Alex Hendrie

ANALYSIS: ABC Test Breaks Biden's $400,000 Tax Pledge

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Posted by Tom Hebert, Alex Hendrie on Tuesday, September 21st, 2021, 3:30 PM PERMALINK

Democrats are attempting to backdoor parts of the PRO Act in their $3.5 trillion reconciliation spending blowout. 

As part of this effort, Democrats are attempting to include Sen. Ron Wyden's "Unemployment Insurance Modernization Act," in the reconciliation package. This legislation contains a California-style "ABC" test that would lead to the forced reclassification of independent contractors to employees, affecting the 59 million Americans that engage in some form of freelance work. 

According to ATR analysis, this is a violation of President Joe Biden's pledge to not raise taxes on any American making less than $400k.

Click here to view our full memo. 

Photo Credit: Gage Skidmore


Dems Set to Break Biden Small Business Tax Pledge

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Posted by Alex Hendrie on Monday, September 13th, 2021, 10:43 AM PERMALINK

During his campaign, President Biden promised the American people that he would not raise taxes on small businesses. But the tax hike plan proposed by House Democrats contains several tax increases on small businesses which will violate the pledge.

Biden's small business tax promise was made on Feb. 20, 2020 before a national audience during a Democratic debate hosted by MSNBC:

MSNBC's Hallie Jackson: "I want to ask you about Latinos owning one out of every four new small businesses in the United States. Many of them have benefited from President Trump's tax cuts, and they may be hesitant about new taxes or regulations. Will taxes on their small businesses go up under your administration?"

Biden: "No. Taxes on small businesses won't go up." 

Click here or below to see Biden's broken pledge

Despite Biden’s pledge, Democrats have proposed several tax increases that will hit small businesses: 

Raising the top income tax rate to 39.6 percent, which will increase taxes on businesses organized as pass-through entities like sole proprietorships, LLCs, partnerships and S-corporations. 

Of the 26 million businesses in 2014, 95 percent were pass-throughs. Pass-through businesses also account for 55.2 percent, or 65.7 million of all private sector workers.

More than half of all pass-through income would be taxed at this new, higher rate. 

Limiting the 20 percent small business deduction to $500,000 for a joint return or $400,000 for an individual. 860,000 returns earning over $500,000 claimed the deduction in 2018, according to IRS data.

While some Democrats characterize this tax cut as a “giveaway” or “loophole” for the wealthy, the Small Business Deduction is limited to prevent taxpayers from taking advantage of the tax code by improperly allocating wage income, which is paid by the individual, as business income. 

One of the main limitations within the deduction is a wage limitation combined with a capital limitation. The wage limitation applies to taxpayers with greater than $315,000 in income for joint filers or $157,500 for single filers and is phased in over the next $100,000 or $50,000, respectively. 

Past this threshold, the deduction is limited to the greater of 50 percent of a business’s W-2 wages or 25 percent of W-2 wages plus a capital limitation of 2.5 percent of the “unadjusted basis” immediately after acquisition of all qualified property. 

Raising the corporate tax rate to 26.5 percent, a rate higher than Communist China. As noted by the Small Business Administration Office of Advocacy, there are 31.7 million small businesses in the U.S. Of those, 25.7 million have no employees, while 6 million have employees. Of these 6 million small employers, 16.8 percent, or 1 million of these businesses are classified as c-corporations. The SBA classifies a small employer as any independent business with fewer than 500 employees.

Biden claims his spending plan makes large corporations pay their “fair share.” However, the plan will raise taxes on many small businesses that are structured as corporations.

A recent study from the U.S. Chamber of Commerce found that 1.4 million small businesses organized as C-corporations in every sector of the economy: “agriculture, construction, health care, real estate, finance, and more.” 

The analysis also details the state-by-state impact of this tax hike on small businesses: 

  • In Arizona, 31,315 employers will see their taxes increased, including 21,646 small businesses with fewer than 500 employees. Under Joe Biden’s plan, Arizona’s combined state and federal corporate tax rate would be 31.5 percent.  
  • In West Virginia, 6,081 employers will face tax hikes, including 4,203 small businesses. West Virginia’s state corporate tax rate, in addition to the federal 28 percent, would result in a 32.7 percent tax rate for these small businesses.  
  • In New Jersey, which has the highest corporate tax rate, 45,053 small businesses would face a combined state and federal corporate tax rate of 36.3 percent.  
  • Construction, retail trade, and professional/scientific/technical service industries across the nation would be hit the hardest by Biden’s tax hike. 

