Alex Hendrie

Republicans Hold the Line Against Pelosi’s $3 Trillion Spending Plan in New COVID Relief Bill

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Posted by Alex Hendrie on Sunday, December 20th, 2020, 11:00 PM PERMALINK

Lawmakers have reached an agreement to fund the government and provide additional Coronavirus relief. While this package is far from perfect and contains several wasteful spending provisions, it rejects the Pelosi/Biden effort for $3 trillion in new spending.

Instead, the COVID relief bill reportedly allocates roughly $325 billion in new taxpayer dollars after spending offsets won by Republicans, which means the final proposal is just 10 percent of total spending that Pelosi and Democrats demanded earlier this year.

Importantly, the package does not include the $1 trillion in state and local bailout money pushed by Democrats that would have subsidized poorly run blue states. Republicans also offset new COVID-19 spending by repurposing unused Paycheck Protection Program (PPP) funds and rescinding over $400 billion in unused funds allocated to the federal reserve by the Coronavirus Aid, Relief, and Economic Security (CARES) Act earlier this year.

Unfortunately, as part of this legislation, Democrats have forced inclusion of hundreds of billions in wasteful spending including a new $300-per-week supplemental unemployment program that will discourage Americans from returning to work and $600 direct payments to individuals that will do nothing to help the economy recover.

While these provisions should be opposed, it is important to note that this wasteful spending could have been much worse.

Democrats will undoubtedly continue to push for new trillion dollar bills next year. President-elect Joe Biden has already said that any Coronavirus package now is a “down payment” for more COVID-19 spending in 2021. House Speaker Nancy Pelosi (D-Calif.) will also continue pushing the $3 trillion HEROES Act, which contained the $1 trillion state bailout as well as countless other liberal priorities unrelated to the pandemic.

Key highlights of this agreement include:

Additional Unemployment Benefits That Could Prolong the Economic Recovery

The $300-per-week expanded unemployment payments included in the budget agreement could prolong the economic recovery by creating a disincentive for workers to return to work that unnecessarily drives up unemployment rates. It is important to note that these payments are on top of regular unemployment compensation that displaced workers receive from states.

This $300-per-week expansion is a watered-down version of Pelosi’s $600-per-week unemployment expansion, which created a situation in which 68 percent of Americans got paid more on unemployment than in the workplace. The economic damage caused by this is long-lasting – a recent study conducted by the Heritage Foundation found that the Pelosi expansion will reduce GDP by between $955 billion and $1.49 trillion. 

Direct Cash Payments That Go to Americans Regardless of Their Financial Need

Coronavirus aid should be targeted to help families and businesses that need it. New stimulus payments would not do that – they would go to Americans regardless of whether they need money, have a job, or have experienced any direct financial hardships from the pandemic. Incidentally, this proposal is supported by socialist Bernie Sanders, who supports trillions of dollars in middle class tax increases and new spending programs.

The fact is, the economy is already recovering and millions of Americans are back at work. Since an April high of 14.7 percent, the unemployment rate has dropped to 6.7 percent in November. Over 12 million Americans have gained jobs since the April low. In addition, personal savings rates are extremely high – Americans saved an average of almost 20 percent of their income between April and October, more than three times the 6 percent average savings rate over the past two decades.

Given this improving economic situation, any aid should be narrowly tailored to helping those that need it most and toward addressing the underlying problems of the economy.

No State and Local Bailout

Fortunately, the budget agreement does not include Democrat proposals for hundreds of billions to a trillion dollars in state and local aid. This new spending is entirely unnecessary and Republicans should be applauded for rejecting this proposal.

While some states have seen their revenues drop, others have seen revenue increase. In all, state collections declined just 4.4 percent through September compared to the first nine months of 2019, according to the Tax Foundation.

Congress has already provided aid to states, including approximately $360 billion that directly went to state and local governments to help them response to COVID-19. This is on top of the $500 billion in short-term loans the Federal Reserve has made available to state and local governments, of which only $1.7 billion has been used.

In fact, according to the Heritage Foundation, “Congress has already authorized federal aid to state and local governments equal to 17 times their 2020 revenue losses and two times their expected 2020 and 2021 combined losses.” 

