Alex Hendrie

Lawmakers Should Reject Harmful "Buy American" Amendments To FY21 NDAA

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Posted by Alex Hendrie on Tuesday, June 23rd, 2020, 9:00 AM PERMALINK

ATR President Grover Norquist has released a letter to the House Armed Services Committee urging lawmakers to reject any "Buy American" amendments to the FY 2021 National Defense Authorization Act (NDAA). 

Some lawmakers are using the COVID-19 pandemic as an excuse to push Buy American mandates, which would place unnecessary sourcing requirements on medicines and medical inputs purchased with federal dollars. 

If implemented, Buy American mandates will disrupt the medical supply chain, threatening timely access to medicines and leading to retaliatory actions from trading partners. During this unprecedented health crisis, a Buy American policy could even threaten our ability to adequately respond to the pandemic.

Click here to read the full letter. 

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ATR Urges Republicans to Oppose COVID-19 Government Healthcare Expansion

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Posted by Alex Hendrie on Monday, June 15th, 2020, 8:00 AM PERMALINK

In a letter to Senate Majority Leader Mitch McConnell (R-Ky.) and Senate Finance Committee Chairman Chuck Grassley (R-Iowa), ATR urged Republicans to reject efforts by far-left politicians to allow COVID-19 to lead to a government takeover of healthcare.

Liberal politicians are exploiting the pandemic to push government-run healthcare, an outcome that would move us closer toward the Left’s ultimate goal of socialist, single payer healthcare.

If the left is successful in expanding government healthcare, Americans will face higher taxes, healthcare shortages, and a loss of their quality, private health insurance.

If lawmakers decide to pursue another Coronavirus package, they should consider a temporary, targeted proposal to help recently laid-off Americans retain their employer provided health insurance through a COBRA subsidy. 

This would be a vastly superior alternative to expanding government healthcare programs like Obamacare or Medicaid.

It would also be a way to help Americans that have lost their jobs instead of extending the $600 supplemental pandemic unemployment program.

The full letter can be found here.

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ATR Supports the Small Business Expense Protection Act

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Posted by Alex Hendrie on Thursday, June 4th, 2020, 9:39 AM PERMALINK

ATR President Grover Norquist today released a letter in support of S. 3612, the “Small Business Expense Protection Act.”

This legislation has been introduced by Senator John Cornyn (R-Texas), Senate Finance Committee Chairman Chuck Grassley (R-Iowa), Finance Ranking Member Ron Wyden (D-Ore.), Senator Tom Carper (D-Del.), and Senate Small Business Committee Chairman Marco Rubio (R-Fla.).

This legislation restores congressional intent over the Paycheck Protection Program (PPP) by allowing small businesses to deduct business expenses paid using loans received through the program.

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

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

Denying the ability of small businesses to deduct expenses paid with PPP loans will impose an additional tax burden on these businesses that will erode a portion of the financial assistance granted through the program. This will only harm small businesses across the country as they attempt to survive and re-engage in commerce in the wake of the pandemic.  A recent second tranche of PPP loans averaged just $79,000 per business, so the financial assistance businesses receive is relatively modest.

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

Congress should pass the Small Business Expense Protection Act. This legislation will uphold Congressional intent by allowing small businesses to deduct business expenses paid by PPP loans, a measure that will ensure businesses do not face additional taxation from COVID-19 relief measures.

See the full letter here.

Photo Credit: Gabe Skidmore


Trump Admin Allows 401ks to Invest in Private Equity

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Posted by Alex Hendrie on Wednesday, June 3rd, 2020, 4:51 PM PERMALINK

The Trump administration is expanding options for retirement savings by allowing Americans with a 401k to invest in private equity funds.

The Department of Labor (DOL) today announced it is issuing guidance allowing private equity investments to be a component of professionally managed investment funds offered to Americans with a defined contribution benefit plan.

Previously, Americans with a 401(k) were unable to invest in private equity funds, even though this investment option was widely used by public pension funds and large investors. The Trump administration’s deregulatory action will open up private equity investment to the roughly 80 million American families and individuals that actively participate in a 401k or other defined benefit plan.