 

Expanding the 3.8 percent Obamacare net investment income tax so that it applies to all earnings from passthrough businesses. This would disallow taxpayers from using passthrough entities like S-corporations to avoid the 3.8 percent Obamacare net investment income tax.

While Democrats have often described this as a “loophole,” Biden has repeatedly utilized this strategy in a practice that left-leaning tax experts described as “aggressive.” Specifically, he avoided paying $500,000 in payroll taxes including $121,000 in Obamacare taxes by sheltering $13 million of income in several S-corporations. 

It is clear hypocrisy that Biden used the same loophole that he now wants to close. Moreover, Biden supports expanding Obamacare and routinely says “the rich” need to pay their fair share. 

Makes permanent the cap on passthroughs deducting net operating losses. This makes the $500,000 cap on passthrough businesses deducting excess business permanent. This could impact a restaurant, retailer, or other capital-intensive business that sees significant business losses in any year due to the cost of wages, rent, new equipment, inventory, and interest payments. 

The cap was originally created by the Tax Cuts and Jobs Act passed by Congressional Republicans. It was used to offset the creation of the 20 percent deduction for passthrough businesses, which resulted in a net tax cut for taxpayers. Democrats are proposing to make the cap permanent, but not the 20 percent deduction, resulting in a significant tax increase. 

The Democrat tax-and-spend plan will see small businesses hit with hundreds of billions of dollars in higher taxes, despite Biden’s earlier pledge. 

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Five Things to Know About H.R. 3, 95% Tax on Medicines Included in Dem $3.5T Spending Plan

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Posted by Alex Hendrie on Monday, September 13th, 2021, 10:05 AM PERMALINK

House Democrats have included new taxes and government price controls on American medical innovation in their $3.5 trillion reconciliation package. They have included H.R. 3, legislation that creates a 95 percent excise tax on manufacturers and imposes an international reference pricing scheme that directly imports foreign price controls into the U.S. 

These provisions should be rejected and opposed by members of Congress. This plan will undermine the market-based structure of Medicare Part D harming patients, manufacturers, and the American healthcare system.

Here are 5 things to know about H.R. 3:

1. H.R. 3 Should Not be Conflated with “Negotiation”

Supporters of government price controls on American medicines routinely characterize this plan as allowing the government to negotiate with the private sector. This is misleading because there is already negotiation and competition in Medicare Part D.

Part D facilitates negotiation between pharmacy benefit managers (PBMs), pharmaceutical manufacturers, and plans. This system works because Congress created a non-interference clause when Part D was created, which prevents the secretary of Health and Human Services (HHS) from interfering with the robust private-sector negotiations.

Since the law’s enactment, the program has proven to be a successful model of healthcare by saving taxpayers billions of dollars and granting patients access to medicines at low costs. Under this system, plans are free to compete based on the goal of maximizing access and minimizing coverage costs.

Federal spending on Part D has come in 45 percent below projections and is just 14 percent of total Medicare spending. Average monthly premiums in 2019 were just $32.50 and have been stable since 2011. Part D spending also helps keep costs in the rest of Medicare down – it has decreased hospital admissions by 8 percent, resulting in $2.3 billion in annual savings.

According to a 2020 survey, 84 percent of seniors found their Part D premiums affordable and 93 percent found their plan convenient to use. 9 in 10 seniors are satisfied with the Part D drug coverage.

2. H.R. 3 Imposes a 95 percent, Retroactive Excise Tax on Hundreds of Medicines

H.R. 3 enforces its price controls through a 95 percent, retroactive tax on hundreds of life-saving and life-preserving drugs, including cures for cancer, hepatitis C, epilepsy, and multiple sclerosis. This tax is imposed on the sales of a drug if the manufacturer does not agree to government-imposed prices. The tax starts at a 65 percent rate, increasing by 10 percent every quarter a manufacturer is out of “compliance.”

This tax is concerning for a number of reasons:

  • It is imposed at such a high rate that it will result in income taxes above 100 percent of income even if applied to a portion of a business’s sales.  
  • It is imposed retroactively, rather than prospectively. Taxes are typically imposed prospectively in order to promote consistency, certainty, and fairness. All taxpayers deserve to make decisions based on a reasonable interpretation of the law with the expectation that future changes to the law will not be applied looking backwards. 
  • It is imposed on sales, not income. Businesses are typically taxed on their income as it allows them to deduct expenses such as wages and other employee benefits, equipment, and machinery. A tax on sales is imposed irrespective of whether a business made any money. 

