Alex Hendrie

ATR Releases Coalition Letter Opposed to Interference in Venezuela Property Rights Litigation


Posted by Alex Hendrie on Wednesday, June 12th, 2019, 9:00 AM PERMALINK

Americans for Tax Reform today released a coalition letter in opposition to executive action that would shield the nation of Venezuela against debts that it owes for property that was stolen by previous regimes.

Recent media reports suggest that the interim Venezuelan government is pressuring the Trump administration to interfere in litigation between the country and US investors that had their property seized by the nation’s former socialist leaders.

Any such interference would violate the constitution, would deny American investors hundreds of millions of dollars that they are owed, and could discourage private investment moving forward as Venezuela attempts to rebuild.

Instead of interfering in litigation, the new Venezuela government should follow existing processes to restructure its debt and to deal with its legitimate creditors within the framework set out by existing legal regimes and court processes.

To view the full letter, click here or see below:

Dear Secretary Mnuchin, 

We write to express concerns about reports that leaders within Venezuela’s newly-recognized interim government are pressuring the Trump Administration to take executive action that would devalue or altogether eliminate legitimate property rights, including vested rights that have been upheld in U.S. courts. Instead of taking executive action that could chill private investment in Venezuela, the Trump Administration should seek to help rebuild the country without violating property rights and the rule of law protected by the United States Constitution. 

For decades, tyrannical socialist leaders in Venezuela have wreaked havoc on the country’s economy, abasing its currency, raising taxes, and pursuing countless other job-killing policies that inflict suffering on the Venezuelan people. In many cases, Venezuelan tyrants stole private property owned by international investors in its efforts to nationalize of broad swaths of the economy. 

Fortunately, investors harmed by illegal practices (including theft of property) can pursue arbitration backed by the International Centre for Settlement of Investment Disputes (ICSID), a multilateral framework established by the World Bank that provides a forum for neutral dispute settlements. ICSID and the Investor-State Dispute Settlement (ISDS) provisions contained in many U.S. investment and free trade agreements help protect investment between nations and are critical to uphold the rule of law. 

According to recent press reports, the interim government of Venezuela has been pressuring the Trump Administration to take executive action to shield the nation against debts that it owes for property that was stolen by previous regimes. This would deny American investors hundreds of millions of dollars that they are owed. 

While it is understandable that the government wants to be held harmless for debts it did not incur, executive action, or any other unilateral or multilateral asset protection regime endorsed or implemented by the Trump Administration, would likely be unconstitutional (at least with respect to vested property rights), and could discourage private investment moving forward. For the Venezuelan economy to rebuild and prosper, the country – with the United States’ support – must embrace free-market solutions and private sector investment, especially given its extensive oil reserves. 

If the United States takes action that hurts legitimate creditor claims, especially those claims that are already before the U.S. Courts, investors will have no reason to believe that future investment would be protected from theft. Further, executive action would circumvent proven multilateral and U.S. legal processes which have helped resolve international disputes for decades. 

As the Trump Administration continues to support democracy and the end of tyrannical socialist regimes in Venezuela, we urge you to reject any requests for executive action to devalue or eliminate longstanding private property rights that are protected by the U.S. Constitution and the rule of law, which even multilateral actions cannot supersede. Instead, the Administration should urge the interim Venezuela government to follow existing processes to restructure its debt and to deal with its legitimate creditors within the framework set out by existing legal regimes and court processes. 

Doing so would send a clear signal that Venezuela is committed to charting a course that protects property rights, the rule of law, and that will encourage much-needed investment in the nation. 

Sincerely, 

Grover Norquist 
President, Americans for Tax Reform 

Adam Brandon 
President, FreedomWorks 

Jessica Anderson 
Vice President, Heritage Action 

Pete Sepp 
President, National Taxpayers Union 

James L. Martin 
Founder/Chairman, 60 Plus Association 

Saulius “Saul” Anuzis 
President, 60 Plus Association 

David Williams 
President, Taxpayers Protection Alliance 

CC: 

Vice President Mike Pence 
Secretary of State Mike Pompeo 
Secretary of Commerce Wilbur Ross 
Acting Chief of Staff Mick Mulvaney 
Assistant to the President for National Security Affairs John Bolton


Dems Hold Third Hearing on Medicare for All

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Posted by Spencer Peck, Alex Hendrie on Tuesday, June 11th, 2019, 9:15 AM PERMALINK

The Democrat led House Ways & Means Committee will this week hold a hearing on Medicare for All.

