Alex Hendrie

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.


Drug Price Controls Could Cost Jobs in Key States

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Posted by Alex Hendrie on Thursday, September 17th, 2020, 12:58 PM PERMALINK

Price controls on prescription medicines proposed by President Trump and House Speaker Nancy Pelosi (D-Calif.) could have a significant negative economic impact on key states including Florida, Pennsylvania, Michigan, and North Carolina.

President Trump recently signed a “most favored nation” executive order that adopts foreign, socialist price controls by tying the prices we pay for medicines to the artificially low prices set by other countries. In addition, Speaker Pelosi has proposed H.R. 3, legislation that would force manufacturers to accept government set prices on hundreds of medicines or face a 95 percent excise tax.

Ahead of the 2020 election, lawmakers should consider the impact such proposals would have on jobs and the economy.

Nationwide, the pharmaceutical industry directly or indirectly accounts for over four million jobs across the U.S, according to research by TEconomy Partners, LLC. This includes 800,000 direct jobs, 1.4 million indirect jobs, and 1.8 million induced jobs, which include retail and service jobs that are supported by spending from pharmaceutical workers and suppliers.

The average annual wage of a pharmaceutical employee in 2017 was $126,587, which is more than double the average private sector wage of $60,000.

These jobs support $1.1 trillion in total output, a significant contributor to the overall economy considering U.S. GDP at the end of 2017 was $19.7 trillion, according to the Bureau of Economic Analysis.

In addition to threatening jobs and the economy, price controls could have significant political impacts. For instance, in Michigan and Pennsylvania, the number of pharmaceutical jobs exceed Trump’s margin of victory in 2016. In Florida and North Carolina, the total number of direct, indirect and induced jobs exceed Trump’s margin of victory.
 

State

2016 Trump margin of victory

Number of direct pharmaceutical jobs

Number of direct, indirect, and induced pharmaceutical jobs

Florida

112,911

25,757

130,903

Pennsylvania

44,292

46,830

253,876

Michigan

10,704

15,982

86,485

North Carolina

173,315

44,969

251,053

 

Economic and political impacts of price controls in Florida

  • Pharmaceutical manufacturers directly employ 25,757 workers in Florida. When accounting for direct, indirect, and induced jobs, manufacturers are responsible for an estimated 130,903 jobs. These jobs contribute an estimated $29 billion in economic impact per year.
     
  • In the 2016 presidential election, Florida was decided by a margin of 112,911 votes. Donald Trump won the state by 48.6 of the vote, receiving 4,617,886 votes to Hilary Clintons 4,504,975 votes.  
     
  • If all 25,757 workers directly employed by the pharmaceutical industry in Florida voted as a bloc, they could have had a significant impact on the outcome. If all 130,903 workers whose jobs were directly or indirectly related to the pharmaceutical industry as a bloc, they could have decided who won the state.

 

Economic and political impacts of price controls in Pennsylvania

  • Pharmaceutical manufacturers directly employ 46,830 workers in Pennsylvania. When accounting for direct, indirect, and induced jobs, manufacturers are responsible for an estimated 253,876 jobs. These jobs contribute an estimated $67 billion in economic impact per year.
     
  • In the 2016 presidential election, Pennsylvania was decided by a margin of 44,292 votes. Donald Trump won the state with 48.2 percent of the vote, receiving 2,970,733 votes to Hillary Clinton’s 2,926,441 votes. 
     
  • If all 46,830 workers directly employed by the pharmaceutical industry in Pennsylvania voted as a bloc, they could have decided who won the state.  If all 253,876 workers whose jobs were directly or indirectly tied to the pharmaceutical industry voted as a bloc, they would constitute a group five times the margin of victory. 

 

Economic and political impacts of price controls in Michigan

  • Pharmaceutical manufacturers directly employ 15,982 workers in Michigan. When accounting for direct, indirect, and induced jobs, manufacturers are responsible for an estimated 86,485 jobs. These jobs contribute an estimated $22 billion in economic impact per year.
     
