ATR Applauds Pruitt EPA for Moving to Rescind WOTUS
This week the U.S. Environmental Protection Agency (EPA), under the direction of EPA Administrator Scott Pruitt, announced its decision to rescind the costly and burdensome Obama-era "Waters of the United States Rule" commnonly referred to as WOTUS.
Americans for Tax Reform applauds EPA Administrator Pruitt and his agency for the leadership shown in taking steps to protect the property rights of American landowners and businesses by addressing the federal overreach inherent in WOTUS.
Speaking on the proposed rescisicion, Administrator Pruitt this week said the EPA is "taking significant action to return power to the states and provide regulatory certainty to our nation's farmer's and businesses."
The rule proposed by former President Obama would have drastically expanded the EPA's jurisdiction, making small waterways such as wetlands and ponds subject to increased federal rules and permitting processes. According to the Obama EPA's own projections, the increased permitting burden under WOTUS could have cost American property owners and small businesses between $158 million and $465 million annually.
In 2015 then Oklahoma Attorney General Pruitt, joined by 17 other states, successfully led a challenge to block implemnetation of WOTUS. Speaking at the time on the Sixth Circuirt Court of Appeal's decision, Pruitt stated that WOTUS is a "devastating blow to private property rights and is an unlawful power grab by the EPA over virtually all bodies of water in the United States."
Now with Pruitt leading the EPA, the agency is able to roll back this harmful rule. The new rule proposed by Pruitt's EPA would rescind WOTUS and provide certainty in the interim pending a second rulemaking which the EPA, along with the Army Corps of Engineers, could engage in a substantive re-evaluation of the rule.
Photo credit: Gage Skidmore
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Rep. Krishnamoorthi’s E-Cigarette Nicotine Cap Proposal Will Increase Youth Cigarette Smoking, Ravage Business
Earlier this month, U.S. Representative Raja Krishnamoorthi (D-Illinois) introduced H.R. 3051 which seeks to implement a cap on nicotine concentration in e-cigarettes at 20 milligrams per milliliter. The proposed bill, titled the END ENDS Act (Ending Nicotine Dependency from Electronic Nicotine Delivery Systems), is aimed at “making e-cigarettes less addictive and appealing to youth”. While well-intentioned, Rep. Krishnamoorthi’s proposal would increase youth smoking, prevent adult cigarette smokers from quitting, and devastate countless small businesses across the country.
In a press release, Rep. Krishnamoorthi stated that the intent of H.R. 3051 is to, “successfully replicate international efforts to prevent youth from using e-cigarettes". Citing the United Kingdom and European Union as examples, Rep. Krishnamoorthi correctly claims that imposed caps on nicotine levels have led to lower rates of youth vaping in those countries. However, he chooses to ignore the overwhelming evidence that nicotine caps have led to increases in youth cigarette smoking.
Comparing youth nicotine use in the United States, Canada, and the United Kingdom, the overall rate of nicotine use is nearly identical. In the US, the rate of those aged 16-19 who reported vaping or smoking in the last 30 days was 21.3% as of 2019. The rate of prevalence was 21.6% in Canada and 21.0% in the UK.
However, when looking at the data more closely, the situation is significantly worse in the UK than the US or Canada. 8.4% of youth between the ages of 16 and 19 smoked only cigarettes in the past 30 days in the UK, while a mere 2.8% of youth in the US smoked only cigarettes. In Canada, 3.8% of youth reported smoking only cigarettes in the past 30 days.
The United Kingdom has a 20 mg/ml cap on nicotine concentration, identical to the proposal of Rep. Krishnamoorthi. If youth smoking rates are any indication, this policy has not been successful at improving public health. E-cigarettes are proven to be 95% less harmful than combustible cigarettes and have been endorsed by dozens of the world’s leading public health organizations as safer than smoking. Decreasing youth vaping use is critical and should be addressed, but policies that would lower e-cigarette prevalence at the expense of increased cigarette smoking among teenagers would harm the health of our youth more than e-cigarettes ever could.
It is also vital to acknowledge that nicotine caps hurt adult cigarette smokers seeking to quit. E-cigarettes are the most effective method of smoking cessation, more than twice as effective as nicotine patches or gum. Capping the amount of nicotine allowed in e-cigarettes makes it much more difficult for vapes to compete with cigarettes, protecting cigarette companies and their sales at the expense of public health. E-cigarettes must be able to deliver sufficient nicotine to quell the cravings of those addicted to nicotine and lowering the amount of nicotine removes their ability to do so. Data shows this, as a study of adult smokers demonstrated that higher levels of nicotine “significantly reduced craving and withdrawal”, compared to lower strength nicotine.
There is also noteworthy evidence revealing that nicotine caps make it harder for adults to quit smoking. The rates of cigarette smokers switching to e-cigarettes is 40% lower in the UK, where a 20 mg/ml limit exists, then in the United States and Canada where no such limit is yet in place nationwide.
In addition to helping smokers quit, high strength e-cigarettes are immensely valuable for members of disadvantaged groups, like those struggling with schizophrenia and other mental-health related illnesses. A study authored by Dr. Richard Polosa and published by the Oxford University Press found that, among a sample of schizophrenic cigarette smokers, 40% had completely quit cigarette use after twelve weeks of vaping high strength nicotine products and 92.5% of participants had reduced their cigarette consumption by 50% or more. By the end of the study, 61.9% of participants reported feeling more awake, less irritable, and had a greater ability to concentrate.
With data showing that people with mental health issues smoke at three to four times the national average, it is unsurprising that a study from researchers at the University of Glasgow determined that e-cigarettes are particularly helpful for members of disadvantaged communities. Imposing a nicotine cap, which would prohibit products like the one used by Dr. Polosa in his study, would exacerbate existing socioeconomic inequalities in health and fail to address such disparities.