Under this plan, workers, families, and businesses both small and large will see higher taxes and less control over their lives. A single payer system eliminates choice, raises costs, and reduces access by allowing the government to control and ration care. The millions of Americans who currently enjoy their doctors and coverage won’t have a say in this radical overhaul of the system.

According to the Mercatus Center, the plan would cost $32 trillion over the next decade. This would increase federal spending by a staggering 60% in that time frame. That money has to come from somewhere, and unsurprisingly, it will be American taxpayers footing the bill.

The plan has faced two previous congressional hearings in the past month or so, but this will be a heightened level of scrutiny for the proposed government takeover. However, this latest hearing is notable as the Ways & Means Committee has policy making jurisdiction over healthcare and taxation. The hearing should be a chance for Americans to understand the real costs of Medicare for All, seeing as they haven’t gotten many answers thus far.

Democrat supporters in the House have refused to explain how they’ll pay for their plan, let alone tell the American people what kind of tax hikes they can expect. However, self-avowed socialist Senator Bernie Sanders (I-Vt.) has released a list of tax increase “options.”

In all, Sanders’ proposals would lead to $14.3 trillion dollars in higher taxes over the next decade, according to an Americans for Tax Reform analysis. It should be noted that this tax hike wouldn’t even cover half of the overall cost of Medicare for All. However, this would still mean drastically higher taxes on American families and businesses:

A new 4% payroll tax on workers would raise taxes by $3.9 trillion over the next ten years.

The proposal also includes a 7.5% payroll tax on employers, which would cost businesses $3.5 trillion over the decade.

  • The law would eliminate employer-based health insurance, which currently covers about 158 million Americans. This would raise taxes on businesses by $3 trillion by getting rid of the healthcare deduction utilized by employers.

  • The proposal would eliminate Health Savings Accounts (HSA’s), utilized by 25 million American families. “Cafeteria plans” and the medical expenses deduction would also be repealed. In all, these tax increases are a $4.2 trillion tax hike.

  • Increase the top marginal tax rate for individuals and the tax rate for capital gains above $10 million to 70%. The Tax Foundation estimates that increasing these rates would raise $51 billion over the decade. However, due to how much these rates would discourage investment and slow economic growth, it would actually be a net loss of $63.5 billion to the federal budget.

  • The proposal raises the top death tax rate to a whopping 77%. Currently, the tax kicks in at inheritances over $11 million with a rate of 40%. Sanders’ plan would drop the threshold to any inheritance worth $3.5 million with a starting rate of 45%. This would raise taxes on families by $315 billion over the next ten years.

  • The plan also implements an annual “wealth tax” on American taxpayers. This would force Americans to pay an annual 1% tax on assets worth at least $21 million, and would increase taxes by $1.3 trillion.

  • An additional $800 billion in new taxes is proposed by setting a “bank tax” on financial institutions throughout the country.

  • The self-employment tax would be broadened, hitting small businesses with an additional $247 billion over the decade.

Medicare for All would have drastic consequences for American families. The proposal would outlaw private health insurance, thus removing the competition and innovation of the free market. It would eliminate choice for Americans, especially for those who want to keep their doctors. Like the single payer systems of Canada and the UK, it would lengthen wait times and reduce access to care.

Most of all, Medicare for All would immediately raise taxes on the American people by unprecedented rates.

Americans are entitled to answers from the people who want to raise taxes and hand over complete control of their healthcare to the government. This hearing ought to deliver those answers.

Photo Credit: Molly Adams


The Rise of IRS Injunction Suits Threatens Taxpayer Rights

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Posted by Alex Hendrie, Tom Hebert on Monday, June 10th, 2019, 9:34 AM PERMALINK

The Internal Revenue Service (IRS) has a history of harassing law-abiding taxpayers. Congress sought to address this through legislation in 1998, but problems have persisted.

More recently, the IRS, working with the Department of Justice, has increasingly turned to “injunction actions,” as a tool to go after taxpayers as noted in a recent report by Tax Notes.

