Task Force Releases Blueprint to Fix Pennsylvania’s Costly Juvenile Justice Mess

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Posted by Doug Kellogg on Wednesday, June 23rd, 2021, 5:43 PM PERMALINK

Pennsylvania’s Juvenile Justice Task Force just released its report and recommendations after a thorough, pandemic-disrupted process. The proposals promise to address a juvenile justice system that has been plagued by scandal, failure to deliver the public safety results communities deserve, and out-of-control costs.

The state’s $192,000 per year cost to house just one juvenile offender is one of the most outrageous signs of a system that is not working.

The task force offered 35 recommendations for addressing this failing system. Some of the most critical for Pennsylvania taxpayers to ensure due process, give those who have served their time a chance to clear their record, and eliminate excessive fines that put juveniles in debt.

At Tuesday’s press conference covering the report’s release, Rep. Tara Toohill highlighted that a lack of diversion options in some counties causes a minor offense to result in a juvenile going into the system, and being held. This disrupts their family life, and their education.

In Pennsylvania, 60% of the juveniles who are held in state facilities are there for a misdemeanor offense – and just 39% of those are offenses against another person. This means higher costs for taxpayers. Worse, for low-level offenders extended incarceration does not reduce recidivism, and research shows it can increase it.

The Juvenile Justice Task Force recommends expanding alternative options to arresting and detaining youth accused of low-level offenses. For those that pose no risk to the community, supervision and programming options make sense to address what is clearly a problem without creating worse outcomes for everyone.

Recommendations to ensure families and juveniles know their rights and receive appropriate representation in proceedings are commonsense, needed reforms to ensure due process.   

Expungement clears, or seals the records of a conviction from public view. These records can still be seen, and used by the court system for any future criminal proceedings.

Once someone has served their time, there should be some limit to the collateral consequences they face, otherwise they can struggle to work, find housing, and progress in life. For youth, this means they often cannot begin their lives on solid footing. Since having a decent job is a key factor in reducing recidivism, this is a win for public safety.

One of the most important recommendations the task force makes, is to streamline, and make the expungement process standard statewide.

For cases that do not result in a conviction, the task force sensibly recommends immediately beginning the expungement process. After a youth offender that was not incarcerated completes their programming, the expungement process will automatically begin. And for offenders who were held in a juvenile facility or placed on probation, two years after completing their sentence expungement will begin (if they have not committed another offense).

These policies follow the lead of Pennsylvania’s first-in-the-nation Clean Slate law, which automatically seals records of cases that did not result in a conviction and misdemeanors after a period of time.

Fines and fees are another area where government has failed. High fines and fees often follow juvenile offenders long after their sentence, despite the obvious fact many of them are too young to have jobs. In Pennsylvania, some counties have an average fee burden of nearly $700.

The task force suggests focusing on offenders paying restitution and any fee required to administer it. Where there is a victim involved, they are owed recompense. Court system fines and fees would be eliminated.

Another core recommendation is that counties track and report data on their juvenile justice systems. It is incredibly important that officials and the public can see whether changes are working as planned. The public deserves to be confident that anything that goes wrong will be addressed, and that reforms achieve their positive goals.

As recommendations are implemented through legislation, it is important that savings from reforms are reinvested into new programs, and that Pennsylvania taxpayers do not have to take on new, costly burdens. The current system is already too expensive and inefficient.

The above recommendations we’ve highlighted enjoyed consensus or unanimous support among the task force members. Meanwhile, some proposals were less popular. A number of limits on schools’ ability to report various offenses may prove more controversial, for example. There are points to be made for all recommendations, but many enjoy stronger support, and also happen to offer the most meaningful impact.

Speaker Brian Cutler said the task force finidings, “present us with the opportunity to ensure our juvenile justice system rehabilitates our youngest offenders to not only create a positive path for them, but also to strengthens families, protect communities and create long-term benefits for all Pennsylvanians.”

The report and recommendations offered by the task force offer a great, needed blueprint to address scandals and high costs while boosting public safety and giving young people an opportunity to earn a second chance. The legislature will now get to work on making the plan a reality.  

Photo Credit: Pennsylvania Senate Republicans

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Grover Norquist Joins Mornings with Maria to Discuss The Cicilline Antitrust Package

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Posted on Wednesday, June 23rd, 2021, 4:09 PM PERMALINK

Americans for Tax Reform President Grover Norquist appreared today on Fox Business ­Network’s Mornings with Maria. During his interview, he talked about the antitrust package led by House Subcommittee on Antitrust, Commercial and Administrative Law Chair David Cicilline (D-RI).

This Trojan horse package would allow Biden bureaucrats to use antitrust law as a vehicle to advance their woke social agenda. 

When asked about his article in The Hill calling on conservatives to reject the Cicilline package, Norquist elaborated:

“To change the law for antitrust is not just to change it for a few companies, it's to change it for everybody and would allow antitrust lawyers and the federal government to come in and play Smash Mouth with all sorts of companies. Before Robert Bork said antitrust should only apply when there is consumer harm – if a company is doing something that hurts consumers raising prices and having barriers to entry. What the left wants to do is use antitrust to go after critical race theory, all sorts of various things.”

Last week, Norquist joined with over 25 conservative groups and activists to urge Congress to resist this antitrust package. You can read the full letter here or below:

Dear Member of Congress: 

We urge you to reject the package of European-style over-regulation in the antitrust bills spearheaded by Rep. David Cicilline (D-R.I.) and co-sponsored by Members from the far left like Rep. Pramila Jayapal (D-Wash.). 

These bills are a deceitful attempt by Democrat lawmakers to exploit legitimate conservative anger over Big Tech in order to give the Biden administration sweeping new power to regulate the economy. But make no mistake about it – Democrats are dealing in bad faith, and this Trojan horse package does absolutely nothing to address conservative concerns with Big Tech censorship – and could increase those concerns. 

If implemented, bureaucrats in the Biden administration would wield vast new powers at the expense of American business and households. This heavy-handed approach should offer no comfort for those worried that the platforms are biased against them, as it actually increases the likelihood of political abuse. 