 

3. H.R. 3 Adopts Foreign Price Controls from Countries That Have Healthcare Shortages

H.R. 3 arbitrarily sets the prices of medicines based off the prices in six countries - Australia, Canada, the United Kingdom, France, Germany, and Japan.

These countries utilize socialist price controls on their healthcare systems, which in turn reduce access to care. Because there is no way to compete on price, supply is reduced, which ends up harming patients in the form of less access to healthcare.

For instance, Canadian patients wait an average of 19.8 weeks from referral to treatment. By comparison, 77 percent of Americans are treated within four weeks of referral, while just 6 percent wait more than two months.

At any one time, one million Canadians are waiting for treatment according to some estimates.

In the UK, there was a shortage of 10,000 doctors and 43,000 nurses in 2019, with 9 in 10 managers in the National Health Service saying that too few doctors and nurses presented a danger to patients. At any one time, 4.5 million patients were waiting to see a doctor or receive care.

France has been forced to make significant spending cuts to its “free” socialist healthcare system and there have been significant shortages of basic supplies. Australia has also experienced problems with shortages of medicines and healthcare professionals.

4. H.R. 3 will Lead to Fewer New Cures and Treatments

Adopting foreign price controls will create the same problems that foreign healthcare systems suffer from. It will lead to less medical innovation leading to fewer cures and healthcare shortages for American patients.

The U.S. is currently 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.

H.R. 3 will directly undermine this medical innovation. In fact, it could lead to 100 fewer lifesaving medicines over the next decade and could reduce life expectancy of the average American by four months, according to a study by the Council of Economic Advisors.

5. H.R. 3 Could Cost High-Paying Jobs Across the Country

President Biden has repeatedly promised to create millions of new high paying manufacturing jobs in America. However, H.R. 3 would threaten existing jobs by imposing taxes and price controls on American businesses.

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.

Photo Credit: "Pills" by Daniel Go is licensed under CC BY-NC 2.0

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Dems Propose $3 Trillion Tax Hike on Working Families and Small Businesses

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Posted by Alex Hendrie on Sunday, September 12th, 2021, 7:25 PM PERMALINK

House Democrats are proposing almost $3 trillion ($3,000,000,000,000) in tax increases including tax increases on small businesses and working families. This is the largest tax increase since 1968 compared to the size of the economy and the largest tax increase ever in nominal dollars.

See also: Poll: 80% Oppose Tax Hikes Coming Out of Pandemic

Some of these tax increases include: 

Raising taxes on working families by increasing the federal corporate income tax rate from 21 percent to 26.5 percent. This tax increase will be passed along to working families in the form of higher prices, fewer jobs, and lower wages. This will give the U.S. a combined state-federal rate of 30.9 percent, higher than our foreign competitors including China, which has a 25 percent corporate tax rate, and Europe which has an average rate of 21.7 percent. The developed world average (OECD) is 23.5%.

U.S. Federal + State Tax Rate Under Democrat Plan: 31% 

China's Corporate Tax Rate 25% 

Developed World (OECD) Average National + Subnational Rate: 23.5%

According to the Stephen Entin of the Tax Foundation, labor (or workers) bear an estimated 70 percent of the corporate income tax in the form of wages and employment. Similarly, a 2020 study by the National Bureau of Economic Research found that 31% of the corporate tax falls on consumers.  

A corporate tax increase will threaten the life savings of families by reducing the value of publicly traded stocks in brokerage accounts or in 401(k)s. Individual investors opened 10 million new brokerage accounts in 2020 and at least 53% of households own stock. In addition, 80 million to 100 million people have a 401(k), and 46.4 million households have an individual retirement account

Raising the corporate income tax rate will hit Americans with higher utility bills as the country tries to recover from the pandemic. Customers directly bear the cost of corporate income taxes imposed on utility companies. Investor-owned electric, gas, and water companies must get their billing rates approved by the respective state utility commissions. Therefore, if Democrats raise the corporate tax rate, they will have voted to raise utility bills. [Americans for Tax Reform has compiled 300 examples of utilities passing tax savings along to customers.] 

Raising taxes on small businesses by raising the top income tax rate to 39.6 percent, limiting the 20 percent small business deduction, expanding the Obamacare net investment income tax, limiting the ability of passthroughs to deduct excess business losses, and raising the corporate tax rate.