The IRS has authority to launch an injunction action against a taxpayer under U.S. Code Section 7402(a). They are typically launched under one of two circumstances: cases involving tax preparers and cases involving suspected tax shelters. In recent years, the IRS has also used Section 7402 to seek disgorgement against taxpayers, which requires the defendant to turn over all money that they have made in conduct associated with the injunction claim.

Instances of disgorgement (and of Section 7402 in general) have skyrocketed in recent years – since 2015 there have been over 40 cases involving disgorgement, while there were just five between 1954 and 2014.

The agency’s increasingly aggressive use of Section 7402 lawsuits violates the pro-taxpayer reforms passed two decades ago. Section 7402 was little used until passage of the IRS Restructuring and Reform Act of 1998 (RRA), a landmark law which created important protections for taxpayers.

RRA was enacted with several pro-taxpayer provisions and curbed the IRS’ enforcement authority, created the Treasury Inspector General for Tax Administration, an independent watchdog office, and codified the Taxpayer Bill of Rights, a document that the IRS must send every taxpayer who faces an enforcement action.

The Taxpayer Bill of Rights guarantees a basic level of service to American taxpayers. For instance, taxpayers are guaranteed the right to be informed, the right to privacy, the right to challenge the IRS, and the right to not pay more money in taxes than you owe.

Section 7402 injunction lawsuits effectively allow the agency to disregard many of these rights. For instance, these lawsuits are searchable on the Justice Department’s website, subjecting taxpayers to public shaming and damaging their reputation   

The IRS has used its broad authority to file injunction suits in complex cases where it is unclear whether taxpayers are at fault. This was the case in United States v. Zak, where the government filed a complaint asking the court to block six defendants from promoting use of the conservation easement deduction. Without alleging any specific facts, the agency made a blanket claim that defendants impermissibly inflated the value of the deduction by overstating the value of donated easements. The government also seeks to confiscate via disgorgement any income the defendants made from facilitating conservation easement donations.  

To be clear, Section 7402 has legitimate uses. For instance, injunctions have been used against tax preparers that have committed clear fraud by claiming false deductions for unwitting taxpayers in an attempt to defraud the Treasury. However, its use should be limited in scope.

Alarmingly, the IRS has been using Section 7402 as an end run around enshrined taxpayer protections and using this provision to subject taxpayers to extensive litigation. Given the increasing use of this provision, it may be necessary for Congress to step in and reaffirm the congressional intent of RRA by updating the law to stop IRS abuse over taxpayers. 

Photo Credit: Martin Haesemeyer


Wyden Carried Interest Capital Gains Tax Hike Bill is Misguided

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Posted by Alex Hendrie on Thursday, May 30th, 2019, 12:05 PM PERMALINK

Finance Committee Ranking Member Ron Wyden (D-Ore.) has introduced legislation that would increase taxes on carried interest capital gains by taxing it as annual compensation and at ordinary income tax rates. 

This is problematic in two ways. First, it undermines the tax treatment of capital gains by discriminatorily taxing carried interest as ordinary income.

Second, it imposes taxes on carried interest income each year, rather than when income is realized from the sale of an investment.

The fact is, carried is structured based on longstanding norms of the tax code. The Wyden bill is terrible tax policy that should be rejected by Congress.

Taxing Unrealized Gains is Bad Tax Policy

Currently, the capital gains tax is imposed only when a taxpayer sells an asset. This makes sense because an investor does not receive any returns on the investment until they cash out.

The Wyden bill would undo this commonsense approach and force taxpayers to pay tax on unrealized gains every year.

This represents a dramatic departure from the norms of the tax code and could create needless complexity, arbitrary tax treatment, and perverse incentives.

Wyden has already introduced legislation that would require taxpayers to pay annual capital gains tax on all investments, so it is clear that Democrats are taking aim at increasing taxes on all capital gains, not just carried interest.

Carried interest capital gains drives significant investment across the country and in every Congressional District, so increasing taxes would harm economic growth. 

More broadly, increasing taxes on capital gains – including taxes on carried interest capital gains – suppresses growth and economic productivity, harms the creation of jobs and wages, and reduces other government revenue sources.

Carried Interest Should Be Preserved As A Capital Gain

Taxing carried interest as ordinary income is bad policy that violates two long-standing tax principles.

