Alexander Hendrie

Senate Should Pass Debt Management and Fiscal Responsibility Act

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Posted by Alexander Hendrie on Wednesday, July 13th, 2016, 8:00 AM PERMALINK

Senator Orrin G. Hatch (R-Utah) will this week introduce the “Debt Management and Fiscal Responsibility Act.” America is more than $19 trillion in debt and this number shows no sign of decreasing. If a President asks Congress to raise the debt ceiling, they must also show a commitment to addressing the long term debt crisis.

This legislation forces this by requiring the administration provide Congress with detailed information on the federal debt and propose solutions to address the crisis as a condition of raising the debt limit. Similar legislation introduced by Congressman Kenny Marchant (R-Texas) passed the House last year on a bipartisan vote of 267-151. Given the support in the House, ATR urges all Senators to co-sponsor and swiftly pass this commonsense legislation.

The Debt Management and Fiscal Responsibility Act requires the Treasury Secretary to appear before Congressional Committees between 21 and 60 days before the Debt Limit will be reached to provide a detailed report outlining the nation’s financial state and to propose substantive reforms.

First, Treasury must submit a “Debt Report,” containing information on the current state of public debt, including historical levels of debt, the drivers and current composition of debt, and future debt projections.

Second, the legislation requires a “Statement of Intent,” containing short, medium, and long-term solutions the debt crisis, how increasing the debt limit will impact future spending, debt service, and the strength and stability of the U.S. dollar as the international reserve currency.

Third, the Debt Management and Fiscal Responsibility Act requires a “Progress Report,” if the administration comes before Congress for additional debt limit increases in the future. This report must contain information on the status of all recommendations made in the original statement of intent.

The Debt Management and Fiscal Responsibility Act creates a clear, yet comprehensive framework that any administration must follow to reduce federal debt when requesting a debt limit increase. By requiring the submission of a detailed report and comprehensive plan before Congress, this legislation will ensure that increasing the debt ceiling only occurs as part of a framework to reform the nation’s finances and chart a pathway toward fiscal responsibility. ATR urges all Senators to support and co-sponsor this important legislation.

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Obama Admin Lawyers Threatened IRS Employee Testifying About Illegal Obamacare Payments

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Posted by Alexander Hendrie on Thursday, July 7th, 2016, 2:14 PM PERMALINK

Lawyers for the Obama Treasury Department threatened an IRS employee before his testimony to Congressional investigators over the administration’s illegal funding of Obamacare “Cost Sharing Reduction” (CSR) payments. The employee, IRS Chief Risk Officer David Fisher, was threatened with an “overly broad, inapplicable regulation.”

As the report notes on page 145 Mr. Fisher wanted to testify without government lawyers because of concerns that they did not represent his interests:

“One witness, however, did not want agency counsel to accompany him…. Mr. Fisher told Committee staff that he did not believe that Treasury counsel represented his interests and did not wish for them to attend the interview. Mr. Fisher also stated that he had already spoken to Treasury counsel and told them he did not want representatives from that office to attend his interview.”

In a letter to Mr. Fisher, government lawyers explicitly state that the IRS “forbids its employees and former employees from speaking to Congress without explicit permission from the IRS.” The letter references “Touhy regulations” as justification for this prohibition, however these regulations typically do not apply to Congressional information requests, a fact that was not made clear in the letter provided to Mr. Fisher.

As the report notes, this put Mr. Fisher in an untenable situation:

“Congress requested information from him, and he was willing to provide it, but Treasury threatened him with an overly broad, inapplicable regulation.”

Mr. Fisher was eventually subpoenaed by investigators so he could speak freely about both the program and the reasons for the administration’s unprecedented obstruction. As the report notes, his testimony provided key information over the illegal CSR payments:

“The answers he gave in provided more insight into the Administration’s decision-making processes than those of any other individual the committees interviewed with agency counsel present. His answers also shed light onto why the Administration has restricted the testimony of every other witness—going so far as to not letting witnesses answer questions about the names of individuals involved in the decision-making process—and why the Administration has failed to comply with the committees’ document subpoenas.”

