Alex Hendrie

Dems Want To Reimpose Obamacare Individual Mandate Tax On Millions

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Posted by Alex Hendrie, Tom Hebert on Tuesday, February 18th, 2020, 12:30 PM PERMALINK

The Democrat effort to repeal the Trump tax cuts would re-impose the Obamacare individual mandate tax penalty on millions of households, hitting thousands of families in every state and Congressional district.

Americans for Tax Reform has broken down the most recent IRS data on the individual mandate tax penalty by Congressional district, which you can view here.

The individual mandate was one of the most regressive taxes in the code before it was repealed in 2017 by the Republican passed Tax Cuts and Jobs Act. Every single Democrat in the House and Senate voted against the repeal of the Obamacare individual mandate tax. 

Prior to repeal, the mandate forced households to purchase government approved health insurance or pay a $695 tax for an individual and $2,085 for a family.

Reinstatement of this tax will hit low and middle-income families hard.

In 2017, the tax hit 4,654,990 households according to IRS data. Nationwide, roughly 74 percent of those paying the mandate had annual income of less than $50,000 and roughly 32 percent had annual income of less than $25,000. 

Key swing states that President Trump won in 2016 would be hard-hit if the Democrats reimposed the individual mandate tax penalty. 

In Pennsylvania, the tax hit 153,140 households. 

  • 56,490 of those households, or 37 percent, had annual income of less than $25,000. 
  • 121,100 of those households, or 79 percent, had annual income of less than $50,000.

In Wisconsin, the tax hit 80,240 households. 

  • 24,550 of those households, or 31 percent, had annual income of less than $25,000. 
  • 62,440 of those households, or 78 percent, had annual income of less than $50,000. 

In Michigan, the tax hit 132,750 households. 

  • 50,920 of those households, or 38 percent, had annual income of less than $25,000. 
  • 106,910 of those households, or 81 percent, had annual income of less than $50,000. 

Here is the breakdown from some notable House members: 

In Ways and Means Ranking Member Rep. Kevin Brady's district (R-Texas), 13,880 households paid the Obamacare individual mandate tax penalty in 2017.

  • 3,270 of those households, or 24 percent, had annual income of less than $25,000.
  • 8,900 of those households, or 64 percent, had annual income of less than $50,000. 

In Ways and Means Chairman Rep. Richard Neal’s district (D-Mass.), 10,140 households paid the Obamacare individual mandate tax penalty in 2017.

  • 3,390 of those households, or 33 percent, had annual income of less than $25,000.
  • 8,060 of those households, or 79 percent, had annual income of less than $50,000. 

In House Speaker Rep. Nancy Pelosi’s district (D-Calif.), 9,700 households paid the Obamacare individual mandate tax penalty in 2017.

  • 2,280 of those households, or 24 percent, had annual income of less than $25,000.
  • 6,050 of those households, or 62 percent, had annual income of less than $50,000. 

In House Minority Leader Kevin McCarthy’s district (R-Calif.), 8,000 households paid the Obamacare individual mandate tax penalty in 2017.

  • 2,530 of those households, or 32 percent, had annual income of less than $25,000.
  • 5,870 of those households, or 73 percent, had annual income of less than $25,000. 

[View ATR's breakdown of the most recent IRS individual mandate tax penalty data by Congressional district

Photo Credit: Nancy Pelosi - Flickr

Rep. Harris Leads Letter Against Price Controls

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Posted by Alex Hendrie, Tom Hebert on Tuesday, February 18th, 2020, 10:15 AM PERMALINK

Congressman Andy Harris (R-Md.) recently led a letter opposed to price controls as a solution to surprise medical billing.

The letter was signed by 38 other members including House Freedom Caucus Chairman Andy Biggs (R-Ariz.), House Judiciary Committee Ranking Member Jim Jordan (R-Ohio), Republican Study Committee Chairman Mike Johnson (R-La.), and House Oversight Committee Ranking Member Mark Meadows (R-N.C.).

Rep. Harris and all signers should be commended for standing against price controls.

ATR has long opposed policies that directly or indirectly impose price controls on the US healthcare system. Price controls are bad policy because they utilize government power to forcefully lower costs in a way that distorts the economically efficient behavior and natural incentives created by the free market.

