Alexander Hendrie

The “Bubble Rate” Is Not A 46 Percent Rate and Is Consistent with the Taxpayer Protection Pledge

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Posted by Alexander Hendrie on Sunday, November 5th, 2017, 1:07 PM PERMALINK

An article released earlier this week in Politico claimed that the House Republican tax reform legislation contains a 46 percent tax bracket. However, H.R. 1 does not create a new, higher tax bracket. It is simply a phaseout of the 12 percent bracket for those within the top bracket. Bubble rates were a feature of President Reagan’s landmark 1986 tax reform legislation.

H.R. 1 is also consistent with the Taxpayer Protection Pledge, a written commitment to constituents made by 209 members of the House of Representatives including House Speaker Paul Ryan and Ways and Means Chairman Kevin Brady.

Under the legislation, families earning above $1.2 million see the benefits of the 12 percent bracket (applying to income below $90,000) phased out up to $1.614 million worth of earnings. This claw back shouldn’t be considered a higher tax bracket, but rather a way of phasing out the 12 percent bracket.

Phasing out tax provisions based on income level is a common feature of the tax code: 

-The child tax credit currently phases out over $75,000 for individuals and $110,000 for joint filers. 

-Itemized deductions currently phase out at $311,300 for families or $259,400 for individuals. 

-Personal exemptions begin phasing out at $261,500 for individuals and $313,800 for families. It fully phases out at $384,000 for individuals and $436,300 for families. 

-The Earned Income Tax Credit begins phasing out at $50,198 for a family of four.

-The American Opportunity Tax Credit is phased out between $80,000 and $90,000 ($160,000 and $180,000 for families).

As noted above, a phase out of the bottom income tax bracket for those within the top bracket was also included in the Reagan Tax Reform Act of 1986. This reform clawed back the 15 percent bracket for those in the top tax bracket.

 

Photo Credit: John Morgan

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Lawmakers Should Repeal IPAB In Full

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Posted by Alexander Hendrie on Monday, October 30th, 2017, 3:28 PM PERMALINK

While efforts to repeal Obamacare and reform the nation’s healthcare system have stalled, there are still opportunities to enact healthcare reform that undoes the damage caused by Obamacare. Next week, Congress will take up a clean repeal bill of the Independent Payment Advisory Board, or IPAB. Repealing IPAB is bipartisan and may be the only chance for the Republican Congress to repeal parts of Obamacare. The House should be commended for taking up repeal of IPAB, and this measure should be supported by all members of Congress. 

IPAB was created seven years ago when Obamacare was signed into law. The basic role of IPAB is to lower costs through the implementation of blunt price controls that ration the existing Medicare system. This indiscriminate tool leaves the U.S. healthcare system with the same price controls attempted (and failed) in socialized medicine systems seen throughout the world.

In addition to being a blunt instrument that drives bad policy, IPAB also undermines the constitutionally granted authority Congress has over the power of the purse. IPAB bureaucrats are free to institute price controls they see fit without approval from Congress. As a result, this board has immense power over health outcomes and the livelihood of patients and doctors.

Given the board is problematic both politically and from a policy standpoint, it should not be surprising that there is broad consensus to repeal IPAB from numerous stakeholders.

The alternative – allowing the board to operate as planned – will result in indiscriminate cuts to Medicare that will undermine healthcare choice and access of 55 million Americans.

While there are clear arguments for repealing this panel, lawmakers should be sure to ignore poor arguments in favor of keeping IPAB. For example, some argue that IPAB repeal needs to be offset. However, this logic is flawed – under current law CBO has already assumed that IPAB will save money over the ten-year window even though the price controls have not yet been implemented. The assumption that preventing these price controls “costs” the government money is backwards thinking logic that is biased toward the status quo of Obamacare.

Ultimately, while previous stages of healthcare reform have failed Congress can still achieve repeal some of Obamacare by repealing IPAB and saving Medicare beneficiaries from indiscriminate price controls. Congress should vote next week to repeal IPAB. 

