Oregon Examples of Tax Reform Good News

Posted by John Kartch on Monday, March 4th, 2019, 4:30 PM PERMALINK Follow @johnkartch

Thanks to the Tax Cuts and Jobs Act enacted by congressional Republicans and President Trump, 90 percent of American wage earners have higher take-home pay. And employers of all sizes are hiring, raising pay, increasing benefits, upgrading equipment and expanding operations.

Below are several examples of tax reform good news in Oregon (Additions to this list can be sent to jkartch@atr.org)

FireBird Bronze (Damascus, Oregon) – Thanks to tax reform this full-service foundry with nine employees is able to offer health insurance for the first time. They are also upgrading equipment and hiring, and building a new facility in Troutdale, Oregon:

We are a small manufacturing business casting artwork for artist in bronze, we have 9 employees and because of the tax cuts and the current business friendly climate we are for the first time offering employees health care insurance costing our company 40k per year. – Rip Caswell, FireBird Bronze

Eagle Telephone System, Inc. & Eagle Valley Communications (Hells Canyon Snake River Corridor, Oregon) -- $1,000 bonuses; together the companies have 19 employees:

Though our Companies are small in comparison to Boeing and AT&T and others on this list, our hearts are none the less just as big or bigger, said Mike Lattin, President and CEO of Eagle Telephone System, and Eagle Valley Communications, dba Comco Construction.

Mike announced that both Eagle and Comco employees will be receiving $1000.00 bonuses by the holidays, this is due in large part to the recent tax reform bill having been passed and also the fact that President Trump has worked very hard to lessen the regulatory burdens that had been put on our industry by the previous administration. Combined these companies employ 19 people in a very rural part of Eastern Oregon; Richland. Our services include providing telephone and broadband, cellular and wireless, as well as construction services of all types. Our services are critical to the Rural market we serve. A sample of our market is Hydro Production along the Hells Canyon stretch of Snake River, Ranchers, Cattle Producers and Farmers, providing everything from beef, lamb, soy, alfalfa, hay, dairy products and more, Forest Production Practices and in large part Recreation in all four seasons.

Mike stated that he believes that this administration is looking out for us, for Rural America and that is what we need to keep our industry competitive world wide. He finished by stating that this administration and the tax reform bill just passed have been a god send to Rural Eastern Oregon. – Statement by Rusti Lattin, for Mike Lattin, President and CEO.

Pacific Power (Portland, Oregon) – The utility will pass along tax savings to customers:

The new Republican tax plan has brought a variety of tax cuts. Pacific Power says they are committed to passing the benefit of this tax cut on to customers.

“We strive to provide our customers reliable service while keeping rates low," said Stefan Bird, President and CEO of Pacific Power. “The benefit of this tax cut should be passed on to our customers – and we will work with our regulators and stakeholders on the best way to do that.” – Jan. 3, 2018 My Columbia Basin article excerpt

Rocky Mountain Power (Portland, Oregon) – The utility will pass along tax savings to customers:

Rocky Mountain Power says it plans to pass some of its federal tax savings on to customers. But, the company isn't sure how much or when.

"We strive to provide our customers reliable service while keeping rates low," said Cindy Crane, President and CEO of Rocky Mountain Power. "The benefit of this tax cut should be passed on to our customers — and we will work with our regulators and stakeholders on the best way to do that." – Jan. 4 2018, Local News 8 article excerpt

Avista Corporation – The utility will pass federal tax reform savings to customers:

Avista customers could collectively see a $50 million to $60 million annual benefit from federal tax reform, utility officials said Wednesday.

The savings on individual customers’ bills, however, won’t be known until later this year.

Corporate tax rates for the Spokane-based utility dropped from 35 percent to 21 percent effective Jan. 1. Savings from the lower taxes will get passed on to Avista’s utility customers in Washington, Idaho and Oregon, said Mark Thies, senior vice president and chief financial officer.