In the Canadian province of Nova Scotia, a 20 mg/ml nicotine cap was implemented in April of 2020 along with a ban on flavored vape products. This policy caused the closure of 50% of all specialty vape shops in the province, destroying businesses and livelihoods. Additionally, cigarette sales increased by 25%, further evidence that nicotine caps drive vapers back to higher risk, combustible cigarettes.
While these harmful effects were in part a result of the flavor ban, which is not included in H.R. 3051, Rep. Krishnamoorthi signed on to a letter earlier this year that called for the removal of all flavored e-cigarettes. Nicotine caps are a part, but not all, of the anti-vaping agenda being pushed by advocates on both sides of the aisle. Flavor bans are another aspect of this agenda and at least 13 states have introduced proposals to ban flavors in e-cigarettes. If implemented, these policies will increase smoking rates among youths and adults, prevent adult cigarette smokers from making the life-saving switch to vaping, and ravage businesses all over the US, costing thousands of jobs. In the interests of public health and protecting the American economy at a time when it is most vulnerable, H.R. 3051 must be rejected.
Photo Credit: Anthony T. Pope
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Study Shows Corporate Tax is Borne by Consumers Through Higher Prices
Biden is pushing for $2 trillion in higher corporate taxes, including raising the corporate income tax rate from 21 to 28 percent. This will harm consumers and workers, according to a recent National Bureau of Economic Research paper. This study found that 31 percent of the corporate tax rate is borne by consumers through higher prices and that 38 percent of the corporate tax is borne by workers through lower wages or less jobs. Despite the Biden administration's assertions, tax hikes won't just hurt the wealthy – it will harm everyday Americans.
According to the study's findings, nearly 70 percent of the cost of the corporate tax is borne by working families and consumers. This is hardly the crackdown on corporate America the Left promised.
This study was published in April 2020, conducted by Scott R. Baker of Northwestern University, Stephen Teng Sun of the City University of Hong Kong, and Constantine Yannelis of the University of Chicago. In describing their results, they asserted that the findings “suggested that models used by policymakers significantly underestimate the incidence of corporate taxes on consumers.”
In their breakdown of who is impacted by corporate taxes, they found the incidence on consumers, workers, and shareholders was 31 percent, 38 percent, and 31 percent, respectively. The study also found that increasing the corporate tax rate by one percentage point leads to a 0.17 percent increase in retail product prices.
Working families spend a significant portion of each paycheck on goods and services. In this way, rising costs disproportionately hurt low- and middle-income Americans. According to the OECD, core goods and services make up more than half of middle-class spending. As the OECD describes it, there is a “rising cost of the middle-class lifestyle.”
As the NBER paper notes, many studies operate under the assumption that product prices should not be considered when analyzing corporate tax incidence. In this way, the effects of corporate tax hikes on product prices have been largely left out of academic discourse. This study gives us valuable insight which had been lacking in research before.
Interestingly, voters already understand that Biden’s tax increases will harm them. In a poll was conducted by HarrisX and commissioned by ATR, 58 percent of respondents said that raising taxes on businesses will harm the cost of goods and services, with 22 percent saying it would help the cost of goods and services, and 19 percent saying it would make no difference.
This study is one of many that shows how working families will be harmed by corporate tax increases.
Photo Credit: Dave MacFarlane
A Performance Right is Not a Tax, Congress should Exit the Music Business
Americans for Tax Reform send a letter to the Senate and House sponsors of the Local Radio Freedom Act, that reasserts our long-held position that the government should not insert itself into markets.
You can read the full letter below and linked to here.
Dear Congressman:
I am writing today to clarify Americans for Tax Reform’s position on licensing and copyright, especially as it pertains to what does and does not constitute a tax.
As language circulates concerning music distribution, we urge the consideration of the entire universe of music distribution and how copyright is applied. Artists and distributors, including broadcasters, should have the opportunity for free-market negotiations, as do other businesses.
When Congress considers reform, it should support market forces rather than increased government intervention as the best tool for unleashing innovation and fostering creativity.
All parties, e.g., writers, artists, recording companies, broadcasting companies and others, should be allowed to negotiate mutually agreeable terms. There is no way, ultimately, for a legislator to decide what the fair market value of a product or service is.
We should move toward a market where setting prices; forbidding actions on one side or another; preventing the acceptance of payment for one service or another; or prohibiting collection of compensation for the use of property, are things of the past. We should not prevent compensation for work created or compensation from promotion supplied. This should not be a regulatory issue. This should be the work of a functional market.
The debate on performance rights is an interesting and important one. Ultimately, it should be made in the marketplace, not in House and Senate office buildings. Prior private agreements between music creators and record labels demonstrate that the performance rights issue is better addressed through private contracts than a broad government mandate.
By definition, charging for content is not a tax. Specifically, a performance right is not a tax. We often correct tax proponents who try to call a new tax something (anything) other than a tax, however, the term “tax” doesn’t apply in this case.
We believe in an open and free market, and the vigilant protection of property rights. Government should extract itself from this debate to allow an environment for negotiations to develop among broadcasters, record companies, artists, and other interested parties.
Moving forward, I urge you to enact reforms that protect intellectual property, nurture the private sector and allow the free market to determine prices and compensation for labor and intellectual property.
Onward,
Americans for Tax Reform
Photo Credit: Firmbee.com
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Gov. Cuomo Begs Business Leaders to Lobby for Blue State Tax Handout
Business leaders and wealthy taxpayers are leaving New York in droves due to the high tax burden imposed by state Democrats. Rather than fixing this problem through tax cuts, New York Governor Andrew Cuomo is privately begging wealthy business leaders to stay in the state and lobby the federal government to subsidize the high taxes he has imposed.
As reported by CNBC, Cuomo recently asked a small group of executives to lobby the federal government to repeal the cap on state and local tax (SALT) deductions, a policy Rep. Alexandria Ocasio-Cortez has called a "gift to billionaires." This comes several weeks after Cuomo signed a state budget into law that will see some New York residents pay tax rates that are even higher than California. Clearly, Cuomo understands that these tax hikes will cause taxpayers to leave the state, yet he wants the federal government to step in and provide a federal tax cut to offset his state tax increases.
