Alex Hendrie

ATR Releases New Video Against Foreign Price Controls on Medicare

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Posted by Alex Hendrie on Wednesday, October 21st, 2020, 11:57 AM PERMALINK

ATR has released a new video highlighting free market opposition to efforts to impose price controls on medical innovation and seniors in Medicare.

The video, narrated by ATR President Grover Norquist, highlights the coalition of 80 conservative, free market, libertarian groups, and activists that oppose the “most favored nation (MFN)" executive order to tie the prices we pay for medicines to foreign, socialist healthcare systems. 

Foreign countries have been free riding off American medical innovation for decades through crushing price controls and other market-distorting government rules and regulations.

If we adopt these same price controls, we will do significant harm to the healthcare system. Studies have shown that countries with price controls have access to fewer innovative cures leading to healthcare shortages.

For instance, 290 new medical substances were launched worldwide between 2011 and 2018. While Americans had access to over 90 percent of these medicines, countries with price controls had limited access – the United Kingdom had access to only 60 percent of these medicines, Japan had 50 percent, and Canada had just 44 percent.

Implementing price controls through an MFN will also threaten the ability of our country to continue recovering from COVID-19. The U.S. is the best in the world when it comes to developing innovative, lifesaving, and life preserving medicines. Because of this, the U.S. is leading the way when it comes to developing COVID-19 vaccines, with several promising candidates entering the final stages of testing and clinical trials. 

In addition, price controls could harm the U.S. economy. Medical innovation directly or indirectly supports 4 million jobs and $1.1 trillion in total economic impact, including jobs in every state. These jobs will be threatened by price control schemes like the MFN. 

Rather than imposing price controls, lawmakers and President Trump should adopt a deregulatory, market-based approach that allows free market innovation to flourish. Moving forward, we should look to policy proposals that promote medical innovation and the development of new cures and reject efforts to impose price controls on the American healthcare system. 

The full video can be found here: 
 

Photo Credit: Wellness GM


The Tax Code is Already Steeply Progressive

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Posted by Alex Hendrie on Wednesday, October 14th, 2020, 1:36 PM PERMALINK

Democrat presidential candidate Joe Biden says he wants to make sure “the rich” pay their “fair share.” However, Biden fails to mention that the tax code is already steeply progressive.

According to recently released Congressional Budget Office data analyzing 2017 household income: 

  • The top one percent of households pay 38.6 percent of federal income taxes and 25.3 percent of all federal taxes.
     
  • The top 20 percent of households pay 87.1 percent of federal income taxes and 69.2 percent of all federal taxes.
     
  • The top one percent of households pay an average income tax rate of 24.4 percent while the middle 20 percent of households pays an average income tax rate of 3.3 percent.
     
  • The top one percent of households pay an average federal tax rate of 31.6 percent while the middle 20 percent of households pays an average federal tax rate of 14 percent.  
     
  • The top 20 percent of households pay an average federal tax rate of 26.1 percent while the middle quintile pays an average total tax rate of 14 percent. 
     

The data is shown below: 

Photo Credit: Gage Skidmore


Voters Support Allowing All Americans to Pay for Healthcare Tax Free by Four to One Margin

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Posted by Alex Hendrie on Friday, October 9th, 2020, 3:06 PM PERMALINK

Two-thirds of the American people support expanding Health Savings Accounts (HSAs) so that all Americans can pay for their health care tax-free during the duration of the coronavirus pandemic, according to polling conducted by John McLaughlin.

McLaughlin worked as an advisor and pollster for President Donald Trump during the 2016 election campaign.

The polling data found Americans support expanding HSAs during the pandemic by a ratio of four to one – with 67 percent of respondents supporting the policy and just 15 percent opposing.

70.5 percent of Democrats and 64.7 percent of Republicans backed the policy. Importantly, the strongest support was among women, swing voters, and independents.

This policy could be accomplished by passing S.3546/H.R. 6338, the “Pandemic Healthcare Access Act,” introduced by Senator Ted Cruz (R-Texas) and Congressman Ted Bud (R-NC). This simple, one-page bill will cut taxes and enact healthcare reform.

Currently, there is a government requirement that HSAs can only be offered to Americans that have a high deductible health plan (HDHP). The Pandemic Healthcare Access Act suspends this requirement for as long as the coronavirus emergency declaration is in effect.

This will increase access to health care by making HSAs available to hundreds of millions of Americans- including those on Medicare and Medicaid, and those that receive care through the VA, Indian health plans, ObamaCare and any employer plan.

It will also help individuals pay for their deductible or any increased health care costs, allow HSA funds to pay for direct primary care, and allow telemedicine below the deductible.