The anticipated $50 million to $60 million in annual savings is the result of the lower federal tax rate and changes to Avista's deferred tax liability related to depreciation costs. As the result of the depreciation changes, about $442 million will be returned to Avista customers over 35 years, Thies said. – Feb. 21 2018, The Spokesman Review article excerpt

Miles Fiberglass (Oregon City, Oregon) - Hiring more employees, increasing wages, implementing profit-sharing bonuses for existing employees:

Lori Miles-Olund, who is the president of the family-owned business that her father founded in 1963, explained how Miles Fiberglass plans to pass along the benefits to its employees:

“We increased our starting wage by 9 percent, which bumps everyone up the chart,” Miles-Olund said. “We’ve also implemented a new training program, ‘Learn to Earn.’ Every time employees learn a new skill, they get an hourly pay increase of $1.00, $1.50.”
She reported that, even as expenses like health insurance have gone up on the employer side, tax reform means that Miles Fiberglass will not be passing those added expenses along to its employees. And, since many employees commute from more than an hour away, Miles Fiberglass is also helping make these long commutes more affordable, providing a flat-rate gas stipend.
“We also anticipate implementing our bonus program again this year,” Miles-Olund said, noting that it had previously been on hold for quite some time due to the economic climate. Once implemented employees will start receiving a quarterly profit-sharing bonus, meaning that, as Miles continues to succeed, employees will directly benefit.

Miles Fiberglass also plans to expand its facilities and workforce dramatically. “We anticipate our sales to double this year due to the economic climate,” Miles-Olund told the National Association of Manufacturers (NAM), adding that demand for composite component parts is “far more than we’d seen in the past.” – June 1, 2018, National Association of Manufacturers Shopfloor article excerpt

Umpqua Holdings Corporation (Portland, Oregon) – Base wage raised to $15.25 per hour; $1,000 bonuses for over 15,000 non-executive employees:

Umpqua Bank, based in Portland, Ore., announced in its latest earnings call that it had paid $3.2 million in employee profit-sharing and contributed $2 million to the Umpqua Bank Charitable Foundation as a result of the tax bill. – Jan. 31 2018, ABA Banking Journal article excerpt

AT&T -- $1,000 bonuses to 637 Oregon employees; Nationwide, $1,000 bonuses for 200,000 employees and a $1 billion increase in capital expenditures:

Today, Congress approved legislation representing the first comprehensive tax reform in a generation. The President is expected to sign the bill in the coming days.

Once tax reform is signed into law, AT&T* plans to invest an additional $1 billion in the United States in 2018 and pay a special $1,000 bonus to more than 200,000 AT&T U.S. employees — all union-represented, non-management and front-line managers. If the President signs the bill before Christmas, employees will receive the bonus over the holidays.

“Congress, working closely with the President, took a monumental step to bring taxes paid by U.S. businesses in line with the rest of the industrialized world,” said Randall Stephenson, AT&T chairman and CEO. “This tax reform will drive economic growth and create good-paying jobs. In fact, we will increase our U.S. investment and pay a special bonus to our U.S. employees.”

Since 2012, AT&T has invested more in the United States than any other public company. Every $1 billion in capital invested in the telecom industry creates about 7,000 jobs for American workers, research shows. -- Dec. 20, 2017 AT&T Inc. press release

Apple -- (Apple store locations in Tigard and Portland) -- $2,500 employee bonuses in the form of restricted stock units; Nationwide, $30 billion in additional capital expenditures over five years; 20,000 new employees will be hired; increased support of coding education and science, technology, engineering, arts, and math; increased support for U.S. manufacturing.

Walmart – Oregon employees at 43 Walmart stores received tax reform bonuses, wage increases, and expanded maternity and parental leave. Walmart employees who adopt children will be given $5,000 to help cover expenses.

Home Depot -- 37 locations in Oregon - Bonuses for all hourly employees, up to $1,000.

Lowe's -- 2,000 employees at 14 stores and one distribution facility in Oregon. Employees will receive bonuses of up to $1,000 based on length of service, for 260,000 employees; expanded benefits and maternity/parental leave; $5,000 of adoption assistance.