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

It is also treated as capital gains income as it is earned through long-term investment, not as ordinary income. There is no justification for treating it as ordinary income – the investor purchased an asset, grew the asset by making it more economically valuable, and sold the asset at a profit – exactly the same as other types of investment.

Undermining either of these two principles undermines the existing tax code as a whole by opening the door to arbitrarily higher taxes.

Photo Credit: Oregon State University - Flickr


RSC Budget Ends Capital Gains Inflation Tax

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Posted by Alex Hendrie on Wednesday, May 1st, 2019, 2:57 PM PERMALINK

The Republican Study Committee Budget, “Preserving American Freedom,” proposes ending the inflation tax on savings and investment by indexing the calculation of capital gains taxes to inflation.

The budget, proposed by RSC Chairman Mike Johnson (R-La.) and RSC Budget and Spending Task Force Chairman Jim Banks (R-IN), also reduces the top two capital gains tax rates from 20 percent to 18 percent and from 15 percent to 13 percent.

For decades, Americans have paid capital gains taxes on phantom, inflationary gains which unfairly expose taxpayers to additional taxation. According to a 2013 analysis by the Tax Foundation, the average effective inflation indexed rate on capital gains between 1950 and 2012 was 42.5 percent, nearly twice today’s 23.8 percent top capital gains tax rate.

For example, an investor that makes a capital investment of $1,000 in 2000 and sells that investment for $2,000 in 2017 will be taxed for a $1,000 gain at a top capital gains tax rate of 23.8 percent. After adjusting for inflation, the “true gain” is much lower – just $579. (1,000 in 2000 - $1,421 in 2017). 

Ending the taxation of inflationary gains will have clear, immediate economic benefits.

Lowering the capital gains rate would encourage the formation of more capital and would result in the creation of more jobs. In turn, worker productivity and wages would be higher. 

Indexation would free up “sticky capital”—buildings, land, stocks—that are held by individuals or businesses rather than sold and put to higher and better use because much of the “capital gain” is inflation and the high capital gains tax discourages mobility of capital. The value of all property in America would increase.

In addition, recent history shows that reducing the tax on capital gains increases short-term federal revenues by creating an unlocking effect, where pent-up gains they had built up over time are realized at greater rates than they would be if the tax was not changed.

Treasury has the legal authority to index the calculation of capital gains taxes to inflation.

While it is unlikely that Congress will pass indexing legislation, the Treasury department also has the authority to re-define cost basis in an investment in such a way that the inflation tax on savings can be eliminated, based on legal scholarship going back decades.

Under the precedent set by the Supreme Court in Chevron U.S.A. v. National Resources Defense Council (1984), the ability of Treasury to add an inflation adjustment hinges on whether a new definition of “cost” is plausible. Currently, the capital gains tax is calculated as the difference between the cost of the asset and the sale price of the asset.

While in this context, “cost” is commonly understood to mean historical cost, this definition is not explicitly enshrined in law and Treasury has utilized regulatory discretion in the past. For instance, in 1918, Treasury decided that an asset’s cost was not strictly purchase price but was purchase price less depreciation and depletion taken by the taxpayer prior to sale.

Recent legal precedent proves that there is precedent for the term “cost” to include inflation. For instance, in Verizon v. FCC (2002) the Supreme Court affirmed that the term “cost” was ambiguous and the use of historical cost was not required by law.  National Cable & Telecommunications Ass’n v. Brand X Internet Services (2005), affirmed the right of an agency to interpret an ambiguous provision of the law, while in Mayo Foundation for Medical Education & Research v. United States (2011), the Supreme Court affirmed that the Chevron doctrine applies to Treasury regulations.

There is strong support for ending the inflation tax.

  • President Trump stated last year that he was "very strongly" considering a decision to index capital gains to inflation. 
  • Larry Kudlow, the President’s Chief Economic Advisor, has urged the President to end the inflation Tax in a CNBC column, describing the policy as a way to “spark a wave of prosperity.”
  • Treasury Secretary Steven Mnuchin also said that the administration is considering the policy.
  • Current and former members of Congress, including Vice President Mike Pence support indexing capital gains taxes to inflation. Pence introduced legislation in 2007 with 88 co-sponsors including now-Office of Management and Budget Director Mick Mulvaney, House Speaker Paul Ryan (R-Wis.), and House Ways and Means Chairman Kevin Brady (R-Texas).
  • Senator Ted Cruz (R-Texas) and Congressman Devin Nunes (R-Calif.) introduced legislation last year to index capital gains taxes to inflation. This legislation is supported by Senator Pat Toomey (R-Pa.) and Freedom Caucus Chairman Mark Meadows (R-N.C.)
 