Democrats from high-tax states are desperate to repeal the SALT deduction cap because their constituents balk at the true tax burden from living in these states. Last month, several House Democrats said that the SALT deduction cap must be repealed as part of the next tax-related legislation passed by Congress. Rep. Tom Suozzi (D-NY) has even said he will not support the legislation if this provision is not included.
Repealing the SALT deduction cap would shield taxpayers from bad state tax policy. It is also a costly policy proposal that would disproportionately benefit the wealthy and do little, or nothing to benefit the middle class.
Repealing the SALT deduction cap disproportionately benefits the wealthy, as many on the left have noted. For instance:
- The New York Times described the SALT deduction as “The Tax Cut for the Rich That Democrats Love.”
- The Center for American Progress has stated that repeal of the SALT cap “should not be a top priority” as it would “overwhelmingly benefit the wealthy, not the middle class.”
- Referring to repealing the SALT deduction, Rep. Alexandria Ocasio-Cortez said, "I think it's just a giveaway to the rich... and I think it's a gift to billionaires."
- Senator Bernie Sanders (I-Vt.) recently criticized efforts to repeal the SALT cap, arguing that it “sends a terrible, terrible message... You can't be on the side of the wealthy and the powerful if you're gonna really fight for working families.”
- The left-of-center Tax Policy Center found that the top 1 percent of households would receive 56 percent of the benefit of repealing the SALT cap, and the top 5 percent of households would receive over 80 percent of the benefit. The bottom 80 percent of households would receive just 4 percent.
- The Brookings Institution explained that almost all (96 percent) of the benefits of SALT cap repeal would go to the top quintile, 57 percent would benefit the top one percent (a cut of $33,100), and 25 percent would benefit the top 0.1 percent (for an average tax cut of nearly $145,000). Whether or not this is a tax cut for the wealthy is not up for debate—the evidence is clear.
Repealing the SALT cap would be a costly addition to Biden's spending plan. Fully repealing the SALT deduction cap would cost $80 billion per year, or $400 billion in total, as the cap sunsets in 2026 along with several other tax provisions. This $400 billion proposal would tie Medicaid expansion for the single largest category in Joe Biden’s infrastructure plan. Because Democrats are attempting to fund this bill through tax hikes, the repeal of the SALT deduction cap could result in Democrats raising taxes elsewhere, including taxes directly or indirectly on low- and middle-income Americans.
Democrats falsely claim that when the unlimited SALT Cap was repealed, middle class Americans in blue states like New Jersey and New York saw a massive tax hike and were hit with double taxation. They claimed that these blue state residents were now paying federal taxes on income that was already subject to state and local taxes.
In reality, a majority of Americans do not claim the SALT deduction, or any deduction. Instead, they claim the standard deduction. In 2018, 133 million American taxpayers (or 87% of filers) claimed the standard deduction. These taxpayers deduct zero state and local taxes, so they have no protection against double taxation.
In addition, most middle income taxpayers in blue state saw a significant tax cut. According to IRS Statistics of Income Data, the average taxpayer in both New York State and New Jersey earning between $50,000 and $200,000 saw a tax cut between 2017 and 2018.
Taxpayers in both states with AGI of between $75,000 and $99,999 saw an average federal income tax cut of 10 percent, while taxpayers between $100,000 and $199,999 in AGI saw an average tax cut of between 6 and 7 percent. While this does not necessarily prove that every taxpayer in this income bracket saw a tax cut, it does mean the majority of taxpayers in blue states did not see a tax hike, as Democrats claim.
Gov. Cuomo’s hypocrisy is clear. Just weeks after signing a tax hike into law on wealthy New York residents, he is now begging these same taxpayers to lobby for a federal tax break on high state taxes. This tax break is terrible policy that would subsidize high tax states and do little or nothing to benefit the middle class, a fact that many on the left realize.
Photo Credit: Zach Seward
Norquist Calls Out Biden for Undermining American IP Rights: "How are you going to get people to invest in the next vaccine if you take away their intellectual property?"
Americans for Tax Reform president Grover Norquist called out President Biden for his attempts to undermine American intellectual property rights.
In a triumph of hard work and ingenuity, American manufacturers created lifesaving vaccines at a record pace. But Biden recently announced a radical decision to strip IP rights from these manufacturers.
Appearing on Newsmax TV's The Count this weekend, Norquist said:
“And an additional damage to the economy – and you are talking about China recently – the President said all of the work that American companies put into finding the vaccine, to getting it on warp speed, to getting it in less than a year rather than more than two years -- they now want to hand over to other countries for free. Now, how are you going to get people to invest in the next vaccine if you take away their intellectual property?
The good news here is that other countries may save us. Germany -- in Merkel the leader there, and the entire legislature -- voted no to breaking the intellectual property rights of firms that have invested in vaccines. It takes a number of countries to agree to do this, Biden cannot do this by himself and right now the Germans are providing common sense to tell the United States not to throw away its intellectual property or hand it to the Chinese, to the Indians, and to others to just take advantage of and manufacture stuff.
I mean we’ve made this vaccine, we can certainly make more of it, we can sell it at a reasonable price to the world, but throwing away the intellectual property. [IP] is why the United States is better off economically than other countries."
WATCH:
Biden's move would not help end the pandemic and would undermine U.S. medical innovation, jobs, and the Constitution.
Strong IP protections have facilitated the creation of highly effective COVID-19 vaccines.
Biden’s decision to support an IP waiver for COVID-19 innovations will create a precedent that IP rights can easily be waived or undermined when government bureaucrats find it convenient. Surrendering on IP rights will also provide an implicit endorsement of the rampant theft of American IP by China. The U.S. should be doing more, not less to defend American IP.