Republicans and free-market Democrats should hold firm and vote No. 

One bill would give bureaucrats power to determine if “covered” platforms with over fifty million users and a market cap of $600 billion might operate businesses that present a “conflict of interest.” If so, “any person” who fails to sell off these alleged conflicts of interest within two years of the bill’s enactment faces steep civil penalties of up to 30 percent of revenue in a given year.

At the same time, another bill effectively bans covered platforms from selling or providing private-label goods that consumers value in their marketplaces, which makes about as much sense as banning grocery stores from selling generic cereal. 

Another bill outlaws new acquisitions for covered platforms, a key driver of economic growth and innovation. The legislation inverts the burden of proof in certain antitrust cases that would presume that American companies are guilty of anticompetitive conduct until proven innocent. This would massively stack the deck in favor of government enforcers and litigious trial lawyers looking to score a quick buck by gaming the legal system. U.S. economic growth would be dealt a crippling blow just as we emerge from the pandemic.

Another bill would force covered platforms to share their data with competitors via a government-mandated “interface” – giving government agents and malicious hackers the ability to access sensitive consumer information all in one place. The final bill will give more resources to the Federal Trade Commission at a time when the agency, controlled by liberal activists like Commissioner Rebecca Slaughter and newly-installed Chair Lina Khan, seems likely to use rulemaking authority to effectively create new antitrust law. Once this power is claimed, they plan to deploy it in service of their social agenda.

As a whole, this European antitrust approach would deliver Europe’s low levels of innovation and deprive Americans of choice and access to convenient services and products that we use each and every day. Apple would no longer be able to operate the App Store or Apple Music. Google would not be able to display YouTube links or Google Maps directions when searched. Amazon would lose the ability to offer free Prime shipping or AmazonBasics products. 

And that’s just the beginning. 

Meanwhile, these bills do absolutely nothing to address conservative concerns with Big Tech. This package is just a test run for Democrats to regulate entire sectors of the economy, and there is no reason to believe they will stop with technology companies. Sen. Amy Klobuchar has been crystal clear that she believes antitrust law is a tool for unelected bureaucrats to “rejuvenate capitalism.” 

A vote for this package is a vote to give bureaucrats even more power to pick economic winners and losers. This is neither a conservative nor free-market approach, and would stifle the robust competition that guarantees the best products and lowest prices for every American. 

Republicans need to hold the line and vote no against weaponizing antitrust law for Democrat political gains.  

Sincerely,

Grover Norquist
President, Americans for Tax Reform

James L. Martin
Founder/Chairman, 60 Plus Association

Saulius “Saul” Anuzis
President, 60 Plus Association

Marty Connors
Alabama Center Right Coalition

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

Kevin Waterman
Chair, Annapolis Center Right Coalition Meeting (Maryland)

Iain Murray
Vice President for Strategy, Competitive Enterprise Institute

Chuck Muth
President, Citizen Outreach (Nevada)

Ashley Baker
Director of Public Policy, Committee for Justice

Curt Levey
President, Committee for Justice

Katie McAuliffe
Executive Director, Digital Liberty

Heather R. Higgins
CEO, Independent Women’s Voice

Sal Nuzzo
President, James Madison Institute

Dave Trabert
Chief Executive Officer, Kansas Policy Institute

Rodolfo Milani
Chairman, Miami Freedom Forum (Florida)

Brian McClung
Chair, Minnesota Center Right Coalition

Pete Sepp
President, National Taxpayers Union

William O’Brien
Former Speaker, NH House of Representatives
Co-chair, New Hampshire Center Right Coalition

Doug Kellogg
Executive Director, Ohioans for Tax Reform

Tom Hebert
Executive Director, Open Competition Center

Lorenzo Montanari
Executive Director, Property Rights Alliance

Wayne Brough
Director of Technology & Innovation, R Street Institute

Mike Stenhouse
CEO, Rhode Island Center for Freedom & Prosperity

Karen Kerrigan
President & CEO, Small Business & Entrepreneurship Council

Kerri (Houston) Toloczko
Meeting Chair, SWFL Center-Right Coalition
Senior Policy Fellow, Institute for Liberty 

Patrick Hedger
Vice President of Policy, Taxpayers Protection Alliance

Ralph Benko
Chairman, The Capitalist League

Rusty Cannon
President, Utah Taxpayers Association

Casey Givens
Executive Director, Young Voices

 


Taxpayer Groups from 40 Countries Urge Rejection of Global Minimum Tax

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Posted by Andreas Hellmann on Wednesday, June 23rd, 2021, 10:58 AM PERMALINK

In partnership with the World Taxpayers Associations, Americans for Tax Reform is leading a large international coalition of 76 conservative groups and activists from 40 different nations to oppose the implementation of a global minimum corporate tax rate. The coalition released a letter today urging Congress to reject the global minimum tax proposal of at least 15 percent that the governments of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States agreed on at a Group of Seven (G7) meeting.

The coalition's message is clear – This agreement would significantly damage the valuable tax competition among countries and would cause undue harm to businesses, workers, and economies around the world. A global minimum tax would greatly curtail the force of tax competition. This competition between nations offers a critical check on the power of governments and it is vital for ensuring efficient and reasonable levels of taxation.

Grover Norquist, President of Americans for Tax Reform described President Biden’s efforts to impose a global minimum tax as follows: 

"Cartels that keep prices high hurt consumers. Creating a Tax OPEC of governments to avoid tax competition is bad for citizens and taxpayers. Competition drives out self-serving rent-seekers in business and in government. Putting a floor on the cost of government is like putting a floor on the cost of oil or wheat--bad for consumers. Why create a new OPEC jacking up the cost of government rather than oil."

You can view the full letter here or below. 

Dear Members of Congress,

We, the undersigned organizations, representing taxpayers and consumers across the globe, strongly oppose the creation of a global minimum corporate tax rate agreement by the G7 nations. This agreement would significantly damage the valuable tax competition among countries and would cause undue harm to businesses, workers, and economies around the world.