Moving forward, lawmakers need to continue holding the line against the Pelosi-Biden agenda of trillions in wasteful new spending. The COVID-19 pandemic should not be an excuse for the left to enact vast new spending programs that will permanently expand the size and scope of government.

Photo Credit: Gage Skidmore


Congress Must Stop PPP Small Business Tax Increase in End of Year Package


Posted by Alex Hendrie on Wednesday, December 16th, 2020, 11:00 PM PERMALINK

If Congress fails to act before the end of year, struggling small businesses will be taxed on their Paycheck Protection Programs (PPP) loans. Given that businesses across the country are enduring government-mandated lockdowns, this tax could mean the difference between surviving and shutting down.

Lawmakers are negotiating an end-of-year government funding package and another Coronavirus relief bill. As part of this proposal, they must include legislation allowing business to deduct PPP loans when spent on ordinary, necessary business expenses, as is typically allowed.

Failing to act will impose taxes on as many as five million small businesses across the country that have relied on PPP loans to keep the lights on since the program was created. According to recent data from the Small Business Association, the average loan received by businesses was just $100,000 and more than two thirds of companies received a loan of $50,000 or less.  PPP loans are calculated based on the average monthly cost of salaries that a business incurs, so the average loan is correlated to the number of workers a business has on their payroll.

The PPP was enacted through the bipartisan Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide small businesses impacted by COVID-19 with emergency liquidity so they could continue making payroll and meeting other business expenses. While conservatives typically oppose new government spending programs, the PPP was necessary because of the unprecedented situation where governments forcefully closed businesses due to the pandemic.

While this aid provided a much-needed lifeline for small businesses, the IRS and Treasury Secretary Steven Mnuchin ruled that businesses would be taxed on these PPP loans. This announcement was made on April 30 when the IRS released Notice 2020-32, which prohibited businesses from deducting expenses paid with a PPP loan such as payroll, rent, and utility expenses, even though these expenses would otherwise qualify as ordinary, tax deductible business expenses.

By imposing taxes on PPP loans, the IRS essentially canceled a significant portion of the loan, eroding the financial assistance granted. This will harm small businesses across the country as they attempt to survive and re-engage in commerce in the wake of the pandemic.  

This tax is even more harmful given Congress is proposing $300 billion in additional PPP funding in the next COVID-19 relief package. This additional funding was included because governments are still restricting the ability of small businesses to fully open and conduct business.

Taxing previously granted PPP loans undermines the benefit of any new loans – essentially, the government will be giving with one hand and taking away with the other. Small businesses would also face a compliance nightmare – they will have to track loans received (including documenting what they were spent on), pay taxes on them, and then apply for new loans.

If Congress fails to stop this tax increase on small business PPP loans, hundreds of thousands of American businesses will face a tax hike. The number of businesses that will face a tax hike in key states is broken down below: 

California

  • Number of businesses receiving PPP: 623,360
     

Georgia

  • Number of businesses receiving PPP: 174,429
     

Kentucky

  • Number of businesses receiving PPP: 50,655
     

Massachusetts

  • Number of businesses receiving PPP loan: 118,392

 

North Carolina

  • Number of businesses receiving PPP loan: 129,289
     

New York 

  • Number of businesses receiving PPP loan: 348,870
     

Ohio

  • Number of businesses receiving PPP loan: 149,144
     

Pennsylvania 

  • Number of businesses receiving PPP loan: 173,552 
     

Texas

  • Number of businesses receiving PPP loan: 417,276
     

This tax hike will also impact hundreds of thousands of businesses in key industries: 

Health care

  • Number of businesses receiving PPP loan: 532,775
     

Construction

  • Number of businesses receiving PPP loan: 496,551
     

Manufacturing

  • Number of businesses receiving PPP loan: 238,494
     

Accommodation and Food Services

  • Number of businesses receiving PPP loan: 383,561

 


Lawmakers Announce Surprise Medical Billing Deal That Avoids Price Controls

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Posted by Alex Hendrie on Monday, December 14th, 2020, 1:20 PM PERMALINK

Late last week, leaders in Congress announced an agreement on surprise medical billing legislation that avoids relying on government price controls.

