Americans for Tax Reform

ATR Op-Ed in American Banker: “Regulators must provide relief during transition from Libor”

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Posted by Americans for Tax Reform on Wednesday, January 19th, 2022, 1:53 PM PERMALINK

In an op-ed published in American Banker today, ATR Federal Affairs Manager Bryan Bashur highlights the importance of providing regulatory relief and flexibility for financial institutions as they transition away from using the London Interbank Offered Rate (LIBOR) as a gauge for how much interest to charge on certain financial products. Trillions of dollars in contracts for mortgages, credit cards, bonds, student loans, futures, swaps, and options, will all feel the effects of this transition. As Bashur explains:

It is imperative that the United States government implement regulatory relief, emphasize flexibility and develop concrete guidelines for financial institutions so they can easily adapt to the changing interest rate landscape. As banks and other financial institutions rewrite contracts for mortgages, credit cards, bonds, student loans and financial derivatives to adjust to fluctuating interest rates, the federal government needs to ensure that the tax burden is limited and litigation is mitigated.

According to the Congressional Research Service, as of the end of 2020 Libor was referenced in over $220 trillion financial instruments denominated in U.S. dollars, including mortgages, student loans, bonds, derivatives and more. PwC estimates that Libor is tied to as much as $350 trillion “in bonds, loans, derivatives and securitizations worldwide.” The aggregate gross domestic product for all the economies in the world pales in comparison ($84.68 trillion in 2020) to the amount of financial products connected to Libor.

As LIBOR is phased out and new benchmark interest rates will be widely adopted, it is imperative that banks and other financial institutions are able to use reference rates that best suit their products and the customers they serve. As Bashur points out:

However, regulators should emphasize flexibility and allow financial institutions to use benchmark rates that best suit their customers. Benchmarks such as the American interbank offered rate (Ameribor) and the Bloomberg Short Term Bank Yield Index (BSBY) are credit-sensitive and “provide a more accurate reflection of lenders’ funding costs.”

Enabling lenders to choose among a host of different rates will lead to more innovative financial products and could increase capital disbursement to borrowers.

Some long-term financial contracts that use LIBOR do not include plans for how to adjust the terms when LIBOR is fully discontinued. However, Congress is working on legislation to provide a more concrete framework to ease the transition. Bashur states that:

Federal regulators also need to ensure that bonds or other contracts that extend beyond 2021 and do not include contingency plans for the Libor transition are able to avoid costly litigation, which would harm both lenders and borrowers.

Fortunately, Congress is working on a bill to provide a federal framework to allow these longer-term contracts to easily transition to new reference rates. Rep. Brad Sherman, D-Calif., introduced HR 4616, the Adjustable Interest Rate (Libor) Act of 2021, to provide a framework to ease financial institutions away from Libor for contracts that lack explicit language explaining how borrowers and lenders can transition their contract from Libor to a new reference rate. The federal framework would preempt any cumbersome patchwork of state laws that could inhibit a streamlined transition for financial contracts that cross state lines.

HR 4616 garnered strong bipartisan support and passed the House by a vote of 415-9. It is highly likely that the Senate will introduce a bipartisan bill identical or nearly identical to Rep. Sherman’s bill and pass it with little consternation.

One example of regulatory relief during the LIBOR transition is a rulemaking the IRS published that exempts financial contracts from capital gains tax if the terms of the contract are amended to reflect the change in benchmark interest rates. Bashur elaborates that:

The IRS concludes in the draft rule that the exemption from capital gains tax applies “to both the issuer and holder of a debt instrument and to each party to a nondebt contract.”

Accordingly, the final rulemaking would preserve the tax exemption and avoid the negative implications of imposing the burdensome capital gains tax on borrowers and lenders during the Libor transition. Application of a capital gains tax to mortgages and student loans in this scenario is unnecessary and erroneous.

Bashur urges Congress and federal regulators to continue the stream of regulatory relief “so that both lenders and borrowers can avoid costly litigation, burdensome taxation and illiquidity.”

Click here to read the full op-ed.

Photo Credit: "interest rate" by Mike Cohen is licensed under CC BY 2.0

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Texas Governor Greg Abbott Signs Taxpayer Protection Pledge

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Posted by Americans for Tax Reform on Tuesday, January 18th, 2022, 12:36 PM PERMALINK

Texas Governor Greg Abbott (R) signed the Taxpayer Protection Pledge in Houston on January 17 in his bid for a third term this November. The Pledge, sponsored by Americans for Tax Reform, commits gubernatorial signers to oppose and veto any and all efforts to enact net tax hikes. 

Americans for Tax Reform offers the Pledge to all candidates for state and federal office. In signing the Taxpayer Protection Pledge, Greg Abbott becomes the 15th incumbent governor who has made this important commitment to taxpayers. More than 1,000 state legislators across the country and 20 members of the Texas congressional delegation have also signed the Taxpayer Protection Pledge.

“I want to thank and congratulate Governor Greg Abbott for signing the Taxpayer Protection Pledge,” said Grover Norquist, president of Americans for Tax Reform. “Governor Abbott, in addition to adhering to the Taxpayer Protection Pledge during his two terms in office, has enacted significant tax relief that has made Texas an even more attractive place to live and do business. By signing the Taxpayer Protection Pledge, Governor Abbott makes it clear that tax hikes will not be a concern in Texas if he’s elected to a third term.”