On June 5th, 2021, the governments of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States agreed at a Group of Seven (G7) meeting to institute a global minimum corporate tax rate of at least 15 percent. The official 2021 G7 Summit will occur in the United Kingdom from June 11th to 13th. Leaders from the G7 countries are expected to promote an even more comprehensive agreement on international taxation at the G20 meeting in July.

A global minimum tax would greatly curtail the force of tax competition. This competition between nations offers a critical check on the power of governments and it is vital for ensuring efficient and reasonable levels of taxation. According to the nonpartisan Tax Foundation, “Tax competition can help to keep taxes closer to their optimal level, constraining wasteful government excess.” Instituting a global minimum tax would reduce pressure on higher-tax governments, and overall corporate tax rates would rise to inefficient and confiscatory levels.

The proposed 15 percent minimum tax rate would be particularly detrimental to countries such as Ireland, Bulgaria, and Hungary that currently keep their corporate tax rates at lower, more competitive rates. A global minimum tax also threatens poorer, developing countries that need to maintain high growth rates in order to be lifted out of poverty. Cutting corporate tax rates leads to an increase in investment, productivity, and economic growth, output, and ultimately higher standards of living.

Low corporate tax rates are an important tool for developing countries to improve the lives of their citizens, and a global minimum tax rate would impair the effectiveness of that tool. It’s also important to point out that countries like China have no intention to agree on or implement such a global minimum tax and any other smart country will immediately lower its corporate tax rate and reap the benefits.

The G7s agreement on a global minimum corporate tax rate should be abandoned and should be rejected by the G20 in July. Individual countries should be able to follow their own open democratic processes to pursue the tax rules they see fit and not be forced to cede sovereignty to a group that might not act in their own interests.

International bodies should not infringe on the tax systems of sovereign countries and should be focused on facilitating tax competition, free trade, and economic prosperity for countries of all sizes. 

Grover Norquist
President, Americans for Tax Reform (United States)

Cristina Berechet
Secretary General, World Taxpayers Associations (Global)

Brent Wm. Gardner
Chief Government Affairs Officer, Americans for Prosperity (United States)

Jonas Torrico
Executive Director, Asociación Argentina de Contribuyentes (Argentina)

Ozlem Yilmaz
General Coordinator, Association for Liberal Thinking (Turkey)

Barbara Kolm
Director, Austrian Economics Center (Austria)

Julia Kril
President, BETA Ukraine (Ukraine)

Pieter Cleppe
Editor-in-Chief, Brussels Report (Belgium)

Troy Lanigan
President, Canada Strong and Free Network (Canada)

Scott Hennig
President & CEO, Canadian Taxpayers Federation (Canada)

Rocio Guijarro
General Manager, Cedice Libertad (Venezuela)

Daniel Mitchell
Chairman, Center for Freedom and Prosperity (United States)

Roberto Salinas
Executive Director, Center for Latin America, Atlas Network (Mexico)

Edo Omercevic
Director, Center for Public Policies and Economic Analyses (Bosnia & Herzegovina)

Tomasz Kolodziejczuk
Founder, Center for Capitalism (Poland)

Ignacio Arsuaga
President, CitizenGO (Spain)

Chip Ford
President/Executive Director, Citizens for Limited Taxation (United States)

Andrés Barrientos
Cofounder, Ciudadano Austral Foundation (Chile)

Marek Tatala
Vice President, Civil Development Forum (Poland)

Prasad Dasanayaka
Partner, Dasanayaka Associates (Sri Lanka)

Margherit Saltini
Secretary General, Democratic Youth Committee of Europe (Italy)

José Andrade
Executive Director, Ecuadorian Institute of Political Economy (Ecuador)

Gary Kavanagh
Director, Edmund Burke Institute (Ireland)

Mario Alvino Fantini
Editor-in-Chief, The European Conservative (Austria)

Diego Sanchez de la Cruz
CEO, Foro Regulación Inteligente (Spain)

Emilio Caviglia
Director, FREE Argentina (Argentina)

Gabriel Maldonado
Director Ejecutivo, Free Fundación (Venezuela)

Máté Hajba
Director, Free Market Foundation (Hungary)

Chris Hattingh
Deputy Director, Free Market Foundation South Africa (South Africa)

Elena Toledo
Executive Director, Fundación Eleutéra (Honduras)

Francisco Isetta
President, Fundación FREE (Uruguay)

Federico Fernandez
President, Fundación Internacional Bases (Argentina)

Juan Pina
Secretary-General, Fundación para el Avance de la Libertad (Spain)

Slobodan Franeta
Chairman, Global Communication Network (Montenegro)

Richard Zundritsch
Director, Hayek Institute (Austria)

Scott Kaufman
Legislative Director, Howard Jarvis Taxpayers Association (United States)

Shantha Kumar
President, India Tax Payer (India)

Svetla Kostadinova
Executive Director, Institute for Market Economics (Bulgaria)

Krassen Stanchev
Professor, University of Sofia (Bulgaria)

Armen Arzumanyan
Chairman, Institute of Nations (Armenia)

Maria Clara Escobar Pelaez
Executive Director, Instituto de Ciencia Polvetica (Colombia)

Jose Tapia
Executive Director, Instituto de Libre Empresa (Peru)

Federico Rabino
CEO, Instituto Fernando de la Mora (Paraguay)

Alejandro Chafuen
President, International Freedom Educational Foundation (United States)

Nicolas Lecaussin Director, IREF (France)

Masaru Uchiyama
President, Japanese for Tax Reform (Japan)

Nicos Rompapas
Executive Director, KEFiM – Markos Dragoumis (Greece)

Shari Williams
Executive Director, Krieble Foundation (United States)

Oliver Kessler
Director, Liberales Institut (Switzerland)

Camilo Guzman
Executive Director, Libertank (Colombia)

Patrick Mardini
CEO, LIMS (Lebanon)

Zoran Low
Executive Manager, Lipa, Croatian Taxpayers Association (Croatia)

Vladimir Maciel
Head, Mackenzie Center for Economic Freedom (Brazil)