In the context of surprise billing, some lawmakers have proposed using rate-setting for any payments made to out-of-network providers. Under this system, the government would set a benchmark rate to resolve out-of-network payment disputes between insurers and providers. Benchmark rate-setting would replace private negotiations between insurers and providers with government-set prices, a blatant price control on the healthcare system. 

The signers explained the numerous problems with using rate-setting to address surprise billing, noting: 

“...we oppose price controls as a solution to the issue as a solution to the issue of surprise medical billing. By design, placing such price controls on purely private transactions, would reduce access to care, increase the power of the federal government, and result in negative unintended consequences.” 

Signers also acknowledged that while Congress should act on surprise billing, any legislation that includes price controls would be a nonstarter. As the letter states: 

“Congress should act on surprise medical billing, but it should avoid top-down price controls that would simply be trading one problem for another.” 

Conservative lawmakers have consistently expressed significant opposition to price fixing mechanisms within healthcare. For instance, 192 Republicans opposed H.R. 3, legislation that would impose price controls on pharmaceutical innovation under threat of a 95 percent excise tax.

Lawmakers need to take a serious, deliberative approach in addressing surprise billing instead of rushing to pass a flawed proposal that imposes price controls on our healthcare system. 

Thankfully, conservative lawmakers are standing firm in advocating against surprise billing proposals that rely on distortionary price fixing mechanisms. 

Photo Credit: Gage Skidmore

White House Report Highlights Foreign Freeloading of American Medical Innovation

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Posted by Alex Hendrie on Monday, February 17th, 2020, 4:32 PM PERMALINK

Foreign countries are freeloading off American medical innovation according to a recent report by the White House Council on Economic Advisers. 

Because of foreign price controls, the prices paid by other countries for pharmaceuticals is less than what is needed to incentivize the development of innovative new medicines. This harms foreign countries through lack of access to new medicines and harms the U.S. because prices are higher than they would otherwise be.

The U.S. healthcare system largely relies on free market forces that promote competition between various stakeholders. In comparison, most foreign developed countries utilize price controls to forcefully lower costs. In many cases, these countries are able to strong arm manufacturers into accepting lower prices, as the report notes: 

“In the U.S., private insurance plans compete and make decisions that reflect the value to pharmacy benefit managers or individuals selecting plans. In contrast, if a government-run monopoly plan’s employees decide not to cover a drug, there is no risk of losing a customer because the customers cannot leave. Moreover, drug companies would often rather sell drugs at prices below the value of their products than not sell at all.”

However, this does not come without costs. By relying on price controls, these developed countries have far fewer innovative cures than the U.S. In some cases, there is a wide disparity in terms of available treatments, as the report notes:

“[M]any of the 200 top-selling drugs examined here show no quantities sold in the countries of comparison, suggesting that those drugs are not available for sale in that country. For example, in Australia, only 97 of the 200 drugs show evidence of significant sales. Similarly, Canada has only 120 of the drugs, France 109, and Germany 133.”

Where prices are artificially lower in other countries, this indirectly harms American patients and taxpayers, who shoulder a greater share of the cost of innovative medicines than they are consuming. As the report notes, this problem is increasing:

“[F]or the past 15 years, stringent government underpricing in foreign countries has substantially increased foreign free-riding on the United States. Our main finding is that prices are much lower in other developed nations than would have been predicted by income differences alone and that this discrepancy is substantially widening.”

The fact is, developing new medicines is a complex, time consuming process. A manufacturer must invest a substantial amount in research and development. In addition, the clinical development and approval times average 90.3 months for a pharmaceutical drug and 97.3 months for a biologic. Given this extensive process, there is a clear linkage between the ability of manufacturers to recoup their investment and their willingness to innovate, as the report notes:

“The gains from global sales of innovative products drive incentives for research and development, which means that the challenge of financing global biopharmaceutical R&D poses a public-goods problem.”

Some proposals, like Speaker Nancy Pelosi’s plan to impose a 95 percent excise tax on manufacturers that don’t accept government price setting, or the International Pricing Index to tie U.S. prices to prices in foreign countries, would lead to the U.S. adopting the same pricing schemes that underpay for innovation.