The administration went to extreme lengths to hide the truth throughout the entire investigation. Since the House Ways and Means Committee and the House Energy and Commerce Committee launched its investigation, multiple agencies have refused to provide information, selectively applied the law, and even pressured one witness not to testify. As the report notes:

“The Administration successfully limited the testimony of most of their current and former employees by sending Administration counsels to attend the interviews. These counsels instructed witnesses not to provide full and complete answers to the Committees’ questions.”

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Report Uncovers Stonewalling of Illegal Obamacare Payments

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Posted by Alexander Hendrie on Thursday, July 7th, 2016, 9:53 AM PERMALINK

The Obama administration has been illegally funding Obamacare “Cost Sharing Reduction” (CSR) payments for years over the objections of IRS officials, according to a report released today by the House Ways and Means Committee and the House Energy and Commerce Committee. Since Congress launched its investigation, multiple agencies have refused to provide information, selectively applied the law, and even pressured one witness not to testify.

Key findings:

-The administration initially submitted a CSR appropriations request for Fiscal Year 2014, but later withdrew it and began making payments illegally. As the report notes, Obamacare created CSR payments, but they have never been appropriated for. The Constitution explicitly makes clear that the power of the purse lies with Congress and the Executive cannot spend taxpayer money without Congressional approval.

-CSR payments were created as one way to artificially hide the true costs of Obamacare through a web of government spending programs. CSR payments would be given to an insurance company based on the income of an enrollee and the plan they purchased. Assuming certain criteria were met, the insurance company would receive federal dollars as an incentive to keep co-payments, deductibles, and other out of pocket costs low.

-After officials from the Obama Department of Health and Human Services (HHS) withdrew the CSR appropriations request, the administration begun illegally shifting funds from a separate appropriation. The administration has refused to provide the legal memorandum that led to this decision even in the face of Congressional subpoenas.

-IRS officials expressed concern that this method of funding CSR payments was illegal so were briefed on the memorandum. As the report notes in an interview with one IRS official at the meeting, they were not permitted to take notes or keep a copy of the memo:

“We were given a memo to read. We were instructed we were not to take notes and we would not be keeping the memo, we’d be giving it back at the end of the meeting.”

-Following this meeting, IRS officials continued to have concerns that the CSR payments violated federal law and raised concerns with IRS Chief John Koskinen. As the report notes, these concerns were heard, but ignored:

“The IRS officials’ concerns that this course of action violated appropriations law were noted, but not addressed or ameliorated by OMB’s legal memorandum.”

-Shortly thereafter, DoJ and Treasury officials officially approved the decision to use an unrelated appropriation to make CSR payments.

Since Congress launched its investigation, multiple Obama government agencies have undertaken a concerted effort to hide the truth by refusing to provide, or unlawfully redacting documents, refusing to answer questions or allow witnesses to testify, and selectively applying the law. In at least one case, the Obama administration pressured a witness into not revealing information, and in another case the administration prevented a witness from answering questions.

As the report notes:

  • The Department of the Treasury improperly withheld and redacted documents without any valid legal basis to do so.
  • The Department of Health and Human Services improperly withheld documents without any valid legal basis to do so.
  • The Office of Management and Budget improperly withheld documents without any valid legal basis to do so.
  • The Department of the Treasury failed to search for records responsive to the committees’ subpoenas.
  • Treasury used regulations and Testimony Authorizations to prohibit current and former IRS employees from providing testimony to Congress about the source of funding for the CSR program.
  • Treasury officials selectively enforced the law by allowing witnesses to answer certain questions prohibited by the authorizations without objection
  • HHS counsel prevented witnesses from answering substantive questions regarding the CSR, citing the need to protect “internal deliberations” and “confidentiality interests”
  • Witnesses were instructed not to reveal the names of White House and DoJ officials involved in decisions regarding the cost sharing reduction program.
  • The Department of the Treasury pressured at least one witness into following the restrictions set forth in his Testimony Authorization after the witness questioned Treasury’s ability to limit his testimony.
  • OMB prevented a witness from answering factual questions regarding the dates or times of a meeting or conversation, refusing to invoke a legal privilege to justify withholding the information from Congress.