Daniele Capezzone Cofounder, Mercatus (Italy)

Bienvenido Oplas Jr.
President, Minimal Government Thinkers (Philippines)

Pete Sepp
President, National Taxpayers Union (United States)

Jordan Williams
Executive Director, New Zealand Taxpayers’ Union (New Zealand)

Andrea Gabba
Co-Founder, Osservatore Repubblicano (Italy)

Yuya Watase
President, Pacific Alliance Institute (Japan)

Pascal Salin
Honorary Professor, Paris-Dauphine University (France)

Juan Pina
Secretary General, Unión de Contribuyentes (Spain)

Lorenzo Montanari
Executive Director, Property Rights Alliance (United States)

Skafti Hardarson
Chairman, Samtök Skattgreiðenda (Iceland)

Maureen Blum
President, Strategic Coalitions & Initiatives LLC (United States)

Krassen Stanchev
Professor, Sofia University (Bulgaria)

Anders Ydstedt
Chairman, Svensk Tidskrift (Sweden)

John O’Connell
Chief Executive, Taxpayers’ Alliance (United Kingdom)

Manu Guar
President, Taxpayers Association of Bharat (India)

David Williams
President, Taxpayers Protection Alliance (United States)

Ralph Benko
Chairman, The Capitalist League (United States)

Giuseppe Sabella Director, Think-in (Italy)

Mykhailo Lavrovskyi
CEO, Ukrainian Economic Freedoms Foundation (Ukraine)

Dick Patten
President, American Business Defense Council (United States)

Christopher Lingle
Professor of Economics, Universidad Francisco Marroquin (United States)

Manuel Rosales
President and CEO, Verissimo (United States)

Tomasz Wroblewski
CEO, Warsaw Enterprise Institute (Poland)

Photo Credit: HM Treasury


Grover Norquist Joins Mornings with Maria to Discuss The “Ensuring Economic Recovery Act"

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Posted by Mike Mirsky on Wednesday, June 23rd, 2021, 9:58 AM PERMALINK

Today Americans for Tax Reform president Grover Norquist joined Fox Business Network's Mornings with Maria hosted by Maria Bartiromo. Norquist discussed the “Ensuring Economic Recovery Act" sponsored by Rep. Beth Van Duyne (R-Texas). This bill would direct the SBA to study the effects of a $15 federal minimum wage on the recovery efforts of small businesses attempting to emerge from the COVID-19 pandemic. 

Asked about the impact of a potential increase in the minimum wage, Norquist responded:

“Congresswoman Beth Van Duyne from Texas has put forward legislation to require a study on just this question. The CBO has done a study in the past, and in the past they said it would kill —taking the minimum wage up to $15 an hour which is what the left wants to do—would kill 1.3 million to 3.7 million jobs.”

Norquist also added that:

“We’ve seen this in Seattle where people lost jobs, we saw in New York, where they went to a higher minimum wage, 75% of restaurants reduced hours and 50% laid people off. We know it kills jobs. Beth Van Duyne’s study will find out how many”

On Tuesday Norquist sent a letter to congress in support of the bill, which can be read here or below:

Dear Member of Congress,

On behalf of Americans for Tax Reform, I write in support of H.R.1718, the “Ensuring Economic Recovery Act” sponsored by Rep. Beth Van Duyne (R-Texas). This bill requires the Small Business Administration (SBA) to investigate and report on the effects of a $15 federal minimum wage on small business pandemic recovery efforts.

All members of Congress should co-sponsor H.R. 1718.

Over the past year, the COVID-19 pandemic has crushed hundreds of thousands of small businesses. The government exacerbated this economic damage with lockdowns and unemployment payment expansions that led to many Americans making more at home than in the workplace.

The next few years will be crucial for the long-term survival of American small businesses, who are now contending with a labor shortage and the threat of inflation thanks to President Biden’s reckless spending.

In the face of all this economic uncertainty, a $15 minimum wage is the last thing small businesses need as we come out of the pandemic. This would substantially raise the cost of labor, especially during a shortage, as small businesses are already struggling to pay their employees and keep the lights on.

A $15 minimum wage would kill millions of jobs. In 2019, the nonpartisan Congressional Budget Office estimated that a nationwide $15 minimum wage would cost at least 1.3 million American jobs, and could cost as many as 3.7 million at the high end. Another study shows that a $15 minimum wage would disproportionately impact women and shut out young, low-skilled workers attempting to enter the workforce for the first time.

A $15 minimum wage has repeatedly failed at the state level. When Seattle implemented a $15 minimum wage, thousands of jobs were lost, while other workers saw a reduction in hours worked. New York City’s minimum wage increase forced 75 percent of restaurants to cut employee hours, and nearly 50 percent to eliminate jobs entirely.

As some lawmakers continue their efforts to double the federal minimum wage to $15, it is crucial that Congress knows how such proposals would impact small businesses. H.R. 1718 does this by requiring the SBA to study the recovery of small businesses from the COVID-19 pandemic, including the effects of a nationwide $15 minimum wage. The bill also includes a trigger for a second study in the event legislation is passed that imposes a $15 federal minimum wage.

If implemented, H.R. 1718 ensure that all lawmakers have access to the data they need to prevent further damage to American small businesses and job loss for American workers.

All members of Congress should cosponsor the Ensuring Economic Recovery Act.

Onward,

Grover Norquist
President, Americans for Tax Reform

The full interview with Grover can be found here


Bernie Sanders Flip-Flops on SALT Cap in Proposed Budget

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Posted by Jack Fencl on Tuesday, June 22nd, 2021, 6:15 PM PERMALINK

Senate Budget Chairman Bernie Sanders included $120 billion for raising the cap on the state and local tax (SALT) deduction in draft budget outline released Tuesday afternoon, a proposal which he previously opposed and labled as a "tax break for rich people in blue states."

In an interview with Axios last month, Sen. Bernie Sanders stated his opposition to efforts by congressional Democrats to repeal the state and local tax (SALT) deduction cap.