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Tax Reform Must Include Repeal of the Death Tax

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Posted by Alexander Hendrie on Friday, October 27th, 2017, 9:38 AM PERMALINK

Repealing the Death Tax is an important part of the Republican tax reform framework. The Death Tax is a burdensome and unfair tax that forces families to pay a tax on all their deceased loved one’s assets. As the tax reform framework is developed into legislative text and moves through both the House and Senate, it is important that permanent, full repeal of the Death Tax is maintained.

Repeal of the Death Tax will spur economic growth. In 2016, the Tax Foundation estimated that repeal of the Death Tax would create 150,000 jobs. Additionally, the  Joint Economic Committee reported that the Death Tax has suppressed over $1.1 trillion of capital in the United States’ economy since being introduced. Much of this comes from small businesses, who are the core of America’s economy. This loss of capital ultimately results in fewer jobs and lower wages for American workers.

The Death Tax is bad for jobs and repeal would give families a raise. Again according to the Tax Foundation the Death Tax is an economy killer. They have a macroeconomic “dynamic” model to see what killing the Death Tax would do to the job market. This model projects that killing the death tax would create 139,000 jobs, increase private business hours by 0.1 percent, and increase wages by 0.7 percent.

Numerous studies have found that majority of Americans oppose the Death Tax and support its repeal. For example, a recent report by NPR found that 76 percent of Americans support full, permanent repeal of the Death Tax.  

In addition, the Death Tax contributes a miniscule amount of revenue relative to the size of federal government. In all, it makes up only one half of one percent of all federal revenue. Because the Death Tax is so economically destructive, almost all the revenue lost would be offset by increased economic growth. As noted by the Tax Foundation, repealing the Death Tax would result in $240 billion in lower taxes over a decade. However, the economic growth created by repealing the Death Tax would produce $221 billion in federal revenue because of increased wages and more jobs.

Repeal of the death tax pays for itself. The same Tax Foundation report says that the death tax would increase the economy by 0.8 percent (or $137 billion in today’s dollars). Because this additional economic growth would be subject to taxation all its own, it would more than make up for the revenue lost by repealing the death tax–it would make up the $20 billion per year, plus yield an extra $8 billion per year on top of that.  You heard that right–we’d actually collect more tax revenue if we stopped collecting the death tax.

The Death Tax needs to be repealed. Republicans in Congress and in the White House should be commended for prioritizing the repeal of the Death Tax.

Photo Credit: Thomas Hawk


Carried Interest Is A Capital Gain And Should Be Maintained As Such

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Posted by Alexander Hendrie on Wednesday, October 25th, 2017, 1:59 PM PERMALINK

The Republican tax reform framework contains numerous provisions which will increase economic growth, raise wages, and create new or better jobs for American families.

For instance, the plan reduces taxes on all businesses by 42 percent, resulting in a 20 percent tax rate for corporations and a 25 percent rate for pass-through entities. The framework also implements a territorial system of taxation so that American businesses operating overseas compete on a level playing field against foreign companies.

In combination with the reforms to individual taxation such as cutting and consolidating the income tax brackets and doubling the standard deduction, the tax reform plan will result in bigger paychecks for taxpayers across the country.

One area, the framework is silent on is capital gains taxes, which directly hinder economic growth by disincentivizing investment. Because the plan contains many other pro-growth provisions, it is not necessarily a problem that there is no reduction in the capital gains tax, given the constraints faced by budget reconciliation. However, increasing this tax, either through a direct increase in the rate or by narrowing the base of the tax, would limit economic growth and contradict the goals of tax reform.

One way that lawmakers may increase taxes on capital gains is through taxing carried interest capital gains as ordinary income, rather than capital gains income.