The full polling data can be seen below (click here to expand image): 

TableDescription automatically generated

Photo Credit: 401(K) 2012


New Report: IRS Continues to Use 50 Year Old Obsolete Technology

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Posted by Alex Hendrie on Monday, October 5th, 2020, 4:18 PM PERMALINK

Federal government agencies are using technologies that have been obsolete for decades, creating numerous obstacles in their ability to provide basic services, notes a recent report by the Progressive Policy Institute (PPI).

This outdated IT has been exacerbated by the Coronavirus pandemic and points to a need for the government to engage in public-private partnerships to resolve this problem.

As the report notes, several agencies, including the IRS, continue to use technology that was developed almost 50 years ago and was considered obsolete decades ago.

For instance, the agency is using COBOL, a programing language first developed in the 1960s, to administer key programs. COBOL was designed for use with mainframe computers and has been replaced by cloud computing services offered by companies like Amazon and Microsoft.

The government continues to use COBOL even though they are struggling to find employees that have expertise with the technology. This shortage of expertise not be surprising – according to the PPI report, COBOL is 43rd most popular programming language and the average age of a COBOL programmer is 55-years-old.

As the report notes, the continued used of COBOL meant that many Americans struggled to receive COVID-19 stimulus payments:

“Many Americans encountered error messages (‘Payment Status Not Available’) when they tried to find out why they hadn’t received their stimulus check yet. The solution? Using only uppercase letters in the form (and if that didn’t solve the issue, people were advised to try abbreviating words like ‘Street’ and ‘Avenue’).”

To be clear, this is only one case of outdated technology. As the report notes, the IRS has a “profoundly outdated and inaccurate taxpayer database.” Several parts of the IRS IT infrastructure date back to the Kennedy administration.

One way the government can improve its IT is through public-private partnerships that take advantage of private sector innovation. As the report notes:

“Governments should start with pilot projects and partner with the private sector where possible. Likewise, modern public-private partnership strategies would enable government to leverage private sector investments and infrastructure to apply them to public purpose.” 

The IT used by federal government is in dire need of modernization and points to clear limitations of the IRS and other agencies. In addition, this dangerously outdated technology points to a need to engage with the private sector.

Photo Credit: 401(K) 2012


IRS Data: Middle Income Taxpayers Saw Significant Tax Cuts in Key Swing States

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Posted by Alex Hendrie on Monday, October 5th, 2020, 2:00 PM PERMALINK

Middle class American families in key Presidential and Senate swing states saw significant tax reduction from the Trump-Republican Tax Cuts and Jobs Act (TCJA). While the TCJA reduced taxes for American families at every income level, middle income families saw the biggest tax reduction, according to IRS data compiled by ATR. This middle-class tax cut contradicts the claims made by the left that this law overwhelmingly cut taxes for “the rich.” 

This data compared “total tax liability” between 2017 and 2018 in Ohio, Pennsylvania, Texas, Arizona, Nevada, Florida, Georgia, Maine, Michigan, North Carolina, Wisconsin, Colorado, Montana, and Iowa. Total tax liability includes federal income taxes as well as taxes listed on IRS form 1040 such as social security taxes on self-employment income and tax applicable to individual retirement arrangements (IRAs).

Nationwide, American families with incomes between $50,000 and $100,000 saw their tax liability drop by twice as much as Americans with income above $1 million. The trend of middle-income Americans seeing greater tax cuts than millionaires is also seen in states across the country.

For instance, in Ohio, American families with AGI of between $25,000 and $49,999 saw an average reduction in tax liability of 14.4 percent. Families with AGI between $75,000 and $99,999 saw an average reduction in tax liability of 15.3 percent. 

In contrast, Americans with AGI of $1 million or above saw an average reduction in tax liability of 0.4 percent.

Similarly, in Pennsylvania, households in the AGI brackets of $25,000 and $49,999, with AGI of between $50,000 and $74,999 and with AGI of $75,000 and $99,999 all saw average tax cuts of 14 percent or more. By comparison, Americans with AGI of $1 million or above saw tax cuts averaging 3.1 percent.

Texas and Florida are outliers in that taxpayers earning $1 million or above saw similar tax reduction to middle income taxpayers. A possible reason for this is that Texas and Florida are both “no income tax states,” so taxpayers would have been unaffected by the TCJA limitation on deducting state and local taxes (SALT).

The full data on each state is below.

