Alexander Hendrie

Senate Should Pass the Better Care Reconciliation Act

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Posted by Alexander Hendrie on Friday, June 30th, 2017, 2:00 PM PERMALINK

Passage of the Senate Health Bill is A Conservative Win [link]

- Obamacare suppressed individual choice, competition, and state flexibility, and imposed a long list of taxes on businesses and families.

- The Senate's Better Care Reconciliation Act (BCRA) will replace the failing system with a sustainable, patient-centered health care system, just as Republicans promised in the last election.

-  The bill repeals a total of $700 billion dollars in Obamacare taxes that raise the cost of care, restrict choice, and hurt economic growth.

- The BCRA strengthens tax-preferred Health Savings Accounts, so that families are better able to save for health care expenses.

- The bill allows states to implement health care systems that work for families in the real world. No longer will we have a one size fits all system dreamed up by bureaucrats in Washington and policed by the IRS.

- The BCRA enacts long overdue entitlement reform that reins in out of control spending while ensuring the truly needy are protected.

The Senate Plan to Abolish Obamacare Taxes Is Good for the Middle Class [link]

-  The narrative from the media has been that this bill is a giant tax cut for “the rich.” This narrative is false.

- Obamacare imposed a long list of taxes that directly hit middle class families.

- Many of these taxes have been used to enforce the Obamacare vision of bigger government, more regulations and rules, and fewer choices.

- Former President Obama promised he would not raise any form of tax on any American making less than $250,000 a year. But he shattered the promise when he signed Obamacare into law.

The Senate Bill Reforms Medicaid in A Fiscally Responsible Way [link]

- Under the reforms in the BCRA, Medicaid will continue to grow. No one is kicked off the program, and no one loses their federal Medicaid eligibility.

- The Senate bill ensures that Medicaid does not grow faster than the economy by tying the program to inflation.

- These Medicaid reforms were originally proposed by the Clinton Administration.

 The Senate Bill Repeals Obamacare’s Medicine Cabinet Tax [link]

- Repeal of this tax provides relief to the 30 – 35 million Americans with a Flexible Spending Account and the 20 million Americans with a Health Savings Account.

- Under this tax, Americans are forbidden from using HSAs and FSAs to purchase over the counter medicines such as cold, cough, and flu medicines, aspirin, and allergy medicines.

- This is a $5.6 billion tax cut.

The Senate Bill Also Repeals Obamacare’s Chronic Care Tax [link]

- Before Obamacare, Americans facing high out of pocket medical expenses were allowed an income tax deduction to the extent that those expenses exceeded 7.5 percent of adjusted gross income (AGI).

- Obamacare now imposes a threshold of 10 percent of AGI.

- The Obamacare Chronic Care Tax hits at least 10 million American households making an average of $53,000.

- This is a $36 billion tax cut.

The Senate Bill Should Keep Repeal of the 3.8 Percent Net Investment Income Tax [link]

- This tax is a known job-killer. It would be a bad idea to leave this tax in the code for a second longer than necessary. The faster we get the capital gains tax down, the faster we’ll get further growth and investment.

- 47 conservative groups support repeal of the 3.8 percent NIIT.

- Capital gains taxes have a significant negative impact on capital formation, productivity, and economic growth while raising little or even negative revenue.

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Obamacare’s Health Insurance Tax Should Be Repealed Effective Immediately

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Posted by Alexander Hendrie on Wednesday, June 21st, 2017, 2:00 PM PERMALINK

The U.S. Senate is moving forward with repeal of Obamacare, including the nearly 20 new or higher taxes that the law imposed.

These taxes directly hit middle class families and small businesses, raise the cost of healthcare, and reduce access to care. Repealing these taxes is a huge win for taxpayers across the country. 

It is expected that the Senate will phase in the repeal of these taxes over multiple years. Most Obamacare taxes are currently in effect, and relief should be offered as quickly as possible.  