“The Trump Administration’s decision to allow Americans to invest in private equity with their 401(k)s is a big win that will give every family saving for retirement more options,” said Grover Norquist, President for Americans for Tax Reform. “Big pension plans already had this option. Now everyone does.”

Photo Credit: Gage Skidmore


ATR Leads Coalition Letter Urging Deferral of Alcohol Excise Taxes

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Posted by Alex Hendrie on Wednesday, June 3rd, 2020, 5:00 AM PERMALINK

Americans for Tax Reform today released a coalition letter signed by over 30 organizations and activists urging Treasury Secretary Steven Mnuchin to delay excise tax payments for beer, wine, and distilled spirit manufacturers and importers through the end of 2020. 

As the letter notes, COVID-19 has forced the closure of retail establishments, tasting rooms, restaurants and bars, a situation that has weakened consumer spending, and threatened the livelihood of small businesses. This decline in commerce has harmed alcohol manufacturers and importers, especially smaller breweries, distillers, and wineries. Delaying payments of excise taxes is a modest step toward helping manufacturers and importers:

“Deferring excise tax payments will help these businesses receive much needed emergency liquidity and allow them to prioritize paying workers and meeting expenses over making tax payments. This is a modest step toward helping businesses, as these taxes will eventually be repaid.”

Treasury has already utilized its legal authority to postpone excise taxes for the second quarter of 2020. Moving forward, this should be extended through the end of 2020.

In addition, it is imperative that any excise tax deferral apply equally to importers. As the letter notes, there is no reason to exclude or limit importers given they face the same excise taxes as products manufactured in the U.S, and face the same economic challenges.

The Q2 excise tax deferment imposed burdensome requirements on importers by requiring “significant financial hardship,” which U.S. Customs and Border Protection defined as a loss of more than 40 percent in revenue. This is the wrong approach – excise tax deferral should be available equally to all alcohol manufacturers and importers.

Deferring excise tax payments for distillers, breweries and wineries through the end of the year is a simple step that will help manufacturers and importers as they look to survive the damage caused by COVID-19.

The full letter can be found here.

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Trump Admin Releases Plan to Reduce Insulin Costs

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Posted by Alex Hendrie on Tuesday, June 2nd, 2020, 12:16 PM PERMALINK

Last week, the Trump administration announced a plan to lower out of pocket insulin costs for American seniors. This proposal will drive significant savings to millions of seniors through negotiation with the private sector, not price controls.

Under the proposal, released by the Centers for Medicare and Medicaid Services (CMS), 1,750 Medicare Part D plans and Medicare Advantage Prescription Drug Plans have agreed to offer a range of insulin products at a maximum copay of $35 for a month’s supply.

According to CMS, seniors in all 50 states, the District of Columbia, and Puerto Rico will have access to a plan that offers insulin at this lower cost. Under the model, the average senior could see savings of 66 percent, or $446 in annual out of pocket costs. Over 3.3 million seniors take one or more forms of insulin, so this proposal could deliver significant savings.

This proposal also addresses a key flaw in the Part D coverage benefit. Currently, seniors can have different out of pocket costs depending on which phase of the coverage benefit they are in. The administration’s proposal will fix this and give seniors a stable copay for insulin regardless of which benefit phase they are in. This will be especially beneficial for seniors that are in the coverage gap threshold (between $4,020 and $9,719 in spending), who have to pay 25 percent of the costs of insulin and other medicines.

This proposal is a welcome example of the government working with the private sector to lower prices, instead of relying on government rules or mandates to dictate prices.  88 plan sponsors and major insulin makers Novo Nordisk, Eli Lilly, and Sanofi have signed up for this model, so there is significant support for the proposal amongst industry stakeholders.

In addition, this proposal draws a stark contrast with healthcare plans proposed by members of Congress that would expand the size of government. For instance, House Speaker Nancy Pelosi (D-Calif.) has a plan to impose a 95 percent excise tax on manufacturers that don’t accept government price setting. This proposal would harm American innovation and medical development, leading to fewer cures, and less R&D in the U.S. It would also serve as a stepping stone toward moving the American healthcare system toward a single payer, socialist system, a long-held goal of the Left.