This would be a mistake – there is no difference between carried interest and any other type of capital gain. Carried interest is the investor’s share of an investment partnership between the investor and individuals providing expertise on investment decisions. These partnerships generate income through a long-term investment in the same way as any to which the capital gains tax applies – individuals do not benefit from any special treatment. There is no sound basis for taxing these returns as ordinary income.

A carried interest tax increase is also bad policy. It would reduce investment and savings while damaging the economy and America’s economic growth prospects. The Joint Committee on Taxation estimates that a carried interest tax increase will raise a paltry $19.6 billion in revenue over a decade, with Tax Foundation estimating that this number would be just $13 billion due to the negative macroeconomic effects. Both numbers are a small fraction of the $41.7 trillion that will be raised over the same time period, according to the Congressional Budget Office.

In return, the impact of this tax increase will be felt by pension funds, charities and colleges that depend on investment partnership structures in order to meet savings goals. Small businesses would also be badly affected, as investment money available from these partnerships dries up.

The better policy would be preserving the base of the capital gains tax to promote investment by maintaining current law (or reducing taxes on all capital gains). Multiple layers of taxation under our tax code mean that there is little rationale for taxing income derived from a capital gain, as investment in capital is derived from income which has already been taxed at the individual level prior to reinvestment in the economy. Double taxation discourages savings, suppresses productivity, and discourages investment. It acts as a barrier to job creation, wage growth, and economic growth.

America’s capital gains taxes are already among the highest in the world.  The top rate has increased from 15 percent to 23.8 percent in the last 8 years alone. A study by Ernst and Young placed the top U.S. integrated rate at 56.3 percent after accounting for the corporate tax, federal and state capital gains taxes, and the Obamacare net investment income tax - far in excess of the average integrated rate of other OECD nations and the five BRICS countries which sits at just 40.3 percent.

The Republican tax reform framework is strongly pro-growth and will turbocharge the economy. Lawmakers should be sure not to undermine the framework through pay-fors that hinder economic growth.

Photo Credit: Madeleine Tsol


KEY VOTE: ATR Urges House Passage of Senate Passed H.Con.Res. 71, the FY 2018 Budget Resolution

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Posted by Alexander Hendrie on Tuesday, October 24th, 2017, 2:36 PM PERMALINK

The budget resolution is the vehicle to pass tax reform. Support for the budget equals support for tax reform

ATR urges a YES vote on the Senate Amendment to H. Con. Res. 71

 
"The Republican tax reform plan will turbo-charge the economy, create millions of new jobs and make America the best place in the world to invest, build and create," said Grover Norquist, president of Americans for Tax Reform. "The first step toward passing this tax reform plan is for congress to pass a budget resolution that unlocks reform."
 

It is imperative that the Trump tax reform plan is signed into law in 2017. The first step toward achieving this goal must be passage of a budget resolution. 

Without a budget resolution, Congress is unable to move forward with tax reform as almost every Senate Democrat has already ruled out supporting Trump's tax reform plan. The only path forward is through budget reconciliation which avoids a Senate filibuster before moving to a regular order process that involves Committees of jurisdiction drafting legislative text.

Support for this budget resolution should be viewed as support for the Trump tax reform plan. Opposition to the budget resolution equals opposition to tax reform.

All Members of Congress should vote YES on the Senate Amendment to H. Con. Res. 71, the FY2018 Budget Resolution.

The Trump Tax Reform Framework proposes tax cuts and simplification for individuals and businesses: 

  • Consolidates the existing seven tax brackets into three (12%, 25%, 35%). 
  • Doubles the standard deduction (The first $12,000 for individuals and $24,000 for families will not be taxed). 
  • Expands the child tax credit so that families have more take home pay. 
  • Simplifies the code by repealing unnecessary deductions and credits but preserves home mortgage and charitable deductions. 
  • Repeals the death tax and AMT. 
  • Reduces taxes on all businesses by 42 percent - The corporate tax rate is reduced to 20 percent, and the tax rate on pass-through entities is reduced to 25 percent. 
  • Enacts 100 percent, full business expensing for at least five years to stimulate new investment in the economy. 
  • Replaces the outdated worldwide system of taxation with a system of territoriality so that American businesses operating overseas can compete. 
  • Allows trillions of dollars' worth of after-tax income to come back to the U.S. to be reinvested in the economy after a one-time repatriation rate. 