Photo Credit: GotCredit


RSC Budget Builds on the Success of GOP Tax Cuts

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Posted by Alex Hendrie on Wednesday, May 1st, 2019, 2:55 PM PERMALINK

Despite controlling the House of Representatives, Democrats have failed to vote on or even release a budget for Fiscal Year 2020.

In contrast, conservatives led by Republican Study Committee Chairman Mike Johnson (R-La.) and RSC Budget and Spending Task Force Chairman Jim Banks (R-IN) have a vision to restore the nation’s fiscal health and build on the success of the GOP tax cuts.

This budget, entitled “Preserving American Freedom,” reduces taxes by $1.88 trillion, equating to almost $15,000 in tax reduction per family. Most notably, the budget calls for further individual tax reduction, enacts pro-growth policies, indexes capital gains taxes to inflation, and repeals distorting tax provisions.

Strengthens Individual Tax Cuts

The TCJA dramatically reduced taxes for American families with 90 percent of Americans seeing increased take-home pay. For instance, a family of four with annual income of $73,000 (median family income) will see a tax cut of more than $2,058, a 58 percent reduction in federal taxes. 

However, arcane Senate procedure and the refusal of Democrats to support tax cuts meant that the individual provisions in the Tax Cuts and Jobs Act could not be made permanent. If Congress does nothing, these important tax cuts will sunset in 2026. 

The budget addresses this by making individual tax cuts from the TCJA permanent:

  • The doubling of the standard deduction to $12,000 and $24,000 for a family. 
  • The reduction of nearly every individual income tax bracket.
  • The doubling of the child tax credit to $2,000 Child Tax Credit.
  • A 20% deduction for pass-through businesses (LLCs, partnerships, S-corporations etc.)
  • An increase in the threshold that the Alternative Minimum Tax hits individuals so that it kicks in at $1 million of annual income.


The budget also fully repeals the death tax and reduces the bottom two tax brackets from 10 percent to 9.5 percent and from 12 percent to 11 percent.

Indexes Capital Gains Taxes to Inflation and Strengthens Family Savings

The RSC budget proposes ending the inflation tax on savings and investment by indexing the calculation of capital gains taxes to inflation.

For decades, Americans have paid capital gains taxes on phantom, inflationary gains which unfairly expose taxpayers to additional taxation. According to a 2013 analysis by the Tax Foundation, the average effective inflation indexed rate on capital gains between 1950 and 2012 was 42.5 percent, nearly twice today’s 23.8 percent top capital gains tax rate.

Lowering the capital gains rate would encourage the formation of more capital and would result in the creation of more jobs. In turn, worker productivity and wages would be higher. 

The budget also reduces the top two capital gains tax rates from 20 percent to 18 percent and from 15 percent to 13 percent, and creates Universal Savings Accounts, allowing taxpayers to save $10,000 a year tax free that can be withdraw tax free any time, for any reason.

Builds on the Success of Pro-Growth Tax Reform

In addition to individual tax reduction, the RSC budget also promotes strong economic growth. The budget makes 100 percent expensing permanent, which gives businesses a zero percent rate on new investments. 

Under the pre-TCJA system, businesses were forced to deduct, or “depreciate” the cost of new investments over multiple years as depending on the asset they purchase, as dictated by complex and arbitrary IRS rules. 

Full business expensing is the right tax treatment – it encourages investment and increases productivity, leading to stronger economic growth and the creation of new jobs.

The budget also makes current law restrictions on interest deductibility permanent. Businesses can currently deduct interest to the extent it is below 30 percent of EBITDA (earnings before interest, tax, depreciation and amortization.) Starting in 2022, the deduction for net interest expense is narrowed so that it is based on a corporation’s earnings before interest and tax (EBIT).

The existing EBITDA interest limitation is consistent with the limitations imposed by foreign competitors and should be made permanent.