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ATR Supports Fiscal State of the Nation Resolution

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Posted by Alexander Hendrie on Thursday, July 7th, 2016, 2:00 AM PERMALINK

Congressman Jim Renacci (R-Ohio) recently introduced H.Con.Res.140, a resolution calling for the Fiscal State of the Nation. This commonsense resolution requires the Comptroller General of the United States to present a financial report of the United States before a Joint Session of Congress. ATR supports this important resolution and urges all Members of Congress to co-sponsor and support H.Con.Res. 140.

Financial statements for the United States are already compiled, but are typically buried in 300 page reports. As a result, important information regarding the federal government’s assets, liabilities, revenues, expenses, and sustainability of programs are often ignored or missed by Members of Congress, the media, and the public.

The country is $19 trillion in debt and the long-term sustainability of important federal programs remains uncertain. At the same time, billions in taxpayer dollars are wasted on unnecessary or inefficient programs. By requiring an annual update on the long-term financial health of the country, your resolution helps ensure our nation’s finances remain at the forefront of public discussion.

This important financial information is already available but is all too often missed or ignored. ATR urges all Members of Congress to co-sponsor and support this important resolution.


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ATR Submits Comment Opposing Treasury's Proposed Section 385 Regulations

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Posted by Natalie De Vincenzi, Alexander Hendrie on Wednesday, July 6th, 2016, 3:27 PM PERMALINK

ATR President Grover Norquist today submitted a comment in opposition of Treasury’s proposed section 385 debt equity regulations. While these regulations were proposed as a way to halt business inversions, this is clearly not the case as they affect businesses regardless of whether they are inverting.

Instead, these regulations will only make it harder for American businesses to compete. They are unnecessary, will make it harder for our businesses to compete with foreign competitors, will reduce investment in the U.S., and will open the door for the IRS to further abuse its powers.

Debt and equity have been treated differently under the tax code for decades and businesses have structured themselves based on these rules. Altering these rules without adequate expert input as this administration proposes will immediately impact a wide range of common, internal business transactions such as the ability to redistribute cash among subsidiaries to make new investments.

In turn, this will result in extensive compliance and regulatory burdens affecting businesses across all industries. These regulations may result in less money invested in the U.S. economy, slow our already stagnant economic growth, and further encumber job growth. Additionally, the information disclosure requirements created to enforce this rule empower the already dysfunctional IRS to collect an excessive level of new information.

As written, section 385 regulations are an indiscriminate weapon that the federal government can use to restrict and undermine the legitimate business transactions of American companies operating at home and abroad, and foreign companies operating in the U.S.

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House Republican Tax Plan Boosts GDP By 9 Percent, Creates 1.7 Million Jobs

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Posted by Alexander Hendrie on Tuesday, July 5th, 2016, 4:30 PM PERMALINK

The House Republican Tax Reform blueprint would lead to 9.1 percent higher GDP growth, 7.7 percent higher wages, and create 1.7 million new jobs, according to an analysis by Kyle Pomerleau of the Tax Foundation. This pro-growth plan, released under the leadership of Speaker Paul Ryan (R-Wis.) and House Ways and Means Chairman Kevin Brady (R-Texas) cuts taxes for ALL American families and businesses, simplifies the code, promotes strong economic growth, and allows our businesses to better compete against foreign competitors.

According to the Tax Foundation analysis, the plan cuts taxes by $2.4 trillion over the next decade. However, due to the more than 9 percent economic growth, the plan would result in federal revenue losses of just $191 billion over the same period.

On the individual side, the GOP blueprint calls for cutting taxes across the board by consolidating the existing seven tax brackets into three brackets – 12 percent, 25 percent, and 33 percent. The analysis finds that this would result in a $2 trillion tax cut for American families, while also boosting GDP by 1.5 percent.