This would likely increase taxes on several million small businesses across the country – earlier this year, the Biden administration admitted raising the top income tax rate would raise taxes on one million small businesses. This does not include the other tax increases – a study by the Chamber of Commerce found that there are 1.4 million small businesses organized as C-corporations, while almost 900,000 small businesses could be hit with the limitation of the passthrough deduction based on 2018 IRS SOI data.

Increasing the capital gains tax rate to 28.8 percent and increasing the holding period for carried interest capital gains to five years. Communist China’s capital gains tax is 20 percent.

A 16.5 percent global minimum tax. The Biden administration has been pushing a global agreement locking in high taxes and a 15 percent global minimum tax in order to “end the race to the bottom” and “make all citizens fairly share the burden of financing government.”

Increasing the death tax by cutting the exemption level in half and modifying valuation rules. This will raise taxes on family-owned businesses and farms across the country.

Retroactively raising taxes on taxpayers claiming the conservation easement deduction. It would apply this retroactively back to Notice 2017-10 released on December 23, 2016, so would impact taxpayers in tax years 2016, 2017, 2018, 2019, 2020, 2021 and for future years. If lawmakers want to make changes to the conservation easement deduction, they should do so as part of a net tax cut and prospectively, not retroactively.

A new 95 percent excise tax on medicines and socialist healthcare policies. This legislation creates a 95 percent excise tax on manufacturers and imposes an international reference pricing scheme that directly imports foreign price controls into the U.S.  

This proposal will reduce access to new, lifesaving and life-preserving medicines. According to research by the Galen Institute, the U.S. had access to 90 percent of new cures launched between 2011 and 2018, a rate far greater than comparable foreign countries. For instance, The United Kingdom had access to 60 percent of medicines, Japan had 50 percent, and Canada had just 44 percent. 

It will also threaten high-paying manufacturing jobs across the country at a time when we are just emerging from the economic wreckage from the pandemic. Pharmaceutical manufacturers invest $100 billion in the U.S. economy every year, directly supporting 800,000 jobs including jobs in every state.  

$80 billion in new IRS funding to hire 87,000 new agents. This would allow the IRS to audit and harass small businesses and American families for an additional $787 billion. It would hire enough new IRS agents to fill Nationals Park twice. 

It would help implement the Biden plan to create a new comprehensive financial account information reporting regime which would force the disclosure of any business or personal account that exceeds $600. Not only would this include the bank, loan, and investment accounts of virtually every individual and business, but it would also include third-party providers like Venmo, CashApp, and PayPal. 

New IRS funding will also be a boon to the union that represents IRS employees. This union, the National Treasury Employees Union (NTEU), shovels 97 percent of their money into Democrat campaign coffers. IRS employees also regularly perform union work on the taxpayer’s dime. In 2019, 1,421 IRS and other Treasury Department employees spent 353,820 hours of taxpayer-funded union time (TFUT), costing the federal government $17.27 million. 

Photo Credit: Mikhail Nilov

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120+ Organizations, Activists Oppose Democrats’ Tax Hikes on Working Families and Small Businesses

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Posted by Alex Hendrie on Thursday, September 9th, 2021, 2:00 PM PERMALINK

ATR today led a coalition of over 120 center-right organizations, activists, and state lawmakers in opposition to the numerous tax hikes on American families and businesses included in the $3.5 trillion reckless tax-and spend reconciliation proposal.  

Democrats are pushing numerous tax increases that may be in the reconciliation legislation including:

  • Raising the corporate tax rate to 25 percent or 28 percent, a rate higher than Communist China 
  • Doubling the capital gains tax to 43.4 percent 
  • Raising the top rate to 39.6 percent 
  • Creating a second death tax by eliminating step-up-in basis 
  • 95 percent excise tax on pharmaceutical manufacturers if they fail to accept government set price controls 
  • Repealing the deduction for foreign-derived intangible income 
  • Raising taxes on carried interest capital gains 
  • Raising the tax rate on GILTI to a top rate of 26.25 percent and requiring it to be calculated on a country-by-country basis 
  • Imposing a 15 percent minimum tax on book income 
  • Retroactively capping the conservation easement deduction 
  • Repealing numerous oil and gas tax provisions including the 
  • deduction for intangible drilling costs (IDCs) 
  • A tax on American energy manufacturers based on their methane 
  • production 
  • A carbon border tax 
  • Capping Section 1031 like-kind exchanges 

 

Millions of small businesses will see higher taxes through the increase in the corporate tax and the top marginal income tax rate. In addition, the plan to repeal step-up in basis will raise taxes on family-owned businesses across the country. 