“It sends a terrible, terrible message,” Sanders said. “You can’t be on the side of the wealthy and powerful if you’re really going to fight for working families,” the self-proclaimed socialist continued.

Now, Sanders is singing a different tune. In a total flip-flop, Sanders now supports raising the SALT cap, according to a draft budget resolution outline obtained by Bloomberg comparing his proposals to those of President Biden. The plan allocates $120 billion for the SALT deduction and would overwhelmingly benefit wealthy residents living in blue states like California and New York. 

So much for fighting for working families. 

The SALT cap was first implemented as part of the 2017 Republican Tax Cuts and Jobs Act, which significantly reduced the tax burden for the vast majority of Americans.

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Report: Reduced Interest Deduction Will Harm Economy, Leave America Uncompetitive

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Posted by Isabelle Morales on Tuesday, June 22nd, 2021, 2:00 PM PERMALINK

If lawmakers fail to act before the end of the year, American businesses, particularly manufacturers, across the country will face a significant tax increase. This impending tax hike will diminish the ability of businesses to deduct net interest expenses, which will harm the economy and American competitiveness, as noted in a recent report from PricewaterhouseCoopers (PwC).

Currently, businesses can deduct net interest expenses (i.e. debt) up to 30 percent of earnings before interest, tax, depreciation, and amortization (EBITDA) under IRC section 163(j). However, effective 2022, this deduction is narrowed to 30 percent of earnings before interest and tax (EBIT). 

Removing depreciation and amortization from the calculation of the deduction will reduce the value of the tax deduction, resulting in a tax hike for many capital-intensive taxpayers including manufacturing businesses. Allowing the EBIT standard to go into effect could also result in a tax increase of $140 billion on American businesses over the next decade, according to a Joint Committee on Taxation report analyzing the Tax Cuts and Jobs Act.   

PwC’s report concluded that this tax hike would result in reduced investment, reduced economic growth, lower average labor productivity and ultimately lower wages, with manufacturing and information industries bearing over half of the overall tax increase. It also found that the tax hike will leave American businesses less competitive because other countries that have earnings-based limitations use the EBITDA standard, not the EBIT standard.

First, the report analyzes what would have happened in 2019 if the EBIT-based limitation had been in effect. It finds that American businesses would have seen increased costs of borrowing and increased taxes:

  • “US public companies would have had an estimated $29.9 billion of additional excess interest expense, with companies in manufacturing, information, and mining seeing the largest increases in excess interest expense.  
  • US public companies would have paid an estimated $4.7 billion of additional incremental tax, an increase of 275.5 percent relative to the tax increase under an EBITDA-based limitation. Companies seeing the largest increases in tax relative to an EBITDA-based limitation are in information, manufacturing, and transportation and warehousing.  
  • Companies affected by the limitation would have had excess interest expense on average equal to 47.3 percent of their total interest expense. The mining sector would lose almost three-quarters of its interest deductions while the educational services and administrative and support and waste management and remediation services sectors would lose about two-thirds. Worse, low profitability companies would account for more than 60 percent of additional excess interest expense.
  • On average, taxpayers affected by the change would see close to a three-fold increase in their incremental tax liability. However, the change is much higher in some industries. For example, the average accommodations and food services industry taxpayer will see a 35x increase in their incremental tax liability.” 

 

Second, by increasing the cost of capital, this tax hike will hinder economic growth, harm American workers, and restrict business flexibility and cash flow. As the report explains:  

“The increase in the after-tax cost of capital as a result of the limitation on the deductibility of interest is likely to reduce investment. Lower capital investment reduces economic growth and average labor productivity. Lower labor productivity results in lower wages.” 

Third, the report notes that this tax increase would disproportionately hit less profitable companies. These effects are magnified during an economic downturn, as the report explains:

"Companies in cyclical industries with income subject to greater fluctuations may find the limitation restricts interest deductibility during periods of weak economic performance while during periods of normal profitability the companies can fully deduct their interest expense... The limitation increases the cost of capital, making it more expensive to undertake investment during recession times as well. An EBIT-based limitation may be susceptible to larger percentage fluctuations when revenue declines than an EBITDA-based limitation due to depreciation, depletion, and amortization deductions on current and prior year investments."

Lastly, the tax increase would make American businesses less competitive with foreign businesses. In fact, the existing EBITDA standard used in the tax code is the universal standard for earnings-based interest limitations. Of the 35 countries that have  the same interest limitation rule as the United States, all of them employ an EBITDA standard.

Narrowing the deduction by adopting the lesser EBIT standard would leave American businesses uncompetitive with countries like the United Kingdom, Germany, Japan, and France. Further, the 30 percent businesses can deduct of earnings is also the international norm and is used by 27 of the 35 countries mentioned.

Lawmakers should act to make the existing EBITDA standard permanent. Senator Roy Blunt (R-Mo.) has introduced a bill to do this, which should be supported by all members of Congress.

Allowing the tax hike on interest deductions to go into effect at the end of the year will harm the economy, make America uncompetitive, and reduce business flexibility.

Photo Credit: Tim Engle


ATR President Grover Norquist Submits Testimony in Support of EQUAL Act

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Posted by Katie McAuliffe on Tuesday, June 22nd, 2021, 10:52 AM PERMALINK

Americans for Tax Reform President Grover Norquist submitted testimony to the Senate Judiciary Committee for a hearing being held in support of the EQUAL Act. This act would eliminate a sentencing disparity that currently exists between crack and powdered cocaine. This disparity has needlessly given individuals possessing crack cocaine jail sentences 100 times longer than its powdered counterpart.

You can read the testimony below or in a pdf by clicking HERE

Dear Chairman Durbin, Ranking Member Grassley, and Members of the Committee on the Judiciary:

Thank you for the opportunity to submit written testimony in support of S. 79, the EQUAL Act  during this hearing entitled: Examining Federal Sentencing for Crack and Powder Cocaine.