The plan also cuts the corporate income tax rate from 35 percent to 20 percent and the tax rate on pass-through entities from more than 40 percent to just 25 percent. According to the Tax Foundation, this would cut taxes by more than $1.7 trillion over ten years and directly lead to GDP growth of more than 2 percent.

The tax blueprint also simplifies the system through repeal of the Death Tax (raising $20 billion according to the analysis), repeal of business tax credits (raising $677 billion), eliminating itemized deductions except for homeownership and charitable giving (raising $2.2 trillion), and eliminating the AMT (cutting taxes by $428 billion). While may of these provisions increase taxes in isolation, they are more than offset by corresponding tax cuts in the blueprint.


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Rep. Hudson’s FSGG Amendment Will Block Obama’s Last Minute Regulatory Flurry

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Posted by Natalie De Vincenzi, Alexander Hendrie on Tuesday, July 5th, 2016, 1:56 PM PERMALINK

This week, the U.S. House of Representatives will consider H.R. 5485, the Financial Services and General Government Appropriations Act, introduced by Congressman Ander Crenshaw (R-Fla.). This legislation allocates 2017 federal funding for numerous agencies including the Treasury Department, the IRS, the Securities and Exchange Commission and the FCC.

One amendment (#86), introduced by Congressman Richard Hudson (R-NC) blocks all regulations from being proposed or finalized for the remainder of the Obama administration. ATR supports this important amendment and urges all Members of Congress to vote yes in order to stop Obama’s executive overreach.  

Over the past seven and a half years, the Obama administration has pushed numerous, unnecessary and damaging regulations that have cost billions of dollars. In the first half of this year alone, the administration has pushed regulations totaling more than $85 billion. With the Obama presidency coming to a close, unelected bureaucrats are pushing last minute regulations with reckless abandon.

One example of last minute regulations are the Treasury department’s Section 385 “Debt-Equity” regulations that grant the government power over a business’s internal transactions. This regulation was proposed with little input from experts and is on track to be finalized even as businesses do not understand all the ways it may affect them.

Both Democrats and Republicans have raised concerns with the broad scope of this regulation, specifically that it will have a chilling effect on investment, will create unneeded business uncertainty and complexity, and increase the frequency of inversions over the long-term.

However, this regulation is just one of many that the administration has pushed. Stopping Obama’s last minute regulatory flurry should be a priority for lawmakers, and Rep. Hudson’s amendment does exactly that. ATR urges full support for this important, conservative amendment. 

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House Blueprint Calls for Free Market, Patient Centered Healthcare Reform

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Posted by Alexander Hendrie on Monday, June 27th, 2016, 12:00 PM PERMALINK

Congressional Republicans recently unveiled their blueprint to repeal and replace Obamacare with commonsense free-market alternatives. Obamacare has approached healthcare with a “government knows best” mentality, and the GOP blueprint draws a sharp contrast by calling for increased choice and competition in order to lower costs, improve quality, and ensure all Americans have access to the healthcare that best suits their individual needs.

The blueprint starts by repealing Obamacare and its taxes, mandates, slush funds, and wasteful spending programs. The proposal replaces these failed policies with a series of conservative, free market reforms that end a number of distortions and promote individual choice and responsibility. The blueprint also strengthens Medicare and Medicaid to ensure these programs are equipped to provide for the most vulnerable in our society, and calls for promoting and protecting medical innovation to ensure America remains a leader in life-saving and life-improving medicines.

Repeals Obamacare Taxes, Mandates, and Slush Funds
The blueprint calls for repeal of ALL Obamacare taxes including the chronic care tax, the individual mandate tax, the tax on Flexible Savings Accounts, the tax on Health Savings Accounts, the Cadillac tax on employer health insurance, the tax on medical devices, the tax on prescription medicine, the tax on employers, and the tax on health insurers.

The proposal also ends wasteful spending programs by repealing the “Obamacare Public Health” slush fund, and stopping risk corridor and reinsurance corporate welfare payments. Finally, the plan repeals the individual and employer mandates which needlessly penalize individuals and businesses.