Immediate repeal of the Obamacare health insurance tax is crucial because it is set to go into effect in 2018. Letting this tax go into effect next year and then repealing it at a later date will cause the cost of insurance to climb. Moreover, it will result in unnecessary complexity for middle class families and small businesses.

This tax is levied on insurance premiums, so its costs are inevitably passed to middle class families and small businesses that provide healthcare to their employees. In addition, the tax impacts the care received by seniors through Medicare advantage coverage and low-income Americans who rely on Medicaid managed care.

As a result, allowing the health insurance tax to go into effect will have significant economic consequences. Next year alone, the tax will total $12.3 billion. Over the next decade, the health insurance tax totals $145 billion.

Immediate repeal means strong tax relief for middle and low-income families. According to the American Action Forum, the tax increases premiums by as much as $5,000 over a decade. In total, the tax hits 11 million households that purchase through the individual insurance market, and 23 million households covered through their jobs. Roughly half of the tax is paid by those earning less than $50,000 a year.

In addition, the tax is devastating to small businesses. It is estimated to directly impact as many as 1.7 million small businesses. The National Federation of Independent Business estimates the tax could cost up to 286,000 in new jobs and cost small businesses $33 billion in lost sales by 2023.

Small businesses account for half of all jobs in the US and two-thirds of new jobs in recent decades, so this tax will mean businesses across the country can spend less on investing in new equipment, hiring new workers, or providing higher wages.

American families have already been hit hard by Obamacare’s tax increases. The law imposed multiple taxes that have increased the cost of care for families and reduced choice, including taxes on Health Savings Accounts and Flexible Spending Accounts.

The last thing taxpayers need is for the health insurance tax to go into effect, even for one year. Conversely, permanent and immediate repeal of the health insurance tax is a huge win for Americans and will help decrease the cost of care for millions across the country. 

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Lawmakers Call for Preserving Carried Interest Capital Gains in Tax Reform

Posted by Alexander Hendrie on Friday, June 16th, 2017, 8:00 AM PERMALINK

Tax reform should ensure that carried interest remains treated as a capital gain, 22 Members of Congress led by Congressman Richard Hudson (R-N.C.) wrote in a letter released earlier this week.

As the lawmakers note, carried interest meets all the criteria of a capital gain. It is not a loophole as some suggest and there is little justification for taxing carried interest capital gains as ordinary income.

Those who derive income from carried interest capital gains don’t have some special deal – they pay the same capital gains rates as everyone else. Carried interest is simply the share of an investment partnership allocated to the investor. These partnerships occur when individuals with capital and individuals with expertise pool their resources together. All income from this partnership is derived from a long-term investment in a business or real estate and so all income is treated as a capital gain.

While some have called for increasing taxes on carried interest by increasing the rate from 23.8 percent to 43.4 percent, this would be a mistake. Increasing taxes on carried interest raises little revenue and hurts the economy. Pro-growth reform should instead look to reduce taxes on capital.

As noted by the Joint Committee on Taxation, taxing carried interest as ordinary income would raise just $19.6 billion over the next decade, a drop in the bucket compared to the projected $41.7 trillion that the Congressional Budget Office estimates will be raised over that time frame.

However, after accounting for effects on the economy, the Tax Foundation estimates revenue from taxing carried interest as ordinary income would fall to just $13 billion due to negative macroeconomic effects.

This negative impact would be felt by pension funds, charities, and colleges that depend on investment partnerships as part of their savings goals. In addition, small businesses would find themselves increasingly shut out from investment money available to them from these partnerships.

Ideally, none of the income derived from a capital gain should be taxed as it is one of several layers of taxation in the existing tax code. This tax is levied on income that has already been taxed at the individual level and is then reinvested into the economy. This extra layer of taxation creates a bias against savings and suppresses productivity and new investment. In turn, this hinders the creation of new jobs, higher wages, and increased economic growth.