Ryder (Locations in Portland, Salem, Springfield, Tigard) – Tax reform bonuses for employees.

Best Buy -- 14 locations in Oregon; $1,000 bonuses for full-time employees; $500 bonuses for part-time employees.

Cintas (Multiple locations in Oregon)-- $1,000 bonuses for employees of at least a year, $500 for employees of less than a year

Chipotle Mexican Grill (Multiple locations in Oregon) – Bonuses ranging from $250 to $1,000; increased employee benefits; $50 million investment in existing restaurants.

Comcast (Multiple locations in Oregon) -- $1,000 bonuses; nationwide, at least $50 billion investment in infrastructure in next five years.

Starbucks Coffee Company (359 locations in Oregon) –$500 stock grants for all retail employees, $2,000 stock grants for store managers, and varying plan and support center employee stock grants. Nationally, 8,000 new retail jobs; an additional wage increase this year, totaling approximately $120 million in wage increases, increased sick time benefits and parental leave.

T.J. Maxx – (12 locations in Oregon) – Tax reform bonuses, retirement plan contributions, parental leave, enhanced vacation benefits, and increased charitable donations:

The 2017 Tax Act benefited the Company in the fourth quarter and full year Fiscal 2018. The Company expects to continue to benefit from the 2017 Tax Act going forward, primarily due to the lower U.S. corporate income tax rate. As a result of the estimated cash benefit related to the 2017 Tax Act, the Company is taking the following actions:

Associates

A one-time, discretionary bonus to eligible, non-bonus-plan Associates, globally
An incremental contribution to the Company’s defined contribution retirement plans for eligible Associates in the U.S. and internationally
Instituting paid parental leave for eligible Associates in the U.S.
Enhancing vacation benefits for certain U.S. Associates

Communities

Made meaningful contributions to TJX’s charitable foundations around the world to further support TJX’s charitable giving – Feb. 28, 2018 The TJX Companies Inc. press release excerpt

U-Haul (Multiple locations in Oregon) – $1,200 bonuses for full-time employees, $500 for part-time employees.

FedEx (Multiple locations in Oregon) – Accelerated and increased compensation; pension plan contributions:

FedEx Corporation is announcing three major programs today following the recently enacted U.S. Tax Cuts and Jobs Act:

Over $200 million in increased compensation, about two-thirds of which will go to hourly team members by advancing 2018 annual pay increases by six months to April 1st from the normal October date. The remainder will fund increases in performance- based incentive plans for salaried personnel.
A voluntary contribution of $1.5 billion to the FedEx pension plan to ensure it remains one of the best funded retirement programs in the country.
Investing $1.5 billion to significantly expand the FedEx Express Indianapolis hub over the next seven years. The Memphis SuperHub will also be modernized and enlarged in a major program the details of which will be announced later this spring.

FedEx believes the Tax Cuts and Jobs Act will likely increase GDP and investment in the United States. -- Jan. 26 2018, FedEx press release

Waste Management Inc. (Multiple locations in Oregon) -- $2,000 bonuses:

In light of the meaningful contributions of its employees and the new U.S. corporate tax structure, the company will distribute US $2,000 in 2018 to every North American employee not on a bonus or sales incentive plan; that includes hourly and other employees.

“We are about to get a tax benefit as our U.S. corporate tax rate goes from 35 percent to 21 percent. In considering how to best spend that, we wanted to find a way to help grow our economy, which in turn, will help grow our business, and give some of the tax savings back to those hardworking employees who do not get the opportunity to participate in our salaried incentive plans,” said Jim Fish, president and chief executive officer, Waste Management.