Provides Greater Flexibility
In place of Obamacare, the House GOP blueprint calls for a healthcare “backpack” – insurance that is tailored to individual needs and allows flexibility. One centerpiece of this proposal replaces the flawed and highly wasteful Obamacare tax credit with an efficient flat credit that is adjusted based on age. This credit is refundable so that if a plan costs less than the credit, the individual can spend whatever is leftover through an HSA-like account.

This replaces the restrictive approach taken by Obamacare with a flexible alternative that allows individuals to choose healthcare that best fits their needs.

Expands Health Savings Accounts
Health savings accounts, or HSAs are tax-advantaged accounts which are used to pay for routine, out-of-pocket medical expenses.  They are used in conjunction with insurance plans which tend to cover large and/or unexpected health events and allow individuals to make choices that best fit their needs.

The plan first eliminates the many restrictions that Obamacare placed on HSAs and then expands them to eliminate needless restrictions on contribution limits and accessibility. These reforms will better encourage healthcare freedom so Americans have access to patient centered care that best fits their needs.

Promotes Innovation
It takes about 14 years and $2 billion in research and development medical costs with more than 95 percent of drugs failing to make it through this long process. While this process is lengthy and costly, it inevitably leads to significant long-term health benefits and savings within the medical system. Obamacare has only made this arduous process worse with a tax on new medical devices, further slowing innovation.  

The GOP blueprint calls for reforms to medical innovation based off the bipartisan 21st Century Cures Act passed by the House last year. This plan calls for streamlining the innovation process by reforming the FDA so that new medicines can come online faster. The plan also calls for modernizing clinical trials, providing more appropriate incentives, removing regulatory uncertainty, and increased collaboration between stakeholders.

By protecting and promoting medical innovation this plan will allow for the creation of the next generation life-saving and life-threatening medicines that will ensure stronger, most cost effective healthcare solutions in future decades.

Protects Seniors
Medicare spending will double within the next ten years and the program is projected to become insolvent by 2030. This looming insolvency is addressed through a three step approach that also strengthens the program.

First, the plan repeals the needless Medicare regulations contained in Obamacare, like the Independent Payment Advisory Board and cuts to Medicare Advantage. Second, it adopts a series of smart reforms and updating out-of-date regulations that protect the patient doctor relationship and patient choice. Third, the proposal implements reforms that ensure Medicare is around for future generations by transitioning to a more competitive premium support model that does not disrupt the current program.

Reforms and Preserves Medicaid
This year, total Medicaid spending will reach $545 billion, even as the program has been plagued by high risk of fraud and inadequate oversight. For years, federal watchdogs have warned of millions in fraudulent or improper payments and countless cases of patient abuse, neglect, and theft. Under Obamacare, millions of able bodied adults have been added to Medicaid, even as the program is failing to provide care for our most vulnerable.

The GOP blueprint calls for addressing these issues through reforms to the funding structure that set more appropriate incentives that encourage resources to the nations most vulnerable. The program also provides states with better tools, resources, and flexibility by giving them the choice of a block grant or a per capita allotment. Streamlining the funding process will not only ensure that Medicaid enrollees have access to more appropriate care, it will also cut down on waste and promote more efficient allotment of resources.


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ATR Applauds House Republicans’ Tax Blueprint

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Posted by Natalie De Vincenzi, Alexander Hendrie on Friday, June 24th, 2016, 10:19 AM PERMALINK

ATR together with 18 free market organizations today applauded the House Tax Reform Working Group blueprint.

Standing at 74,000 pages, the U.S. tax code is too complex. Americans waste billions of hours and dollars trying to comply with the tax puzzle and the U.S. faces a serious global disadvantage with the nation’s high corporate tax rate. Tax reform is necessary to make American lives easier and to reestablish America’s global competitiveness.

The full letter is here and below.