In fact, capital gains taxes are already high. Over the past eight years, the top rate increased from 15 percent to 23.8 percent. 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. In contrast, the average integrated rate amongst nations in the Organisation for Economic Co-operation and Development and the five member BRICS countries sits at just 40.3 percent.

Rather than push for a tax increase on capital gains, lawmakers should look to reduce the tax to promote economic growth and end the distortions in the tax code.


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47 Conservative Groups and Activists: The Senate Should Repeal All Obamacare Taxes

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Posted by Alexander Hendrie on Tuesday, June 13th, 2017, 6:00 AM PERMALINK

The U.S. Senate should accelerate or maintain the tax relief in the House passed American Health Care Act, 47 free market groups and activists today wrote in a letter addressed to Finance Committee Chairman Orrin Hatch (R-Utah).

Recent media reports suggest the Senate may delay or eliminate repeal of some of these Obamacare taxes. As the coalition notes, this would be a mistake:

“True repeal of Obamacare means repealing the Obamacare taxes and the Senate should resist the urge to deprive taxpayers of relief in order to pay for higher spending.”

As noted in the letter, repealing the Obamacare taxes will reduce taxes for businesses and families and help ensure a free market, patient-centered healthcare system:

 “The roughly one trillion dollars in new or higher taxes imposed by Obamacare directly hit middle class families and small businesses, raise the cost of healthcare, and reduce access to care.”

In addition, repealing Obamacare taxes will lead to stronger economic growth, helping President Trump’s goal of three percent economic growth:

“Obamacare taxes directly suppress economic growth. The best example of this is the 3.8 percent so-called Net Investment Income Investment Tax on capital gains and dividends… A related tax hike is the 0.9 percent Medicare surtax on wages and self-employment income…”

The full letter can be found here and is below:

47 Conservative Groups and Activists: The Senate Should Repeal All Obamacare Taxes

June 13, 2017

The Honorable Orrin G. Hatch
Chairman, Senate Committee on Finance
219 Dirksen Senate Office Building
Washington, DC 20510

Dear Chairman Hatch:

As the Senate continues to make progress on legislation to repeal and replace Obamacare, we urge you and your colleagues to include repeal of the nearly 20 taxes imposed by the law.

During a February 1 speech at the Chamber of Commerce, you declared, "All of the ObamaCare taxes need to go as part of the repeal process."

We agree.

Recent media reports suggest that the Senate may be wavering on repeal of these taxes. This would be a mistake. The final Senate repeal package should retain the broad tax relief that was included in the House passed American Health Care Act.

The roughly one trillion dollars in new or higher taxes imposed by Obamacare directly hit middle class families and small businesses, raise the cost of healthcare, and reduce access to care.

Obamacare taxes directly suppress economic growth. The best example of this is the 3.8 percent so-called Net Investment Income Investment Tax (NIIT) on capital gains and dividends. Historically, capital gains taxes have a significant negative impact on capital formation, productivity, and economic growth while raising little or even negative revenue. 

Repealing the 3.8 percent NIIT would return the capital gains tax rate to 20 percent, the rate agreed to by President Clinton and a Republican Congress in 1997.

A related tax hike is the 0.9 percent Medicare surtax on wages and self-employment income, the repeal of which was unfortunately delayed six years by an amendment in the House.  It should be repealed as expeditiously as possible.

Other Obamacare taxes directly impact the ability of Americans to meet healthcare costs, such as the income tax hike on families with high medical bills. Around 10 million families pay $200 to $400 in higher income taxes each year because Obamacare increases the threshold at which families can deduct medical expenses paid out of pocket.

Obamacare also makes it harder for individuals to save for their own healthcare choices. Roughly 20 million Americans use tax-advantaged Health Savings Accounts (HSAs) to save for healthcare costs. Another 30 million use Flexible Spending Accounts. There are multiple taxes that restrict the ability of families to use these savings accounts, which limits the choice of consumers.

Other taxes hit certain healthcare industries, such as insurance providers, medical device and prescription drug manufacturers. Inevitably, these taxes are passed onto American families in the form of increased costs.