“Texas has long been recognized as a relatively low-tax state, one that boasts no income tax. Under Governor Abbott’s leadership, not only has Texas remained a national leader in keeping taxes low, it has also become a model for spending restraint,” Norquist added. “Under Governor Abbott, the rise in state spending has been held below the rate of population growth and inflation. What’s more, Governor Abbott has begun addressing profligacy at the local level with the enactment of a reform that makes it so annual local government revenue growth in excess of 3% now requires voter approval.”

With his election last November, Virginia Governor Glenn Youngkin (R) became the nation’s 14th governor to sign the Taxpayer Protection Pledge, tying the historic record for gubernatorial Pledge signers that was set after the 2012 election. By signing the Taxpayer Protection Pledge yesterday, not only did Governor Abbott make it clear tax hikes are off the table in Texas so long as he is in office, he set a new record for the number of sitting governors who are Taxpayer Protection Pledge signers. The Taxpayer Protection Pledge is a public, written commitment by elected officials or candidates to the taxpayers of his or her state or district. The Pledge is a commitment to oppose and veto or vote against any net tax increase. All candidates for federal and state office have been offered the Pledge each election cycle since 1986.

Wisconsin Residents Won’t Have To Worry About State Taxes Going Up If Rebecca Kleefisch Is Elected Governor

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Posted by Americans for Tax Reform on Friday, December 3rd, 2021, 12:22 PM PERMALINK

Former Wisconsin Lt. Governor Rebecca Kleefisch signed the Taxpayer Protection Pledge this week in her bid to be the Badger State’s next governor. The Pledge, sponsored by Americans for Tax Reform, commits gubernatorial signers to oppose and veto any and all efforts to enact net tax hikes. 

Americans for Tax Reform offers the Pledge to all candidates for state and federal office.  Fourteen incumbent governors and over 1,000 state legislators have signed the Pledge. Rebecca Kleefisch joins 15 sitting Wisconsin state legislators and four members of the state’s congressional delegation who have made this important commitment to taxpayers.

Incumbent Wisconsin Governor Tony Evers (D) has made it clear he does not share Kleefisch’s commitment to defending taxpayers. In fact, Governor Evers kicked off this year proposing to raise state taxes as part of his executive budget. Governor Evers’ proposed budget would’ve raised taxes by a billion dollars over the next biennium. The Republican controlled Wisconsin House and Senate not only put a stop to Evers’ billion dollar tax hike this year, they convinced him to swallow a budget that actually cut taxes.

By signing the Taxpayer Protection Pledge, Rebecca Kleefisch makes it clear she would be a governor whose administration would allow state legislators to resume and build upon he considerable progress that’s been made over the past decade in reducing Wisconsin’s tax burden. Wisconsin’s average state and local tax burden has dropped from 12.2% of income in 1999, the nation’s fifth highest at the time, to 10.3% today, the nation’s 23rd highest. This progress has been made thanks in large part to the tax relief and Act 10-facilitated spending restraint enacted by then-Governor Scott Walker, Lt. Governor Kleefisch, and the Republican-run Wisconsin Legislature during the last decade.

“I want to thank and congratulate Rebecca Kleefisch for taking the Taxpayer Protection Pledge,” said Grover Norquist, president of Americans for Tax Reform. “Were Rebecca Kleefisch to be elected governor, that would allow Republican lawmakers to build upon the progress they made during the Walker years, such as with reforms that reduce the state’s still uncompetitive top income tax rate. But first and foremost, under a Kleefisch administration Wisconsin taxpayers would not have to worry about their state tax burden going up. The same comfort would not be there should Tony Evers get another four years in office. By signing the Pledge, Rebecca Kleefisch has demonstrated that she understands the problems of hard-working Wisconsin taxpayers in a way that Tony Evers does not.” 

The Taxpayer Protection Pledge is a public, written commitment by elected officials or candidates to the taxpayers of his or her state or district. The Pledge is a commitment to oppose and veto or vote against any net tax increase. All candidates for federal and state office have been offered the Pledge each election cycle since 1986.

Guy Nohra signs Taxpayer Protection Pledge

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Posted by Americans for Tax Reform on Tuesday, October 19th, 2021, 2:21 PM PERMALINK

Americans for Tax Reform commends Guy Nohra, candidate for Governor of Nevada, for signing the Taxpayer Protection Pledge, a written commitment to Nevada taxpayers that, if elected, he will oppose and veto any and all efforts to raise taxes. 

Guy Nohra has made it clear that he will maintain Nevada’s 0% income tax rate. With Nohra’s signing of the taxpayer protection pledge, Nevada households can rest assured that state taxes will not go up during a Nohra administration. 

“I’m proud to be the first and only candidate for Nevada Governor to sign the Americans for Tax Reform Taxpayer Protection Pledge. As Governor, I want Nevada taxpayers know that I will always have their back,” Nohra said.  

By signing the Taxpayer Protection Pledge, candidates and incumbents make a written commitment to oppose any and all tax increases. While ATR has the role of promoting and monitoring the Pledge, the Taxpayer Protection Pledge is made to a candidate’s constituents, who deserve to know where candidates stand on the tax issue. Since the Pledge is a prerequisite for many voters, it is considered binding as long as an individual holds the office for which they signed the Pledge. 

“I want to congratulate Guy Nohra for taking the Taxpayer Protection Pledge, A written commitment to Nevadans, who deserve better than tax-and-spend policies that fall hard on the backs of hardworking families and small businesses. They want real solutions that create jobs, cut government spending, and make Nevada a more attractive place to live and raise a family,” said Grover Norquist, president of ATR. 