Finally, the RSC budget repeals a number of distortionary tax provisions. For instance, the state and local tax deduction is fully repealed under the budget ending the federal tax subsidization of high state taxes.

Photo Credit: GotCredit


Senate Should Pass Bilateral Tax Treaties

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Posted by Alex Hendrie on Tuesday, April 30th, 2019, 9:00 AM PERMALINK

Update (7/16/19): The Senate is set to take up four tax treaties this week: bilateral treaties with Spain, Switzerland, Japan, and Luxembourg. ATR urges passage of each treaty. 

For the past 80 years, the U.S. has pursued bilateral tax treaties with foreign trading partners.

These treaties promote investment and certainty for American businesses operating abroad by mitigating double taxation on investment.

Although the U.S. is part of roughly 60 such treaties, there are several pending before the U.S. Senate that must be approved including treaties with Chile, Hungary, Japan, Luxembourg, Poland, Spain, and Switzerland.

These seven countries invest $1.2 trillion in foreign investment in all 50 states, so hundreds of thousands of jobs are directly or indirectly tied to ratification of these treaties. 

They should be swiftly taken up and ratified by the Senate through unanimous consent, as previous treaties have been.

Tax Treaties Reduce Taxes for American Businesses and Foreigners Investing in the U.S.

Tax treaties reduce withholding taxes on a reciprocal basis when U.S. taxpayers invest overseas and when foreign taxpayers invest in the U.S.

They protect against double taxation by clarifying which country has the right to tax types of income such as interest, dividends, and royalty income. This promotes economic efficiency by allowing U.S. businesses to operate overseas and grants certainty to foreign investors doing business in the U.S.

Each treaty will be substantially beneficial to American businesses. For instance, the proposed treaty with Chile is an new treaty that will help American businesses compete in South America. This agreement is especially important because Chile has a higher corporate rate for businesses from countries that it does not have a tax treaty with.

Other treaties, such as the proposed treaties with Hungary and Poland, update treaties that were ratified decades ago in order to stimulate increased investment with the U.S.

Tax Treaties Are Consistent with the Fourth Amendment

While some have raised concerns that the pending tax treaties do not contain adequate Fourth Amendment protections,  the standards in these treaties are similar to domestic U.S. law and are identical to existing treaties.

They contain provisions allowing the sharing of taxpayer information only under certain, clearly defined circumstances and contain stringent controls that explicitly prevent information sharing for non-tax purposes and safeguards against unlawful disclosure.

In addition, these treaties are unrelated to the broad and burdensome information exchange provisions contained within the Foreign Account Tax Compliance Act (FATCA).

The Senate must move quickly to pass all seven tax treaties. Failure to ratify the pending tax treaties could leave the U.S. behind by making it harder for American businesses to operate overseas and jeopardize new investment opportunities into the U.S.

 

Photo Credit: Prayitno


Open Letter to Congress: 50 Groups and Activists Oppose Foreign Reference Pricing Legislation

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Posted by Alex Hendrie on Tuesday, April 30th, 2019, 6:00 AM PERMALINK

In a letter to members of Congress, Americans for Tax Reform led a coalition of 50 groups and activists in opposition to any legislation that would impose foreign price controls on American medicine.

Click here to read the full letter. 

Foreign reference pricing legislation has been introduced by Senator Rick Scott (R-Fla.) and co-sponsored by Senator Josh Hawley (R-MO). Similar legislation has been introduced by self-avowed socialist Senator Bernie Sanders (I-Vt.) and Progressive Caucus Vice Chair Ro Khanna (D-Calif.)

Both pieces of legislation attempt to artificially lower the cost of lifesaving medicine using government force. Foreign countries often use a range of market-distorting tools to lower the cost of drugs. These proposals are similar to the International Pricing Index plan released by the Department of Health and Human Services.

Importing foreign price controls on medicine would reduce prescription drug access for American health care consumers. Foreign reference pricing would also suppress market competition, innovation, and investment. Congress should reject any legislation that attempts to implement foreign reference pricing.

Read the full letter here or below.

Dear Member of Congress:

We write in opposition to proposals that import foreign price controls on medicines into the U.S. through international reference pricing.