Foreign countries like India and South Africa have been petitioning the World Trade Organization (WTO) to suspend IP rights associated with COVID-19 innovations.
The Chinese state media has already praised President Biden for giving into "global pressure."
Chen Weihua of China Daily, China state-affiliated media, replied to the decision in a tweet:
So global pressure works. And I hope it does not take forever for this to be a reality.
— Chen Weihua （陈卫华） (@chenweihua) May 5, 2021
According to the Washington Post, the administration’s decision was made in a Tuesday meeting with President Biden. Commerce Secretary Gina Raimondo, who had concerns about the waiver, was not included in the meeting.
IP rights are explicitly protected in the constitution. The Founding Fathers recognized the importance of intellectual property rights in Article 1, Section 8 of the Constitution. “To promote the Progress of Science and useful Arts, by securing for limited times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”
Strong IP rights are vital because they turn new ideas into tangible goods and services that improve the quality of life for Americans by creating high-paying jobs and increasing economic growth.
Without IP rights, medical innovators will have no incentive to create new treatments and cures as they will have no way to recoup the investments they made in developing new medicines. Patent exclusivity for medicines has been deliberately legislated to ensure that creativity, innovation, and medical growth are protected.
Because of these policies, the U.S. is a world leader when it comes to medical innovation. According to research by the Galen Institute, 290 new medical substances were launched worldwide between 2011 and 2018. The U.S. had access to 90 percent of these cures, a rate far greater than comparable foreign countries. By comparison, the United Kingdom had access to 60 percent of medicines, Japan had 50 percent, and Canada had just 44 percent.
Strong IP for medicines also supports millions of American jobs. Nationwide, the pharmaceutical industry directly or indirectly accounts for over four million jobs across the U.S and in every state, according to research by TEconomy Partners, LLC. This includes 800,000 direct jobs, 1.4 million indirect jobs, and 1.8 million induced jobs, which include retail and service jobs that are supported by spending from pharmaceutical workers and suppliers.
The average annual wage of a pharmaceutical worker in 2017 was $126,587, which is more than double the average private sector wage of $60,000.
Many lawmakers have rightly spoken out against this decision already. For instance, Senator Richard Burr (R-N.C.) and Ways and Means Republican Leader Kevin Brady (R-Texas) have condemned Biden’s decision to surrender on American IP protections. In addition, the Republican Study Committee announced in a tweet that Rep. Byron Donalds (R-Fla.) will be soon introducing a bill to prevent the Biden admin from undermining IP rights.
The Biden administration should reverse it’s position. Rather than surrendering to foreign governments and global bureaucracies, the administration should stand strong and protect intellectual property rights.
OOPS: Every House Democrat Endorsed By U.S. Chamber Voted for Job-Killing Biden Bucks
The U.S. economy added an anemic 266,000 jobs in April and the unemployment rate rose to 6.1 percent, a far cry from Dow Jones estimates which predicted 1 million new jobs and an unemployment rate of 5.8 percent.
The U.S. Chamber of Congress, the world’s largest pro-business trade association, issued a press release blaming the anemic jobs numbers on President Biden’s supplemental $300-per-week unemployment payments, saying:
“One step policymakers should take now is ending the $300 weekly supplemental unemployment benefit. Based on the Chamber’s analysis, the $300 benefit results in approximately one in four recipients taking home more in unemployment than they earned working.”
Of course, the Chamber is correct – paying people not to work is a massive disincentive for Americans to return to work. At the current federal unemployment supplement level of $300, 37 percent of workers make more on unemployment than at work.
The unfortunate part for the U.S. Chamber is that every single House Democrat the trade association endorsed in the 2020 election cycle voted to extend the 300-per-week “Biden Bucks.”
The $1.9 trillion “American Rescue Plan Act of 2021” passed the House on a narrow 219-212 vote in February. Of the 23 House Democrats endorsed by the U.S. Chamber during the 2020 election cycle, 15 won re-election. All 15 of these Democrats voted to pass the American Rescue Plan which extended the Biden Bucks program through Labor Day.
The U.S. Chamber’s endorsement of 23 House Democrats was a notable increase compared to prior years. During the 2018 cycle, the Chamber reportedly endorsed only 7 House Democrats. According to the U.S. Chamber’s own assessment of its impact on the 2020 House elections, the “U.S. Chamber endorsements are known to have a big impact and that rang true in 2020.”
Below are the House Democrats endorsed by the U.S. Chamber of Commerce who voted in favor of the American Rescue Plan and the percentage of the vote they received as candidates during the 2020 election.
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Rep. Colin Allred (TX-32), won re-election with 51.9% of the vote.
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Rep. Lizzie Fletcher (TX-7), won re-election with 50.8% of the vote.
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Rep. Haley Stevens (MI-11), won re-election with 50.2% of the vote.
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Rep. Josh Harder (CA-10), won re-election with 55.2% of the vote.
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Rep. Cindy Axne (IA-3), won re-election with 49.7% of the vote.
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Rep. Susie Lee (NV-3), won re-election with 48.8% of the vote.
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Rep. Angie Craig (MN-2), won re-election with 48.2% of the vote.
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Rep. Andy Kim (NJ-03), won re-election with 53.2% of the vote.
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Rep. Abigail Spanberger (VA-7), won re-election with 50.9% of the vote.
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Rep. Sharice David (KS-03), won re-election with 53.6% of the vote.
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Rep. Antonio Delgado (NY-19), won re-election with 54.2% of the vote.
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Rep. Elaine Luria (VA-2), won re-election with 51.5% of the vote.
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Rep. Dean Phillips (MN-3), won re-election with 55.6% of the vote.
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Rep. Greg Stanton (AZ-9), won re-election with 61.6% of the vote.
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Rep. David Trone (MD-6), won re-election with 58.9% of the vote.
Photo Credit: Ron Cogswell
How Many IRS Employees Does it Take to Replace an Ink Cartridge?