Dear Speaker Ryan and Chairman Brady,

On behalf of the undersigned organizations, we write to applaud the efforts of the House Tax Reform Working Group. The Blueprint you have released today outlines a thoughtful approach to tax reform that would greatly benefit the individuals, families, and businesses that are hampered by a broken tax code.

Tax reform was last passed three decades ago and our code is woefully uncompetitive, overly complex, and out of date. It urgently needs to be fixed, and the working group’s Blueprint ensures this issue remains center stage. Unfortunately, the current President has proven unwilling to seriously address the issue of our uncompetitive and unfair tax code, instead deriding the pressing need to update it as a “race to the bottom.” Given the urgency of this problem, we believe it is vital that pro-growth tax reform is passed within the first hundred days of the next Congress.

While tax reform touches many issues by necessity, it is crucial that any new code prioritizes competitiveness, simplicity, and growth.

Simplify the Tax Code The tax code is more than 74,000 pages long and Americans spend over 6.1 billion hours complying with it each year, resulting in an annual economic loss of $234.4 billion. The reality is, it is difficult or impossible for American families to properly comply with the tax code. Your Blueprint takes significant, important steps toward simplicity and fairness by consolidating seven individual income tax rates into three, eliminating the alternative minimum tax, and completely killing the death tax, which has destroyed over $1.1 trillion of capital in the U.S. economy. Additionally, it streamlines individual deductions and exclusions and consolidates numerous, overlapping tax benefits for higher education. All of these changes would help reduce the monstrous tax code to a more manageable size and decrease the amount of confusion and frustration that Americans face every year when they file their taxes.

Reducing Rates to Address America’s Competitiveness Problem. Under our current system, American businesses simply cannot compete with the rest of the world. We have business taxes far higher than the rest of the developed world with a statutory corporate rate exceeding 39 percent, more than 14 points higher than the developed average. Other countries are taking advantage of our inaction as they aggressively lower their tax rates to lure American jobs and businesses to their soil. Your Blueprint reduces the corporate tax rate to 20 percent – a change that would act as a powerful economic stimulus by encouraging domestic businesses to grow and foreign businesses to relocate

to the U.S. Further, it would reduce the top rate on pass-through entities, many of which are small businesses, to 25 percent.

Tax reform must encourage economic growth, jobs and innovation. For years, growth has remained stagnant, as new jobs have failed to materialize and wages remain unchanged. Just 38,000 jobs were added in May and labor force participation has continued to drop. Congress can reverse this trend with the type of pro-growth tax reform outlined in your Blueprint. In addition to reducing rates, your plan would provide full expensing for businesses – a change that would incentivize capital investment and lead to significant economic expansion. Additionally, it would transition from a worldwide tax system to a territorial system, thereby aligning our code with much of the industrialized world and, more importantly, allowing companies to reinvest foreign earnings back into our domestic economy. Also, under your plan, the top tax rate on long term capital gains and qualified dividends is cut from 23.8 percent today to 16.5 percent, a powerful pro-growth reform.

We applaud the work of the Tax Reform Working Group and your efforts to keep this important issue at center stage. It has been far too long since Congress last passed tax reform and it is imperative that businesses and families receive relief soon. We understand that there are many details of the plan to be worked out and we look forward to participating in these discussions and working with you to enact pro-growth tax reform in the coming months and years.


Grover Norquist
President, Americans for Tax Reform

Pete Sepp
President, National Taxpayers Union

David Williams
President, Taxpayers Protection Alliance

Neil Bradley
Chief Strategy Officer, Conservative Reform Network

Jim Martin
Chairman, 60 Plus Association

Tom Schatz
President, Council for Citizens Against Government Waste

Karen Kerrigan
President & CEO, Small Business & Entrepreneurship Council

Christine Harbin
Director of Federal Affairs and Strategic Initiatives, Americans for Prosperity

Phil Kerpen
President, American Commitment 

Paul Gessing
President, Rio Grande Foundation 

Andrew Moylan
Executive Director, R Street Institute

Darcie L. Johnston
Founder, Vermonters for Healthcare Freedom

Brian McClung
Chair, Minnesota Center-Right Coalition

Charlie Gerow
CEO, Quantum Communications (Wisconsin)