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Lawmakers Should Repeal IPAB’s Price Controls with CHIP Reauthorization


Posted by Alexander Hendrie on Wednesday, October 18th, 2017, 2:00 PM PERMALINK

While efforts to repeal Obamacare and reform the nation’s healthcare system have stalled, there are still opportunities to enact healthcare reform that undoes the damage caused by Obamacare. Congress is likely to soon take up reauthorization of the Children’s Health Insurance Program (CHIP). They should use this opportunity to also repeal the Independent Payment Advisory Board (IPAB). Repealing IPAB is bipartisan and may be the only chance for the Republican Congress to repeal parts of Obamacare.

IPAB was created seven years ago when Obamacare was signed into law. The basic role of IPAB is to lower costs through the implementation of blunt price controls that ration the existing Medicare system. This indiscriminate tool leaves the U.S. healthcare system with the same price controls attempted (and failed) in socialized medicine systems seen throughout the world.

In addition to being a blunt instrument that drives bad policy, IPAB also undermines the constitutionally granted authority Congress has over the power of the purse. IPAB bureaucrats are free to institute price controls they see fit without approval from Congress. As a result, this board has immense power over health outcomes and the livelihood of patients and doctors.

Given the board is problematic both politically and from a policy standpoint, it should not be surprising that there is broad consensus to repeal IPAB from numerous stakeholders.

The alternative – allowing the board to operate as planned – will result in indiscriminate cuts to Medicare that will undermine healthcare choice and access of 55 million Americans.

While there are clear arguments for repealing this panel, lawmakers should be sure to ignore poor arguments in favor of keeping IPAB. For example, some argue that IPAB repeal needs to be offset. However, this logic is flawed – under current law CBO has already assumed that IPAB will save money over the ten-year window even though the price controls have not yet been implemented. The assumption that preventing these price controls “costs” the government money is backwards thinking logic that is biased toward the status quo of Obamacare.

Ultimately, while previous stages of healthcare reform have failed Congress can still achieve repeal some of Obamacare by repealing IPAB and saving Medicare beneficiaries from indiscriminate price controls. When Congress takes up legislation reauthorizing CHIP, they should also be prepared to take up bipartisan legislation repealing IPAB.

 

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KEY VOTE: ATR Urges Passage of Senate FY ‘18 Budget Resolution


Posted by Alexander Hendrie on Tuesday, October 17th, 2017, 10:00 AM PERMALINK

The budget resolution is the vehicle to pass tax reform. Support for the budget equals support for tax reform

ATR urges a YES vote on the S.Con.Res. 25 as a pro-taxpayer vote 
  
“The Republican tax reform plan will turbo-charge the economy, create millions of new jobs and make America the best place in the world to invest, build and create,” said Grover Norquist, president of Americans for Tax Reform. "The first step toward passing this tax reform plan is for congress to pass a budget resolution that unlocks reform." 

[ATR letter of support for S.Con.Res.25 can be found here]

It is imperative that the Trump tax reform plan is signed into law in 2017. The first step toward achieving this goal must be passage of a budget resolution. 

Without a budget resolution, Congress is unable to move forward with tax reform as almost every Senate Democrat has already ruled out supporting Trump’s tax reform plan. The only path forward is through budget reconciliation which avoids a Senate filibuster before moving to a regular order process that involves Committees of jurisdiction drafting legislative text. 

Support for this budget resolution should be viewed as support for the Trump tax reform plan. Opposition to the budget resolution equals opposition to tax reform.

All Senators should vote “YES” on the S.Con.Res.25, the FY ‘18 budget resolution.