Americans for Tax Reform is dedicated to reducing the influence of government in our lives. The first and most obvious way that ATR works toward this end is by reducing the burden of taxation on all taxpayers, but for years ATR has also fought the creeping federal regulatory burden and otherwise sought to promote individuals’ control of their own lives.

To this affect, ATR has taken a strong interest in reforms to the criminal justice system. In 2009 I testified before the House Judiciary’s Subcommittee on Crime, Terrorism, and Homeland Security that mandatory minimum sentencing polices, relating to drug offenses, do not enhance public safety and are not worth the high cost to justice involved individuals and America’s taxpayers.  Since my 2009 testimony suggesting a review of federal crimes and sunsets on any law including a mandatory minimum is still relevant today, I have included it as part of this submission.

While we haven’t yet set up a sunset policy on federal mandatory minimums, the EQUAL Act sets us on the right path by equalizing the mandatory minimums for crack cocaine and powder cocaine. It seems that from 1986 to 2010 to 2018 to now 2021 we are reviewing this particular mandatory minimum on somewhat of a sunset schedule. A sunset clause on any mandatory minimum requiring Congress to review, say every four or five years, as I suggested in my 2009 testimony, might get us to this place of reassessment of punishments and costs sooner.

The 1986 Anti-Drug Abuse Act set up the initial disparity we seek to right today: the 100-to-1 rule required a five-year mandatory minimum sentence for trafficking in 500 grams of powder cocaine or five grams of crack. 

The enhanced punishments for crack cocaine were designed to target “kingpins” and “middle level dealers,” however research conducted by the U.S. Sentencing Commission found that it primarily impacted low level dealers.  Additionally, research has shown that these different mandatory minimums for crack cocaine resulted in significantly higher sentences for African Americans and Hispanic Americans.

In 2010, the Fair Sentencing Act changed the crack-to-powder-cocaine ratio regarding the amount required to impose an equal sentence from 100-to-1 to 18-to-1,  thereby increasing the amount of crack necessary to result in the minimum sentence and eliminated the five-year mandatory minimum sentence for simple possession of crack. As of now, it takes 18 times as much powder cocaine as crack to trigger the same mandatory minimum sentences for trafficking with the sentences involved being five and 10 years.

We were strong supporters of the First Step Act,   which overwhelmingly passed with an 87-12 favorable vote in the Senate, a 358-36 favorable vote in the House, and was signed into law by President Trump in December 2018. The law included retroactive application of the Fair Sentencing Act of 2010 and the many other reforms included were the product of nearly a decade of justice reform advocacy efforts resulting in the most sweeping set of reforms since 2010.

Excessively long sentences are not only unjust but extremely expensive and wasteful. The federal government simply cannot afford to continue to house so many nonviolent prisoners for such lengthy sentences. In FY 2015, the average cost of incarceration of a federal prisoner was just under $32,000. That cost is steadily rising.  In FY 2017 it was $34,704.12 per year or $94.82 per day , and in FY 2018 data from the Bureau of Prisons estimated that it cost $37,449.00 per year per inmate which comes to $102.60 per day.  Fortunately, thanks in part to the bipartisan First Step Act, the number of federal inmates is decreasing. As of June 10th, 2021, there are 153,047 total federal inmates, with 129,219 of which in BOP custody (facilities), whereas in FY2012 the number of inmates under BOP jurisdiction had ballooned to 219,000.  The economic cost of the prison population remains staggering. Since FY 2000 the federal prison budget of about $3.5 billion continues to rise, to about $5 billion in 2006 up to about $7 billion in 2017.

Even without a sunset clause on mandatory minimums, the EQUAL Act continues the trajectory to lower the total number of nonviolent incarcerated individuals by finally equalizing the treatment of crack cocaine and powdered cocaine offenses. Importantly, the bill also makes this relief retroactive following individualized case review by federal courts in order to address in some degree the unjust punishments of the past.

On an entirely separate note, I would also like to express our support for S.998, the Driving for Opportunity Act.  This legislation would improve public safety by reducing the amount of time police have to spend acting as tax collectors, thousands of hours can go towards a better use of time than enforcing these unnecessary suspensions.  Further, the legislation does not prevent the suspension of an individual’s license on the basis of road safety – such as accumulating too many strikes or driving while under the influence. The legislation does not require state to make this change, but simply encourages them to pursue a better policy. Because, put simply, withholding an American’s driver’s license to force payment of fines and fees is combination of debtor’s prison and house arrest.

Thank you again for the opportunity to submit testimony in support of S. 79, the EQUAL Act. Should you have any questions or comments on this matter, please reach out to me, or our Director of Federal Policy, Katie McAuliffe, kmcauliffe@atr.org.

Onward,

Grover G. Norquist
President
Americans for Tax Reform

 

Enclosure:

Statement of Grover G. Norquist

President, Americans for Tax Reform Subcommittee on Crime, Terrorism, and Homeland Security House Committee on the Judiciary

July 14, 2009

Mr. Chairman, my name is Grover Norquist, and I am the President of Americans for Tax Reform. Thank you for inviting me to testify today on the subject of mandatory minimum sentences.

Americans for Tax Reform is dedicated to reducing the influence of government in our lives. The first and most important way that ATR works toward this end is by reducing the burden of taxation on all taxpayers, but for years ATR has also fought the creeping federal regulatory burden and otherwise sought to promote individuals’ control of their own lives rather than government.

We tend to view each and every federal program skeptically. We want to know if its benefits are worth the cost both in terms of money - that is, the taxes that are necessary to subsidize the program - and in terms of freedom - that is, is this an activity that free people should be doing for themselves or is this something only the government can do?

Taking the second consideration first, I think maintaining public safety and order is a legitimate function of government. But while fighting crime might be a responsibility of the state, my skepticism about government action extends even to popular-sounding anti- crime initiatives. I think it goes without saying that the Justice Department is no less interested in accumulating power than are the IRS, EPA or FDA. As a result, I don’t think every law purportedly designed to protect us from terrorists or homegrown criminals is justifiable. Indeed, I have spoken out in the past against major provisions of the Patriot Act and against the use of secret evidence.