Chuck Muth
President, Citizen Outreach

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

Chip Faulkner
Associate Director, Citizens for Limited Taxation (Massachusetts)

Dan Weber
President, Association of Mature American Citizens  

Penny Nance
CEO& President, Concerned Women for America LAC

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ATR Statement on House GOP Tax Reform Blueprint

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Posted by Alexander Hendrie on Friday, June 24th, 2016, 10:00 AM PERMALINK

The House Republican Conference under the leadership of Speaker Paul Ryan (R-Wis.) and House Ways and Means Chairman Kevin Brady (R-Texas) today released their blueprint to reform the tax code. This pro-growth plan cuts taxes for ALL American families and businesses, simplifies the code, promotes strong economic growth, and allows our businesses to better compete against foreign competitors.

“The Republican blueprint for tax reform is a clear and dramatic path to strong economic growth and job creation,” said Grover Norquist, president of Americans for Tax Reform. “When enacted it will steer America on a sharp U-turn from our present road to serfdom. America cannot limp along on its weak and weakening ‘recovery’ -- with this blueprint the path is clear.”

Norquist continued: “The blueprint is completely consistent with the Taxpayer Protection Pledge a majority of the members of congress have signed promising the American people that they will oppose and vote against any net tax hike.”

For the typical American family, this blueprint will simplify the code so that an annual tax return can be filed on a postcard. For businesses on Main Street, this plan will cut needless bureaucratic red tape and complexity. For iconic American businesses, this blueprint will ensure they can compete, and thrive against foreign competitors. And for the economy, this plan will replace the policies that led to seven years of stagnant growth with a vision that fixes our broken code and promotes opportunity for all.  

Importantly, this proposal takes the code much closer to a system that taxes in the fairest and most efficient way – by taxing once, at the point of consumption. Basic elements of the plan include:

Individual Tax Rates: Consolidates the existing seven tax brackets into three brackets – 12 percent, 25 percent, and 33 percent.

Full Business Expensing: 100 percent immediate, full business expensing, meaning businesses will be allowed to deduct purchases immediately rather than being forced to use the arbitrary and confusing system of depreciation which distorts investment.

Business Tax Rates: Under the current code, American businesses face the highest tax rates in the developed world. This plan ends that by cutting the corporate tax rate from the existing 35 percent rate to just 20 percent. The blueprint also cuts the tax rate on pass-through entities from more than 40 percent to just 25 percent.

International Tax System: Streamlines and overhauls the confusing, complex and uncompetitive international tax system.

- Replaces the worldwide tax system with full territoriality, meaning that American businesses will no longer be subject to double taxation – once when they earn this income overseas and again when this income is brought back to the U.S.

- As part of the shift toward a consumption based system, the blueprint calls for applying businesses taxes on a destination basis. This means that American exports will not be subject to U.S. income tax but products and services sold in the U.S. will be taxed regardless of whether they were produced here, or imported from a foreign country. This ends the competitive disadvantage our exports had when competing with the rest of the world, and that foreign imports had with local competitors.

Death Tax: Repealed

Capital gains and Dividends: Reduces taxes on investment income by creating a 50 percent deduction on a taxpayer’s bracket. This means cap gains/dividends rates of 6 percent, 12.5 percent, and 16.5 percent, far below the existing 23.8 percent. While the plan is silent on section 1031 “like-kind exchanges,” it does call for a tax code that promotes business investment.

Alternative Minimum Tax: Repealed

Individual Credits:  Consolidates five family deductions into two – a larger standard deduction and a child/dependent tax credit. Preserves tax incentives for charitable giving and homeownership and eliminates all other itemized deductions.

Business Credits: Calls for simplifying the code by eliminating the majority of deductions and credits, with the R&D tax credit being one notable exception.

Interest Deduction: Allows businesses to deduct interest expense from any interest income but disallows deductions from net interest expenses. This removes the distortions in the tax code that favor debt over equity toward the ideal consumption base.

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