Not only will this harm American patients in the form of fewer treatments and worse health outcomes, it will also harm the economy because of a decline in American R&D.

Manufacturers invest over $100 billion in the U.S. economy every year, directly supporting over 800,000 jobs. When indirect jobs are included, this innovation supports 4 million jobs and $1.1 trillion in total economic impact. Pharmaceutical jobs are also high paying – the average compensation is over $126,000 – more than double the $60,000 average compensation in the U.S.

If the U.S. implements the same price controls as those utilized in other countries, these jobs will be threatened. Medical innovation will be curtailed, reducing access to medicines in the U.S. and abroad. 

Rather than adopting these proposals, lawmakers should prioritize proposals that protect the free market and medical innovation and ensure that foreign countries pay their fair share.

Photo Credit: Jim Grey

ATR Supports The “Strengthening Innovation In Medicare and Medicaid Act”

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Posted by Alex Hendrie on Thursday, February 13th, 2020, 12:00 PM PERMALINK

Congresswoman Terri Sewell (D-Ala.) and Congressman Adrian Smith (R-NE) recently introduced important legislation to rein in the Center for Medicare and Medicaid Innovation (CMMI). This legislation, H.R. 5741, the “Strengthening Innovation in Medicare and Medicaid Act,” is cosponsored by Reps. Tony Cardenas (D-CA), John Shimkus (R-Ill.), Kurt Schrader (D-Ore), and Brad Wenstrup (R-Ohio).

These members should be applauded for introducing this legislation. Additionally, all members of Congress should support and co-sponsor this legislation.

CMMI was created under Obamacare with the goal of increasing efficiency of healthcare programs. The agency was tasked with conducting demonstrations over new health care delivery and payment models in Medicare, Medicaid, and the Children’s Health Insurance Program with the intent of reducing healthcare costs.

However, in its relatively short history, CMMI has pushed demonstrations with little evidence they would result in savings, while strong-arming healthcare providers and patients into participating.

The agency is also not under the normal appropriations process – Obamacare gave CMMI $10 billion every decade in perpetuity. As a result, Congress is limited in its ability to conduct routine, necessary oversight.

H.R. 5741 would help bring much needed oversight to CMMI through the imposition of several guardrails. For instance, the legislation would:

  • Require a public notice and comment process for any new demonstration. There are currently no requirements for public input.
  • Create a privileged process for Congress to block the implementation of a demonstration within 45 days of a proposed expansion from Phase 1 to Phase 2. 
  • Set limitations on any demonstration including requiring a test to be no longer than five years and only as many participants as necessary to obtain a statistically valid sample.
  • Allow providers and suppliers to opt-out a demonstration if it would cause undue economic hardship. 
  • Require monitoring of the impact any demonstration is having on beneficiaries and health disparities.

These reforms are a good first step towards reining in CMMI by providing much needed transparency, congressional oversight and stakeholder engagement. 

Photo Credit: Kevin Simmons

Senate Should Reject Drug Price Control Legislation

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Posted by Alex Hendrie on Wednesday, February 12th, 2020, 8:00 AM PERMALINK

Recent reports indicate that the Senate may consider the Prescription Drug Pricing Reduction Act (PDPRA) in the coming months. This legislation that would impose another price-setting mechanism on the U.S. healthcare system. 

While supporters continue to call for full Senate consideration of this proposal, lawmakers should reject the PDPRA. The bill disrupts the existing structure of Medicare Part D and does nothing to directly help seniors.

The PDPRA imposes an inflationary rebate penalty on Medicare Part D drugs. This provision would force manufacturers to pay the government a 100 percent fee when the list price of a drug increases faster than inflation.

This provision is problematic because Part D is a system that relies on competition between several stakeholders, namely pharmacy benefit managers (PBMs), insurers, and drug manufacturers. The penalty is imposed on one Part D stakeholder, the drug manufacturer, after the price has been negotiated between several stakeholders. Essentially, the government is handcuffing the ability of manufacturers to negotiate on a level playing field with insurers and PBMs.

The Proposal Undermines Part D Competition

Some PDPRA supporters claim that this policy is nothing more than the government placing a cap on the subsidies that manufacturers receive. This is misguided –– the federal government does not pay subsidies to drug manufacturers.