The administration’s proposal to reduce insulin costs for seniors should be applauded. Instead of adopting price controls, this proposal builds upon the success of Medicare Part D by having the government facilitate competition between the private sector. This is the right way to reduce costs in America’s healthcare system and should be a model for future reform.

Photo Credit: Gage Skidmore


Trump Admin Finalizes Schedule B Regulatory Relief Rule

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Posted by Alex Hendrie on Wednesday, May 27th, 2020, 12:10 PM PERMALINK

Earlier this week, the Trump administration finalized a rule protecting free speech and donor privacy. Under the rule, many nonprofits including 501(c)(4)s, 501(c)(5)s, and 501(c)(6)s would no longer be required to submit a Schedule B form to the IRS.

President Trump, Treasury Secretary Mnuchin, and leaders in Congress including Senate Majority Leader Mitch McConnell (R-KY) and House Minority Leader Kevin McCarthy (R-Calif.) should be congratulated for their work defending free speech. 

Congress first required section 501(c)(3) organizations to send the IRS to personal information of their donors 50 years ago. This information, which includes the names and addresses of donors, is submitted to the IRS on the Schedule B form. The agency later extended this requirement to all other tax-exempt organizations including 501(c)(4)s and 501(c)(6)s.

Schedule B forms are not used for any official purpose and the IRS is prohibited from sharing or disclosing this sensitive information. Instead of serving a legitimate purpose, the disclosure requirement creates needless compliance costs on both non-profits and the IRS.

Ending the collection of Schedule B forms will significantly streamline tax compliance. The Institute for Free Speech estimates that nonprofits would save about $63 million per year compliance costs if Schedule B were fully repealed. 

Opponents of the rule have falsely stated that it allows a flood of “foreign dark money” into the political system. This is not true. As Secretary Mnuchin has noted in the past, this proposal does not limit transparency as the same information will be available to the public as before.

There are already measures in place to track foreign donations, and it is highly unlikely that anyone will admit to funneling illegal money on the form. Even if the IRS did suspect laws were being broken, it has no authority to share the information it collects with the FCC and the DOJ, the two agencies with the ability to enforce campaign finance laws.

Ending the collection of Schedule B forms will instead remove a tool of the left to chill political speech.

Under the Obama administration, there were several cases where agency officials leaked the sensitive information contained on Schedule B forms for political purposes, such as leaking of the schedule B belonging to the National Organization for Marriage.

The IRS record of protecting taxpayers is poor in this space – a 2016 report by the Government Accountability Office warned that the IRS may still be unfairly targeting non-profits “based on an organization’s religious, educational, political, or other views.”

Ending the collection of sensitive taxpayer data for non-profits is a huge victory for free speech and will stop future administrations from targeting these organizations.

Democrats have already tried to block this proposal through the Congressional Review Act process and will undoubtedly continue trying to oppose it in Congress.

Moving forward, further efforts by Democrats to oppose this rule in Congress should be rejected. Instead, lawmakers should follow the lead of the administration and ensure that the prohibition on collecting Schedule B forms is expanded to all non-profits and codified in law.

Photo Credit: Gage Skidmore


Democrats Supported 5-Year Net Operating Loss Carrybacks Before They Opposed Them

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Posted by Alex Hendrie on Tuesday, May 19th, 2020, 2:31 PM PERMALINK

House Democrats and the media are taking aim at a tax cut enacted in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The tax cut allows businesses to carryback net operating losses (NOLS) incurred in 2018, 2019, and 2020 back five years. Democrats now want to retroactively impose tax increases on these struggling companies.

However, Democrats used to vocally support this tax cut. In 2009, Congress passed and President Obama signed into law the “Worker, Homeownership, and Business Assistance Act of 2009,” which allowed businesses to carryback losses incurred by businesses in 2008 and 2009 back five years. Many Democrats including House Speaker Nancy Pelosi (D-Calif.) spoke in support of the NOL provision on the House Floor.

Despite this past support, Pelosi's “Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act,” seeks to repeal this tax cut by preventing losses from being carried back before 2018 and imposing a number of other restrictions on NOLs, a move that will deny businesses liquidity, speed up job losses, and endanger the economic recovery.

[See more: Pelosi Proposes Retroactive Tax Increase on Struggling Companies]

Meanwhile, the press is incorrectly arguing that NOLs are a “handout for big business”. For instance, a recent Bloomberg article argues that this tax cut was a “stealth bailout” for oil and gas companies.