Against this backdrop, I would like to share my thoughts on mandatory minimum sentencing laws. I recognize that these laws might not constitute a government program per se, but their use certainly constitutes government policy.

To begin with, their pedigree makes them highly suspect. As with so many other federal programs, mandatory minimums were hatched by the Left, later embraced by the Right, and have been maintained by a bipartisan majority.

The Left’s support for mandatory minimums was well-intentioned if ill-conceived. Their goal was to eliminate disparities in sentencing and thereby make the criminal justice system fairer. The idea that one judge might give two drug traffickers completely different sentences was questionable on its face. But what made it intolerable was that the disparity too often seemed to be a product of the color of the defendant’s face. The Left’s answer was to eliminate judicial discretion and force all judges to give the same sentence.

Conservatives later saw virtue in mandatory minimums not only as a tool for stopping a few errant liberal judges from handing down light sentences, but as a means to increase sentences across the board. Thus, the minimums established by Congress- especially in the 1980s during the height of the crack cocaine scare - were not really minimums at all, but rather uniformly tough sentences.

We should know by now to beware of easy solutions. As H.L. Mencken said, “There is always an easy solution to every human problem – neat, plausible, and wrong.” Today, a generation later, it is increasingly clear that adoption of mandatory minimums, while a neat and plausible response to sentencing disparities, was the wrong solution.

First, the discretion exercised by judges was not extinguished but simply transferred to prosecutors. Prosecutors now have control over sentencing through their charging decisions. Unsurprisingly, politically-appointed and elected prosecutors are no less foolproof than judges. Both sides of the political aisle can point to examples of abuse in prosecutorial discretion, including, most recently, the decision to seek lengthy prison sentences for the Texas border agents. President Bush fixed that error before he left office by granting commutations to both men, but it would be preferable to have judges with the authority to review and check prosecutorial decisions.

The biggest problem from the perspective of the taxpayer, however, is that mandatory
minimum sentencing policies have proven prohibitively expensive. In 2008, American
12 taxpayers spent over $5.4 billion on federal prisons, a 925 percent increase since 1982.
This explosion in costs is driven by the expanded use of prison sentences for drug crimes and longer sentences required by mandatory minimums. Drug offenders are the largest category of offenders entering federal prisons each year. One third of all individuals sentenced in federal courts each year are drug offenders. And these convicts are getting long sentences. In 2008, more than two-thirds of all drug offenders receive a mandatory minimum sentence, with most receiving a ten-year minimum.
 

The jump in corrections costs at the state level has been equally dramatic. State corrections spending has ballooned from $6 billion in 1982 to over $50 billion in 2008. These skyrocketing costs are hitting states at a time when they are already being forced to cut back due to the bad economy.

The benefits, if any, of mandatory minimum sentences do not justify this burden to taxpayers. Illegal drug use rates are relatively stable, not shrinking. It appears that mandatory minimums have become a sort of poor man’s Prohibition: a grossly simplistic and ineffectual government response to a problem that has been around longer than our government itself.

Yet all is not lost. Center-right governors like Rick Perry of Texas are trying new approaches. A couple of years ago, Texas started sending low-level, first-time felony drug users to mandatory drug treatment rather than prison. Before Governor Perry, it was Republican Governor – John Engler of Michigan – who signed into law the first major repeal of state mandatory minimum sentences. Engler’s action saved Michigan taxpayers $40 million in prison costs without jeopardizing public safety.

In closing, I want to note that questioning the wisdom of mandatory minimums has nothing to do with being soft on crime. I believe in strong and swift punishment when appropriate. I support the death penalty for murderers. But the government has a responsibility to use taxpayer money wisely. Viewed through the skeptical eye I train on all other government programs, I have concluded that mandatory minimum sentencing policies are not worth the high cost to America’s taxpayers.

Photo Credit: Louis Velazquez

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ATR Opposes David Weil For Wage & Hour Division

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Posted by Tom Hebert on Tuesday, June 22nd, 2021, 10:30 AM PERMALINK

ATR President Grover Norquist released a letter in opposition to David Weil's nomination to lead the Department of Labor's Wage & Hour Division. Weil is a radical academic with a long trail of anti-worker, anti-free enterprise, pro-union boss beliefs. 

If confirmed, Weil will work overtime to implement his harmful agenda. Read the full letter here or below: 

Dear Members of the Senate Health, Education, Labor, and Pensions Committee: 

President Joe Biden has nominated David Weil to lead the Department of Labor’s Wage & Hour Division, an agency with a $330 million budget that is responsible for enforcing all major labor laws. A recycled Obama-era appointee, Weil previously served in this position from April 2014 to January 2017, and was confirmed on a party-line vote with unanimous Republican opposition. 

Based on Weil’s extensive record in the Obama administration and his anti-free enterprise views, it is obvious that Weil does not deserve a second chance at DOL to further his harmful agenda. 

Members of the Senate HELP Committee should reject David Weil to lead DOL’s Wage & Hour Division. 

Weil suffers from a lack of real-world experience beyond the ivory tower and his previous stint as Wage & Hour chief. In 2013, the Wall Street Journal called Mr. Weil a “life-long, left-wing academic with labor-union sympathies, no private-sector experience or legal training, and limited management experience.” 

Weil is not shy about using the full force of government power to advance his radical agenda. In a 2007 academic paper, Weil wrote: “Regulatory systems provide the government with tools to change private behavior, and those tools are usually related to enforcement activities.” 

Weil has a longstanding hostility to free enterprise. Weil is a major proponent of the liberal “fissured workplace” theory, which alleges that outsourcing, independent contracting, and franchising are responsible for every single progressive criticism of employers. Weil has used this left-wing theory to push for an aggressive expansion of the DOL’s enforcement capabilities to expand government control over American businesses. 

Weil would work overtime to dismantle business models that employ millions of Americans, the last thing we need as our economy attempts to rebound from the pandemic. Weil has attacked franchising, which employs an estimated 7.6 million Americans, as “a form of outsourcing.” Weil is a staunch opponent of the right to work as an independent contractor, issuing a report in 2015 that construed the definition of an “employee” in an overly broad fashion that made it impossible for businesses to work with freelancers. Approximately 59 million Americans engage in some form of freelance work. 