Democrats have also floated retroactive tax increases on the American people. For instance, the Biden budget calls for retroactively increasing the capital gains tax. This is a terrible idea – retroactive tax policy changes the rules on taxpayers after the fact. It is fundamentally unfair and erodes confidence in the tax system. 

Many of the tax hikes being pushed by the administration violate President Biden’s pledge not to raise taxes on any American earning less than $400,000 per year. A recent analysis by the left-of-center Tax Policy Center found that the tax hikes proposed in President Biden’s budget will raise taxes on 74.1 percent of middle income-quintile households in 2022. In addition, a report by the Joint Committee on Taxation found that over the long-term, approximately $100 billion of the corporate tax increase would be borne by taxpayers making less than $100,000. 

Now is one of the worst times to raise taxes on American families and businesses. We are still over five million jobs short of pre-pandemic levels. In addition, inflation is running rampant and increasing prices for families and businesses across the country. 

Click here to view the letter.

Photo Credit: Kevin Burkett

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Study: Raising Taxes on Carried Interest Capital Gains Will Eliminate 4.9 Million Jobs

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Posted by Alex Hendrie on Wednesday, September 8th, 2021, 2:35 PM PERMALINK

Raising taxes on carried interest capital gains will eliminate 4.9 million jobs and cause pension funds to lose $3 billion per year, according to a new study by the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness.

Democrats have proposed raising taxing carried interest capital gains. President Biden’s fiscal year 2022 budget called for doubling the tax rate from 23.8 percent to 43.4 percent, while Senate Finance Committee Chairman Ron Wyden (D-Ore.) has introduced legislation that would double the tax and require taxes to be paid on unrealized gains every year.

Raising Taxes on Carried Interest Capital Gains Would Cost Jobs and Reduce Life Savings

This tax increase would hit private equity, venture capital, real estate partnerships, and their portfolio companies which collectively account for over 25 million American jobs. It will cause these firms to downsize and decrease investment, which in turn will cause a loss of jobs and a reduction in the returns investors see.

This could affect Americans in every state. For instance, private equity investment supports 11.7 million jobs across the country including 1.5 million jobs in California, 1 million jobs in Texas, 738,000 jobs in Florida, 421,000 jobs in Ohio, and 359,000 jobs in Michigan.

One third of all private equity investment comes from public pension funds so raising taxes on carried interest will harm firefighters, teachers, and police officers that have their life savings invested in these funds. For instance, the California Public Employee Retirement System has $26.5 billion invested in private equity, the Teachers Retirement System of Texas has $23.9 billion invested, while the California State Teachers Retirement System has $23.5 billion invested.

Raising Taxes on Carried Interest Capital Gains is Bad Tax Policy

While the Left frequently characterizes this tax provision as a “loophole” it is actually based on longstanding tax principles.

First, carried interest capital gains is treated as partnership income, meaning taxation flows through to the individual taxpayers. In this case, carried interest is the investor’s share of partnership income they receive for providing expertise on investment decisions. All taxpayers involved in the partnership – those providing expertise and those providing capital – are taxed the same.

Second, carried interest is treated as capital gains income as it is earned through long-term investment, not as ordinary income.  Investors hold the portfolio companies for a significant period of time, often 5 to 7 years. There is no justification for treating this as ordinary income – the investor purchased an asset, grew the asset by making it more economically valuable, and sold the asset at a profit – exactly the same as other types of investment.

Raising taxes on carried interest capital gains should be rejected. It is terrible tax policy that would harm economic growth, reduce jobs, and reduce the returns of public pension funds across the country.

Photo Credit: Marco Verch Professional Photographer

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List: Tax Hikes to Expect in the Dems' $3.5 Trillion Plan

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Posted by Alex Hendrie on Tuesday, August 24th, 2021, 4:35 PM PERMALINK

[To schedule an interview please contact John Kartch at jkartch@atr.org]

Today, the House voted to pass S. Con. Res. 14, the Democrat Fiscal Year 2022 budget resolution. The Senate has already passed this measure on a party-line vote. By voting for this budget, Democrats have fast tracked President Biden’s reckless $3.5 trillion ($3,500,000,000,000) tax and spending spree later this year. 

The passing of this resolution has now teed off the following proposals: 

Trillions in new tax increases on working families and small businesses. This budget resolution is the first step toward the Biden plan to raise taxes by $3 trillion over the next decade. Some of these tax increases include: 

  • Increasing the corporate tax rate from 21 percent to 28 percent, which will be passed along to working families in the form of higher prices, fewer jobs, and lower wages. This will give the U.S. a combined state-federal rate of 32 percent, higher than our foreign competitors including China, which has a 25 percent corporate tax rate.  
     