The government makes payments to insurers based on the negotiated price of a drug which includes substantial discounts off the list price. In actuality, this policy will disrupt existing negotiation in Part D. In fact, as noted by Doug Badger, this policy is “at odds with the Part D program’s reliance on private entities to negotiate discounts on behalf of seniors.”

Instead of having the government directly provide care, Medicare Part D leverages competition between pharmacy benefit managers (PBMs), pharmaceutical manufacturers, plans, and pharmacies to provide coverage to seniors. This lowers costs and maximizes access for seniors.

At the core of this program is the non-interference clause which prevents the Secretary of Health and Human Services (HHS) from interfering with the robust private-sector negotiations. The Congressional Budget Office has even said that there would be a “negligible effect” on Medicare drug spending from ending non- interference.

This structure has been successful in driving down costs. Since it was first created, federal spending has come in 45 percent below projections - the CBO estimated in 2005 that Part D would cost $172 billion in 2015, but it has cost less than half that – just $75 billion. Monthly premiums are also just half the originally projected amount, while 9 in 10 seniors are satisfied with the Part D drug coverage.

Existing Part D Negotiation Already Protects Against Price Increases

“Price protection rebates” negotiated between PBMs and manufacturers are an example of existing Part D negotiation. Today, almost 100 percent of medicines are subject to these rebates.

Under these agreements, any price increase past a predetermined threshold results in increased rebates from the manufacturers to the PBM.

In effect, this establishes a private sector ceiling or cap on the amount by which the price of a medication can increase.

On the other hand, the inflationary rebate penalty could create a perverse incentive for manufacturers to automatically increase the list price of their drugs each year to keep pace with inflation. 

There is Strong Opposition from Conservative Groups and Senators

While supporters of PDPRA claim that the bill is bipartisan, there is significant opposition on the right.

An amendment to strip out the inflationary rebate penalty – the key provision of PDPRA – was supported by 13 out of 15 Republican Senators on the Finance Committee when it was offered in July.

The amendment was offered by Senator Pat Toomey (R-Pa.) and supported by Senators Mike Crapo (R-Idaho), Pat Roberts (R-Kan.), Mike Enzi (R-Wyo.), John Cornyn (R-Texas), John Thune (R-S.D.), Johnny Isakson (R-Ga.), Rob Portman (R-Ohio), Tim Scott (R-S.C.), James Lankford (R-Okla.), Steve Daines (R-Mont.), and Todd Young (R-Ind.)

There is also strong opposition from conservative groups. Almost 20 conservative groups including ATR wrote in opposition to PDPRA when the legislation was released in July. 

The Rebate Penalty Does Nothing to Directly Help Seniors

Not only is the proposal unpopular and disruptive to Part D, it would do little to directly help reduce seniors drug costs. Any revenue generated from this penalty goes directly into government coffers, not to seniors that may need help affording their medicines.

The proposal may actually have the opposite effect of crowding out the existing rebates and discounts which flow through to patients. 

In sum, the inflationary rebate penalty imposes a price-fixing mechanism into the Medicare Part D system by forcing manufacturers to pay a 100 percent fee if the list price of a drug increases faster than inflation. The revenue generated from this penalty would go straight to the government, and would do nothing to directly reduce drug costs. Congress should reject the PDPRA.

Photo Credit: Flickr

Democrats Are Wrong to Criticize the 21 Percent Corporate Rate

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Posted by Alex Hendrie on Tuesday, February 11th, 2020, 8:00 AM PERMALINK

Democrats have wrongly argued that the Tax Cuts and Jobs Act has enabled corporations to avoid paying their taxes. Far-left politicians like Representative Alexandria Ocasio Cortez (D-NY) and self-avowed socialist Bernie Sanders (I-Vt.) have repeatedly raised this point.

Democrats on the Ways and Means Committee are now following this theme with a hearing called “The Disappearing Corporate Income Tax.”

There are two fundamental problems with the Democrat criticism. First, Democrats ignore the many benefits to workers and the economy from the Trump Tax Cuts. Secondly, they ignore the simple reason that some corporations are paying less than the statutory 21 percent rate – the existence of numerous credits and deductions that are designed to promote investment and job creation.