Ohio

  • Taxpayers with AGI of between $25,000 and $49,999 saw their average tax liability drop from $2,789.59 in 2017 to $2,389.05 in 2018, a 14.4 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $50,000 and $74,999 saw their average tax liability drop from $5,865.81 in 2017 to $5,013.63 in 2018, a 14.5 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $75,000 and $99,999 saw their average tax liability drop from $9,168.66 in 2017 to $7,761.84 in 2018, a 15.3 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $100,000 and $200,000 saw their average tax liability drop from $17,614.13 in 2017 to $15,401.30 in 2018, a 12.6 percent reduction in federal tax liability.
  • Taxpayers with AGI of over $1 million saw their average tax liability drop from $760,382.14 in 2017 to $757,492.05 in 2018, a 0.4 percent reduction in federal tax liability.

 

Pennslyvania

  • Taxpayers with AGI of between $25,000 and $49,999 saw their average tax liability drop from $2,802.11 in 2017 to $2,410.56 in 2018, a 14 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $50,000 and $74,999 saw their average tax liability drop from $5,915.73 in 2017 to $5,075.37 in 2018, a 14.2 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $75,000 and $99,999 saw their average tax liability drop from $9,519.73 in 2017 to $7,822.61 in 2018, a 14.6 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $100,000 and $200,000 saw their average tax liability drop from $18,037.37 in 2017 to $15,888.72 in 2018, a 11.9 percent reduction in federal tax liability.
  • Taxpayers with AGI of over $1 million saw their average tax liability drop from $848,564.65 in 2017 to $821,984.86 in 2018, a 3.1 percent reduction in federal tax liability.

 

Texas

  • Taxpayers with AGI of between $25,000 and $49,999 saw their average tax liability drop from $2,661.04 in 2017 to $2,376.69 in 2018, a 10.7 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $50,000 and $74,999 saw their average tax liability drop from $5,584.79 in 2017 to $4,845.27 in 2018, a 13.2 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $75,000 and $99,999 saw their average tax liability drop from $9,033.36 in 2017 to $7,707.05 in 2018, a 14.7 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $100,000 and $200,000 saw their average tax liability drop from $18,590.69 in 2017 to $16,177.64 in 2018, a 13.0 percent reduction in federal tax liability.
  • Taxpayers with AGI of over $1 million saw their average tax liability drop from $1,001,319.32 in 2017 to $864,387.92 in 2018, a 13.7 percent reduction in federal tax liability.

 

Arizona

  • Taxpayers with AGI of between $25,000 and $49,999 saw their average tax liability drop from $2,615.08 in 2017 to $2,313.67 in 2018, an 11.5 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $50,000 and $74,999 saw their average tax liability drop from $5,566.23 in 2017 to $4,841.36 in 2018, a 13.0 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $75,000 and $99,999 saw their average tax liability drop from $8,920.40 in 2017 to $7,658.675 in 2018, a 14.1 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $100,000 and $200,000 saw their average tax liability drop from $17,957.82 in 2017 to $15,727.25in 2018, a 12.4 percent reduction in federal tax liability.
  • Taxpayers with AGI of over $1 million saw their average tax liability drop from $823,514.63 in 2017 to $753,368.45 in 2018, a 8.5 percent reduction in federal tax liability.

 

Nevada

  • Taxpayers with AGI of between $25,000 and $49,999 saw their average tax liability drop from $2,617.7 in 2017 to $2,337.07 in 2018, a 10.7 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $50,000 and $74,999 saw their average tax liability drop from $5,656.8 in 2017 to $4,920.07 in 2018, a 13.0 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $75,000 and $99,999 saw their average tax liability drop from $ 9,133.8 in 2017 to $ 7,827.59 in 2018, a 14.3 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $100,000 and $200,000 saw their average tax liability drop from $18,272.7 in 2017 to $15,922.23 in 2018, a 12.9 percent reduction in federal tax liability.
  • Taxpayers with AGI of over $1 million saw their average tax liability increase from $1,140,405.0 in 2017 to $1,143,723.22 in 2018, a 0.3 percent increase in federal tax liability.

 

Florida

  • Taxpayers with AGI of between $25,000 and $49,999 saw their average tax liability drop from $2,613.12 in 2017 to $2,321.82 in 2018, a 11.1 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $50,000 and $74,999 saw their average tax liability drop from $5,675.12 in 2017 to $4,901.67 in 2018, a 13.6 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $75,000 and $99,999 saw their average tax liability drop from $9,168.57 in 2017 to $7,859.65 in 2018, a 14.3 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $100,000 and $200,000 saw their average tax liability drop from $18,528.07 in 2017 to $16,122.07 in 2018, a 13.0 percent reduction in federal tax liability.
  • Taxpayers with AGI of over $1 million saw their average tax liability drop from $1,165,563.77 in 2017 to $1,010,261.10 in 2018, a 13.3 percent reduction in federal tax liability.