While conservatives can debate the extent to which the government should impose rules and regulations on surprise medical billing, lawmakers should be applauded for avoiding price controls in their proposal and should reject efforts to add price controls back into a legislative package.

The bipartisan, bicameral agreement was announced by House Ways and Means Committee Republican Leader Kevin Brady (R-Texas) and Chairman Richard Neal (D-Mass.), House Energy and Commerce Committee Republican Leader Greg Walden (R-Ore.) and Chairman Frank Pallone, Jr. (D-N.J.), House Education and Labor Committee Republican Leader Virginia Foxx (R-NC) and Chairman Bobby Scott (D-Va.), and Senate Health Committee Chairman Lamar Alexander (R-Tenn.) and Ranking Member Patty Murray (D-Wash.).

Surprise medical billing occurs when an individual receives an unexpectedly high medical bill as a result of being out-of-network or receiving emergency care. 

Over the past 18 months, some lawmakers have pushed legislation to address this problem by using the heavy hand of government to set rates for any payments made to out-of-network providers. Under this proposal, 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, resulting in a blatant price control on the healthcare system. 

The negative impact of price controls would be devastating to healthcare providers. When applied to surprise medical billing, price controls would result in a 20 percent pay cut for doctors, according to the nonpartisan Congressional Budget Office. Over the long-term, price controls could lead to a shortage of doctors and care.

There is strong opposition to price controls in surprise medical billing.

Senator Marsha Blackburn recently released a letter signed by Senator Ron Johnson (R-Wis.), Roger Wicker (R-Miss.), Rand Paul (R-Ky.) and Mike Lee (R-Utah) calling on Congress to reject price controls in an end-of year package.

Senator Kelly Loeffler (R-Ga.) also released a healthcare reform proposal that explicitly rejected price controls.

Earlier this year, Congressman Andy Harris (R-Md.) released a joint letter with almost 40 members of Congress in opposition to price controls in surprise medical billing.

The deal reached by Congressional leaders avoids imposing these government price controls on surprise medical billing. Lawmakers should be applauded for this stance and should reject efforts to add price controls back into a legislative package.

 

Photo Credit: Alex Proimos


Congress Must Pass the Small Business Expense Protection Act Before the End of the Year 

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Posted by Alex Hendrie on Friday, December 11th, 2020, 11:13 AM PERMALINK

If Congress fails to act before the end of the year, millions of struggling small businesses will be stuck with a tax bill of thousands, or even hundreds of thousands of dollars because they are forced to pay taxes on federal COVID-19 loans. 

Lawmakers can protect small businesses by passing S. 3612, the “Small Business Expense Protection Act,”  introduced by Senator John Cornyn (R-Texas), Senate Finance Committee Chairman Chuck Grassley (R-Iowa), Finance Ranking Member Ron Wyden (D-Ore.), Senator Tom Carper (D-Del.), and Senate Small Business Committee Chairman Marco Rubio (R-Fla.). Congress should ensure this bill is included in an end-of-year legislative package.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act created the PPP to provide small businesses impacted by COVID-19 with emergency liquidity so they could continue making payroll and meeting other business expenses.

However, on April 30, the IRS released Notice 2020-32, which prohibited businesses from deducting expenses paid with a PPP loan such as payroll, rent, and utility expenses, even though these expenses would otherwise qualify as ordinary, tax deductible business expenses.

Essentially, the IRS cancelled a significant portion of the PPP loan given to small businesses by imposing taxes on the loans.  This will erode a portion of the financial assistance granted through the program and will harm small businesses across the country as they attempt to survive and re-engage in commerce in the wake of the pandemic.  

The IRS Notice clearly disregards Congressional intent, as Section 1106(i) of the CARES Act clearly states that any PPP loan should be exempt from taxation if such loan is forgiven. Further, Congressional leaders from both sides of the aisle recently urged Treasury to reverse course, noting that the IRS Notice “ignores the overarching intent of the PPP, as well as the specific intent of Congress to allow deductions in the case of PPP loan recipients.”

Small businesses across the country are still struggling to keep the lights on due to the Coronavirus pandemic. The last thing these businesses need is an unexpected tax bill on the expenses paid with PPP loans. Lawmakers must step in and protect businesses by passing the Small Business Expense Protection Act.