It is also important to note that companies are not using “loopholes” to lower their tax liability. They are following the law exactly as written and are paying state and local taxes as well as payroll taxes – sometimes totaling billions of dollars per year. 

Many of the tax provisions that lower corporations’ effective rates are non-controversial and have bipartisan support. For instance, businesses are currently allowed to immediately deduct the cost of business assets purchased. This provision, known as full business expensing, has been supported by the Obama White House. In fact, as noted in an Obama White House document, expensing is designed to lower the effective tax rate of a business:

“A policy of allowing an immediate deduction (or ‘expensing of investment costs’) has an alternative rationale, which is to lower the effective tax rate on income derived from business investments, and thereby encourage additional demand for capital goods.”

The Organisation for Economic Co-operation and Development (OECD) has recognized that full business expensing increases GDP.  

Similarly, the R&D credit was first created under President Reagan as a temporary provision and was extended by Congress more than a dozen times. It was made permanent in 2015 on a bipartisan basis and was signed into law by President Obama.

In advocating for this provision, the Obama White House noted that every $1 in tax reduction from the R&D credit creates $2 in benefits to the economy and that 80 percent of the credit is directly attributable to salaries of U.S. workers performing U.S. based research.

While the tax cuts did lower the corporate rate from 35 percent to 21 percent, this brought the U.S. rate in line with the rest of the developed world. The U.S. rate is 25.89 percent after accounting for the state corporate tax, while the average rate in the 36-country OECD is 23.52 percent.

This tax cut has also benefited the American economy and workers. Businesses have created 100,000 jobs in 34 of the 38 months that Trump has been President and the unemployment rate has been below 4 percent for 23 consecutive months. Wage growth has been at or above 3 percent for the past 18 months, according to the Bureau of Labor Statistics (BLS).

Americans are also seeing their savings increase. When Donald Trump was elected President, the Dow Jones sat at 18,332. It is now at above 29,000, an increase of more than 60 percent. This stock market growth benefits the 100 million 401(k)s, the 46.4 million households that have an individual retirement account, and the nearly $4 trillion in public pension funds, half of which is invested in stocks. 

This good news is not just anecdotal – there are numerous examples of companies providing increased benefits or pay raises to their employees and of utility companies reducing rates.

Businesses have responded to the tax cuts by creating new employee benefit programs including adoption programs, workforce development programs, and education programs. For example: 

  • Walmart and Lowes now provide $5,000 to help cover the cost of adopting a child.
  • Express Scripts in Missouri has created a $30 million education fund for their employees’ children.
  • Boeing provided $100 million in workforce development programs
  • McDonald’s employees who work just 15 hours a week, receive $1,500 worth of tuition assistance every year per year.

Companies have also reduced utility bills for Americans across the country. Utility companies in all 50 states are passing on the tax savings in the form of lower rates for customers. This means lower electric bills, lower gas bills, and lower water bills for Americans than if the corporate rate cut had not occurred. For example: 

Businesses have increased wages and bonuses to their employees. For example: 

  • Wells Fargo raised base wages from $13.50 to $15.00 per hour.
  • AT&T provided $1,000 bonuses to 200,000 employees. 
  • Cigna raised base wages to $16 per hour.
  • Apple provided $2,500 employee bonuses in the form of restricted stock.


Trump FY 2021 Budget Expands Health Savings Accounts to Working Seniors

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Posted by Alex Hendrie on Monday, February 10th, 2020, 1:50 PM PERMALINK

President Trump’s Fiscal Year 2021 budget calls for expanding tax advantaged Health Savings Accounts (HSAs) by allowing working seniors eligible for Medicare to continue using their account. This will reduce taxes, promote patient centered healthcare, and encourage robust saving.

Since they were created in 2004, HSAs have become a popular and successful vehicle for individuals to spend and save their own money for a wide array of healthcare needs. However, under current law, workers who are Medicare eligible are not allowed to contribute to an HSA even if they have an HSA qualified plan. The budget fixes this needless restriction.

HSAs are used in conjunction with low premium, high deductible health insurance plans and can be used to pay for many expenses, including doctor visits, prescription drug costs, and hospital care.