 

Georgia

  • Taxpayers with AGI of between $25,000 and $49,999 saw their average tax liability drop from $2,553.19 in 2017 to $2,312.76 in 2018, a 9.4 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $50,000 and $74,999 saw their average tax liability drop from $5,459.71 in 2017 to $4,829.49 in 2018, a 11.5 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $75,000 and $99,999 saw their average tax liability drop from $8,803.29 in 2017 to $7,675.99 in 2018, a 12.8 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $100,000 and $200,000 saw their average tax liability drop from $17,824.57 in 2017 to $15,881.30 in 2018, a 10.9 percent reduction in federal tax liability.
  • Taxpayers with AGI of over $1 million saw their average tax liability drop from $786,363.64 in 2017 to $737,697.06 in 2018, a 6.2 percent reduction in federal tax liability.

 

Maine

  • Taxpayers with AGI of between $25,000 and $49,999 saw their average tax liability drop from $2,856.90 in 2017 to $2,466.15 in 2018, a 13.7 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $50,000 and $74,999 saw their average tax liability drop from $5,725.49 in 2017 to $4,951.34 in 2018, a 13.5 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $75,000 and $99,999 saw their average tax liability drop from $8,824.15 in 2017 to $7,485.94 in 2018, a 15.2 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $100,000 and $200,000 saw their average tax liability drop from $17,314.79 in 2017 to $15,317.31 in 2018, a 11.5 percent reduction in federal tax liability.
  • Taxpayers with AGI of over $1 million saw their average tax liability drop from $626,594.90 in 2017 to $580,869.44 in 2018, a 7.3 percent reduction in federal tax liability.

 

Michigan

  • Taxpayers with AGI of between $25,000 and $49,999 saw their average tax liability drop from $2,690.90 in 2017 to $2,341.82 in 2018, a 13.0 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $50,000 and $74,999 saw their average tax liability drop from $5,733.69 in 2017 to $4,939.96 in 2018, a 13.8 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $75,000 and $99,999 saw their average tax liability drop from $8,960.20 in 2017 to $7,604.86 in 2018, a 15.1 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $100,000 and $200,000 saw their average tax liability drop from $17,790.46 in 2017 to $15,523.34 in 2018, a 12.7 percent reduction in federal tax liability.
  • Taxpayers with AGI of over $1 million saw their average tax liability drop from $861,239.70 in 2017 to $842,104.99 in 2018, a 2.2 percent reduction in federal tax liability.

 

North Carolina

  • Taxpayers with AGI of between $25,000 and $49,999 saw their average tax liability drop from $2,633.94 in 2017 to $2,327.11 in 2018, a 11.6 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $50,000 and $74,999 saw their average tax liability drop from $5,537.27 in 2017 to $4,800.64 in 2018, a 13.3 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $75,000 and $99,999 saw their average tax liability drop from $8,752.56 in 2017 to $7,479.65 in 2018, a 14.5 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $100,000 and $200,000 saw their average tax liability drop from $17,665.40 in 2017 to $15,580.95 in 2018, a 11.8 percent reduction in federal tax liability.
  • Taxpayers with AGI of over $1 million saw their average tax liability drop from $749,444.13 in 2017 to $738,040.64 in 2018, a 1.5 percent reduction in federal tax liability.

 

Wisconsin

  • Taxpayers with AGI of between $25,000 and $49,999 saw their average tax liability drop from $2,814.83 in 2017 to $2,425.99 in 2018, a 13.8 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $50,000 and $74,999 saw their average tax liability drop from $5,723.83 in 2017 to $4,970.99 in 2018, a 13.2 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $75,000 and $99,999 saw their average tax liability drop from $8,562.71 in 2017 to $7,283.48 in 2018, a 14.9 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $100,000 and $200,000 saw their average tax liability drop from $16,769.65 in 2017 to $14,829.76 in 2018, a 11.6 percent reduction in federal tax liability.
  • Taxpayers with AGI of over $1 million saw their average tax liability drop from $819,695.33 in 2017 to $800,014.55 in 2018, a 2.4 percent reduction in federal tax liability.

 

Colorado

  • Taxpayers with AGI of between $25,000 and $49,999 saw their average tax liability drop from $2,919.45 in 2017 to $2,555.25 in 2018, a 12.5 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $50,000 and $74,999 saw their average tax liability drop from $5,997.71 in 2017 to $5,220.98 in 2018, a 13.0 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $75,000 and $99,999 saw their average tax liability drop from $9,342.18 in 2017 to $8,072.75 in 2018, a 13.6 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $100,000 and $200,000 saw their average tax liability drop from $18,528.19 in 2017 to $16,214.74 in 2018, a 12.5 percent reduction in federal tax liability.
  • Taxpayers with AGI of over $1 million saw their average tax liability drop from $799,532.72 in 2017 to $763,601.61 in 2018, a 4.5 percent reduction in federal tax liability.