“So, we are offering each North American hourly full-time employee and salaried employee who does not participate in any sales incentive or bonus plan during 2018, a cash bonus of US $2,000 to show our appreciation to so many of our valued employees while growing our business and returning a good portion of the tax savings directly to the overall economy,” he continued. – Jan. 10 2018, Waste Management Inc. press release excerpt

McDonald’s (200+ locations in Oregon) – Increased tuition investments which will provide educational program access for 400,000 U.S. employees. $2,500 per year (up from $700) for crew working 15 hours a week, $3,000 (up from $1,050) for managers, and more:

McDonald’s Corporation today announced it will allocate $150 million over five years to its global Archways to Opportunity education program. This investment will provide almost 400,000 U.S. restaurant employees with accessibility to the program as the company will also lower eligibility requirements from nine months to 90 days of employment and drop weekly shift minimums from 20 hours to 15 hours. Additionally, McDonald’s will also extend some education benefits to restaurant employees’ family members. These enhancements underscore McDonald’s and its independent franchisees’ commitment to providing jobs that fit around the lives of restaurant employees so they may pursue their education and career ambitions.

The Archways to Opportunity program provides eligible U.S. employees an opportunity to earn a high school diploma, receive upfront college tuition assistance, access free education advising services and learn English as a second language.

“Our commitment to education reinforces our ongoing support of the people who play a crucial role in our journey to build a better McDonald’s,” said Steve Easterbrook, McDonald’s President and CEO. “By offering restaurant employees more opportunities to further their education and pursue their career aspirations, we are helping them find their full potential, whether that’s at McDonald’s or elsewhere.”

Accelerated by changes in the U.S. tax law, McDonald’s increased investment in the Archways to Opportunity Program includes:

Increased Tuition Investment:
- Crew: Eligible crew will have access to $2,500/year, up from $700/year.
- Managers: Eligible Managers will have access to $3,000/year, up from $1,050.
- Participants have a choice for how they apply this funding – whether it be to a community college, four year university or trade school. There is no lifetime cap on tuition assistance – restaurant employees will be able to pursue their education and career passions at their own pace. The new tuition assistance is effective May 1, 2018 and retroactive to January 1, 2018.
Lowered Eligibility Requirements: Increase access to the program by lowering eligibility requirements from nine months to 90 days of employment. In addition, dropping from 20 hours minimum to 15 hours minimum (roughly two full time shifts) per week to enable restaurant employees more time to focus on studies.
Extended Services to Families: Extension of Career Online High School and College Advisory services to restaurant employees’ family members through existing educational partners Cengage and Council for Adult and Experiential Learning (CAEL).
Additional Resources: Career exploration resources for eligible restaurant employees to be available later this year.
Creation of an International Education Fund: Grants to provide local initiatives and incentives in global markets to further education advancement programs.

“Since its inception, Archways to Opportunity was meant to match the ambition and drive of restaurant crew with the means and network to help them find success on their own terms,” said David Fairhurst, McDonald’s Chief People Officer. “By tripling tuition assistance, adding education benefits for family members and lowering eligibility requirements to the equivalent of a summer job, we are sending a signal that if you come work at your local McDonald’s, we’ll invest in your future.”

After launching in the U.S. in 2015, Archways to Opportunity has increased access to education for over 24,000 people and awarded over $21 million in high school and college tuition assistance. Graduates have received college degrees in Business Administration, Human Resources, Communications, Accounting, Microbiology and more. – March 29, 2018 McDonald’s Corporation press release excerpt

Bank of America (50 branch locations in Oregon) -- $1,000 bonuses.

Wells Fargo (95 locations in Oregon) - Raised base wage from $13.50 to $15.00 per hour; $400 million in charitable donations for 2018; $100 million increased capital investment over the next three years.

Note: If you know of other Oregon examples, please email John Kartch at jkartch@atr.org

The running nationwide list of companies can be found at www.atr.org/list

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

Posted by Adam Sabes on Tuesday, June 25th, 2019, 10:57 AM PERMALINK Follow @asabes10

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

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 Follow @asabes10

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."

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"

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.

Onward,

Grover G. Norquist
President, Americans for Tax Reform

Photo Credit: Guy Middleton

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

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 Follow @asabes10

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.