  • In the 2016 presidential election, Michigan was decided by a margin of 10,704 votes. Donald Trump won the state with a 47.3 percent of the vote, receiving 2,279,543 votes to Hilary Clinton’s 2,268,839 votes. 
     
  • If all 15,982 workers directly employed by the pharmaceutical industry in Michigan voted as a bloc, they could have had decided who won the state. If all 86,495 workers whose jobs were directly or indirectly related to the pharmaceutical industry voted as a bloc, they would constitute a group eight times the margin of victory.   

 

Economic and political impacts of price controls in North Carolina

  • Pharmaceutical manufacturers directly employ 44,960 workers in North Carolina. When accounting for direct, indirect, and induced jobs, manufacturers are responsible for an estimated 251,053 jobs. These jobs contribute an estimated $74 billion in economic impact per year.
     
  • In the 2016 presidential election, North Carolina was decided by a margin of 173,315 votes. Donald Trump won the state with 49.8 percent of the vote, receiving 2,362,631 votes to Hilary Clinton’s 2,189,316 votes. 
     
  • If all 44,969 workers directly employed by the pharmaceutical industry in North Carolina voted as a bloc, they could have had a significant impact on the outcome. If all 251,053 workers whose jobs were directly or indirectly related to pharmaceutical industry as a bloc, they would make up a group about one and a half times the margin of victory.  

Photo Credit: Chris Potter


Census Data: Wages Grew by $4,400 Last Year, a 6.8 Percent Increase

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Posted by Alex Hendrie on Wednesday, September 16th, 2020, 8:30 AM PERMALINK

Median household income increased by $4,440 or 6.8 percent in 2019 – the largest one-year wage growth in history.

In addition, the poverty rate declined from 11.8 percent to 10.5 percent, hitting a 50-year low, according to recently released Census Bureau data.

The 6.8 percent wage growth in 2019 exceeds the wage growth experienced during the entire Obama Administration. In 2008, median income was $59,877. By 2016, it had grown to just $62,898 – an increase of just $3,021 or just 5 percent. 

Since 2016, real median household income has increased by almost 10 percent and was $68,703 in 2019. While this is benefiting Americans at every income level, lower wage workers are seeing their incomes grow faster than higher wage workers according to the Federal Reserve Bank of Atlanta. 

According to the Census data, real median income increased at record levels in key demographics. African-Americans saw 7.9 percent wage growth, Hispanic Americans saw 7.1 percent wage growth, and Asian Americans saw 10.6 percent wage growth.

This strong wage growth lifted 4 million Americans out of poverty in 2018 and 2019.

This good news again demonstrates that the Trump-GOP policies of tax cuts and deregulation work.

While the Coronavirus pandemic interrupted the strong American economy, there are already signs that we are recovering quickly.

Over 10 million jobs were created in the last four months and analysts are predicting third quarter annualized GDP growth of 30 to 35 percent.

Moving forward, we need to ensure that pro-growth policies remain in law so that workers and businesses can continue recovering and thriving. While President Trump and Republicans are promising to push policies that allow the economy to regrow and have pledged to create another 10 million jobs, Democrats and Joe Biden are pushing for at least $4 trillion in tax increases. 

Biden has repeatedly promised to repeal the Tax Cuts and Jobs Act which would raise taxes on businesses and Americans at every income level.

Photo Credit: Gage Skidmore


REMINDER: 80 Groups Oppose Most Favored Nation Drug Pricing Executive Order

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Posted by Alex Hendrie on Monday, September 14th, 2020, 12:00 PM PERMALINK

80 free market, conservative, and libertarian organizations and activists oppose President Trump’s recently signed “most favored nation” (MFN) executive order to impose foreign price controls on the medicines used by American seniors. 