 “By signing the Pledge, Guy has demonstrated that he understands the problems of hard-working taxpayers in Nevada. Steve Sisolak has made it clear he will continue to pursue a higher tax and spend agenda that grows government and increases the burden of state spending on taxpayers. Nevadans deserve better” Norquist continued. 

Today, the Taxpayer Protection Pledge is offered to every candidate for state and federal office and to all incumbents. Nearly 1,400 elected officials, from state representative to governor to US Senator, have signed the Pledge.  

New candidates sign the Taxpayer Protection Pledge regularly. For the most up-to-date information on this race or any other, please visit the ATR Pledge Database. 

Candidates for governor can still make this important commitment to voters by visiting:  

Photo Credit: Guy Nohra Facebook Page

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Three States Pass Historic Tax Cuts on the Same Day

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Posted by Americans for Tax Reform on Wednesday, June 30th, 2021, 11:50 AM PERMALINK

Republican-run states provide tax relief while Biden and congressional Democrats try to impose enormous tax increases 

June 24, 2021 was a significant date in state tax reform history. On that day Arizona, New Hampshire, and North Carolina took monumental steps towards the enactment of pro-growth income tax cuts. 


Arizona lawmakers, in a party line vote, gave final passage to a sweeping tax relief package that will make the state’s tax code among the nation’s most competitive. Once fully implemented, this package, which Gov. Doug Ducey (R) is eager to sign into law, will leave an additional $1.9 billion a year in the pockets of individual taxpayers, families, and small businesses across the Grand Canyon State.

Under the Republican tax package, Arizona’s four income tax brackets, which range from 2.59% to 4.5%, (and effective fifth bracket with a rate of 8% when accounting for Proposition 208’s 3.5% surcharge on certain income) will be streamlined down to a flat rate of 2.5% (with an aggregate cap of 4.5% to mitigate some to harm inflicted by the Prop. 208 “surcharge”). Arizona’s new flat rate will be lower than Arizona’s current bottom rate of 2.59% and the lowest flat rate in the nation.

“Arizona passed a historic and game changing budget that reduces taxes for all taxpayers and moves Arizona to a flat tax on the road to phasing out the entire state income tax,” said Grover Norquist, president of Americans for Tax Reform. “Already there are eight states with no state income tax. Governor Doug Ducey, bill sponsors Senator J.D. Mesnard and Majority Leader Ben Toma, Senate President Pro Tempore Vince Leach, House Appropriations Chair Regina Cobb, House Ways & Means Chair Shawnna Bolick, and many others worked together to create a brighter future for Arizona.”


Also on June 24, legislators passed and sent a budget to the desk of Gov. Chris Sununu (R) that will finally make New Hampshire a true no-income-tax state. While New Hampshire has long avoided taxing wage income, its 5% tax on interest & dividend income has required it to appear with an asterisk by its name when listed as a no-income-tax state. 

This provision of the Republican budget will provide much-needed relief to senior living off of investment income and allow New Hampshire to better compete with the other eight no income tax states.

“New Hampshire becomes the nation’s ninth true no-income-tax state fewer than six months after Tennessee became the eighth. States led by smart governors and legislators are now competing to see who will become no-income-tax state number ten,” said Norquist.


The same day that New Hampshire and Arizona Republicans passed the aforementioned tax reform packages, North Carolina state senators approved their new budget, which includes a new round of income tax relief, with a bipartisan, veto-proof majority. The North Carolina Senate budget cuts the state’s flat income tax rate from 5.25% to 3.99%. 

At 2.5%, North Carolina’s corporate income tax, which used to be the highest in the southeastern U.S., is now the lowest among states that impose the tax thanks to tax reform enacted in 2013. The North Carolina Senate budget phases out the corporate income tax entirely by 2028.

“By passing these historic tax relief packages Republican legislators are taking the tax codes of these politically and economically crucial purple states in the opposite direction from Biden and congressional Democrats are seeking to take the federal tax climate,” said Norquist. “While Democrats seek to push the U.S. corporate rate beyond that of China and European competitors, confiscate more household savings and investment income through ending stepped up basis, and impose massive income tax hikes that will crush small businesses, Republicans are using their control of state governments to demonstrate that there is another, better way.” 

The Tragic Consequences of Anti-Vaping Laws

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Posted by Americans for Tax Reform on Thursday, June 24th, 2021, 3:09 PM PERMALINK

On a recent Saturday evening, law enforcement in Ocean City, Maryland tasered, kneed, and violently restrained teenagers for the crime of vaping in a public area. This disturbing incident is the result of efforts across the country to criminalize vaping, despite calls from Americans for Tax Reform, the American Civil Liberties Union (ACLU), and countless law enforcement agencies, that prohibitions disproportionately impact communities of color and are detrimental to criminal justice efforts because they exacerbate the over policing of minorities. 

In an opinion piece for InsideSources, ATR’s Karl Abramson explained how anti-vaping laws, such as flavor bans, bring about unequal criminal justice outcomes, all while harming public health. 

Amidst the ongoing nationwide discussion regarding police brutality and racial equality, the Biden administration is actively taking steps to prohibit menthol cigarettes, a move that would criminalize a product used predominately among Black smokers. The move is opposed by civil rights advocates like Al Sharpton and the ACLU who claim flavor prohibitions “disproportionately impact people and communities of color,” and “instigate unconstitutional policing and other negative interactions with local law enforcement.” The Ocean City incidents perfectly illustrate the validity of these concerns. 