  • At least 2 million small businesses will get hit by Biden’s tax hikes. This includes over 1.4 million small businesses organized as c-corporations, family-owned farms impacted by the repeal of step-up in basis, and pass-through organizations which would be hit by the increase of the top marginal income tax to 39.6 percent.  
     
  • Raising the corporate income tax rate will hit Americans with higher utility bills as the country tries to recover from the pandemic. Customers directly bear the cost of corporate income taxes imposed on utility companies. Investor-owned electric, gas, and water companies must get their billing rates approved by the respective state utility commissions. Therefore, if Democrats raise the corporate tax rate, they will have voted to raise utility bills. [Americans for Tax Reform has compiled 300 examples of utilities passing tax savings along to customers.] 
     
  • Doubling the capital gains tax to 43.4 percent, a rate more than double China’s capital gains tax. 
     
  • Taking away step-up in basis and imposing a second death tax by taxing unrealized capital gains at death. This will disproportionately fall on family-owned businesses. Taking away step-up in basis has already been tried and failed. In 1976, Congress eliminated stepped-up basis, but it was so complicated and unworkable that it was restored in 1980. 
     
  • Imposing a 15 percent minimum tax on “book income” that will disallow the use of important deductions and credits that help promote job creation and economic growth. 
     
  • Increasing the top income tax rate to 39.6%, a tax increase that will fall on small businesses. As noted in a recent Senate Finance Committee report, "... in 2016, only 42 percent of net business income in the United States was earned by corporations, down from 78.3 percent in 1980." 
     
  • New taxes on American energy including a tax on manufacturers based on their methane production and a carbon border tax. These tax increases will be passed along to families and businesses in the form of higher prices. 
     
  • Creating a 21 percent global minimum tax, higher than the 15 percent global minimum tax the Biden admin is pushing other countries to enact. Because existing law denies foreign tax credits, this could see businesses pay a top rate of 26.25 percent. 
     
  • Repealing the deduction for foreign-derived intangible income, a tax cut that encourages businesses to house their intellectual property in the United States. 


$80 billion in new IRS funding to hire 87,000 new agents. This would allow the IRS to audit and harass small businesses and American families for an additional $787 billion. It would hire enough new IRS agents to fill Nationals Park twice. 

It would help implement the Biden plan to create a new comprehensive financial account information reporting regime which would force the disclosure of any business or personal account that exceeds $600. 

Not only would this include the bank, loan, and investment accounts of virtually every individual and business, but it would also include third-party providers like Venmo, CashApp, and PayPal. 

New IRS funding will also be a boon to the union that represents IRS employees. This union, the National Treasury Employees Union (NTEU), shovels 97 percent of their money into Democrat campaign coffers. 

IRS employees also regularly perform union work on the taxpayer’s dime. In 2019, 1,421 IRS and other Treasury Department employees spent 353,820 hours of taxpayer-funded union time (TFUT), costing the federal government $17.27 million. 

Socialist healthcare policies such as H.R. 3, the Pelosi plan to impose new taxes and government price controls on American medical innovation. This legislation creates a 95 percent excise tax on manufacturers and imposes an international reference pricing scheme that directly imports foreign price controls into the U.S.  

This proposal will reduce access to new, lifesaving and life-preserving medicines. According to research by the Galen Institute, the U.S. had access to 90 percent of new cures launched between 2011 and 2018, a rate far greater than comparable foreign countries. For instance, The United Kingdom had access to 60 percent of medicines, Japan had 50 percent, and Canada had just 44 percent. 

It will also threaten high-paying manufacturing jobs across the country at a time when we are just emerging from the economic wreckage from the pandemic. Pharmaceutical manufacturers invest $100 billion in the U.S. economy every year, directly supporting 800,000 jobs including jobs in every state.  

Trillions in new welfare spending that will allow the federal government to promote woke policies. This includes: 

  • Hundreds of billions in funding for “free” pre-K and community college to “close the equity gap.” Part of this funding will ensure classroom environments that are “inclusive for all students.” 
     
  • $10 billion to create a Civilian Climate Corps. The program will help set the stage for the Green New Deal and give progressive activists free government housing, transportation, and salaries to “advance environmental justice.” 
     
  • New spending to make childcare “affordable,” and to promote “culturally and linguistically responsive environments.” 
     
  • New federal subsidies to improve “housing affordability and equity” and to encourage green and sustainable housing. 
     