Trump's executive order will tie the prices we pay for medicines in Medicare Part B and Part D to the prices in foreign countries, most of which have government-set prices.

Signatories of the coalition letter include representatives from prominent national organizations as well as almost 30 states.

President Trump has repeatedly stood strong against the left’s calls for socialized medicine, even promising in the 2020 State of the Union Address that “we will never let socialism destroy American healthcare.” 

Unfortunately, an MFN policy would adopt these same socialist healthcare policies and threaten American medical innovation. As the letter notes: 

"Adopting these price controls will slow medical innovation, threaten American jobs, and undermine criticism of single-payer systems. In addition, a United States embrace of price controls will make it immeasurably more difficult to get foreign countries to pay their own way in the development of new medicines."

An MFN policy would also threaten our COVID-19 response and exacerbate foreign freeloading off of American innovation. As the letter notes: 

"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."

Rather than adopting price controls, the signatories urge President Trump to continue pushing policies that encourage American innovation like tax cuts and renegotiated trade deals:  

“As President, you have championed vital changes in tax and regulatory policies that have allowed free market innovation to flourish. We believe a market-based approach like those that your administration has consistently supported in other policy areas will lead to economic growth and promising new treatments but adopting price controls through the MFN plan would undermine rather than build on those successes.”

Click here to read the full letter.

Signatories of the coalition letter:

Grover Norquist
President, Americans for Tax Reform

Brent Wm. Gardner
Chief Government Affairs Officer, Americans for Prosperity

Joel White
President, Council for Affordable Health Coverage

Grace Marie-Turner      
President, Galen Institute (organization listed for affiliation purposes only)

Daniel Schneider
Executive Director, American Conservative Union

Lisa B. Nelson
CEO, ALEC

Adam Brandon
President, FreedomWorks

Pete Sepp
President, National Taxpayers Union

Phil Kerpen
President, American Commitment

Thomas Schatz
President, Citizens Against Government Waste

Karen Kerrigan
President & CEO, Small Business & Entrepreneurship Council

David Williams
President, Taxpayers Protection Alliance

Saulius “Saul” Anuzis & Jim Martin
President, 60 Plus Association
Founder/Chairman, 60 Plus Association

Marty Connors
Leader, Alabama Center-Right Coalition 

Bethany Marcum
Executive Director, Alaska Policy Forum

Dee Stewart
President, Americans for a Balanced Budget

Richard Manning
President, Americans for Limited Government

Michael Bowman
President, ALEC Action

Kevin Waterman
Chair, Annapolis Center-Right Coalition Meeting (Maryland)