This is not true. As leading Democrats noted a decade ago, NOL carrybacks are available to any industry, help provide businesses emergency liquidity in an economic downturn, and are largely a timing shift in taxes paid, not a bailout.

A list of Democrat quotes in support of NOLs are below:

The Obama White House  

“Business losses incurred in 2008 or 2009 can now be used to recoup taxes paid in the prior five years. This provision is a fiscally responsible economic kick-start, putting $33 billion of tax cuts in the hands of businesses this year when they need it most, while enabling Treasury to recoup the majority of that funding in the coming years as these businesses regain their strength and resume paying taxes.”

Speaker Pelosi

“The bill also has the net operating loss carryback, which businesses tell us is necessary for them to succeed and to hire new people, and also to mitigate some of the damage that has been done to the economy from past policies.”

Ways and Means Chairman Richie Neal (D-Mass.)

“Finally, the bill provides net operating loss relief for many businesses that have been simply hanging on in this country over the last year. It is particularly important to retailers. Based on a bill that I filed with Representative Tiberi which became the basis for this provision, this relief for businesses, big and small, will provide quick capital at a time when it is currently impossible to find.”

Former Ways and Means member Rep. Shelley Berkley (D-Nev.)

“Additionally, this bill includes important tax provisions, extending and expanding the homebuyer tax credit and allowing businesses to carryback losses in 2008 or 2009 for 5 years… The net operating loss provision will help keep businesses afloat during the tough times, preventing further layoffs.”

Former Ways and Means Chairman Sander Levin (D-Mich.)

“As to growth, there are two provisions here. I am surprised that the previous speaker says nothing is being done to create jobs when we have two provisions here that are aimed to do that. The homeowners’ tax credit is extended and is also expanded, and the net operating loss provision is inserted here to create jobs. This is a bill that combines equity and, hopefully—and I think it will—create jobs.”

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Treasury Should Defer Alcohol Excise Tax Payments for 2020

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Posted by Alex Hendrie on Tuesday, May 19th, 2020, 10:24 AM PERMALINK

The Coronavirus pandemic has caused extensive damage to the American economy, businesses and workers.

Almost 37 million Americans have filed for unemployment in the past eight weeks and Federal Reserve Chair Jerome Powell has said the unemployment rate could reach 25 percent during the peak of the pandemic. 

Alcohol manufacturers are not immune from this damage. The slowdown in commerce and forced closure of restaurants and bars has hit the industry hard. Smaller wineries, distilleries, and breweries are particularly vulnerable to collapse, with some fearing thousands of these businesses may go under.

Fortunately, there are simple steps that the Trump administration can take to help the industry without massive bailouts, like deferring payment of excise taxes on wine, beer, and distilled spirits through the end of the year.

This will provide breweries, distillers, and wineries with liquidity so they can prioritize paying workers and meeting other expenses over tax payments.

The Treasury has already postponed these taxes for the second quarter of 2020 due to the adverse impact of COVID-19 on businesses, and is just one of many tax deadlines that the Trump administration has delayed. Extending this deferral through the end of the year will help alcohol manufacturers as the economy starts to reopen in the coming weeks and months.

It is almost important to note that these taxes will be repaid. Ideally, an excise tax deferral could be modeled off the recently enacted payroll tax deferral which permits businesses to delay paying a portion of employer payroll taxes through the end of the year with half repayable in 2021 and the other half in 2022. 

However, this deferral should apply equally to imports, given they face the same excise taxes as products manufactured in the U.S, and face the same economic challenges.

The Q2 excise tax deferment imposed burdensome requirements on importers by requiring “significant financial hardship,” which US Customs and Border Protection defined as a loss of more than 40 percent in revenue. Future excise tax deferral should be available equally to all alcohol manufacturers and importers.

Deferring excise tax payments should not be viewed as a handout to the industry because these taxes are discriminatory. Federal excise taxes on wine, beer, and spirits are a form of double taxation as they are imposed in addition to federal income taxes as well as state and local taxes. Excise taxes are widely acknowledged to be economically inefficient and increase prices for consumers.