  • Lowers the Medicare eligibility age and expands coverage to Dental, Vision, and Hearing. 

 

This $3.5 trillion spending package is a reckless proposal that will lead to increased taxes on working families and small businesses and trillions in new spending on welfare programs and woke policies.  

Photo Credit: House Democrats

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ATR Supports Young Amendment #3444 Prohibiting Tax Hikes on Taxpayers Making Less than $400k Per Year

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Posted by Alex Hendrie on Tuesday, August 10th, 2021, 3:20 PM PERMALINK

Senator Todd Young (R-Ind.) has introduced S. Amdt #3444 to S.Con Res. 14, the Fiscal Year 2022 Budget Resolution. This amendment would ensure Democrats keep the Biden pledge to not raise taxes on Americans earning less than $400,000. ATR urges Senators to support and vote YES on this amendment. 

President Joe Biden and Vice President Kamala Harris have repeatedly pledged to every American making less than $400,000 that they would not raise a single penny of their taxes. Biden and Harris made the pledge at least 60 times.

Unfortunately, the $3.5 trillion reckless, tax and spend plan being pushed by Biden and Senate Democrats raises taxes on Americans earning less than $400,000 per year.

A new report by the Joint Committee on Taxation released earlier this week found that raising the corporate tax rate to 28 percent, as proposed by Democrats, would raise taxes on American workers and retirees.

Almost 60 percent of the tax would be borne by taxpayers making less than $500,000. Of those impacted by a 28 percent corporate income tax hike, 98.4 percent earn less than $500,000.

The analysis also detailed how low- and middle-income Americans have a stake in the success of U.S. corporations through ownership of stocks, bonds, pensions, IRAs and other retirement accounts. There are 107.8 million U.S. taxpayers with ownership stake in U.S. corporations, 97.7 percent of which earn less than $500,000 a year.  

In addition, an analysis by the left-of-center Tax Policy Center found that the tax hikes proposed in President Biden’s budget will raise taxes on 74.1 percent of middle income-quintile households in 2022.

Clearly, Democrats are lying when they claim their tax hikes will not impact Americans earning less than $400,000. Raising the corporate tax would harm millions of middle-class American families by increasing the cost of goods and services, decreasing wages and the availability of new jobs, and reducing the value of stocks, 401(k)s, and other investments. ATR urges all Senators to vote YES on Senator Young’s important amendment.

Photo Credit: Brookings Institution

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ATR Supports Crapo Amendment to Prohibit IRS Financial Reporting Requirements

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Posted by Alex Hendrie on Tuesday, August 10th, 2021, 11:55 AM PERMALINK

Senate Finance Committee Ranking Member Mike Crapo (R-Idaho) has introduced S. Amdt #3099 to S.Con Res. 14, the Fiscal Year 2022 Budget Resolution. ATR urges Senators to support and vote YES on this amendment.

This amendment would prohibit the IRS from implementing President Biden’s proposal to create a new comprehensive financial account information reporting regime which would force the disclosure of any business or personal account that exceeds $600.

Not only would this include the bank, loan, and investment accounts of virtually every individual and business, but it would also include third-party providers like Venmo, CashApp, and PayPal.

President Biden wants to give the IRS $80 billion in new funding. This funding would add 87,000 new IRS agents that Biden claims will squeeze taxpayers for an additional $787 billion. It will allow the agency to audit and harass taxpayers. A major way the agency will do this is through the new $600 reporting regime.

The IRS has a record of mismanagement and corruption. It has routinely failed to protect taxpayer data. Rather than being given new responsibilities the IRS needs reform so that it can better assist taxpayers.

See Also:

Biden’s $600 Financial Reporting Requirement Could Lead to Even More Violations of Taxpayer Rights

Poll: 65% of Voters Say IRS Has Too Much Power

IRS Has Repeatedly Failed to Protect Taxpayer Data

IRS Fails to Document Contractor Laptops, Putting Private Taxpayer Data at Risk

Photo Credit: Senator Mike Crapo

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Dems Set Stage for Trillions in Tax Hikes, 87,000 IRS Agents, Woke Spending

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Posted by Alex Hendrie on Monday, August 9th, 2021, 1:00 PM PERMALINK

Senate Budget Committee Chairman Bernie Sanders (I-Vt.) and Senate Majority Leader Chuck Schumer (D-N.Y.) have introduced the Democrat Fiscal Year 2022 budget resolution. This budget includes instructions for the Democrats to fast-track their reckless $3.5 trillion ($3,500,000,000,000) tax and spending spree later this year.