Photo Credit: Ben Schumin


Senator Blackburn Leads Letter Opposed to Price Controls in Surprise Medical Billing

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Posted by Alex Hendrie on Wednesday, December 9th, 2020, 11:10 AM PERMALINK

Senator Marsha Blackburn (R-Tenn.) has led a letter urging Congress to reject proposals to impose price controls as a solution to surprise medical billing. The letter, which was signed by Senator Ron Johnson (R-Wis.), Roger Wicker (R-Miss.), Rand Paul (R-Ky.) and Mike Lee (R-Utah), specifically calls on Congress to reject efforts to include government mandated rate setting proposals in an end of year package.

The letter was addressed to Senate Majority Leader Mitch McConnell (R-Ky.), Senate Health Committee Chairman Lamar Alexander (R-Tenn.) and Senate Finance Committee Chairman Chuck Grassley (R-Iowa).

Surprise medical billing occurs when an individual receives an unexpectedly high medical bill as a result of being out-of-network or receiving emergency care. 

Unfortunately, some lawmakers want to address this problem by using the heavy hand of government to set rates for any payments made to out-of-network providers. 

Under this proposal, 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 negative impact of price controls would be devastating to providers. When applied to surprise medical billing, price controls would result in a 20 percent pay cut for doctors, according to the nonpartisan Congressional Budget Office. Over the long-term, price controls could lead to a shortage of doctors and care.

Conservatives oppose 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. They are a tool of the left to expand the size and scope of government and are a key part of the socialist Medicare for All proposal being pushed by far-left Members of Congress like Senator Bernie Sanders (I-Vt.) and Alexandria Ocasio-Cortez (D-NY).

There is strong opposition to price controls in surprise medical billing. Senator Kelly Loeffler (R-Ga) recently released a healthcare reform proposal that explicitly rejected price controls.

Earlier this year, Congressman Andy Harris (R-Md.) released a joint letter with almost 40 members of Congress in opposition to price controls in surprise medical billing.

As lawmakers look to wrap up the year with a government funding package, they should reject efforts to impose price controls on surprise medical billing. Senator Blackburn should be applauded for fighting against price controls and standing for free market policies. 

Photo Credit: Gage Skidmore


Congress Should Pass the Craft Beverage Modernization Act

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Posted by Alex Hendrie on Tuesday, December 1st, 2020, 2:33 PM PERMALINK

If lawmakers fail to act by the end of the year, breweries, distilleries, and wineries across America will face a tax increase.

The Craft Beverage Modernization and Tax Reform Act (CBMTRA) was first enacted through the Tax Cuts and Jobs Act of 2017. This bill provided federal excise tax relief for breweries, wineries, and distilleries, allowing these businesses to hire more employees, purchase new equipment, and expand production.

Unfortunately, this tax relief was temporary and is set to expire at the end of the year. Congress can make these tax cuts permanent by passing S. 362/H.R. 1175, legislation introduced by Reps. Ron Kind (D-Wis.) and Mike Kelly (R-Pa.) and Senators Ron Wyden (D-Ore.) and Roy Blunt (R-Mo). 

This legislation is overwhelmingly bipartisan and has been co-sponsored by 350 members of the House of Representatives and 76 Senators. Congress should pass this legislation, either as a stand-alone proposal or as part of a broader legislative package.

ATR has kept a running list of dozens of distilleries, breweries, and wineries that have been able to expand production, hire new workers, and invest in the economy thanks to the CBMTRA. Making these tax cuts permanent will help businesses continue supporting the economy and workers.  

Examples of businesses that have already seen benefits from the CBMTRA include:

Alexander Valley Vineyards

 (Healdsburg, California) – The vineyard was able to create new jobs, buy new equipment, and remodel their tasting rooms because of the Tax Cuts and Jobs Act:

“The craft beverage bill has been an incredible boost for our industry and this extension allows us to continue investing in our wineries by buying new equipment, remodeling tasting rooms, hiring new employees and more,” said Hank Wetzel, founder and family partner of Alexander Valley Vineyards and Chairman of Wine Institute. “All of this benefits local communities in the form of jobs, tax revenue and support for the hospitality industry.” – Dec. 20, 2019, Southeast Farm Press article.