When 18-year-old Taizier Griffin was tased by police, he was subject to more harm than vaping could ever cause. Since 2000, more than 1,000 people have died after being tased by police. A study has found the shock from a taser can lead to cardiac arrest and sudden death. There has not been a single recorded case of a vaper dying from nicotine-containing e-cigarette. Tragically, nine in 10 of those who have died from being tased by police were unarmed, just like Griffin. 

It should upset anyone who cares about criminal justice reform that the same politicians who claim to care about repairing the relationship between police and minority communities relentlessly push for restrictions on vaping. In doing so, they ignore the advice of countless medical experts, public health organizations, and civil rights advocates.” 

Click here to read the full article. 

Photo Credit: InsideSources

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North Carolina Republicans Propose New Tax Plan That Would Make State Home To Top Five Business Tax Climate

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Posted by Americans for Tax Reform on Thursday, May 27th, 2021, 10:07 AM PERMALINK

North Carolina Senators introduced a tax plan this week that would provide significant tax relief to families and employers across North Carolina, leaving the nation’s ninth most populous state with a greatly improved business tax climate (improving from the nation’s 10th best, to 5th best, according to the Tax Foundation).

“That proposal, introduced as an amendment to House Bill 334, would cut North Carolina’s flat state income tax rate from 5.25% to 4.99%,” ATR’s Patrick Gleason writes in Forbes. “The corporate rate, which currently stands at 2.5%, would be phased out, making North Carolina the third state with no corporate income or gross receipts tax.”

The North Carolina Senate’s tax plan also cuts the franchise tax, raises the standard deduction by 18%, and increases the child tax credit. At the May 25 press conference announcing this new tax relief package, Senate Finance Committee Co-Chairman Paul Newton (R) explained that North Carolina Republicans have put the state in a position to provide further relief to individuals, families, and employers across the state due to a decade of conservative budgeting and sound governance.

“We have large cash reserves and we have yet another budget surplus for the sixth and seventh years,” Senator Newton said at the May 25 press conference. “The Republican philosophy, when government takes too much money from the people, is to give it back in the form of tax relief. In our view, it's never, never the government's money, it's the people's money. So we are proposing yet another tax cut because we believe people spend their money better than government does.”

“The state is in good financial shape, with a new revenue forecast due soon,” Dawn Vaughan reported in the News & Observer on May 26. “There is already a $5 billion surplus and $5.7 billion coming to the state from the federal American Rescue Plan.”

Americans for Tax Reform supports the tax relief package proposed by North Carolina Senators this week and urges North Carolina lawmakers to enact these pro-growth reforms before adjourning for the summer.

“I applaud Senators Paul Newton, Bill Rabon, and Warren Daniel for pursuing a new tax relief package that would increase household income, while expanding the job creating and sustaining capacity of North Carolina-based businesses,” said Grover Norquist, president of Americans for Tax Reform. “At a time when the Biden White House and Congress are pushing for unprecedented increases in government spending along with job-killing tax hikes, North Carolina Republicans continue lead by example in demonstrating the alternative, conservative approach to governing.”

“By both keeping the growth of state government spending in check, while continuing to pursue reforms that will further improve the state tax code, North Carolina Republicans continue to serve as a national model for conservative governance,” Norquist added. “North Carolina taxpayers are fortunate to have Taxpayer Protection Pledge signers leading both chambers of the state legislature and at the helm of finance committees. North Carolina voters’ decision last year to keep the GOP in charge of the General Assembly could soon pay dividends for North Carolina taxpayers once again.”

The Democrat Party's War on Small Business

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Posted by Americans for Tax Reform on Thursday, April 22nd, 2021, 8:00 AM PERMALINK


The PRO Act is a central component of the left's crusade against American workers and small businesses: 

The PRO Act Bans Right to Work Laws Nationwide

  • Right to Work laws prohibit employers from forcing their employees to join a union or pay union dues as a condition of employment. Existing Right to Work laws protect 166 million Americans in 27 states, more than half the U.S. population. 
  • Research shows that Right to Work states experience stronger growth in the number of people employed, growth in manufacturing employment, and growth in the private sector than states run by union bosses. 
  • According to the National Institute for Labor Relations Research, the percentage growth in the number of people employed between 2007-2017 in Right to Work states was 8.8% and 4.2% in forced-unionism states. Growth in manufacturing employment between 2012-2017 in Right to Work states was 5.5% and 1.7% in forced-unionism states. The percentage growth in the private sector from 2007-2017 in Right to Work states was 13.0% and 10.1% in forced-unionism states.

The PRO Act Limits Opportunities To Work With Freelancers and Independent Contractors

  • The PRO Act implements California’s disastrous “ABC” test for independent contractors, which forced the mass reclassification of California’s freelancers, causing them to flee the Golden State to chase their dreams and earn a living. The ABC test goes far beyond federal guidance for independent contractors. 
  • Under the ABC test, businesses must prove that a contractor is doing duties “outside the usual course of work of the hiring entity” and that “the worker customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.” This significantly limits the ability of businesses to retain contractors who may operate within the scope of work sometimes performed by employees in similar circumstances. It’s an unnecessary distinction that prohibits most businesses from working with independent contractors.
  • The ABC was widely unpopular among California’s independent contractors, over 90 percent of whom opposed Assembly Bill 5 before Governor Gavin Newsome signed it into law. ATR has compiled 655 personal testimonials from independent contractors who details the ways that AB5 has hurt them, which you can view here
  • If the PRO Act is passed into law, the livelihoods of more than 59 million independent contractors across the country will be at risk.