The Trump Tax Reform Framework proposes tax cuts and simplification for individuals and businesses: 

-Consolidates the existing seven tax brackets into three (12%, 25%, 35%). 
-Doubles the standard deduction (The first $12,000 for individuals and $24,000 for families will not be taxed). 
-Expands the child tax credit so that families have more take home pay. 
-Simplifies the code by repealing unnecessary deductions and credits but preserves home mortgage and charitable deductions. 
-Repeals the death tax and AMT. 
-Reduces taxes on all businesses by 42 percent – The corporate tax rate is reduced to 20 percent, and the tax rate on pass-through entities is reduced to 25 percent. 
-Enacts 100 percent, full business expensing for at least five years to stimulate new investment in the economy. 
-Replaces the outdated worldwide system of taxation with a system of territoriality so that American businesses operating overseas can compete. 
-Allows trillions of dollars’ worth of after-tax income to come back to the U.S. to be reinvested in the economy after a one-time repatriation rate. 

 

 

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TPC Study Based on Flawed Assumptions, Fails to Use Accurate Scoring

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Posted by Alexander Hendrie, Olivia Grady on Friday, October 6th, 2017, 10:30 AM PERMALINK

[Full PDF of this Document Can be Found Here]

Since President Trump and Republicans in the House and Senate released their joint tax reform framework last month, many have rushed to judge the plan. While this plan is an excellent first step, it is still just a framework that will further be developed by the Committees of jurisdiction, as noted in the document. The next step in the process is to move through regular order:

 “This unified framework serves as a template for the tax-writing committees that will develop legislation through a transparent and inclusive committee process.”

Despite this, some have decided to prematurely analyze the tax framework using their own assumptions. Exhibit A amongst these biased analyses is the study published by the Tax Policy Center, a joint project of the left-leaning Urban Institute and Brookings Institution. 

This study fails to take into account numerous issues.

First, it does not take into account any dynamic macroeconomic effects of the tax changes. Instead, it analyzes tax changes solely on the static revenue lost or gained as if every tax cut or tax increase is the same and has no effect on behavior.

Second, it assumes numerous details that have not been decided yet. The framework did not include the income ranges for the individual brackets or the size of the expanded child tax credit. Both of these will be decided by Committees of jurisdiction. The Tax Policy Center study included income ranges and the size of the credit despite this.

[The Full Document is Also Available Here] 

Dynamic Scoring is Key to Any Realistic Analysis of The Tax Reform Framework

The analysis conducted by the Tax Policy Center fails to use dynamic scoring to analyze the benefits of the plan. Instead, it uses static scoring to downplay the positive economic effects of the plan.  Realistic scoring of tax proposals must use dynamic scoring for several reasons, as outlined by the Tax Foundation. 

First, static scoring does not take into account the changes to the economy and specifically economic growth that a tax change might cause. With dynamic scoring, however, representatives can understand the real benefits and costs of a tax change proposal. Dynamic scoring, therefore, is simply more accurate scoring. 

A high tax rate will discourage some people from working as much because if the government is taking away most of the money from an additional hour that they’ll work, it won’t be worth it to work. However, if the government only takes a small percentage, more people will choose to work to i.e. save up for a vacation or their child’s college tuition. Dynamic scoring reflects these behavioral changes, while static scoring does not.

Second, many tax changes made in the GOP framework are designed to promote economic growth. Because this is the goal, lawmakers need to understand how the change will affect economic growth. Static scoring does not show economic growth. It assumes that the gross domestic product will remain the same.

The Unified Framework is a plan to grow the economy and increase the number of jobs. In fact, economic growth is one of President Trump’s goals for tax reform. Using static scoring makes it impossible for policy analysts to determine how much economic growth and how many jobs this framework will create.

Finally, static scoring does not show all the benefits of tax cuts. It downplays how much additional money the Treasury will see from economic growth due to the tax cuts. Therefore, the Congressional Budget Office’s (CBO) estimates were often very far off from reality before the office started using dynamic scoring. Despite how far off the estimates were, the analysis by the CBO and JCT did determine whether a tax change passed.

