women alike. Under HB 107, workers would be compensated for 90% of their wages until $27,000 of their salary, and 55% of their higher earnings.

The bill also mandated the same benefit for paid family leave to take care of a sick relative for up to 6 weeks. A 0.2% payroll tax would be used to fund the proposal, as if taxes in Vermont aren’t high enough (Vermont currently has some of the highest income taxes in the country, according to Tax Foundation, with the 6th highest tax collections per capita of any state).

In an article for Seven Days, Vermont Senator Randy Brock (R) objected to the tax, saying, “This is a plan that thousands of people don’t want and can’t use, and it’s being forced down their throats". Brock also notes that there are many hard-working Vertmonters who are planning on having children or have a sick relative at home.

Another point made by Brock in a VPR article is that Vermont lawmakers may seek higher pay rates for off-duty workers in the future, possibly up to 100% of their wages. This will further burden the taxpayers of the Green Mountain State, where only a small percentage of the workforce will ever use paid leave.

Vermont is not the only state in New England to consider a paid leave mandate bill this year. Maine Gov. Janet Mills signed a similar bill on Tuesday, May 28th. The new Maine law calls for up to 40 hours annually of paid leave. Maine workers will be paid their full wages for the hours taken off. Predictably, funding comes from a tax hike of 0.77 percent of payroll taxes.

An article from The Maine Heritage Policy Center explained that the proposal would be particularly harmful to low-income workers in Maine. According to the think tank, individuals earning $25,000 annually will pay $100 each year for the new tax. This tax hike will reduce consumption for the low-income residents, who spend a higher amount of income on consumption than high-income residents.

Maine joins Washington, DC, and five other states in the progressive efforts to tax all workers for the benefit of very few.

Photo Credit: Jennifer/Flickr