Today, HSAs are used by almost 30 million American families and individuals. Annual contributions to an HSA in 2020 are capped at $3,550 for an individual and $7,100 for a family. Both an individual and employer can make contributions.

HSAs have been successful in promoting efficient healthcare spending that prioritizes consumer driven healthcare over one-size-fits-all care. 

Funds are controlled by the individual and follow them between jobs, creating an incentive to spend funds wisely. Research shows that families and individuals that utilize HSAs spend less on health care and use fewer medical services without forgoing necessary primary and preventative care.

HSAs can be a significant vehicle to pay for healthcare expenses. An HSA user can accumulate as much as $600,000 after contributing to an account for 40 years assuming a rate of return of 5 percent, according to the Employee Benefit Research Institute. 

HSAs also reduce taxes for American families. HSAs offer triple tax benefits to users – contributions made are tax free, investments are earned tax free, and payments made for qualifying health expenses are tax free.

Allowing Medicare-eligible seniors to continue using their HSAs will continue the success of these tax advantaged accounts in promoting healthcare savings and lowering taxes.

Photo Credit: Flickr - Gage Skidmore

Trump FY 2021 Budget Repeals EV Tax Credit

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Posted by Alex Hendrie on Monday, February 10th, 2020, 1:29 PM PERMALINK

President Trump’s Fiscal Year 2021 budget proposal calls for repeal of the Electric Vehicle Tax Credit.

This is the right policy. The EV credit is regressive, wasteful, and distortionary tax policy that arbitrarily benefits one type of car over others.

The tax code should promote economically efficient decisions by limiting the number of distortionary provisions. The electric vehicle tax credit directly undermines this goal and should be repealed as part of revenue neutral or revenue reducing tax reform.

Under current law, the EV tax credit grants a taxpayer purchasing a qualifying vehicle a credit of between $2,500 and $7,500 depending on the vehicle sold. The credit is capped at 200,000 vehicles per manufacturer at which point it begins to phase out.

This credit is highly regressive with a majority of the benefits of this credit go to residents of wealthy, blue states. Almost 80 percent of the credit goes to those making $100,000 or more per year. 

Further, according to 2019 projections of electric vehicle sales in the United States, California will account for over 61 percent of all EV sales in the nation. California’s clear domination of EV market share occurs despite the fact that California only accounts for roughly 12% of all licensed U.S. drivers.

Unsurprisingly, this type of tax subsidy is unpopular with the American people with 67 percent of voters oppose subsidizing electric vehicles.

The credit is also rife with waste and fraud. A recent report by the Treasury Inspector General for Tax Administration (TIGTA) found “the IRS does not have effective processes to identify and prevent erroneous claims.” Between 2014 and 2018, roughly 16,500 taxpayers received $73.8 million in potentially erroneous EV tax credits. A previous 2011 report found that as many as one in five EV credits claimed went to individuals who did not qualify for the credit.

Senators Ron Johnson (R-Wis.), Chuck Grassley (R-Iowa), and John Barrasso (R-Wyo.) led a letter last month urging for more information on these fraudulent claims.

Congress should follow the lead of the President repealing the EV credit as part of revenue-neutral tax reform.

Photo Credit: Flickr - Gage Skidmore

President Trump’s FY 2021 Budget Calls for Further Middle Class Tax Relief

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Posted by Alex Hendrie on Monday, February 10th, 2020, 1:09 PM PERMALINK

President Trump’s Fiscal Year 2021 budget calls for further tax relief for American families through the extension of the individual Trump tax cuts.

Thanks to the Trump tax cuts, a family of four earning the median income of $73,000 is seeing a reduction of federal income taxes of $2,000 – a 60 percent cut. Similarly, a single parent with one child making the median income of $41,000 is seeing a $1,300 tax cut, a 73 percent reduction in federal income taxes. 

However, because of arcane Senate procedure and the refusal of Democrats to support the tax cuts, the individual tax reductions could only be enacted for 8 years – through 2025.

Many Democrats in Congress and on the campaign trail have proposed repealing these tax cuts. This would be a significant tax increase for American families.

According to the Heritage Foundation, the average American would be almost $27,000 poorer over the next ten years if the tax cuts were repealed. The average family of four would be almost $46,000 poorer.