Due to these reasons, Congress passed the Pro-Growth Budgeting Act of 2013, requiring the CBO and the JCT to use dynamic scoring. However, both the CBO and the JCT do not use as robust scoring as they should.

An example of how their scoring isn’t robust enough is one provided in Curtis Dubay’s 2015 Heritage article, “JCT Dynamic Score of Bonus Depreciation: Highly Flawed.” His example was bonus depreciation, a policy that allows businesses to deduct 50 percent of their investments in the year that they purchased them. The Joint Committee on Taxation (JCT) said this policy would only grow the size of the economy by .2 percent over ten years using dynamic scoring, while the Tax Foundation argued that the economy would grow by 1.1 percent over ten years.

Despite this flaw, the scoring by the CBO and JCT is more accurate than if they used static scoring.

While there are clear reasons for using dynamic scoring, the Tax Policy Center surprisingly examined the effects of the Congressional Republican’s proposal, the “Unified Framework for Fixing Our Broken Tax Code” using static scoring. The Center now claims that the framework would reduce federal revenue by $2.4 trillion over ten years. In addition, those with the largest income would see the biggest tax cuts, and some would experience a tax increase under this plan.

The United States has historically seen large economic growth after tax cuts, and economic growth is one of the main purposes for this tax cut. If you think that there isn’t going to be growth after a tax cut and the taxes have been reduced, it is not a surprise that federal revenue decreases and deficits increase. The Wall Street Journal pointed this out in a recent article and predicts that if GDP growth increases to 3% a year with this tax cut, the Treasury would see an additional $2.5 trillion. 

Efforts to Attribute Distributional Effects to the Framework Are Premature

As the framework notes, specific details, such as the income threshold for the consolidated tax brackets, will be developed by the House Ways and Means and Senate Finance Committees. Given this, any detailed modeling including distributional tables is premature and based on assumptions on details that have yet to be decided.

Despite this, the report by the Tax Policy Center conducted a detailed analysis of the changes to the framework, based on their own assumptions they claim that there would be little to no benefit for many Americans.

These conclusions are very different from those reached by the Tax Foundation. Tax Foundation Senior Analyst Scott Greenberg explained in an article, ”What Would the “Big Six” Framework Mean for Lower-Middle Income Households?” how the plan would affect lower-middle income households. 

Greenberg says that the GOP individual tax proposal would reduce federal revenue by $209 billion on a static basis. The plan would benefit taxpayers in the 20% to 80% income group most, while the highest earners would pay more in taxes due to the elimination of most itemized deductions. The bottom 20% would gain from the increased standard deduction and child tax credit.

Similarly, Ryan Ellis, Senior Tax Advisor for the Family Business Coalition, found that the TPC was understating the benefits of the tax reform framework. In a recent Forbes column, he describes three typical scenarios. All three median scenarios will allow the individuals or families to invest in the economy, instead of “investing” in poorly performing government programs that were created to help politicians stay in power.

His first scenario is a family of four. The family has two children under the age of 14. The family earns the median income for a married couple, $87,000, according to the Census bureau. While the larger standard deduction reduces the family’s taxable income substantially, the lack of a personal exemption makes the family’s taxable income larger after the deductions have been taken. However, once the child tax credit is accounted for, the family receives a tax cut of $1223. This is a substantial decrease for a family that owes $4560 under the new tax plan.

The second scenario is a single mother with two small children. She earns the median income of a female head of household, $41,000. Once again, her taxable income after only the larger standard deduction has been applied is larger than her taxable income after the current standard deduction and the personal exemption have been applied. This changes again when the larger child tax credit is used. Her tax cut is $498. Under the new plan, she not only doesn’t have to pay $258 in taxes, she is given $240 by the federal government.