PRO Act Forces Employers to Hand Over Sensitive Employee Contact Information to Union Organizers

  • The PRO Act forces employers to turn over private employee contact information - such as home addresses, email addresses, and personal phone numbers - to union bosses during organization drives. This would open workers to union intimidation and harassment. 


President Biden and the Democrats vow to target small businesses and individuals with a new Death Tax: They will eliminate step-up in basis. This will impose a steep tax increase and paperwork nightmare for small businesses, farms, and families. It will also violate his own pledge against raising any tax on any American making less than $400,000. In this video, you can see a sample of the many times Biden has threatened to eliminate step-up in basis.

Elimination of stepped up basis would impose an automatic capital gains tax at death -- separate from, and in addition to -- the Death Tax.

In a Forbes piece titled "This Biden Tax Hike Hike Will Hit Mom & Pop Hard" tax lawyer Robert W. Wood writes:

Under current tax law, assets that pass directly to your heirs get a step-up in basis for income tax purposes. It doesn’t matter if you pay estate tax when you die or not. For generations, assets held at death get a stepped-up basis—to market value—when you die. Small businesses count on this.

Wood notes:

Biden's proposal would tax an asset's unrealized appreciation at transfer. You mean Junior gets taxed whether or not he sells the business? Essentially, yes. The idea that you could build up your small business and escape death tax and income tax to pass it to your kids is on the chopping block. Biden would levy a tax on unrealized appreciation of assets passed on at death. By taxing the unrealized gain at death, heirs would get hit at the transfer, regardless of whether they sell the asset.

As reported previously by CNBC:

“When someone dies and the asset transfers to an heir, that transfer itself will be a taxable event, and the estate is required to pay taxes on the gains as if they sold the asset,” said Howard Gleckman, senior fellow in the Urban-Brookings Tax Policy Center. 

In its analysis of Biden's tax plan, Tax Policy Center says the step-up in basis proposal mirrors a proposal described in an Obama-Biden 2016 Treasury Department document. This document confirms that Biden will force a capital gains tax payment immediately upon transfer of an asset after death of a loved one:

Under the proposal, transfers of appreciated property generally would be treated as a sale of the property. The donor or deceased owner of an appreciated asset would realize a capital gain at the time the asset is given or bequeathed to another.

The amount of the gain realized would be the excess of the asset's fair market value on the date of the transfer over the donor's basis in that asset. That gain would be taxable income to the donor in the year the transfer was made, and to the decedent either on the final individual return or on a separate capital gains return.


In 1976 congress eliminated stepped-up basis but it was so complicated and unworkable it was repealed before it took effect because it was an impossible-to-overcome compliance burden.

As noted in a July 3, 1979 New York Times article, it was "impossibly unworkable":

Almost immediately, however, the new law touched off a flood of complaints as unfair and impossibly unworkable. So many, in fact, that last year Congress retroactively delayed the law's effective date until 1980 while it struggled again with the issue.

As noted by the NYT, intense voter blowback ensued:

Not only were there protests from people who expected the tax to fall on them -- family businesses and farms, in particular -- bankers and estate lawyers also complained that the rule was a nightmare of paperwork.


Biden vows to impose capital gains tax increases just as America digs out from the pandemic. He said "every single solitary person" will pay capital gains taxes at ordinary income tax rates. Biden wants to take the current capital gains tax rate of 20 percent and double it to 39.6 percent, highest since Jimmy Carter in 1977 when the highest possible capital gains rate was 39.875 percent.

Here is the documentation of Biden's threatened capital gains tax hike:

On Oct. 23, 2019 Biden said: “So every single solitary person, their capital gains are going to be treated like real income and they are going to pay 40 percent on their capital gains tax."

On Sept. 27, 2019 Biden said: “I’m gonna double the capital gains rate to 40 percent."

On Aug. 21, 2019 Biden said“The capital gains tax should be at what the highest minimum tax should be, we should raise the tax back to 39.6 percent instead of 20 percent."

Video documentation of the above statements can be found here: How High Will Biden Raise Your Capital Gains Taxes?

In 2012, Vice President Biden and President Obama succeeded in their push to let the capital gains tax rate rise to 20 percent (from the Bush-era rate of 15 percent.)

Biden and Obama then piled on another 3.8 percent capital gains tax hike -- the Net Investment Income Tax -- one of the many tax increases in Obamacare. The 3.8 percent tax hike took effect Jan. 1, 2013, purposefully timed to kick in *after* the 2012 election.

Some taxpayers under Biden will face a capital gains tax rate over 50 percent, when combined with state capital gains taxes. California's 13.3 percent state capital gains rate means Golden State taxpayers will face a rate of 56.7 percent (39.6 + 3.8 + 13.3 = 56.7%).

So what ever happened to the high capital gains rate under President Carter? In 1978 he wanted to raise the rate even higher. But there was a backlash from middle class households around the country, from Democrats and Republicans alike. It was so fierce, Carter was forced to relent and ended up signing a capital gains tax cut.

As recounted by Mark Bloomfield in the Wall Street Journal:

But the year was 1978, the push for a tax hike came from President Jimmy Carter, and the tax in question was on capital gains. Mr. Carter wanted to tax capital gains at the same rate as ordinary income -- effectively doubling the rate for many taxpayers.