Reference pricing legislation has been introduced by Senator Rick Scott (R-Fla.) and co-sponsored by Senator Josh Hawley (R-MO). Similar legislation has been introduced by self-avowed socialist Senator Bernie Sanders (I-Vt.) and Progressive Caucus Vice Chair Ro Khanna (D-Calif.).

Both bills are similar – they reference price U.S. drugs based on the prices in Canada, the United Kingdom, France, Germany, and Japan.

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.

We 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.

These pieces of legislation are similar to the International Pricing Index proposal released by the Department of Health and Human Services. 

This proposed payment model modifies the reimbursement rate for Medicare Part B drugs so that it is calculated based off the prices set by 14 countries.

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.

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.

This is not hypothetical. As noted in a study by the Galen Institute, roughly 290 new medical substances were launched worldwide between 2011 and 2018. Of these medicines, the U.S. had access to 90 percent.

In contrast, foreign countries have access to far fewer. The United Kingdom had 60 percent of medicines, Japan had 50 percent, and Canada had just 44 percent.

The U.S. is a world leader in research & development because the 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.

The administration has 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.”

Instead of fighting these price controls, we are concerned that both the Sanders-Khanna legislation and the Scott-Hawley legislation adopts them.

Proposals to import foreign price controls will suppress competition and innovation, harm American competitiveness and investment, and should be rejected by Congress.

Sincerely,

Grover Norquist
President, Americans for Tax Reform

James L. Martin
Founder/Chairman, 60 Plus Association

Saulius “Saul” Anuzis
President, 60 Plus Association

Lisa Nelson
CEO, ALEC Action

Dick Patten
President, American Business Defense Council

Phil Kerpen
President, American Commitment

Steve Pociask
President/CEO, The American Consumer Institute

Michi Iljazi
Director of Government Affairs, American Conservative Union

Dee Stewart
President, Americans for a Balanced Budget

Rick Manning
President, Americans for Limited Government

Kevin Waterman
Chair, Annapolis Center-Right Coalition

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 J. Pitts.
President, Center for Medicine in the Public Interest

Iain Murray
Vice President for Strategy, Competitive Enterprise Institute

James Edwards
Executive Director, Conservatives for Property Rights

Matthew Kandrach
President, Consumer Action for a Strong Economy

Fred Roeder
Health Care Economist/Managing Director, Consumer Choice Center

Yaël Ossowski
Deputy Director, Consumer Choice Center

Joel White
President, Council for Affordable Health Coverage

Thomas Schatz
President, Council for Citizens Against Government Waste

Katie McAuliffe
Executive Director, Digital Liberty

Rick Watson
Co-Chair, Florida Center-Right Coalition

Adam Brandon
President, FreedomWorks

George Landrith
President, Frontiers of Freedom

Grace-Marie Turner
President, Galen Institute

Naomi Lopez Bauman
Director of Healthcare Policy, Goldwater Institute

Rodolfo E. Milani
Trustee, Hispanic American Center for Economic Research (HACER)

Mario H. Lopez
President, Hispanic Leadership Fund

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

Seton Motley
President, Less Government

Charles Sauer
President, Market Institute

Ted Tripp
Chair, Massachusetts Center-Right Coalition

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

Pete Sepp
President, National Taxpayers Union

William O’Brien
Former Speaker, New Hampshire House of Representatives
Co-Chair, New Hampshire Center-Right Meeting

Doug Kellogg
Director, Ohioans for Tax Reform

Jeff Kropf
Executive Director, Oregon Capitol Watch Foundation

Sally Pipes
President, Pacific Research Institute

Lorenzo Montanari
Executive Director, Property Rights Alliance

Paul Gessing
President, Rio Grande Foundation

Karen Kerrigan
President & CEO, Small Business & Entrepreneurship Council

David Williams
President, Taxpayer Protection Alliance

Sara Croom
Executive Director, Trade Alliance to Promote Prosperity

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

Photo Credit: Matt Wade


H&R Block: Taxes Down 25 Percent This Year

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Posted by Alex Hendrie on Thursday, April 11th, 2019, 4:35 PM PERMALINK

Biweekly paychecks have increased by $50 per check​

Taxes are down 24.9 percent on average following passage of the Tax Cuts and Jobs Act, according to a report released today by H&R Block based on their clients’ tax returns.