Finally, the tax associated with the employer mandate has limited millions of Americans to part-time work and the tax penalty associated with the individual mandate hit eight million Americans in 2014, with a family of four facing an income tax hike exceeding $2,000.

True repeal of Obamacare means repealing the Obamacare taxes and the Senate should resist the urge to deprive taxpayers of relief in order to pay for higher spending.

We commend you on your stance to repeal these Obamacare taxes and urge any final package accelerate or at least maintain the House-passed tax reductions.


Grover Norquist
President, Americans for Tax Reform

James L. Martin
Founder/Chairman, 60 Plus Association

Phil Kerpen
President, American Commitment

Steve Pociask
President, American Consumer Institute

Lisa B. Nelson
CEO, American Legislative Exchange Council

Ashley N. Varner
Executive Director, ALEC Action

Dan Weber
President, Association of Mature American Citizens (AMAC)

Lindsay Boyd
Policy Director, Beacon Center of Tennessee

Norm Singleton
President, Campaign for Liberty

Andrew F. Quinlan
President, Center for Freedom and Prosperity

Jeff Mazzella
President, Center for Individual Freedom

Chuck Muth
President, Citizen Outreach (Nevada)

Twila Brase, RN, PHN
President and Co-founder, Citizens’ Council for Health Freedom

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

David McIntosh
President, Club for Growth

Michael J. Bowen
CEO, Coalition for a Strong America

Thomas Schatz
President, Council for Citizens Against Government Waste

Katie McAuliffe
Executive Director, Digital Liberty

Adam Brandon
President, FreedomWorks

Richard Watson
Chairman, Florida Center-Right Coalition

Annette Meeks
CEO, Freedom Foundation of Minnesota

George Landrith
President, Frontiers of Freedom

Grace-Marie Turner
President, Galen Institute*

Mario H. Lopez
President, Hispanic Leadership Fund

Joseph Bast
President & CEO, The Heartland Institute

Heather R. Higgins
President & CEO, Independent Women's Voice

Donald P. Racheter, Ph.D.
Chair, Iowa Center-Right Coalition

Tom Giovanetti
President, Institute for Policy Innovation

Ryan Ellis
IRS Enrolled Agent

Seton Motley
President, Less Government

Colin A. Hanna
President, Let Freedom Ring

Stephen Waguespack
President and CEO, Louisiana Association of Business and Industry

Brett Healy
President, The MacIver Institute (Wisconsin)

Mary Adams
Chair, Maine Center-Right Coalition

Bryan Dench
Maine Conservative Activist

Tim Jones
Former Speaker, Missouri House of Representatives

Brian McClung
Chair, Minnesota Center-Right Coalition

Devon Herrick Ph.D.
Senior Fellow, National Center for Policy Analysis

Brandon Arnold
Executive Vice President, National Taxpayers Union

Jeff Kropf
Executive Director, Oregon Capitol Watch Foundation

Jordan Harris & Josh Crawford
Co-Executive Directors, the Pegasus Institute (Kentucky)

Mike Stenhouse
Founder & CEO, Rhode Island Center for Freedom and Prosperity

Karen Kerrigan
President & CEO, Small Business & Entrepreneurship Council

David Williams
President, Taxpayers Protection Alliance

Michael W. Thompson
President, Thomas Jefferson Institute for Public Policy

Nancy Piotter
Executive Director, Virginians for Quality Healthcare

Gerrye Johnston
Founder/CEO, Women for Democracy in America, Inc.

Cc: United States Senators

*Organization listed for identification purposes only 


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The CREATES Act & FAST Generics Act Violate IP Protections and Opens the Door to Unnecessary Litigation

Posted by Alexander Hendrie on Tuesday, June 6th, 2017, 4:00 PM PERMALINK

The House Energy and Commerce Committee is expected to soon consider H.R. 2430, the FDA Reauthorization Act, legislation to reauthorize the agency’s user fees for drugs and medical devices.