Weil supports doubling the federal minimum wage to $15/hour, a death blow to millions of American jobs and thousands of small businesses. A $15 minimum wage would drastically raise labor costs at a time when businesses are struggling just to keep the lights on thanks to government-mandated lockdowns. According to the nonpartisan Congressional Budget Office, a $15 minimum wage could kill as many as 3.7 million American jobs. 

If confirmed as Head of the Wage & Hour Division, Weil would be in the pole position to enforce the radical PRO Act if President Biden signs it into law. The PRO Act would nullify Right to Work laws in 27 states, which prevent employers from forcing workers to join a union just to get a job. The PRO Act nationalizes California’s onerous ABC test that makes it nearly impossible to work as an independent contractor. Finally, the PRO Act stacks the deck in favor of Big Labor by changing several election rules for unionizing efforts. 

Ultimately, Weil is a radical left-wing academic that has a long paper trail of anti-worker, anti-free enterprise, pro-union boss views. Weil did enough damage during his first tenure at the Wage & Hour division, so no Republican should give him a second bite at the apple. 

Members of the Senate HELP Committee should reject David Weil to lead the DOL’s Wage and Hour Division. 

Onward, 

Grover G. Norquist
President, Americans for Tax Reform

Photo Credit: International Labour Organization


ATR Supports The “Ensuring Economic Recovery Act"

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Posted on Tuesday, June 22nd, 2021, 9:40 AM PERMALINK

Today, ATR President Grover Norquist released a letter supporting the “Ensuring Economic Recovery Act” sponsored by Rep. Beth Van Duyne (R-Texas). This bill would direct the SBA to study the effects of a $15 federal minimum wage on the recovery efforts of small businesses that are recovering from the COVID-19 pandemic.

All members of Congress should support and co-sponsor this legislation.

You can read the full letter here or below:

Dear Member of Congress,

On behalf of Americans for Tax Reform, I write in support of H.R.1718, the “Ensuring Economic Recovery Act” sponsored by Rep. Beth Van Duyne (R-Texas). This bill requires the Small Business Administration (SBA) to investigate and report on the effects of a $15 federal minimum wage on small business pandemic recovery efforts.

All members of Congress should co-sponsor H.R. 1718.

Over the past year, the COVID-19 pandemic has crushed hundreds of thousands of small businesses. The government exacerbated this economic damage with lockdowns and unemployment payment expansions that led to many Americans making more at home than in the workplace.

The next few years will be crucial for the long-term survival of American small businesses, who are now contending with a labor shortage and the threat of inflation thanks to President Biden’s reckless spending.

In the face of all this economic uncertainty, a $15 minimum wage is the last thing small businesses need as we come out of the pandemic. This would substantially raise the cost of labor, especially during a shortage, as small businesses are already struggling to pay their employees and keep the lights on.

A $15 minimum wage would kill millions of jobs. In 2019, the nonpartisan Congressional Budget Office estimated that a nationwide $15 minimum wage would cost at least 1.3 million American jobs, and could cost as many as 3.7 million at the high end. Another study shows that a $15 minimum wage would disproportionately impact women and shut out young, low-skilled workers attempting to enter the workforce for the first time.

A $15 minimum wage has repeatedly failed at the state level. When Seattle implemented a $15 minimum wage, thousands of jobs were lost, while other workers saw a reduction in hours worked. New York City’s minimum wage increase forced 75 percent of restaurants to cut employee hours, and nearly 50 percent to eliminate jobs entirely.

As some lawmakers continue their efforts to double the federal minimum wage to $15, it is crucial that Congress knows how such proposals would impact small businesses. H.R. 1718 does this by requiring the SBA to study the recovery of small businesses from the COVID-19 pandemic, including the effects of a nationwide $15 minimum wage. The bill also includes a trigger for a second study in the event legislation is passed that imposes a $15 federal minimum wage.

If implemented, H.R. 1718 ensure that all lawmakers have access to the data they need to prevent further damage to American small businesses and job loss for American workers.

All members of Congress should cosponsor the Ensuring Economic Recovery Act.

Onward,

Grover Norquist
President, Americans for Tax Reform


Biden's Press Secretary Makes False Claim about Gas Prices

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Posted by Jack Fencl on Monday, June 21st, 2021, 4:46 PM PERMALINK

White House Press Secretary Jen Psaki falsely claimed on Monday that current gas prices under President Biden are at the same level now as they were in June of 2018.

In a Twitter exchange with Rep. Jim Jordan (R-Ohio), Psaki wrote, “You forgot to mention that gas prices are the same now as they were in June 2018. Or that this time last year unemployment was 11.1% -- today it’s 5.8%.”

But in reality, the average price of a gallon of gas at this point of June of 2018 was $2.83—today, it is $3.07. This means consumers in June of 2021 are paying 24 cents more per gallon than they did three years ago, making Psaki’s claim that “gas prices are the same” laughably false. 

Psaki was obviously cherry-picking data by comparing current gas prices with those of 2018 rather than prices of June of 2019 - a better pre-pandemic baseline for comparison. Indeed, when one looks at the more appropriate comparison, the increase in gas prices is even starker. At this point in June of 2019, gas was selling for $2.65 a gallon, or $.42 less than today. 

The U.S. Energy Information Administration has conveniently compiled weekly gas prices going back to 1990. 

Additionally, Psaki’s treatment of unemployment data is extremely misleading. While in this case her numbers are at least accurate, she fails to mention that summer of 2020 was middle of the COVID-19 pandemic. A better comparison would be to June of 2019, as the economy had yet to suffer any pandemic-related effects. 

It appears that Psaki chose to obscure the comparison because it reflects poorly on the Biden administration. According to the Bureau of Labor Statistics, the unemployment rate in June of 2019 was 3.6 percent, whereas it is currently 5.8 percent, a full 2.2 percentage points higher. 

 

Photo Credit: The White House

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