 

Montana

  • Taxpayers with AGI of between $25,000 and $49,999 saw their average tax liability drop from $2,777.24 in 2017 to $2,417.81 in 2018, a 12.9 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $50,000 and $74,999 saw their average tax liability drop from $5,563.07 in 2017 to $4,844.34 in 2018, a 12.9 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $75,000 and $99,999 saw their average tax liability drop from $8,612.29 in 2017 to $7,287.73 in 2018, a 15.4 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $100,000 and $200,000 saw their average tax liability drop from $16,879.90 in 2017 to $14,679.53 in 2018, a 13.0 percent reduction in federal tax liability.
  • Taxpayers with AGI of over $1 million saw their average tax liability drop from $731,934.88 in 2017 to $708,856.00 in 2018, a 3.2 percent reduction in federal tax liability.

 

Iowa

  • Taxpayers with AGI of between $25,000 and $49,999 saw their average tax liability drop from $2,777.97 in 2017 to $2,390.11 in 2018, a 14 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $50,000 and $74,999 saw their average tax liability drop from $5,573.02 in 2017 to $4,774.71 in 2018, a 14.3 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $75,000 and $99,999 saw their average tax liability drop from $8,431.20 in 2017 to $7,011.00 in 2018, a 16.8 percent reduction in federal tax liability.
  • Taxpayers with AGI of between $100,000 and $200,000 saw their average tax liability drop from $16,776.49 in 2017 to $14,519.44 in 2018, a 13.5 percent reduction in federal tax liability.
  • Taxpayers with AGI of over $1 million saw their average tax liability drop from $763,403.78 in 2017 to $719,900.77 in 2018, a 5.7 percent reduction in federal tax liability.

 

Photo Credit: Pictures of Money


Congress Should Reject Pelosi's Partisan "HEROES Act"

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Posted by Alex Hendrie on Tuesday, September 29th, 2020, 2:56 PM PERMALINK

House Speaker Nancy Pelosi and Congressional Democrats have re-released their partisan “Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act." 

This legislation would use the COVID-19 pandemic as an excuse to spend trillions of dollars on liberal priorities like bailing out state and local governments. It would do nothing to assist Americans that have lost their employer provided healthcare and would pave the way for an expansion of government healthcare. It would also suspend the cap on state and local taxes (SALT), a policy that does nothing to help the middle class.

Lawmakers should reject the HEROES Act and instead focus on more targeted solutions to help American families and businesses through the Coronavirus pandemic.

$500 billion state and local government bailout

The HEROES Act contains $238 billion in bailouts to states, $179 billion in bailouts to local governments, and $19 billion in bailouts to tribal and territory governments.

Pelosi is pushing this funding through despite the fact that states have already received funding to offset Coronavirus-related costs, including money for hospitals in both relief packages.

Federal bailouts in times of crisis has historically led to expansions in state spending, creating a moral hazard and disincentvizing decision-makers from being prudent stewards of taxpayer resources. Following a $20 billion federal bailout for state budgets after a market downturn in 2003, state spending rose by 33 percent in the subsequent five years and state debts increased by 20 percent in the following four years.

Pelosi’s $500 billion blank check to fiscally irresponsible states is the wrong approach and would put taxpayers in fiscally responsible states on the hook for bad decisions in other states. 

Extends $600 Unemployment Program that Will Hinder Economic Recovery

Pelosi is also pushing to extend the $600 supplemental pandemic unemployment program. While American workers should be given assistance, this unemployment program subsidizes welfare over work.

The $600 per week benefit is in addition to existing unemployment insurance, which varies by state, but typically totals 50 percent of previous earnings up to a cap. The combination of these two programs mean that millions of Americans would receive more money from being on unemployment than they would from working. In fact, according to the Heritage Foundation, a job would have to pay more than $62,000 a year to exceed the pandemic unemployment insurance payments.

This is a significant disincentive for Americans to rejoin the workforce, and could lead to a shortage of applicants as five out of every six Americans on UI receive more than they otherwise would in their job, according to the Congressional Budget Office. 

Because of this disincentive, the CBO has predicted that an extension of the $600 supplemental pandemic benefit will reduce economic output and lower employment. In total, the Heritage Foundation estimated that this disincentive to work could increase unemployment by 13.9 million, and reduce GDP by up to $1.49 trillion.

Paves the Way for Expansion of Government Healthcare

The Coronavirus pandemic has caused business closures and a rapid decline in commerce, resulting in millions of job losses. Out-of-work Americans have also lost their employer provided healthcare.

As a result, the number of Americans on government healthcare is beginning to increase. 