Portland Cider Company

 (Clackamas, Oregon) – Because of the Tax Cuts and Jobs Act, the owner was able to create new jobs and invest in new equipment:

Jeff Parish, Co-Founder of Portland Cider Company and Committee Member of the United States Association of Cider Makers: “As a cider maker, the temporary CBMTRA allowed me to purchase new equipment, hire new staff and grow my business. If the excise tax credits go away, I have to reverse those choices. We're hopeful the permanent version of the bill passes, so we can plan with certainty for a growth-future." – Feb. 6, 2019, U.S. Senate Finance Committee press release.

Central Standard Distillery

 (Milwaukee, Wisconsin) – The Tax Cuts and Jobs Act allowed the distillery to hire four new employees, invest in a new facility, and ordered a new bottling line:

"Central Standard Distillery co-owner Evan Hughes said his business was able to grow faster than it normally would because of the act. He attributes four key growth areas to the success of the act, including: Central Standard hired four new employees, bringing staff totals to 22 people. The company invested in a 15,000-square-foot facility on Clybourn Street. In addition, Central Standard ordered a new bottling line for improved efficiency and offered health care to all of its employees.

"It gave us the courage to expand our business quicker than we normally would," Hughes said. – Dec. 10, 2019, Milwaukee Business Journal.

Bar Cento

 (Cleveland, Ohio) – The tax cuts allowed the bar to add new jobs and invest more in their facility:

Sam McNulty, co-founder of multiple Cleveland brewery/restaurants including Market Garden Brewery and Bar Cento, credited the tax break with helping his operations expand at an accelerated rate, "which in our case meant several million dollars of investment in our facility as well as the creation of a large number of full-time positions."

Not having certainty for the tax cut beyond next year could stymie other, more long-term investments.

"As in life, so it goes in business, where if the future is uncertain, you are more likely to be less secure and optimistic and thus more conservative and frugal," McNulty said. "There's not a bank on the planet that will finance a business that has only a one-year lease. And so a one-year extension is appreciated, but it is not enough to really fuel this growing industry and reach the full promise of the economic benefits of local craft beer." – Dec. 17, 2018, Crains Cleveland article.

Photo Credit: Darren Maloney


Biden OMB Pick Wants National Soda Tax

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Posted by Alex Hendrie on Tuesday, December 1st, 2020, 7:30 AM PERMALINK

Neera Tanden, President-elect Joe Biden’s pick to lead the Office of Management and Budget (OMB), wants to impose a steep national soda tax.

Tanden endorsed the “Medicare for America Act,” legislation introduced by House Democrats that imposed a one cent tax per 4.2 grams of caloric sweetener in sugary drinks.

The Center for American Progress, which is currently led by Tanden, also called for a tax on sugary drinks as part of their “Medicare Extra for All” plan. This plan would impose several “public health excise taxes” including a tax of 1 cent per ounce to finance new spending on liberal priorities.

If one of these sugary drink taxes were imposed, it could result in a 55 to 67 cent tax on a 2-liter bottle of Coca-Cola. A single 2 liter bottle of Coca-Cola costs anywhere from $1.25 to $1.70, so this tax could total 50 percent of the cost of the product. With the Tanden soda tax burden, the cost of a 12-pack of soda could increase by $1.11 to $1.44.

A tax on sugary drinks would also be extremely regressive and disproportionately harm low-income Americans. In fact, according to a 2018 report from the Tax Foundation, 47 percent of the tax collections from a sugary drink excise tax would come from households with income under $50,000.

Even Bernie Sanders came out against a soda tax.

During his 2016 presidential bid Bernie Sanders slammed Hillary Clinton’s endorsement of a soda tax. Sanders said:

“The mechanism here is fairly regressive. And that is, it will be increasing taxes on low income and working people.”

Sanders went on to note that Clinton’s embrace of a soda tax violated her pledge to the American people not to support any tax increase on Americans making less than $250,000 per year.

"Frankly, I am very surprised that Secretary Clinton would support this regressive tax after pledging not to raise taxes on anyone making less than $250,000. This proposal clearly violates her pledge," Sanders said.