He didn't get his tax hike, but he did spark a pro-growth insurgency that reframed the tax debate.

The chief insurgent was Republican Rep. Bill Steiger of Wisconsin, who called for cutting the top capital gains tax rate almost in half. From its inception, the 1978 "Steiger amendment" won bipartisan support. In the Senate, Democrat Russell Long (then chairman of the tax-writing committee), Alan Cranston (the second-ranking Democrat) and Republican Clifford Hansen signed up 59 Democrats and Republicans to co-sponsor legislation to cut capital gains taxes.

Within weeks, political and popular support turned in favor of the tax cuts as more people acknowledged that lowering the rates would reward the middle class for saving and investing, not just "fill the pockets of fat cats."

What prompted this unexpectedly strong support for lower taxes on capital gains? The tax on capital gains may have been seen as a tax on the rich by some in Washington, but most Americans saw it differently. People believe in the American Dream, the old-fashioned Horatio Alger rags-to-riches story. A tax on capital gains is a tax on the hard work and risk-taking people undertake to build their own wealth.

Mainstream economists know that lower capital gains taxes result in lower capital costs, more saving and investment, and a stronger economy. And ordinary citizens understand that low taxes on capital gains can make it possible for them to buy a new lathe or the newest software, which will give them the chance to compete effectively in today's global economy. Retirement security is also at stake. Low taxes on capital gains allow Americans to build up larger nest eggs.


Democrats snuck through new reporting requirements that will increase tax complexity for independent contractors, small businesses, and freelancers. This was part of the recently-enacted "stimulus" bill as another attempt by the Left to exploit the pandemic by passing unrelated policy measures long desired by progressives.

The provision lowered the reporting threshold to $600 or more for 1099-K reporting and eliminated the transactions threshold. Previously, Americans were only required to report when there were more than $20,000 in sales and more than 200 transactions in a year. The provision also extends the 1099-K reporting to "specified electronic payment processors."

This will burden low- and middle-income contractors, small businesses, and freelancers, many of which have been devastated by the coronavirus pandemic. Implementing new, burdensome reporting rules will only do more damage.

Democrats last enacted burdensome new 1099 reporting requirements in Obamacare, when they required businesses to send 1099 forms for all purchases of goods and services over $600 annually.

Soon after this provision was signed into law, the National Taxpayer Advocate raised concerns that these reporting requirements would cause “disproportionate” harm to small businesses and do little to improve tax compliance.

This provision was so unpopular that it was quickly repealed in 2011 with a bipartisan vote of 87 to 12 in the Senate and 314 to 112 in the House. The Obama administration even hailed repeal of the provision a “big win” for small businesses in a press release:  

“Today, President Obama signed a law that removes the expanded ‘1099’ reporting requirement from the Affordable Care Act. This is a big win for small businesses.

The SBA and President Obama supported repealing this provision, which would have required businesses to send 1099 forms for all purchases of goods and services over $600 annually. With this bipartisan effort, we have removed a requirement that would have been an undue barrier to small business growth.”

Increasing compliance costs and the regulatory burden on already-struggling workers and small business owners is especially alarming given they have been disproportionately harmed by the pandemic.


If Democrats increase the corporate income tax rate, they will have to explain why they just increased the utility bills of households and small businesses which typically operate on tight margins, with considerable heating, cooling, gas, and refrigeration costs.

Customers bear the cost of corporate income taxes imposed on utility companies. Corporate income tax cuts drive utility rates down, corporate income tax hikes drive utility rates up.

Electric, gas, and water companies must get their billing rates approved by the respective state utility commissions. When the 2017 Tax Cuts and Jobs Act cut the corporate income tax rate from 35% to 21%, utility companies worked with officials to pass along the tax savings to customers

Many Americans benefited from lower electric bills, lower gas bills, and lower water bills. ATR collected over 140 examples nationwide here and you may view a compilation of local television reports here.

Example 1:
“The tax law will result in lower bills for our customers and lower taxes for Pepco,” said Dave Velazquez, President and CEO, Pepco Holdings, which includes Pepco. – Jan. 5, 2018 Pepco press release

Example 2:

The legislation cuts the federal corporate income tax rate from 35% to 21% effective January 1, 2018. This tax cut, in turn, reduces the cost of service for many of Virginia’s major electric, gas and water utilities.  – January 8, 2018, Virginia SCC Press Release

Example 3:

The Arizona Corporation Commission is following through on its promise to pass savings created by the Tax Cuts and Jobs Act to Arizona utility ratepayers. As of August, the effort has totaled $189,088,437.- August 24, 2018 Arizona Corporation Commission press release

Example 4:
The Pennsylvania Public Utility Commission (PUC) today issued an Order, requiring a “negative surcharge” or monthly credit on customer bills for 17 major electric, natural gas, and water and wastewater utilities, totaling more than $320-million per year. The refunds to consumers are the result of the substantial decrease in federal corporate tax rates and other tax changes under the Tax Cuts and Jobs Act (TCJA) of 2017, which impacted the tax liability of many utilities. -- May 17, 2018 Pennsylvania Public Utilities Commission Press Release
Conversely, if Biden and the Democrats raise the corporate tax rate, Americans will see their utility rates increase. Democrats will get to explain why they imposed higher utility rates on their constituents as the country tries to dig out from the pandemic.