Robert Alt
President and CEO, The Buckeye Institute

Rabbi Aryeh Spero
President, Caucus for America

Ryan Ellis
President, Center for a Free Economy 

Andrew F. Quinlan
President, Center for Freedom and Prosperity 

Jeffrey Mazzella
President, Center for Individual Freedom

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

Peter Pitts
President, Center for Medicine in the Public Interest

John Hinderaker
President, Center of the American Experiment

Leo Knepper
CEO, Citizens Alliance of Pennsylvania

Donald Bryson 
President & CEO, Civitas Institute

Regina Thomson
President, Colorado Issues Coalition

Gregory Conko
Senior Fellow, Competitive Enterprise Institute

James Edwards
Executive Director, Conservatives for Property Rights 

Matthew Kandrach
President, Consumer Action for a Strong Economy 

Fred Roeder
Health Economist/Managing Director, Consumer Choice Center

Yaël Ossowski
Deputy Director, Consumer Choice Center

Katie McAuliffe
Executive Director, Digital Liberty

Robert Roper
President, Ethan Allen Institute

Annette Meeks
CEO, Freedom Foundation of Minnesota           

George Landrith
President, Frontiers of Freedom

Ray Chadwick
Chairman, Granite State Taxpayers

Naomi Lopez
Director of Healthcare Policy, Goldwater Institute

Mario H. Lopez 
President, Hispanic Leadership Fund

Carrie Lukas
President, Independent Women's Forum

Heather R. Higgins
CEO, Independent Women's Voice

Andrew Langer
President, Institute for Liberty

Tom Giovanetti
President, Institute for Policy Innovation

Sal Nuzzo
Vice President of Policy, James Madison Institute

Amy Oliver Cooke
CEO, John Locke Foundation

Drew Cline
President, Josiah Bartlett Center for Public Policy

Seton Motley
President, Less Government

Jay Fisher
Immediate Past Chairman, Lisle Township Republican Organization

Doug McCullough
Director, Lone Star Policy Institute

Lindsay Killen 
Vice President for Strategic Outreach, Mackinac Center for Public Policy

Brett Healy
President, The John K. MacIver Institute for Public Policy 

Matt Gagnon
President, Maine Policy Institute

Charles Sauer
President, Market Institute

Dee Hodges
President, Maryland Taxpayers Association, Inc

Gene Clem
Spokesman, Michigan Tea Party Alliance

Jameson Taylor, Ph.D.
Vice President for Policy, Mississippi Center for Public Policy

Tim Jones
Chair, Missouri Center-Right Coalition
Fmr. Speaker, Missouri House

David A. Ridenour 
President, National Center for Public Policy Research

Everett Wilkinson
Chairman, National Liberty Federation

John Tsarpalas
President, Nevada Policy Research Institute

Scott Pullins
Founder, Ohio Taxpayers Association

Doug Kellogg
Executive Director, Ohioans for Tax Reform

Sally Pipes
President and CEO, Pacific Research Institute

Ellen Weaver
President & CEO, Palmetto Promise Institute

Daniel Erspamer
Chief Executive Officer, Pelican Institute for Public Policy

Ed Martin
President, Phyllis Schlafly Eagles

Lorenzo Montanari 
Executive Director, Property Rights Alliance

Stone Washington
Member, Project 21

Paul J. Gessing
President, Rio Grande Foundation

Bette Grande
President & CEO, Roughrider Policy Center

James L. Setterlund
Executive Director, Shareholder Advocacy Forum

Paul E. Vallely, Major General, US Army (ret)
Chairman, Stand Up America US Foundation 

Richard Watson 
Chair, Tallahassee Center-Right Coalition

Sara Croom
Executive Director, Trade Alliance to Promote Prosperity

C. Preston Noell III
President, Tradition, Family, Property, Inc. 

Lynn Taylor
President, Virginia Institute for Public Policy

Photo Credit: Matt Wade


Norquist Statement in Opposition to Most Favored Nation EO

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Posted by Alex Hendrie on Sunday, September 13th, 2020, 8:00 PM PERMALINK

ATR President Grover Norquist released the below statement in opposition to President Trump signing a "most favored nation" drug pricing policy:

"Imposing a 'most favored nation' drug pricing proposal into Medicare part B and Part D will adopt the same foreign price controls that President Trump has repeatedly opposed and that Democrats are campaigning on with their Medicare for All plan.

As recently as his 2020 State of the Union Address, the President promised 'We will never let socialism destroy American health care.'

An MFN would adopt these socialist policies, slowing medical innovation and threatening American jobs at a time that the economy is recovering and medical innovators are making unprecedented progress toward developing a COVID-19 vaccine."

There is strong conservative opposition to a MFN price control proposal. Last month, 80 free market, conservative, and libertarian groups and activists released a coalition letter urging President Trump to withdraw this proposal. 

The letter instead urges President Trump to apply the same successful, deregulatory, market-based approach that he has championed in other policy areas to health care:

"As President, you have championed vital changes in tax and regulatory policies that have allowed free market innovation to flourish. We believe a market-based approach like those that your administration has consistently supported in other policy areas will lead to economic growth and promising new treatments, but adopting price controls through the MFN plan would undermine rather than build on those successes."

Photo Credit: Gage Skidmore


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