Dozens of printers used at IRS tax processing centers are unusable because they are out of ink or because the waste cartridge container is full and employees haven't bothered to empty the containers, according to an Inspector General report.
As part of TIGTA’s 2020 IRS audit, released today, audit teams have been performing on-site walkthroughs at the Ogden, Utah, and Kansas City, Missouri, Tax Processing Centers “to meet with staff to discuss challenges they are facing as it relates to addressing the ongoing backlogs of inventory.”
Audit teams identified a lack of working printers as “a major concern” and estimated that 42 percent of printers were unusable as of March 30, 2021.
In many cases the only thing wrong with the printers is that no employee had replaced the ink or emptied the waste cartridge container:
“IRS employees stated that the only reason they could not use many of these devices is because they are out of ink or because the waste cartridge container is full.”
As TIGTA notes, the printing issue had been ongoing since March 2020. The IRS changed contractors in October 2020, nearly six months after the problem was identified. However, in many cases, the new contractor still has not come into IRS sites to replace old printers:
“The contract for supplies and service of the printers ended in September 2020. However, due to COVID-19, these printers remain in the Tax Processing Centers, and the IRS is continuing to use them. The employees we spoke with stated that the IRS entered into a new contract in October 2020 to obtain new printers from a different provider. However, they indicated that the new contractor may not have been coming into the sites to replace the old printers due to COVID-19 concerns.”
This report again demonstrates the ineptitude of the IRS. The agency’s inability to do its job is due to incompetence, not lack of funding.
Previous reports have demonstrated this incompetence:
- In 2016, the IRS has lost track of laptops containing sensitive taxpayer data. TIGTA estimates that the IRS had failed to properly document the return of 84.2 percent, or more than 1,000 computers due to be returned by contract employees.
- A Treasury Inspector General for Tax Administration (TIGTA) report in 2017 showed that the IRS rehired more than 200 employees who were previously employed by the agency, but fired for previous conduct or performance issues.
- Each year the IRS hangs up on millions of callers -- a practice they refer to as “Courtesy Disconnects.” Currently, if you call the IRS, you have a 1-in-50 chance of reaching a human being.
- According to the National Taxpayer Advocate’s 2014 Annual Report to Congress the IRS was unable to justify spending decisions. As the report stated: "The IRS lacks a principled basis for making the difficult resource allocation decisions necessitated by today’s tight budget environment.”
- The agency has also repeatedly failed to compile legally required tax complexity reports. These reports are supposed to contain the IRS's specific recommendations on how to make the tax code easier to comply with. Since 1998, the IRS has done so just twice – in 2000 and 2002.
- Other reports have detailed the countless wasteful spending habits of the agency. A 2015 report found the IRS spends over 500,000 hours per year on “union activities” which could instead be used to answer 2.3 million additional phone calls.
- It was revealed that the IRS was spending $1,000 an hour hiring a litigation-only white shoe law firm for an investigation in 2015, despite having over 40,000 employees dedicated to enforcement efforts.
- In 2015, the agency has been caught red-handed wasting taxpayer dollars on Nerf footballs, the world’s largest crossword puzzle, extravagant $100 dollar lunches, and more.
While the IRS continues to blame poor service on budget constraints, countless reports point to the real problem – the inability of the agency to competently complete basic tasks and spend taxpayer dollars in a responsible way.
Photo Credit: Bonnie Natko
New Poll Shows Voters Understand that Tax Hikes Will Increase Cost of Goods and Services, Harm Wages
Voters understand that raising taxes on businesses will lower wages and increase the costs of goods and services, according to a recent poll by HarrisX commissioned by Americans for Tax Reform.
58 percent of respondents said that raising taxes on businesses will harm the cost of goods and services, with 22 percent saying it would help the cost of goods and services, and 19 percent saying it would make no difference. 51 percent of respondents also said that raising taxes on businesses would harm wages, with 25 percent it would help wages, and 24 percent saying it would make no difference.
While Biden claims his tax hikes will be imposed on “large corporations,” they will also harm the American economy and working families.
For instance:
- Biden’s tax hikes would eliminate one million jobs in the first two years and would eliminate 600,000 jobs per year over the first decade, according to a study by economists John W. Diamond and George R. Zodrow, commissioned by the National Association of Manufacturers.
- As noted by Stephen Entin of the Tax Foundation, workers bear 50 to 70 percent of the cost of a corporate tax through lower wages and fewer jobs. In this way, voters are correct to conclude that tax hikes will harm wages.
- A recent National Bureau of Economic Research paper found that increasing the corporate tax rate by one percentage point leads to a 0.17% increase in retail product prices. They also estimate that 31 percent of the corporate tax rate is borne by consumers through higher prices. Again, voters are correct to conclude that tax hikes will increase the costs of goods and services.
These results are consistent with other polls indicating that voters understand the way tax hikes can harm working families, investment, and jobs. For example, 59 percent of voters said that raising taxes would cause jobs to be shipped overseas, while 60 percent of voters said it would cause jobs to be created overseas rather than in the United States.
The poll was conducted by HarrisX between March 31 to April 6 among 4,577 registered voters. The margin of error of this poll is plus or minus 1.45% and the results reflect a nationally representative sample of U.S. adults weighted for age by gender, region, race/ethnicity, and income where necessary to align them with their actual proportions in the population.
Key findings include:
Voter were asked if raising taxes on businesses help, harm or make no difference for the cost of goods and services. A majority of voters answered, “harm.”
- 58 percent of respondents said that raising taxes on businesses will harm the cost of goods and services, with 22 percent saying it would help the cost of goods and services, and 19 percent saying it would make no difference.
- 72 percent of Republicans indicated that raising taxes would harm costs, including 46 percent of Democrats and 56 percent of Independents.
- 63 percent of suburban residents said that tax hikes would harm costs, along with 70 percent of rural residents.
Voter were asked if raising taxes on businesses help, harm or make no difference for wages. A majority of voters answered, “harm.”