According to the Congressional Research Service, "The majority of both corporations and pass-throughs in 2011 had fewer than five employees (55% of C corporations and 64% of pass-throughs). Nearly 99% of both corporations and pass-throughs had fewer than 500 employees, the most common employment-based threshold used by the Small Business Administration (SBA)." For reference, Amazon has one million employees and Walmart has 2.2 million employees.

The most dire effects of a corporate tax hike would be felt by smaller businesses that Biden has claimed to be a champion for. It would also have severe consequences on workers' wages and the economy as a whole. 

Joe Biden’s tax hikes would eliminate one million jobs in the first two years, according to a new study by economists John W. Diamond and George R. Zodrow. The study, which was commissioned by the National Association of Manufacturers also found that the tax hikes would eliminate 600,000 jobs per year over the first decade and reduce GDP by $117 billion in the first two years. 

The study assumed several Biden tax hikes would go into effect include raising the corporate tax rate to 28 percent, reinstating the corporate alternative minimum tax, eliminating most expensing of depreciable assets, repealing the 20% deduction for pass-through businesses, doubling the tax rate on capital gains and dividends, taxing unrealized capital gains at death, and increasing the top individual tax rate to 39.6 percent.  

Biden’s tax hikes will reduce new investment and decrease capital in both the short and long term. As the study notes:

Investment in ordinary capital declines initially (two years after enactment) by 1.9 percent, by 1.3 percent ten years after enactment, and by 1.6 percent in the long run; this effect is only modestly affected by imports of ordinary capital into the United States, which increase in the long run by 0.2 percent. 

The increase in the statutory corporate income tax rate results in a reallocation abroad of FSK, which declines initially by 2.7 percent, by 3.5 percent 10 years after enactment, and by 2.9 percent in the long run. 

This reduction in investment and capital will not only have detrimental effects on the U.S. economy, it will also harm workers due to a decrease in household wages. As the study notes: 

The decline in the stocks of ordinary capital and FSK gradually reduce the productivity of labor over time and thus real wages, which fall by 0.6 percent in the long run, while labor compensation falls by 0.6 percent initially, by 0.3 percent ten years after enactment, and by 0.6 percent in the long run… 

These effects translate into a reduction of $638 in wage income per household… 

The study also notes that Biden’s tax hikes will cost jobs each and every year after enactment: 

The declines in hours worked would be equivalent to declines in employment of approximately just over 1.0 million FTE jobs two years and five years after enactment, and a decline of 0.1 million FTE jobs ten years after enactment. 

In terms of the duration of the reduction in employment over the first ten years after enactment, the average annual reduction in employment would be equivalent to a loss of roughly 600,000 jobs, or 5.7 million total “job years” lost over the ten-year interval. 

Other studies, on average, show that labor (or workers) bear an estimated 70 percent of the corporate income tax in the form of wages and employment, as ATR notes here.

There is abundant evidence that corporate tax hikes lead to lower investment and employment: 

  • A Treasury Department study estimated that “a country with a 1 percentage point lower tax rate than its competitors attracts 3 percent more capital.” This is because raising the corporate rate makes the United States a less attractive place to invest profits.
  • According to the Stephen Entin of the Tax Foundation, labor (or workers) bear an estimated 70 percent of the corporate income tax in the form of wages and employment. As Entin notes, 50 percent70 percent, or even 100 percent of the corporate tax is borne by workers.
  • A 2012 Harvard Business Review piece by Mihir A. Desai notes that raising the corporate tax lands “straight on the back” of the American worker and will see a decline in real wages. 
  • A 2012 paper at the University of Warwick and University of Oxford found that a $1 increase in the corporate tax reduces wages by 92 cents in the long term. This study was conducted by Wiji Arulampalam, Michael P. Devereux, and Giorgia Maffini and studied over 55,000 businesses located in nine European countries over the period 1996-2003.  
  • Even the left-of-center Tax Policy Center estimates that 20 percent of the burden of the corporate income tax is borne by labor. 



From the Tax Policy Center:

"In 2017, individuals reported about $1.03 trillion in net income from all types of pass-throughs accounting for 9.3 percent of total AGI reported on individual income tax returns."

According to the Congressional Research Service, "The majority of both corporations and pass-throughs in 2011 had fewer than five employees (55% of C corporations and 64% of pass-throughs). Nearly 99% of both corporations and pass-throughs had fewer than 500 employees, the most common employment-based threshold used by the Small Business Administration (SBA)." For reference, Amazon has one million employees and Walmart has 2.2 million employees.

Of the 26 million businesses in 2014, 95 percent were pass-throughs, while only 5 percent were C-corporations.

Businesses organized as pass-through firms don’t pay taxes themselves. Instead, the profits of the business “pass through” to the owners who pay individual taxes on their 1040 form. Sometimes, this means that pass-throughs pay a higher rate than corporations, exceeding 50 percent in some states.

For many small businesses or startups, a rise in the top marginal income tax rate could result in a significant competitive disadvantage that makes it harder to compete with businesses organized as corporations.

Joe Biden also wishes to repeal the 20% deduction for pass-through businesses that the TCJA implemented, which could mean even more hardship for small businesses organized as pass-throughs.

The Death Tax is fundamentally unfair and its bad tax policy. It is levied on assets that have been taxed previously through income taxes, capital gains taxes, and the corporate income tax. 

It disproportionately impacts family-owned businesses like farmers and ranchers especially that tend to be asset rich but cash poor. On the other hand, the wealthy often evade the tax through loopholes and armies of lawyers and accountants. 