The Trump budget will make the Trump tax cuts permanent, extending numerous provisions including:

  • The doubling of the standard deduction from $6,000 to $12,000 for an individual and $12,000 to $24,000 for a family. Thanks to this reform, 90 percent of taxpayers are now taking the standard deduction, dramatically simplifying tax compliance as fewer individuals are itemizing.
  • The reduction of nearly every individual income tax bracket.
  • The doubling of the child tax credit from $1,000 to $2,000. The CTC is claimed by roughly 22 million American families.
  • The 20% small business deduction for pass-through businesses (LLCs, partnerships, S-corporations etc.). There are over 26 million pass-through entities in the U.S.
  • The doubling of the death tax exemption from $5.5 million to $11 million. This reform reduced the number of estates owing the death tax from 5,500 to 1,700.
  • An expansion of the thresholds at which the Alternative Minimum Tax hits individuals. Because of this tax cut, the AMT now kicks in when a taxpayer makes annual income of $1 million. The number of families paying the AMT has dropped from 5 million to 200,000.

Photo Credit: Flickr - Gage Skidmore

Coalition Urges Withdrawal of International Pricing Index

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Posted by Alex Hendrie on Thursday, January 30th, 2020, 5:00 AM PERMALINK

In a letter to HHS Secretary Alex Azar, ATR and a coalition of 52 organizations urged the administration to withdraw, not finalize, the proposed International Pricing Index.

Click here to read the full letter. 

Recent media reports indicate that the administration is planning to move forward with the IPI and could release an updated proposal in the coming weeks.

This would be a mistake. The IPI would import socialist style price controls that will harm patients and innovation.

The United States is a world leader in research and development because our system of healthcare rejects price controls and encourages innovation. As a result, a majority of new medicines are developed and launched in America.

America’s innovative environment for medicines is enormously beneficial to the U.S. healthcare system. Investment in the research and development of medicines is critical to the growth of high-paying jobs and a stronger economy.

In sharp contrast, socialized foreign healthcare systems put price controls on their medicine, eschewing America’s free market approach. Time and time again, price controls have been proven to suppress innovation. Price controls utilize government power to forcefully lower costs in a way that distorts free-market incentives to lower costs through efficiency and innovation.

The Trump administration has repeatedly identified price controls as being harmful to innovation. Instead of fighting these price controls, the proposed International Pricing Index adopts them. This will suppress competition and innovation and harm American competitiveness and investment.

Click here to read the full letter or see below: 

The Honorable Alex Azar
Department of Health and Human Services
200 Independence Avenue SW
Washington, DC 20201

Dear Secretary Azar:

We urge you to withdraw, not finalize, the administration’s proposed International Pricing Index (IPI) for drugs administered under Medicare Part B.

The proposed payment model imports foreign price controls into the U.S. by modifying the Part B reimbursement rate so that it is calculated based off the prices set by 14 countries.

Instead of relying on government price setting, Medicare Part B is currently calculated based on market prices. The formula, which is based on the “Average Sales Price” (ASP) in the U.S. market, includes the discounts negotiated between payers, hospitals and health plans. Recently this system led to a 0.8 percent decrease in the cost of the top 50 Part B drugs.

In contrast, foreign countries frequently utilize a range of arbitrary and market-distorting policies to determine the cost of medicines – by definition such approaches are price controls.

There is no negotiation and foreign governments often force innovators to accept lower prices in a “take-it-or-leave it” proposition. This results in reduced or restricted access to new medicines and higher prices for those medicines that enter the market.

Conservatives have long opposed price controls because they utilize government power to forcefully lower costs in a way that distorts the economically-efficient behavior and natural incentives created by the free market.

When imposed on medicines, price controls suppress innovation and access to new medicines. This deters the development and supply of new life saving and life improving medicines to the detriment of consumers, patients, and doctors.

The U.S. is a world leader in research & development because our healthcare system rejects price controls and encourages innovation. As a result, a majority of new medicines are developed and launched in America.

This innovative environment is enormously beneficial to the long-term well-being of Americans and the efficiency of the U.S. healthcare system. In addition, the investment required for research and development of medicines leads to more high-paying jobs and a stronger economy.