Lawmakers should step in and ensure that Americans can keep their private sector healthcare and are not forced onto government healthcare, an outcome that would move us closer toward the Left’s ultimate goal of socialist, single payer healthcare. 

Pelosi’s HEROES act helps pave the way toward this expansion of government in several ways. First, the legislation creates a special enrollment period for Obamacare. Second, the bill fails to include any COBRA subsidy to help Americans keep their employer provided healthcare.

Combined, these two policies will push Americans away from employer provided care and toward expensive, one-size fits all government healthcare.

Rather than forcing Americans onto government healthcare, lawmakers should consider enacting COBRA subsidies to help Americans retain their employer provided care. While it is far from the ideal solution, it is a reasonable, targeted, and temporary policy proposal to help American families.

Employer provided care is extremely popular with the American people with 8 in 10 Americans saying they were satisfied with this care in recent polling. This healthcare provides Americans with vastly more affordable options, choice, and access when compared with government healthcare.

Moving forward, we should be looking to build upon the private healthcare system, not replace it with more government.

Suspends Cap on State and Local Taxes (SALT)

The HEROES act also suspends the cap on state and local taxes (SALT) for 2020.

Rolling back the SALT cap would do nothing to help fight the Coronavirus, nor would it do anything to help the middle class. Instead, it would expand ineffective tax policy that subsidizes high tax, big government states. 

The 2017 Tax Cuts and Jobs Act limited the deduction for state and local taxes (including property taxes and either sales taxes or income taxes) to $10,000. 

Democrats falsely claim this $10,000 cap raised taxes. They say the cap erodes fairness in the tax code leading to double taxation because individuals are now paying federal taxes on income that was already subject to state and local taxes.

This argument misses the mark. The fact is, the majority of Americans are seeing tax cuts. The TCJA reduced taxes for roughly 90 percent of Americans and for taxpayers at every income level through lower rates, the expanded standard deduction, and the doubling of the child tax credit.

The TCJA also raised the income tax thresholds that the Alternative Minimum tax kicked in, meaning that an estimated 4.5 million families are now able to claim $10,000 in SALT deductions, which was previously disallowed by the AMT.  

It is also important to note that the majority of Americans were not deducting state and local taxes before the cap and are therefore unaffected by the change to the deduction.

This policy should be rejected. Rather than repealing or rolling back the SALT cap, lawmakers should repeal the SALT deduction entirely as part of legislation that offers broad based tax reduction for American families. 

Photo Credit: Gage Skidmore


5 Reasons To Reject Prescription Drug Importation Rule

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Posted by Alex Hendrie on Tuesday, September 29th, 2020, 11:15 AM PERMALINK

The Trump administration announced its final rule allowing the importation of prescription medicines from Canada. This rule will allow states and other non-federal government entities to submit plans for drug importation programs to the Food and Drug Administration.

While advocates claim that prescription drug importation is safe and would lower drug costs, nothing could be further from the truth. Importing Canadian medicine would open the American drug supply chain up to counterfeit, unsafe, unvetted medicine – including pills laced with deadly chemicals.

Here are five facts that importation advocates don’t want you to know about how foreign drugs would impact the U.S. drug supply chain. 

 1. Canada does not have the scale to successfully import drugs to the U.S. in any meaningful way. 

Canada is one-tenth of the U.S. with a population of 37.5 million and an economy of $1.7 trillion. By comparison, the U.S. has a population of 327 million and an economy of $20.5 trillion. 

Canada represents just 2 percent of the world’s pharmaceutical consumption while the U.S. makes up almost 45 percent.

In fact, this proposal may destabilize the Canadian supply chain, a concern raised publicly by Canadian officials. If 40 percent of Canada’s existing prescriptions are diverted into America, Canadian supply would run out in just 118 days – or 16 weeks.

Ultimately, the Canadian government is responsible for ensuring its citizens have access to medicine before other countries. In this scenario, Canadian officials would naturally be incentivized to reduce the supply of imported drugs to keep their prices low and avoid shortages. 

2. Many innovative medicines that are available to U.S. consumers could not be imported because they are not available in the Canadian market. 

Of the 290 new medical substances that were launched across the world between 2011 and 2018, the U.S. had access to 90 percent of these cures, far exceeding other markets. Canada has access to just 44 percent of cures, but it is far from an outlier. The United Kingdom had 60 percent of medicines, Japan had 50 percent, and Ireland had just 40 percent.

3. It is unclear whether there will be any savings from importation.

The non-partisan Congressional Budget Office (CBO) has previously estimated that importing drugs from Canada would have a “negligible reduction in drug spending.”