During consideration of this legislation, it is possible that members will consider amending the bill with several pieces of legislation that modify the FDA’s Risk Evaluation and Mitigation Strategies (REMS), a regulatory structure that applies to a small set of potentially dangerous drugs.

Specifically lawmakers may consider H.R. 2212, the “Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act,” and H.R. 2051, the “Fair Access for Safe and Timely" (FAST) Generics Act.

While these proposals are an honest attempt to increase access to medicines, they risk undermining intellectual property protection, open the door to unjustified litigation, endanger patient and researcher safety, and suppress innovation. 

The existing REMS regulatory structure is carefully balanced to promote safety, innovation, and access. These pieces of legislation would threaten that balance. As such, members of the Energy and Commerce Committee should reject both pieces of legislation.

Upends a Carefully Balanced, Working Regulatory System
REMS is a special regulatory process that affects a small set of about 40 highly advanced, yet potential dangerous drugs. This process is necessary because of the volatile nature of these medicines, and ensures they are efficiently developed and administered in a way that carefully balances property rights, safety, and access.

H.R. 2212 and H.R. 2051 modify this system by allowing generics to bypass FDA procedures that exist to ensure REMS medicines are safely developed. Under the proposal, a generic manufacturer is not required to include adequate safeguards for patients and researchers as a condition of authorization, and FDA is limited in its ability to deny or modify an authorization request. This lack of safety undermines the entire rationale for the REMS regulatory process.

Undermines Intellectual Property Rights
Patent exclusivity for medical development has been carefully and deliberately legislated to ensure that creativity, innovation, and medical growth are protected. However, exclusivity is limited to prevent against a monopoly and ensure that consumers have access to medicine at reasonable prices.

Although H.R. 2212 and H.R. 2051 aim to ensure bad actors do not abuse the regulatory system, the litigation system could create a system where innovators are forced to hand over their IP through the threat of litigation. This represents a potentially dangerous precedent that undermines property rights, resulting in more resources being devoted to fighting frivolous litigation and fewer resources to research and development costs.

Encourages Unnecessary Litigation
As noted above, the legislation creates a new litigation system that grants generic competitors seeking samples from an innovator the ability to launch litigation just 30 days after negotiation has begun --  essentially forcing innovators to hand over their IP or go to court.

If enacted into law, the CREATES Act and the FAST Generics Act would open the door to bad actors in the industry launching petty and unjustified litigation. This would be a handout to trial lawyers at the expense of innovators, consumers, and the healthcare system.

The legislation’s legal protections are so vague that  innovators may even be responsible for actions taken by a reckless generic competitor.

Proposed Changes Will Not Lower Costs

While both the CREATES Act and FAST Generics Act may be well meaning attempts to increase efficiency, they are flawed proposals. Lower health care costs will not be achieved through empowering flawed litigation or through changes to the regulatory process that fail to protect innovation or safety.

While supporters have claimed these proposals are a solution to reducing the cost of medicines, they may do the opposite by creating a more burdensome, litigious system that undermines innovation.

Costs associated with medical development are already significant. On average it costs $2.6 billion and more than a decade of research time for each new medicine that hits the market. Serious proposals to reduce costs should focus on increasing competition in a way that encourages innovation, limits meritless litigation, and protects safety.

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Tax Reform Should Include Immediate, Full Business Expensing

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Posted by Alexander Hendrie on Tuesday, June 6th, 2017, 8:00 AM PERMALINK

One of the priorities of President Trump is reaching three percent economic growth. The administration has said that pro-growth tax reform is one way they will achieve this goal.

The Trump tax plan already makes several important changes to the taxation of businesses including reducing rates on corporations and small businesses to 15 percent, replacing the worldwide system of taxation with a territorial system, and repealing distortive and preferential business credits.

This is a good start, but the Trump tax reform plan should also modify the tax base by allowing businesses to immediately deduct the costs of any new investments.