Importing price controls will undermine this system by basing U.S. prices on the prices of socialized foreign healthcare systems. This will inevitably suppress innovation and harm American competitiveness.

Ironically, the administration recognized the damage that adopting foreign pricing would have on American innovation in a report released in February 2018 by the president’s Council of Economic Advisors:

“If the United States had adopted the centralized drug pricing policy in other developed nations twenty years ago, then the world may not have highly valuable treatments for diseases that required significant investment.”

We are also concerned that the IPI is being proposed through the Obamacare Center for Medicare and Medicaid Innovation (CMMI). There is long standing conservative opposition to CMMI based on the concern that it bypasses Congress’ power over the purse as enshrined in Article I of the Constitution.

CMMI is completely exempt from the Congressional appropriations process and is prone to being misused in ways that result in the executive branch of government usurping Congress’ role in setting policy.

The administration has repeatedly acknowledged that foreign price controls have damaged medical innovation.

Instead of fighting these price controls, we are concerned that the proposed International Pricing Index adopts them. This proposal will suppress competition and innovation and harm American competitiveness and investment.

We respectfully request that your department withdraw this proposal.


Grover Norquist
President, Americans for Tax Reform

James L. Martin
Founder/Chairman, 60 Plus Association

Saulius “Saul” Anuzis
President, 60 Plus Association

Dick Patten
President, American Business Defense Council

Phil Kerpen
President, American Commitment

Dan Schneider
Executive Director, American Conservative Union

Steve Pociask
President, American Consumer Institute

Lisa B. Nelson
CEO, American Legislative Exchange Council

Dee Stewart
President, Americans for a Balanced Budget

Rick Manning
President, Americans for Limited Government

Bob Carlstrom
President, AMAC Action

Andrew F. Quinlan
President, Center for Freedom and Prosperity

Ryan Ellis
President, Center for a Free Economy

Jeffrey Mazzella
President, Center for Individual Freedom

Ginevra Joyce-Myers
Executive Director, Center for Innovation and Free Enterprise

Peter J. Pitts
President and Co-founder, Center for Medicine in the Public Interest

Thomas Schatz
President, Citizens Against Government Waste

Gregory Conko, Senior Fellow
Competitive Enterprise Institute

Matthew Kandrach​​​​​​​
President, Consumer Action for a Strong Economy (CASE)

Fred Roder​​​​​​​
Health Economist/Managing Director, Consumer Choice Center

Yaël Ossowski​​​​​​​
Deputy Director, Consumer Choice Center

James Edwards
Executive Director, Conservatives for Property Rights

Joel White
President, Council for Affordable Health Coverage

Katie McAuliffe​​​​​​​
Executive Director, Digital Liberty

Robert Roper
President, Ethan Allen Institute

Palmer Schoening​​​​​​​
President, Family Business Coalition

Richard Watson
Co-Chair, Florida Center-right Coalition

Adam Brandon
President, FreedomWorks

George Landrith​​​​​​​
President, Frontiers of Freedom

Naomi Lopez Bauman
Director of Healthcare Policy, Goldwater Institute

Tim Chapman
Executive Director, Heritage Action for America

Mario H. Lopez
President, Hispanic Leadership Fund

Linda Gorman
Health Care Policy Center Director, Independence Institute

Carrie Lukas
President, Independent Women’s Forum

Heather R Higgins
CEO, Independent Women’s Voice

Tom Giovanetti​​​​​​​
President, Institute for Policy Innovation

Colin Hanna
President, Let Freedom Ring

Seton Motley
President, Less Government

Mary Adams
Chair, Maine Center-right Coalition

Charles Sauer​​​​​​​
Founder/President, Market Institute

Tim Jones
Chair, Missouri Center-right Coalition
Former Speaker, Missouri House of Representatives

Pete Sepp​​​​​​​
President, National Taxpayers Union

Stephen Stepanek​​​​​​​
Co-Chair, New Hampshire Center-right Coalition

Doug Kellogg
Executive Director, Ohioans for Tax Reform

Jeff Kropf​​​​​​​
President, Oregon Capitol Watch Foundation

Sally Pipes
President, Pacific Research Institute

Ed Martin
President, Phyllis Schlafly Eagles

Photo Credit: 401(K) 2012