Many high cost drugs are excluded from the importation plan, further undercutting the potential to deliver savings. According to the American Action Forum, 42 of the top 50 Medicare Part B drugs by total spend and 31 of the top 50 Medicare Part D drugs by total spend would not be eligible for importation under the proposed plan. Furthermore, the program requires extensive regulatory review before products can hit the market, as noted by HHS: 

“Eligible prescription drugs would have to be relabeled with the required U.S. labeling prior to importation and undergo testing for authenticity, degradation, and to ensure that the drugs meet established specifications and standards. Notably, these programs would also have to demonstrate significant cost reductions to the American consumer.”

Finally, former FDA Commissioner Scott Gottleib noted the futility of a previous importation scheme, saying: “That scheme would have added so much cost to the imported drugs; they wouldn’t be much cheaper than drugs sold inside our closed American system.”

4. There are also long-standing concerns that importation will flood the U.S. market with unsafe, unvetted drugs. 

Every single FDA Commissioner and HHS Secretary over the past two decades have raised concerns about importation and declined to vouch for its safety. 

Current HHS Secretary Alex Azar is no exception –– in 2018, he called the proposal a “gimmick” and described it as “open borders for unsafe drugs in search of savings that can’t be safely achieved.” 

Current FDA Commissioner Stephen Hahn has also stated: “Consumers and physicians purchasing medicines cannot be assured the products they are receiving are legitimate, safe or effective if they are obtained from outside of the FDA-regulated pharmaceutical supply chain.” 

Additionally, four former FDA commissioners from the Obama and Bush Administrations wrote a letter to members of Congress expressing numerous problems with importation, chief among them that importation “...could lead to a host of unintended consequences and undesirable effects, including serious harm stemming from the use of adulterated, substandard, or counterfeit drugs” 

There also is no way for the FDA to properly verify that imported drugs are safe. Canada allows drugs to be imported from anywhere – including third world countries – into Canada and then into the United States, raising serious doubts about the safety of these drugs.

Drug importation could even create a cottage industry for drug traffickers looking to lace counterfeit medicine with deadly compounds. The Drug Enforcement Agency has testified that the black market for counterfeit prescription drugs is “...considerable in size, which significantly increases the risk that fentanyl or fentanyl derivative-laced counterfeit pills will cause more overdoses across the nation as they are more readily produced by drug trafficking organizations.” 

5. Importation should not be conflated with free and fair trade. 

Free trade means a level playing field where prices are set by the market with no tariffs, barriers, or price controls. Drug importation is the exact opposite because foreign countries commonly utilize a range of arbitrary and market-distorting policies to determine the cost of medicines. These approaches are clear price controls and importation adopts them.

While proposals to lower drug costs deserve consideration, it is unclear the extent to which this proposal will reduce costs given the number of drugs excluded from the proposal and the extensive regulatory review process. 

Importation should be not considered a free trade proposal – rather, it should be viewed as a proposal to import market distorting price controls into the U.S.

Photo Credit: Stock Catalog - Flickr


IRS Data: Families Saw Significant Tax Cut from Trump Expansion of Child Tax Credit

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Posted by Alex Hendrie on Friday, September 25th, 2020, 1:30 PM PERMALINK

American families have seen significant tax reduction due to the Trump-Republican expansion of the child tax credit as noted in IRS 2018 Statistics of Income (SOI) data. 

The Tax Cuts and Jobs Act (TCJA) increased the child tax credit from $1,000 to $2,000 per dependent under 17. The phase out thresholds were increased from $75,000 to $200,000 for single filers and $110,000 to $400,000 for joint filers. The TCJA also created a $500 tax credit for non-child dependents.

These reforms resulted in significant tax reductions for American families between 2017 and 2018:

  • In 2017, 22 million households earning $200,000 or less took the child tax credit. These households received an average tax credit of $1,213.
     
  • In 2018, 36 million households earning $200,000 or less took the child and other dependent tax credit. These households received an average credit of $2,002.
     
  • In 2017, 16.6 million households earning between $25,000 and $100,000 took the child tax credit. These households received an average tax credit of $1,271.
     
  • In 2018, 23.3 million households earning between $25,000 and $100,000 took the child and other dependent tax credit. These households received an average tax credit of $1,912.
     

As ATR previously noted, middle class American families saw the biggest tax cut from the TCJA. 

Americans with incomes between $50,000 and $100,000 saw their tax liability drop by an average of 13 percent, twice as much as Americans with income above $1 million, who saw their tax liability drop by an average of 5.8 percent.

Photo Credit: Gage Skidmore


Biden Tax Plan Will Erode American Competitiveness On The World Stage

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Posted by Alex Hendrie on Thursday, September 24th, 2020, 1:15 PM PERMALINK

Democrat Presidential candidate Joe Biden’s tax hike plan will erode America’s competitive advantage in the global economy, which could result in American jobs being shipped overseas and a return of corporate inversions.