Needless to stay, this tax would violate Biden’s pledge to not raise a single penny of any tax on any American making less than $400,000 per year. 

The OMB Director is responsible for implementing the President’s policy priorities across the executive branch. If confirmed, Tanden would play a key role in shaping and implementing policy proposals under a President Biden.

Biden has already called for $4 trillion in new or higher taxes on American families and businesses. With Tanden as OMB chief, a sugary drink tax could be next.

Photo Credit: Center for American Progress


ATR Opposes Most Favored Nation Drug Pricing Proposal

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Posted by Alex Hendrie on Friday, November 20th, 2020, 1:30 PM PERMALINK

The Trump administration has released its “most favored nation” (MFN) final rule to impose price controls on Medicare Part B.

ATR President Grover Norquist released the following statement in opposition to the proposal:

“Now is the worst possible time to impose price controls on American medicines. Thanks to American medical innovation, we have developed Coronavirus vaccines at the fastest rate in history. 

The proposed ‘most favored nation’ rule would impose socialist price controls on America’s healthcare system by arbitrarily tying the prices we pay to the prices in foreign countries. This would cripple American innovation and delay access to new treatments and cures at a time when we need them most. 

The MFN rule would also embolden the left by moving the U.S. closer to a system of government run healthcare that is being pushed by radical far-left politicians like Nancy Pelosi, Bernie Sanders, and Alexandria Ocasio-Cortez.”


See also: 

80 Groups Oppose Most Favored Nation Drug Pricing Executive Order

ATR Releases New Video Against Foreign Price Controls on Medicare

Photo Credit: Gage Skidmore


ATR Supports Sen. Loeffler's "Modernizing Americans' Health Care Plan"

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Posted by Alex Hendrie on Monday, November 16th, 2020, 3:18 PM PERMALINK

Senator Kelly Loeffler (R-Ga.) has released the “Modernizing Americans’ Health Care Plan,” a framework to reduce costs and increase healthcare choice and access through free market, patient-centered policies.

Sen. Loeffler should be applauded for releasing this proposal. The Modernizing Americans’ Health Care Plan contains important proposals to expand HSAs to American families across the country, rejects efforts to impose price controls when addressing surprise medical billing, and provides reforms to lower prescription drug costs and incentivize American manufacturing. 

Not only does this proposal contain a number of pro-growth, patient centered reforms, it also serves as an important contrast to the proposals put forth by the radical left to increase taxes and move the nation’s healthcare system closer toward socialism. 

Highlights of the proposal include:

Expanding Health Savings Accounts (HSAs)
HSAs are currently used by 30 million American families to pay for common health care expenses, including doctor’s visits, prescription drugs, and hospital care. HSAs are also a middle-class tax cut – money contributed to any HSA is tax-deductible, money invested in an HSA can grow tax-free, and money spent on qualified health care expenses from an HSA is tax-free.

The framework expands HSAs so that Americans can pay for their healthcare tax free. This will allow millions of Americans across the country including gig-economy workers, every American that receives health care through their employer, Americans on Medicare and Medicaid, and those that receive care through the VA, Indian health plans, and Obamacare.

The proposal also allows HSAs to be used to pay for healthcare premiums and direct primary care and increases the HSA contribution limit from $3,550 to $10,800 for an individual and $7,100 to $29,500 for a family.

Addressing surprise medical billing without resorting to price controls
Sen. Loeffler’s legislation rejects efforts to address surprise medical billing without price controls. Surprise medical billing occurs when an individual receives an unexpectedly high medical bill as a result of being out of network or receiving emergency care.

While reforms to protect patients from high healthcare costs should be considered, some lawmakers, including Senate Health Committee Chairman Lamar Alexander (R-Tenn.), are pushing a surprise medical billing proposal that uses the heavy hand of government to set rates for any payments made to out-of-network providers. 

This would replace private negotiations between insurers and providers with price controls, a proposal that should be anathema to conservatives as it utilizes government power to forcefully lower costs in a way that distorts economically efficient behavior and natural incentives created by the free market. 

Sen. Loeffler’s proposal wisely reject these price controls. Moving forward, any attempt to address the surprise medical billing issue should be done in a way that avoids price controls.