ATR urges Senators to vote no on this resolution. If signed into law, it will tee off passage of the following proposals:

Trillions in new tax increases on working families and small businesses. This budget resolution will be the first step toward the Biden plan to raise taxes by $3 trillion over the next decade. Some of these tax increases include:

  • Increasing the corporate tax rate from 21 percent to 28 percent, which will be passed along to working families in the form of higher prices, fewer jobs, and lower wages. This will give the U.S. a combined state-federal rate of 32 percent, higher than our foreign competitors including China, which has a 25 percent corporate tax rate. This will also fall on over 1.4 million small businesses organized as c-corporations. 
     
  • Doubling the capital gains tax to 43.4 percent, a rate more than double China’s capital gains tax. 
     
  • Taking away step-up in basis and imposing a second death tax by taxing unrealized capital gains at death. This will disproportionately fall on family-owned businesses. Taking away step-up in basis has already been tried and failed. In 1976, Congress eliminated stepped-up basis, but it was so complicated and unworkable that it was restored in 1980. 
     
  • Imposing a 15 percent minimum tax on “book income” that will disallow the use of important deductions and credits that help promote job creation and economic growth. 
     
  • Increase the top income tax rate to 39.6%, a tax increase that will fall on small businesses. As noted in a recent Senate Finance Committee report, "... in 2016, only 42 percent of net business income in the United States was earned by corporations, down from 78.3 percent in 1980." 
     
  • New taxes on American energy including a tax on manufacturers based on their methane production and a carbon border tax. These tax increases will be passed along to families and businesses in the form of higher prices. 
     
  • Creating a 21 percent global minimum tax, higher than the 15 percent global minimum tax the Biden admin is pushing other countries to enact. 
     
  • Repealing the deduction for foreign-derived intangible income, a tax cut that encourages businesses to house their intellectual property in the United States.

 

$80 billion in new IRS funding to hire 87,000 new agents. This would allow the IRS to audit and harass small businesses and American families for an additional $787 billion. It would hire enough new IRS agents to fill Nationals Park twice.

It would help implement the Biden plan to create a new comprehensive financial account information reporting regime which would force the disclosure of any business or personal account that exceeds $600.

Not only would this include the bank, loan, and investment accounts of virtually every individual and business, but it would also include third-party providers like Venmo, CashApp, and PayPal.

New IRS funding will also be a boon to the union that represents IRS employees. This union, the National Treasury Employees Union (NTEU), shovels 97 percent of their money into Democrat campaign coffers.

IRS employees also regularly perform union work on the taxpayer’s dime. In 2019, 1,421 IRS and other Treasury Department employees spent 353,820 hours of taxpayer-funded union time (TFUT), costing the federal government $17.27 million.

Socialist healthcare policies such as H.R. 3, the Pelosi plan to impose new taxes and government price controls on American medical innovation. This legislation creates a 95 percent excise tax on manufacturers and imposes an international reference pricing scheme that directly imports foreign price controls into the U.S. 

This proposal will reduce access to new, lifesaving and life-preserving medicines. According to research by the Galen Institute, the U.S. had access to 90 percent of new cures launched between 2011 and 2018, a rate far greater than comparable foreign countries. For instance, The United Kingdom had access to 60 percent of medicines, Japan had 50 percent, and Canada had just 44 percent.

It will also threaten high-paying manufacturing jobs across the country at a time when we are just emerging from the economic wreckage from the pandemic. Pharmaceutical manufacturers invest $100 billion in the U.S. economy every year, directly supporting 800,000 jobs including jobs in every state. 

Trillions in new welfare spending that will allow the federal government to promote woke policies. This includes:

  • Hundreds of billions in funding for “free” pre-K and community college to “close the equity gap.” Part of this funding will ensure classroom environments that are “inclusive for all students.” 
     
  • $10 billion to create a Civilian Climate Corps. The program will help set the stage for the Green New Deal and give progressive activists free government housing, transportation, and salaries to “advance environmental justice.” 
     
  • New spending to make childcare “affordable,” and to promote “culturally and linguistically responsive environments.” 
     
  • New federal subsidies to improve “housing affordability and equity” and to encourage green and sustainable housing. 
     
  • Lowers the Medicare eligibility age and expands coverage to Dental, Vision, and Hearing.

 

The Democrat budget resolution is a reckless proposal that will lead to increased taxes on working families and small businesses and trillions in new spending on welfare programs and woke policies.

Photo Credit: Gage Skidmore

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