Biden’s plan includes several tax increases on American businesses, including a 21 percent minimum tax on “ALL foreign earnings” of U.S. companies. Biden also proposes raising the corporate tax rate from 21 percent to 28 percent, a 33 percent increase that would give the United States one of the highest rates in the developed world. In addition, Biden calls for imposing a 15 percent minimum tax on “book income” which will disallow companies from claiming widely-used credits and deductions and proposes an unspecified tax on “shipping jobs overseas.”

Biden’s tax on foreign earnings will impose a worldwide system of taxation that will lead to double taxation on American businesses and make it difficult for them to compete against foreign companies. Under Biden’s plan, an American business operating in the United Kingdom will face British taxes and then American taxes. By comparison, a British business operating in the U.S. will only pay U.S. taxes because the UK has a territorial system that taxes income only if it is earned in that country.

Before President Trump and Congressional Republicans passed the 2017 Tax Cuts and Jobs Act (TCJA), the U.S. was one of the few countries with a worldwide system of taxation. At the time, 26 nations in the Organisation for Economic Co-operation and Development (OECD) had territorial systems including Australia, Canada, France, Germany, Japan, Spain, and the UK. This system, in combination with the fact that the U.S. also had the highest corporate rate in the OECD at 35 percent, meant that American businesses could not compete on the world stage.

This uncompetitive system was causing businesses to invert, which occurred when a U.S. business merged with or acquired a foreign business with the intent of incorporating the new, combined entity overseas. Between 2004 and 2014, almost 50 American businesses left the country through inversions, according to the Congressional Research Service (CRS).

American businesses were also vulnerable to being acquired by foreign companies. According to a study released by EY, American companies also suffered a net loss of almost $510 billion in assets between 2004 and 2017. This was because the high U.S. rate and worldwide tax system meant non-U.S. companies could outbid U.S. companies.

If America’s corporate rate was at a globally competitive rate, the study estimates that U.S. companies would have acquired a net of $1.2 trillion worth of assets, meaning that more than $1.7 trillion in assets were lost in the 15-year period.

The TCJA addressed the root cause of these problems – the bill lowered the corporate rate to 21 percent and repealed the worldwide tax system and implemented a modern, more competitive territorial system of taxation which taxed businesses based on where income is earned. This law put a stop to inversions and encouraged companies to begin coming back to America.

However, Biden will undo this progress.

Not only will he impose double taxation on American businesses, he will raise the corporate tax rate back up to 28 percent, which will again make the U.S. rate one of the highest rates in the developed world and higher than China’s 25 percent rate. 

Many countries also have lower rates for certain types of investment in order to encourage innovation. For instance, China has a 15% rate for industries including high tech enterprises, while the United Kingdom has a 10 percent “patent box” rate for businesses that depend on patented inventions and innovations.

The U.S. is already lagging behind when it comes to promoting research and development. According to a Manufacturing Leadership Council study, the U.S. ranks 26th in R&D tax incentives when ranking the 36 developed countries in the OECD.

Moving forward, we should be enacting policies that ensure American businesses can compete and thrive in the global economy. President Trump and Congressional Republicans have called for tax credits that will incentivize continued investment in the U.S. 

Rather than calling for trillions in tax increases on American businesses, Biden should join with Republicans in acting to help American businesses.

Photo Credit: Gage Skidmore


IRS Data: Middle Class Americans Saw Biggest Tax Reduction from Trump Tax Cuts


Posted by Alex Hendrie on Tuesday, September 22nd, 2020, 5:10 PM PERMALINK

The IRS has released 2018 Statistics of Income (SOI) data. 

This data shows that middle income American families saw the biggest tax cut – measured as the percentage decrease in "total tax liability" between 2017 and 2018 – from the Trump-Republican Tax Cuts and Jobs Act (TCJA).

Total tax liability includes federal income taxes as well as taxes listed on IRS form 1040 such as social security taxes on self-employment income and tax applicable to individual retirement arrangements (IRAs).

As the data notes, Americans with incomes between $50,000 and $100,000 saw their tax liability drop by twice as much as Americans with income above $1 million:

-Americans with adjusted gross income (AGI) of $50,000 to $74,999 saw a 13.2 percent reduction in average tax liabilities between 2017 and 2018. 

-Americans with AGI of between $75,000 and $99,999 saw a 13.6 percent reduction in average federal tax liability between 2017 and 2018. 

-Americans with AGI of $1 million or above saw a 5.8 percent reduction in average federal tax liability between 2017 and 2018, less than half the tax cut seen by Americans with AGI between $50,000 and $100,000.


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