An excise tax deferral for distillers, breweries and wineries through the end of the year is a simple step that will help manufacturers as they look to survive the damage caused by COVID-19.

It will provide liquidity for taxpayers and will build upon past action taken by the Trump administration to mitigate the economic pain being felt by American workers and businesses.


Pelosi Proposes Retroactive Tax Increase on Struggling Companies

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Posted by Alex Hendrie on Thursday, May 14th, 2020, 1:29 PM PERMALINK

House Speaker Nancy Pelosi (D-Calif.) is proposing a retroactive tax increase on struggling American businesses in her recently released “Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act.” If enacted into law, it will speed up job losses by denying businesses the liquidity they need to continue paying workers and keep the lights on.

The bipartisan Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted in March allowed corporations to carry back net operating losses (NOLs) incurred in 2018, 2019, and 2020 back five years. It also allowed businesses organized as passthrough entities to use NOLs to offset against non-business income.

These provisions were designed to help workers by ensuring businesses had cash to meet expenses and make payroll. This legislation was also supported unanimously by Democrats in the House and Senate.

Pelosi and House Democrats are now trying to retroactively reverse this policy and restrict net operating losses.

The Pelosi bill contains several restrictions. First, it prevents any businesses from carrying back losses before 2018.

This would mean 2018 losses could not be carried back at all, 2019 losses could be carried back just one year (to 2018) and 2020 losses could be carried back just two years (2018 and 2019). The CARES Act provision allowing passthroughs to offset business losses against non-business income would also be suspended.

In addition, the Pelosi bill prohibits businesses from taking NOLs if they make “excessive” stock buybacks and dividend payments. This restriction is triggered if the total amount of dividends and repurchased shares since 2018 exceeds 5 percent of the value of the stock in the last day of any taxable year. The average annual dividend yield of a S&P 500 company is around 2 percent so this threshold can easily be triggered by dividend payments alone.

Finally, the bill denies carrybacks if a company triggers section 162(m) or 280(g) – provisions that limit the ability of businesses to deduct compensation payments to executives.

These provisions are all effective retroactive to enactment of the CARES Act.

There is nothing controversial about expanding net operating loss carrybacks. Variants of this proposal have been enacted into law repeatedly over the past 20 years by Republican and Democrat presidents. For instance:


President Obama even highlighted NOL expansion as a “fiscally responsible economic kick-start,” in a 2009 press release:

“The Economic Recovery Act included a provision that allowed small businesses to count their losses this year against the taxes they paid in previous years. "Today, the President extended that benefit for an additional year and expanded it to medium and large businesses as well. Business losses incurred in 2008 or 2009 can now be used to recoup taxes paid in the prior five years. This provision is a fiscally responsible economic kick-start, putting $33 billion of tax cuts in the hands of businesses this year when they need it most, while enabling Treasury to recoup the majority of that funding in the coming years as these businesses regain their strength and resume paying taxes.”

Some have raised concerns that allowing businesses to carryback losses before 2018 will provide a windfall or excessive benefits because businesses will be able to apply losses incurred today from the post-TCJA 21 percent rate against the pre-TCJA 35 percent rate that existed in 2017.

First, it is important to note that there is precedent for this. In 2002, Congress allowed passthroughs to carryback losses despite the fact that the tax rates had been reduced the year before through the Economic Growth and Tax Relief Reconciliation Act.

In addition, this criticism does not change the fact that businesses desperately need help surviving the pandemic, which has restricted commerce and forced businesses to shutter. In the past eight weeks, almost 37 million people have filed for unemployment and the unemployment rate has risen from a 50-year low of 3.5 percent earlier this year to 14.7 percent in April. The Congressional Budget Office now projects that GDP will decline by 12 percent during the second quarter of 2020. 

Dozens of businesses are already using NOLs and other tax provisions enacted by the CARES Act to help them survive the damage caused by COVID-19, according to a report from the Wall Street Journal.

If these tax cuts are taken away, job losses and business failures will only accelerate.

Rather than denying tax cuts to struggling businesses, Pelosi and Democrats should focus on enacting proposals that help businesses weather the Coronavirus storm so that workers can keep getting paid and keep their jobs.

Photo Credit: Gage Skidmore


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