- 51 percent of respondents said that raising taxes on businesses would harm wages, with 25 percent it would help wages, and 24 percent saying it would make no difference.
- 55 percent of suburban voters indicated that raising taxes would harm wages, including 62 percent of rural voters.
- 57 percent of polltakers with “high knowledge” about taxes said that raising taxes on businesses would depress wages.
Photo Credit: Zoetnet
Dismal Jobs Report Should Serve as Warning Against Tax Hikes
The U.S. economy added just 266,000 jobs in April and the unemployment rate rose to 6.1 percent, a far cry from Dow Jones estimates which predicted 1 million new jobs and an unemployment rate of 5.8 percent. While it's good that 266,000 people got jobs last month, there is still a long way to go to recover from the pandemic.
Nearly 40 percent of jobs lost during the pandemic have not been recovered and 8.3 million Americans are still out of work. Further, millions of Americans are still underemployed. About 5.2 million workers are employed part-time for economic reasons, meaning they would prefer to work full-time, but cannot gain the hours needed to do so. March’s reported employment gains were also revised downward by nearly 150,000 jobs, from 960,000 to 770,000 jobs.
Given the still-recovering economy, now is not the right time to impose Biden's $3.5 trillion in new taxes, including taxes that will harm small businesses, working families, and investment.
The American people share this concern. In fact, voters believe, by an 80 to 20 margin, that we should not raise taxes coming out of the pandemic, according to a new poll conducted by HarrisX and commissioned by Americans for Tax Reform.
Biden’s tax hikes would eliminate one million jobs in the first two years and would eliminate 600,000 jobs per year over the first decade, according to a study by economists John W. Diamond and George R. Zodrow, commissioned by the National Association of Manufacturers.
As noted by Stephen Entin of the Tax Foundation, workers bear nearly 70 percent of the cost of a corporate tax through lower wages and fewer jobs.
Republican tax cuts and deregulation ensured that the economy was the strongest it had been in modern history. Before the pandemic hit, the unemployment rate was 3.5 percent. Over 5.1 million jobs were created from December 2017 to February 2020. Median household income increased by $4,440 or 6.8% in 2019 -- the largest one-year wage growth in history. Unemployment rates for Black Americans was 5.8 percent, with Hispanic unemployment standing at 4.4 percent.
The Biden administration should not attempt a recovery which implements policies contrary to ones which caused the strongest economy in modern history.
As Jason Furman, an economist at Harvard University explains, “I think this is just as much about a shortage in labor supply as it is about a shortage of labor demand. If you look at April, it appears that there were about 1.1 unemployed workers for every job opening. So there are a lot of jobs out there, there is just still not a lot of labor supply.”
One reason for this dismal jobs report is Democrats' policy to pay people not to work. At the current federal unemployment supplement level of $300, 37 percent of workers make more on unemployment than at work. In this way, the federal government is offering over one-third of the workforce an incentive not to work. Others have said that, because schools and day care centers have not gone back to normal operations, parents are prevented from going back to work.
While we currently face a problem with labor supply, President Biden’s proposed $3.5 trillion in tax hikes would threaten labor demand as well.
Today's disappointing jobs report shows that we still have a long way to go to fully recover from the economic damage the pandemic caused. With 8.3 million people still out of work and 5.2 million people underemployed, now is a bad time to impose $3.5 trillion in taxes hikes on small businesses, working families, and investment.
Photo Credit: Department of Labor
New Jersey Residents Will Get Stuck with Higher Utility Bills Due to Biden Corporate Tax Rate Hike
If Biden and the Democrats enact a corporate income tax rate increase, they will have to explain why they just increased your utility bills
If President Biden and congressional Democrats hike the corporate income tax rate, New Jersey households and businesses will get stuck with higher utility bills. Democrats plan to impose a corporate income tax rate increase to 28%, even higher than communist China's 25%. This does not even include state corporate income taxes, which average 4 - 5% nationwide.
Customers bear the cost of corporate income taxes imposed on utility companies. Corporate income tax cuts drive utility rates down, corporate income tax hikes drive utility rates up.
Electric, gas, and water companies must get their billing rates approved by the respective state utility commissions. When the 2017 Tax Cuts and Jobs Act cut the corporate income tax rate from 35% to 21%, utility companies worked with officials to pass along the tax savings to customers, including at least fourteen New Jersey utilities. The savings take the form of either a rate reduction, or, a reduction to an existing rate increase.
Working with the New Jersey Board of Public Utilities, Atlantic City Electric, New Jersey American Water, New Jersey Natural Gas, Public Service Enterprise Group, Rockland Electric Company, Atlantic City Sewerage Company, SUEZ Water New Jersey, Inc., Middlesex Water Company, Gordon’s Corner Water Company, Jersey Central Power and Light Company, South Jersey Gas Company, Elizabethtown Gas, Aqua New Jersey, and New Jersey-American Water Company passed along tax savings to their customers.
Atlantic City Electric: As noted in this April 3, 2018, Exelon Utilities press release excerpt:
Atlantic City Electric will provide $23 million in annual tax savings to its customers. The company made a filing this month with the New Jersey Board of Public Utilities, which was approved on March 26, 2018. Customers will begin to see reductions on their bills around April 1, 2018.
New Jersey American Water: As noted in this May 11, 2018, BusinessWire article excerpt:
New Jersey American Water customers also recently had a rate decrease as a result of the Tax Cuts and Jobs Act. On April 1, 2018, most customer water rates were reduced by 5.9 percent (and 2.3 percent for former Shorelands Water Company customers). The water bill for the average residential customer using 6,000 gallons a month decreased approximately $3.36 per month ($1.00 per month for former Shorelands customers), and the average residential wastewater bill decreased between $1.49 and $5.81 per month, depending on service area.
The BPU is continuing their review of the overall impact of the new tax act, and further rate adjustments are anticipated in the coming months.