The final example is that of a single person who earns $36,000. She also benefits from the framework. However, once the larger standard deduction has been used, her taxable income decreases even without the personal exemption. Her taxes decrease from $3,374 to $2,880, and she receives a tax cut of $494.

Photo Credit: 401(K) 2012

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KEY VOTE: ATR Urges Passage of House FY 18’ Budget Resolution


Posted by Alexander Hendrie on Wednesday, October 4th, 2017, 8:00 AM PERMALINK

The first step toward achieving tax reform in 2017 is passage of the budget resolution

ATR urges a YES vote on H.Con.Res. 71 as a pro-taxpayer vote

“The Republican tax reform plan will turbo-charge the economy, create millions of new jobs and make America the best place in the world to invest, build and create” said Grover Norquist, president of Americans for Tax Reform. "The first step toward passing this tax reform plan is for congress to pass a budget resolution that unlocks reform."

It is imperative that the Trump tax reform plan is signed into law in 2017. The first step toward achieving this goal must be passage is a budget resolution.

Without a budget resolution, Congress is unable to move forward with tax reform as almost every Senate Democrats has already ruled out supporting Trump’s tax reform plan. The only path forward is through budget reconciliation which avoids a Senate filibuster before moving to a regular order process that involves Committees of jurisdiction drafting legislative text.

Support for this budget resolution should be viewed as support for the Trump tax reform plan.Opposition to the budget resolution equals opposition to tax reform.

All Members of Congress should vote “Yes” on H.Con.Res. 71.

The Trump Tax Reform Framework proposes tax cuts and simplification for individuals and businesses:

-Folds the existing seven tax brackets into three (12%, 25%, 35%).

-Doubles the standard deduction (The first $12,000 for individuals and $24,000 for families will not be taxed).

-Expands the child tax credit so that families have been take home pay.

-Simplifies the code by repealing unnecessary deductions and credits but preserves home mortgage and charitable deductions.

-Repeals the death tax and AMT.

-Reduces taxes on all business by 42 percent – The corporate tax rate is reduced to 20 percent, and the tax rate on pass-through entities is reduced to 25 percent.

-Enacts 100 percent, full business expensing for at least five years to stimulate new investment in the economy.

-Replaces the outdated worldwide system of taxation with a system of territoriality so that American businesses operating overseas can compete.

-Allows trillions of dollars’ worth of after-tax income to come back to the U.S. to be reinvested in the economy after a one-time repatriation rate.

 

More from Americans for Tax Reform


House Committees To Take Up IPAB Repeal

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Posted by Alexander Hendrie on Tuesday, October 3rd, 2017, 12:52 PM PERMALINK

The House Ways and Means Committee and House Energy and Commerce Committee will this week hold markups for legislation that repeals Obamacare’s Independent Advisory Payment Board (IPAB). The legislation, H.R. 849, introduced by Congressman Phil Roe (R-TN) has more than 200 co-sponsors and should be unanimously approved by both Committees.

IPAB was created seven years ago when Obamacare was signed into law. The basic role of IPAB is to institute price controls and rationing within the Medicare system. In practice, this leaves the U.S. healthcare system with the same price controls attempted (and failed) in socialized medicine systems seen throughout the world.  

IPAB’s scope and role also undermines the constitutionally granted authority that Congress has over the power of the purse. IPAB bureaucrats are free to institute price controls they see fit without approval from Congress. As a result, this board has immense power over health outcomes and the livelihood of patients and doctors.

Repealing IPAB is not controversial – there is broad consensus from a range of stakeholders. Allowing the board to operate will result in indiscriminate cuts to Medicare that undermine healthcare choice and access of 55 million Americans.

While healthcare reform has stalled, Congress should act to quickly repeal IPAB and prevent new price controls from being implemented. Both the House Ways and Means Committee and House Energy and Commerce Committee should quickly approve this common-sense, bipartisan bill and send it to the House floor for swift approval. 

Photo Credit: Jim Grey


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