The report states: “overall tax liability is down 24.9 percent on average.”

Tax refunds are also up, contrary to the line being pushed by Democrats and the establishment media. “Refunds are up 1.4 percent,” according to the H&R Block report.

The GOP’s Tax Cuts and Jobs Act reduced taxes for Americans at every income level. The majority of this tax relief has been felt by Americans in the form of higher paychecks throughout the year.

Biweekly paychecks went up by $50, as noted by the report:

“With tax liability down nearly $1,200 on average, but refunds up just $43, an average of $1,156 went into paychecks during the year, or about $50 a biweekly paycheck starting in March of 2018.

The report also breaks down change in tax liability by state. Taxpayers in every state have seen average tax reduction of at least 18 percent:

“all 50 states and D.C. saw their average tax liability decrease anywhere from 18.0 percent to 29.1 percent.”

This data reinforces the success of the Tax Cuts and Jobs Act, which has also grown the economy, made America a more competitive place to do business, and simplified tax filing for millions of Americans.

See also: 800 examples of pay raises, bonuses, 401(k) match increases, expansions, benefit increases, and utility rate reductions due to the Republican tax cuts.

 

Photo Credit: Gage Skidmore


List of Tax Hikes in Sanders “Medicare for All” Plan

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Posted by Alex Hendrie on Wednesday, April 10th, 2019, 5:36 PM PERMALINK

Self-avowed socialist and Democrat presidential candidate Bernie Sanders has released his proposal for a government takeover of the American healthcare system. The proposal, which Sanders calls “Medicare for All,” replaces private insurance with government as the single payer.

Rather than including financing mechanisms in the legislation, Sanders released a set of tax hike “options” that would be paired with the proposal.

These tax hikes would hit American families at every income level and businesses large and small. The proposal increases taxes by $14.3 trillion over the next decade, according to an estimate of Americans for Tax Reform.

This would pay for roughly half of the cost of single payer healthcare, which costs between $32 trillion and $36 trillion according to estimates.

The list of proposed tax hikes are below:

A New, 4 Percent Employee Payroll Tax

Sanders would impose another 4 percent payroll tax on employees which he calls an “income-based premium paid by employees.”

According to Sen. Sanders’ estimates, this increases taxes on American families and individuals by $3.9 trillion.

A New, 7 Percent Employer Payroll Tax

Sanders would impose another 7 percent payroll tax which on employees which he calls an “income-based premium paid by employers.”

This is a $3.5 trillion tax increase over ten years.

Eliminating Health Tax “Expenditures”

The proposal would ban employer-provided insurance and repeal the deduction for health care, increasing taxes on businesses by over $3 trillion over a decade.

This proposal would also repeal Health Savings Accounts, which are utilized by an estimated 25 million American families. These tax advantaged savings accounts largely benefit the middle class – roughly half of all HSAs are owned by families earning between $60,000 and $200,000.

The deduction for cafeteria plans and the medical expense deduction is also eliminated.

In all, Sanders estimates this will increase taxes on families and businesses by $4.2 trillion.

70 percent Top Tax Bracket for Ordinary Income and Capital Gains Income

This would give America the highest income tax rate in the world.

According to the Tax Foundation, a top 70 percent rate for ordinary income and capital gains income above $10 million will raise $51.4 billion over a decade. After accounting for macroeconomic effects, the proposal would actually cost the government $63.5 billion because of the proposal suppresses investment and economic growth.

77 Percent Death Tax

Sanders proposes raising the death tax rate to 77 percent for inheritances. Under the proposal, the death tax would kick in at $3.5 million with a rate of 45 percent.

Currently, the death tax applies to estates over $11 million and applies a 40 percent rate.

This proposal will increase taxes by $315 billion over ten years.

Wealth Tax
Sanders proposes an annual wealth tax of 1 percent kicking in above $21 million in assets. Sanders estimates the proposal will increase taxes by $1.3 trillion over ten years.

Bank Tax
Sanders proposes a tax on financial institutions totaling $800 billion over ten years.

Broaden the Self Employment Tax
Sanders would require business owners to report more of their business income as salary, increasing the amount of self-employment tax owed. This would increase taxes by $247 billion over ten years.

Photo Credit: Gage Skidmore


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