New Jersey Natural Gas: As noted in this March 2, 2018 New Jersey Resources press release excerpt:
New Jersey Natural Gas (NJNG), a regulated subsidiary of New Jersey Resources (NYSE: NJR), today submitted a filing to the New Jersey Board of Public Utilities (BPU) to pass through the benefits of the recently enacted federal tax reform to customers. NJNG announced it will reduce customers’ rates by $21 million, effective April 1, 2018, resulting in a $31, or 3 percent, decrease to a typical residential heating customer’s annual bill.
NJNG also announced it will provide a one-time refund to customers totaling approximately $31 million. The estimated refund for a typical residential heat customer is $47. The actual refund amounts will be determined in May and reflect individual customer usage. Pending BPU approval, customers can expect to see these savings in their May or June bills.
For the rate decrease, a typical residential heating customer using 1,000 therms a year will see their annual bill go from $1,054 to $1,023, a savings of $31. When combined with the one-time refund, the customer will see an overall reduction of $78 or 7.4 percent this year. This adjustment will help ensure rates reflect the lower tax structure and any appropriate savings are passed on to customers.
“Our top priority is to ensure we deliver safe, reliable and affordable service to our customers, said Laurence M. Downes, chairman and CEO of New Jersey Resources. “We are pleased to pass along the benefits of tax reform to our customers through lower energy bills.”
Public Service Enterprise Group: As noted in this March 2, 2018, PSE&G Press Release:
Public Service Electric and Gas Co. (PSE&G) today proposed to lower customer bills by approximately 2 percent on April 1 to pass on the benefits of the federal tax reform legislation enacted earlier this year.
In its filing with the NJ Board of Public Utilities, PSE&G will reduce rates by approximately $114 million on an annual basis effective April 1 to reflect lower federal taxes the utility will pay. The typical residential combined electric and gas customer will save nearly $41 per year.
Rockland Electric Company: As noted in this June 22, 2018 New Jersey Board of Public Utilities Document:
On March 2, 2018, the Company filed its petition pursuant to the Generic TCJA Order, including proposed tariffs as well as a proposed plan. Specifically, RECO's petition stated that the 2017 TCJA would result in an annual revenue requirement reduction for the Company of approximately $2.868 million, as of April 1, 2018. The Company decreased its net deferred tax liabilities by $45 million, decreased its regulatory asset of future income tax by $17.million and accrued a regulatory liability for future income tax of $28 million. REGO calculated its new interim rates effective April 1, 2018 using billing determinants underlying the distribution rates established in RECO's 2016 Base Rate Case. The Company calculated the current level of revenue based on the currently effective rates and allocated the distribution decrease among the service classifications in proportion to the relative contribution made by each class to the total current level of revenue.
The Company proposed to return to ratepayers the amounts deferred pursuant to the Generic TCJA Order for the period of January 1, 2018 until the effective date of the Company's new rates, by means of a sur-credit. The Company proposed to employ a short-term borrowing rate to accrue interest on the deferred amounts until the Company's returns such amount to ratepayers. The Company would return this total deferral amount over twelve (12) consecutive calendar months, commencing with the month immediately following when the Board issues an order approving the Company's new rate. The sur-credit would be applied to all service classifications on an equal per kWh basis for the twelve (12) month period. According to the petition, the Company's final effective rates reflect the proposed refund of the full amount of the excess accumulated deferred federal income tax liability to ratepayers.
Atlantic City Sewerage Company: As noted in this February 27, 2019 New Jersey Board of Public Utilities Document:
The Update noted that effective April 1, 2018, ACSC implemented a rate decrease, to reflect the fact that the tax expense reflected in ACSC's rates had been calculated at the statutory 34% rate. The new rates, made effective April 1, 2018, were based upon the new statutory rate of 21%.
The Update noted that the April 1, 2018 rate reduction was based upon a reduction in income tax expense of $319,945.00. After applying ACSC's gross up factor, the rate decrease became an annual revenue reduction of $472,838.00.
SUEZ Water New Jersey, Inc.: As noted in this February 27, 2019 New Jersey Board of Public Utilities Document:
On March 5, 2018, pursuant to the Generic Tax Order, SUEZ Water New Jersey, Inc., SUEZ Water Toms River, Inc. and SUEZ Water Arlington Hills, Inc. (collectively, "Joint Petitioners" or "Companies") filed a joint petition requesting Board approval to implement a reduction in base rates effective April 1, 2018, of $12.1 million for SUEZ Water New Jersey, Inc., $1.6 million for SUEZ Water Toms River, Inc. and $0.2 million for SUEZ Water Arlington Hills, Inc.
On March 26, 2018, the Board issued an Order ("March 2018 Order") approving the implementation of the Joint Petitioners' proposed rate reduction on an interim basis, effective April 1, 2018. The proposed refund and other rider tariffs were deferred until a later date.
Middlesex Water Company: As noted in this August 29, 2018 New Jersey Board of Public Utilities Document:
On March 26, 2018, the Board issued an Order Adopting Initial Decision/Settlement ("Middlesex Rate Case Order'') in BPU Docket No. WR17101049, Middlesex's most recent base rate case. 3 This Order adopted a Stipulation of Settlement ("Rate Case Stipulation") executed by Middlesex, the New Jersey Division of Rate Counsel and Board Staff ("Parties"). Under the Rate Case Stipulation, the Parties agreed that the Company included in the Rate Case Stipulation the effect on Middlesex's rates of both phases of the required calculations as set forth in the Board's Generic Tax Order.4 This included $500,000 for Phase Two adjustments accounted for as a result of an analysis performed by the Company and reviewed by the Parties. 5 The Parties further agreed in the Rate Case Stipulation to continue to review any calculations associated with the Company's Phase Two adjustments on an ongoing basis, and to resolve any issues if they were to arise. 6 In addition, the Company agreed that, in the event the Phase Two adjustment resulted in less than the $500,000 returned to customers with the Board's approval of the Rate Case Stipulation, no further adjustment will be made.