Reducing drug costs and America’s dependency on China
The framework rejects the plan by far-left Democrats and Nancy Pelosi to enact socialized healthcare through H.R.3, legislation that would impose a 95 percent tax on hundreds of innovative medicines if manufacturers do not accept government set prices.

Instead, Sen. Loeffler’s proposal aims to address the root cause of high drug costs – the fact that foreign countries are freeloading off American innovation by artificially lowering prices. In order to solve this problem, the framework calls for the creation of a Chief Pharmaceutical and Medical Supply Chain Negotiator in the Office of the United States Trade Representative to fight against foreign price controls.

Sen. Loeffler’s framework also encourages American manufacturing of pharmaceuticals, medical devices and supplies by providing tax incentives for American businesses.

For instance, the proposal allows companies that move back to the U.S. to be eligible for fully business expensing on non-residential property. In order to prevent companies from being taxed when they choose to move back to the U.S, the proposal allows businesses to exclude from gross income any gain earned on the disposition of assets in the country the company is moving from. 

These tax cuts will help level the playing field so that America can compete against the rest of the world. The U.S. currently lags foreign competitors, so these reforms are much needed. According to a study by the Manufacturing Leadership Council, the U.S. ranks 26 out of 36 when it comes to tax incentives that encourage domestic research and development.

Photo Credit: Tim Rawle


ATR Releases Letter Urging Lawmakers To Extend or Make The CFC Look-Through Rule Permanent

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Posted by Alex Hendrie on Thursday, November 12th, 2020, 8:00 AM PERMALINK

ATR President Grover Norquist has released a letter to key lawmakers urging them to extend or make the controlled foreign corporation (CFC) look-through rule permanent under IRC section 954 (c)(6). 

The CFC look-through rule helps provide cash-flow and liquidity for American businesses operating overseas by protecting payments such as dividends, interest, and royalties from taxation when they are made between two U.S. subsidiaries. Without the look-through rule, American businesses will be double taxed on income earned overseas.

The CFC look-through rule is set to expire on December 31, 2020. If lawmakers fail to extend the rule, or ideally make it permanent, American businesses will face tax increases in a time of immense economic damage caused by the COVID-19 pandemic. 

Read the full letter here or below: 

Dear Chairman Grassley, Chairman Neal, Ranking Member Wyden, and Ranking Member Brady:

I urge you to extend or make permanent the controlled foreign corporation (CFC) look-through rule under IRC section 954 (c)(6). If lawmakers fail to act, the CFC look-through rule will expire December 31, 2020, resulting in tax increases on American businesses. 

The CFC look-through rule helps provide cash-flow and liquidity for American businesses operating overseas by protecting payments such as dividends, interest, and royalties from taxation when they are made between two U.S. subsidiaries. Without the look-through rule, American businesses will be double taxed on income earned overseas.

It is important to note that the CFC look-through rule is not a “tax loophole.” It does not give taxpayers a windfall, but instead levels the playing field. Foreign companies typically do not face additional tax when redeploying capital amongst different subsidiaries, so the CFC look-through rule ensures American businesses can compete.

In addition, the provision does not allow American businesses to completely avoid taxation on foreign income. Income attributable to the CFC look-through rule is still taxed under Global Intangible Low-Taxed Income (GILTI) rules, which provides a reduced corporate rate on foreign income.

There is bipartisan support for the CFC look-through rule. Since it was first enacted in 2006, the CFC look-through rule has been extended multiple times. President Obama’s FY 2016 budget proposal called for making this provision permanent. Congress preserved the CFC look- through rule in the Tax Cuts and Jobs Act in 2017, in recognition of the fact that U.S. tax should not be owed when an American company redeploys capital among foreign subsidiaries. More recently, the CFC look-through rule was extended in 2019 on a bipartisan basis.

The Coronavirus pandemic has resulted in significant economic damage to American businesses and workers. Moving forward, we need to preserve tax policies that help businesses maintain payroll and provide liquidity so they can continue investing and creating jobs. As such, I urge you to ensure that the CFC look-through rule is extended, and ideally made permanent, before its expiration at the end of the year.

Onward,

Grover Norquist
President, Americans for Tax Reform

Photo Credit: kidTruant


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