Implementing a system of immediate cost recovery moves the tax base toward a cash-flow, consumption based system. This is desirable because it increases incentives for investment and reduces economic distortions.

Including full business expensing should be a key part of Trump’s plan of strong economic growth.

Current Law Distorts Investment and Adds Complexity to the Code: Currently, businesses must deduct, or “depreciate” the cost of new investments over multiple years depending on the asset they purchase, as dictated by complex and arbitrary IRS rules. 

A business can write off a box of paper clips immediately but has to wait five years to recover the full cost of purchasing a computer, or seven years to recover the full cost of purchasing a desk. These rules create needless complexity and increase compliance costs. They also force business owners to make decisions based on tax reasons over business reasons.

Implementing immediate, full business expensing fixes these distortions by treating all business purchases equally.

Full Business Expensing Leads to Strong Economic Growth: Allowing immediate expensing gives businesses a zero percent rate on new investments, which incentivizes more capital flowing into the economy, leading to stronger growth.

According to research by the Tax Foundation, implementing full business expensing increases GDP by five percent after a decade and increases wages by 4 percent, creating more than one million jobs.

Over a decade, full business expensing is projected to reduce revenues by $2.2 trillion on a static basis. After accounting for feedback from economic growth, expensing loses $1 trillion over the decade. However, as the provision fully phases in, revenue lost drops year after year as old investments are fully recovered.


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Ways and Means Committee To Consider Bills Improving Healthcare Tax Credits

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Posted by Alexander Hendrie on Wednesday, May 24th, 2017, 9:39 AM PERMALINK

Today, the House Committee on Ways and Means will markup three pieces of legislation that compliment the recently passed American Health Care Act, legislation that repeals Obamacare and replaces it with free market, patient centered healthcare.

The AHCA repealed close to one trillion in Obamacare taxes, reduced spending, enacted entitlement reform through block granting of Medicaid, and expanded health savings accounts. The legislation will ensure states are able to implement a healthcare system that best fits their needs, and is a giant step forward in lowering taxes and reforming our nation's health care system.

The three pieces of legislation to be considered by the Committee further compliment the gains made by ensuring that veterans and Americans who recently lost their jobs have the access to the care they need, and implementing robust verification for the AHCA’s tax credit. All Members of the Committee should vote in favor of each piece of legislation.

H.R. 2372, the ‘‘Veterans Equal Treatment Ensures Relief and Access Now (VETERAN) Act,” Sponsored by Rep. Sam Johnson (R-Texas)

The Veteran Act Puts into law an existing regulation that ensures veterans who are not already enrolled in and receiving health insurance through the VA have help to purchase coverage on the individual insurance market. There is no reason that veterans should not receive all the help they deserve, and this legislation helps ensure that is the case.

H.R. 2579, the “Broader Options for Americans Act,” Sponsored by Congressman Pat Tiberi (R-Ohio)

H.R. 2579 ensures Americans who have lost their jobs have access the AHCA’s tax credits. Additionally, it ensures that Americans in similar circumstances who work at churches or other houses of worship can access these tax credits. There is no reason that these Americans should be barred from affordable healthcare simply because of their unique circumstance. This legislation corrects this oversight.

H.R. 2581, the “Verify First Act,” Sponsored by Congressman Lou Barletta (R-Pa.)

The Verify First Act protects taxpayer dollars from waste, fraud, and abuse by tightening verification requirements to ensure that subsidies under current law and tax credits under the AHCA aren’t dispensed until the legal status of an eligible recipient is verified.

Numerous reports by government watchdogs (see here, here, here, here, here) have found that existing controls are insufficient resulting in billions of taxpayer dollars being sent out without verification. This common sense legislation helps correct this weak system by ensuring that controls are stronger and federal resources are not wasted. 