Gordon’s Corner Water Company: As noted in this August 29, 2018 New Jersey Board of Public Utilities Document:
The Parties stipulated and agreed that all issues and requirements set forth in the Generic Tax Order as applied to Gordon's Corner were resolved. 5 Consistent with the Rate CaseStipulation, Gordon's Corner's new rates to be set as a result of that case include a one-time $0.56 (i.e., a 56 cent) credit per customer, reflecting a stub period total credit due to customers of $8,394. This credit resolves both this matter with respect to Docket No. Ax:18010001 as well as all issues in the Gordon's Corner Rate Case, associated with both Phase One and Phase Two of the Generic Tax Order. The Board NOTES that Gordon's Corner has already complied with Phase One of the Generic Tax Order by lowering its volumetric rate from $5.15 to $5.04, or $154,676 on an annual basis, The Board FURTHER NOTES that the new base rates agreed to by the Rate Case Stipulation reflect a rate base adjustment of $137,421, which represents the Accelerated Deferred Income Tax owed to ratepayers pursuant to the 2017 Tax Cuts Act.
Jersey Central Power and Light Company: As noted in this May 8, 2019 New Jersey Board of Public Utilities Document:
On March 2, 2018, the Company filed a petition pursuant to the Generic TCJA Order, which included proposed tariffs as well as a proposed plan. According to the petition, JCP&L recalculated its base rates to incorporate the impact of the mandatory reduction in the federal corporate income tax ("FIT") rate from 35% percent to 21%, effective January 1, 2018 in accordance with the 2017 Act and the Generic TCJA Order. JCP&L's proposed methodology and quantifications of the effects of the 2017 Act included the following: (1) a reduction in the FIT rate which would result in a base rate reduction of $28.6 million annually for the Company; (2) a deferral, as a regulatory liability, of $6.3 million on its books, with interest, for the impact of the reduction in the FIT rate on its tax gross-up between January 1, 2018 and March 31, 2018; and (3) non-rate base (unprotected) Excess Deferred Income Taxes ("EDITs") of $90.89 million to be amortized over a ten-year period (levelized).
South Jersey Gas Company: As noted in this September 17, 2018 New Jersey Board of Public Utilities Document:
On March 2, 2018, the Company filed its petition pursuant to the Generic TCJA Order, including proposed tariffs as well as a proposed plan. Specifically, SJG stated that it planned: (1) a reduction in base rates of $25.88 million effective April 1, 2018; (2) a corresponding estimated $12.88 million refund to customers for the period January 1, 2018 through March 31, 2018 for the corresponding rate adjustment (including interest at the Company's short-term debt rate and (3) are-measurement and adjustment to rates related tci the "Unprotected" excess deferred income taxes of approximately $27.1 million associated with the implementation of the 2017 Act.
Elizabethtown Gas: As noted in this June 22, 2018 New Jersey Board of Public Utilities Document:
On March 2, 2018, the Company filed its petition pursuant to the Generic TCJA Order, including proposed tariffs as w~II as a proposed plan. Specifically, ETG requested an annual reduction in firm distribution revenues of $10,938,818, effective April 1, 2018, which represents a 6.6% decrease. The Company also requested authorization to refund to customers for the difference between the effective April 1, 2018 rate and charges for January 1, 2018 through March 31, 2018, which was estimated to be $5.6 million. The Company proposed to refund the $5.6 million in a billing cycle during or before September 2018. Alternatively, the Company proposed to provide the refunds in May 2018 by filing a true-up after final rate approval by the Board. ETG proposed that the one-time refund would include interest at the Company's short-term debt rate as specified in the Company's last base rate case3 and· New Jersey Sales and Use Tax. ETG's calculations include an adjustment to eliminate all Investment tax credits for the revenue requirements. The Company's revenue factor will be reduced to 1.40828098. Additionally, the Company will use the Average Rate Assumption Method ("ARAM") to amortize the protected excess deferred tax liability and proposed to amortize the unprotected potions of the excess • over five (5) years. ETG's rate base includes an offset for deferred taxes, a portion of which will be used to provide customers an ongoing carrying cost benefit to the pre-tax weighted average cost of capital. To accomplish the rate reduction, the Company proposed to only reduce the distribution charges of its firm service classification and leave the monthly service charges untouched. The Weather Normalization Clause Margin Revenue Factor would be adjusted, effective January 1, 2018, to realize the full benefit of the 2017 Tax Act.
Aqua New Jersey: As noted in this July 25, 2018 New Jersey Board of Public Utilities Document:
On March 2, 2018, the Company filed its petition pursuant to the January 31, 2018 Generic TCJA Order, including proposed tariffs as well as a proposed plan. The Company's filing and proposed tariffs did not include an across-the-board rate reduction reflecting the reduction in the corporate tax rate from thirty-five percent (35%) to twenty-one (21 %). Therefore, Aqua refiled its petition ("Tax Rate Adjustment Filing") which reflected the reduction in the corporate tax rate from thirty-five percent (35%) to twenty-one percent (21%) on March 19, 2018.
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The Company represented that this rate change and one-time refund results in an overall rate decrease of approximately 6.8% to the average residential water customer using 5,000 gallons of water per month.
New Jersey-American Water Company: As noted in this July 10, 2019 New Jersey Board of Public Utilities Document:
The Signatory Parties have reviewed the Company's filing, exchanged discovery, filed comments and reply comments, and reached a resolution with regard to the disposition of the stub period amount and the difference between the originally implemented rate decrease of 5.88% and the agreed upon rate decrease of 6.12%. The resulting Partial Stipulation will result in NJAW issuing the agreed upon one-time credit to its customers.
Conversely, a vote for a corporate income tax rate hike is a vote for higher utility bills as households recover from the pandemic.
Many small businesses operate on tight margins and can't afford higher heating, cooling, gas, and refrigeration costs. President Biden should withdraw his tax increases.
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