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2017 Must Be The Year of Pro-Growth Tax Reform

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Posted by Alexander Hendrie on Thursday, May 18th, 2017, 10:00 AM PERMALINK

Over the past decade, the economy has struggled at just two percent GDP growth as the country has experienced the worst recovery in the modern era.  While the post-World War II average remains at three percent GDP growth per year, the Congressional Budget Office projects that under current policies, two percent growth will continue into the next decade.

Even as the unemployment rate has stabilized in recent years, labor force participation has continued to drop, indicating that the economy remains weak.  Because of this lackluster recovery, families have lost an average of $8,600 in annual income, according to one estimate. 

One reason for the stagnant economy is the fact that the U.S. tax code is outdated, uncompetitive, and complex. The current code restricts the growth of new jobs, increases the cost of capital, and discourages innovation.

It has been more than 30 years since the tax code was reformed, and in that time, the world has changed drastically. Other countries have updated their tax codes and lowered their rates, while the U.S. system has barely changed.

The uncompetitive code means that businesses are unable to compete in the global economy. For instance, our uncompetitive code enables foreign competitors to acquire assets at a far greater pace than American businesses.

Over the past decade, U.S. companies have suffered a net loss of almost $200 billion in assets. Conversely, if the corporate rate was 25 percent (the average rate in the developed world), one report estimates U.S. businesses would have instead experienced a net gain of $600 billion in assets over the same period. 

Tax reform is the only way to reverse these trends and enact policies that benefit the economy. ATR President Grover Norquist recently submitted a statement for the record before the House Ways and Means Committee hearing entitled ‘How Tax Reform Will Grow Our Economy and Create Jobs Across America.’ The recommendations are below and the full paper can be found here.

  • Tax Reform Should Reduce Taxes on Businesses
  • Tax Reform Should Reduce Capital Gains Taxes
  • Tax Reform Should Implement Immediate Full Business Expensing
  • Tax Reform Should Simplify the Code
  • Tax Reform Should Make Permanent Changes to the Code
  • Tax Reform Should Move to Territoriality for Businesses and Individuals
  • Tax Reform Should Kill the Death Tax and Gift Tax

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ATR Supports Senator Thune's INVEST Act

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Posted by Alexander Hendrie on Thursday, May 18th, 2017, 8:00 AM PERMALINK

Senator John Thune (R-S.D) yesterday introduced S. 1144, the Investment in New Ventures and Economic Success Today (INVEST) Act of 2017. This legislation simplifies accounting rules and reforms the tax code to help small and medium-sized business owners more quickly recover investments.

By accelerating cost recovery on property, equipment, inventory, and other common business investments, the INVEST Act would encourage new business growth and help existing businesses, including farms and ranches, expand their operations, create new jobs, and grow the economy.

Read the letter here or below. 


May 17, 2017

The Honorable John Thune
United States Senate
511 Dirksen Office Building
Washington, DC 20510

Dear Senator Thune:

I write in support of S.1144, the Investment in New Ventures and Economic Success Today (INVEST) Act of 2017. Your legislation offers important tax relief for small and medium businesses and startups in a way that encourages innovation, growth, and expansion. All Senators should support this important legislation.

For small and medium sized businesses, the complexity of the tax code creates unnecessary burdens and costs that impede innovation and the formation of capital. The past eight years has seen the worst economic recovery in the modern era. Today, 50 percent of small businesses fail five years after they first begin in part due to excessive rules and regulations that stifle growth.

These trends should be reversed through pro-growth tax policy that encourages investment and innovation. In turn, this reform will promote strong economic growth and the creation of new jobs and higher wages.

The INVEST Act does this in three ways.

First, the INVEST Act expands the ability of small businesses to immediately deduct the cost of investments by expanding Section 179 of the code, and making 50-percent expensing permanent. Section 179 allows small businesses to expense $500,000 worth of equipment purchases every year, with a phase out of $2.5 million. This legislation expands Sec. 179 so businesses can expenses $2 million in purchases every year, with a phase out of $5 million. For purchases above this threshold, the INVEST Act makes 50-percent “bonus” depreciation permanent, so businesses can immediately deduct half of the cost of new investments.

Moving the tax code closer to a cash-flow system, where business investments can be immediately expensed, is a crucial goal of pro-growth tax reform. While the best policy would be 100 percent, immediate full businesses expensing, the INVEST Act is significant progress in the right direction.

In addition to these changes, S. 1144 also shortens depreciation schedules for farm machinery and equipment, business vehicles, and acquired intangibles such as patents and copyrights, so that business owners can more quickly recover these costs.

Second, the legislation expands the ability of businesses to expense startup costs. Currently, businesses can deduct $5,000 worth of costs related to starting up their businesses. This legislation expands the limit to $50,000 and increases the phase out to $100,000. Businesses would also be able to recover the costs of any expenses outside of this limit over a ten year window.

Third, the INVEST Act increases the flexibility of businesses to use accounting methods that best suit their needs. Specifically, the INVEST Act increases the threshold for using cash accounting from $5 million to $15 million, simplifies inventory accounting so small and medium sized businesses can deduct these costs immediately, and expands the threshold for using the completed-contract method of accounting.

Simplifying the tax code and moving to a cash-flow system that allows business owners to immediately recover the cost of new investments are two key planks of pro-growth reform. If signed into law, the INVEST Act would lead to stronger growth, higher wages, and more jobs. All Senators should support this bill.


Grover G. Norquist

President, Americans for Tax Reform






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ATR Supports Legislation Block Granting Education Funds to the States

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Posted by Alexander Hendrie on Wednesday, May 10th, 2017, 3:30 PM PERMALINK

Representative Jim Banks (R-IN) has introduced a bill that would amend the federally funded Head Start program by providing block grants to the states for this education initiative to help at-risk students.  This legislation, the Head Start Improvement Act encourages increased innovation and efficiency to an old program that has failed to live up to its promises.

American taxpayers finance Head Start with $9 Billion dollars a year, yet as a long-term 2012 study by the Department of Health and Human Services notes, Head Start’s enrollees showed varied results in their improvement of language skills, literacy, math and overall school performance as compared to their non-Head Start peers.

This legislation adds increased flexibility to states, ensuring that taxpayer dollars will be spent more efficiently and lead to positive academic outcomes for students whose families fall below the poverty line.  

Americans for Tax Reform supports Rep. Banks’ legislation and urges all members of Congress to support it as well. Read the letter here or below. 

May 10, 2017

The Honorable Jim Banks
United States House of Representatives
509 Cannon House Office Building
Washington, D.C. 20515

Dear Congressman Banks:

I write in support of H.R. 1921, The Head Start Improvement Act. This legislation block grants federal funds to the Head Start program to the states for education. By giving states increased flexibility over how they administer this program, your legislation encourages increased innovation and efficiency to a program that has failed to live up to its promises. All members of Congress should support this important legislation.

The Head Start program was created to provide comprehensive early childhood education services to children in families who fall below the poverty line. While the aim of the program was to ensure that these children do not begin kindergarten at an academic disadvantage, the success of the Head Start program has been mixed.

As noted in a 2012 study published by the Department of Health and Human Services, Head Start’s enrollees showed varied results in their improvement of language skills, literacy, math and overall school performance as compared to their non-Head Start peers.

Currently, taxpayers across the country spend nearly $9 billion a year on Head Start, yet states must often accede to top-down Washington control.

H.R. 1921 will improve the program by providing flexible grants that states can tailor to address the distinctive needs of their students. While the bill maintains the current level of funding, the increased flexibility to states ensures that taxpayer dollars will be spent more efficiently. In turn, this would further mitigate the academic barriers facing the children and families.

Given the finite federal resources available for this program, it is crucial they are spent efficiently. The Head Start Improvement Act does this by ensuring states are able to use funds in the most appropriate way possible. Members of Congress should have no hesitation supporting and co-sponsoring this important legislation.


Grover G. Norquist
President, Americans for Tax Reform


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