The Tax Cuts and Jobs Act of 2017 made key progress toward repealing the Death Tax by doubling exemption from $5.5 million to $11 million. Unfortunately, because of arcane senate rules, this tax cut expires in 2025.

Moving forward, the Death Tax should be permanently repealed. While conservatives in Congress support repeal of the Death Tax, Democrats want to dramatically increase the size and scope of the Death Tax.

For instance, Senator Bernie Sanders (I-Vt.) has proposed nearly doubling the death tax to 77 percent in his new Estate Tax Plan, returning the death tax to levels unseen since the 1970s. President Joe Biden has expressed interest in reducing the current exemption for individual’s eligibility of transfer from $11.7 million to $3.5 million for estates.

Repealing the death tax would stimulate job creation and grow the economy. Numerous studies have found that repealing the death tax would grow the economy. For instance, a 2017 study by the Tax Foundation found that the US could create over 150,000 jobs by rolling back the estate tax.

Similarly, a 2012 study by the Joint Economic Committee found that the death tax has destroyed over $1.1 trillion of capital in the US economy, which results in fewer jobs and lower wages. Much of this economic damage hits small businesses, which are the core of America’s economy and have been disproportionately harmed by the Coronavirus pandemic. The economic growth created by repealing the Death Tax would produce $221 billion in federal revenue because of increased wages and more jobs.

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

Repeal of the Death Tax would spur economic growth, create jobs, and increase wages. It would end double taxation and help family-owned businesses across the country.


As part of an $80 billion expansion in IRS funding, Joe Biden has proposed greatly expanding the power of the agency, by allowing it access to the private bank account information of taxpayers. According to the Wall Street Journal

"The Treasury Department’s career staff estimates that more than half of the $700 billion in additional revenue would come from changes to how businesses’ and individuals’ income is reported to the government, the people said. Under the plan, banks and other payment providers would be required to tell the IRS how much money came into and out of individuals’ and businesses’ accounts each year, going far beyond the existing reporting of interest income.

That change wouldn’t require individuals and business owners to file any additional forms, and it wouldn’t provide the IRS with direct information about what someone’s tax liability should be. Business owners trying to hide income could still attempt to use cash or cryptocurrency, both areas that the IRS has struggled to police.

But the change to the information-reporting rules would give the IRS much more information about business income as it decides who to audit. It would also create an enormous flow of information that the IRS would have to learn how to manage and use."

This mandate puts private information of both individuals and businesses at risk. Given the IRS's history of mismanagement and abuse, this is particularly concerning. 


Photo Credit: Gage Skidmore

Rather Than Expand Medicaid, Tennessee Lawmakers Look To Insure More People Through A State-Based Exchange

Posted by Americans for Tax Reform on Tuesday, March 30th, 2021, 9:12 AM PERMALINK

The American Rescue Plan Act (ARPA), the $1.9 trillion spending bill recently enacted by President Joe Biden, with its provision blocking states from cutting taxes, is likely to be ruled by a judge to be an unconstitutional violation of state sovereignty. A number of state Attorneys General are now suing to overturn this unjust encroachment on states’ power to set their own fiscal policy.

At a time when politicians in Washington are pursuing a historic violation of state sovereignty, lawmakers in Tennessee and other states are looking to reassert state sovereignty when it comes to setting health care and other key policies within their borders. That is the goal of Tennessee House Bill 875, legislation introduced by Representative Bryan Terry (R) that would move Tennessee off of the federally-run health care exchange and set up a state-based exchange. Currently 14 states and the District of Columbia run their own health care exchanges.

The ARPA increases the financial incentive for states to expand Medicaid in accordance with Obamacare. This will escalate the near decade-long debate over whether impose Obamacare’s Medicaid expansion in Tennessee and the 11 other states that have yet to go along with the expansion. In this context, Rep. Terry’s bill is seen by some as alternative to expanding Medicaid, instead increasing coverage through private insurers via a state-based exchange.

Proponents of HB 875, which will get a subcommittee hearing this week, tout the greater flexibility that comes from having a state-based exchange versus relying on the federally operated exchange. State-based exchanges provide greater flexibility when it comes to setting open and special enrollment periods. State-based exchanges also provide for more funding and greater regulatory flexibility, permitting premium-cutting reinsurance pools and lighter requirements for small businesses.

Imposition of Obamacare’s Medicaid expansion would have disastrous consequences for Tennessee taxpayers, increasing the cost of state government by billions of dollars annually. The states that have implemented Obamacare’s Medicaid expansion have seen massive cost overruns, which taxpayers are on the hook for. In addition to putting more able-bodied adults in a taxpayer-supported entitlement program that was already crowding out other state spending priorities, Obamacare’s Medicaid expansion has also stoked a wave of fraud.

“Millions of people enrolled as a result of Medicaid expansion were almost certainly ineligible for the program—either because their incomes were too high or because they were not lawful residents,” writes Brian Blase, a senior fellow at the Galen Institute and former Trump administration health care advisor. “The Inspector General at HHS estimated that one- quarter of newly-eligible enrollees in California and New York did not meet eligibility requirements.”

It would behoove Tennessee lawmakers to reject calls to expand Medicaid in accordance with Obamacare. In contrast, seizing greater control of health care policy from the federal government through passage of HB 875 is a reform that deserves lawmakers’ consideration.

State Lawmakers Take Action To Protect Churches From Unwarranted Property Tax Assessments

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Posted by Americans for Tax Reform on Friday, January 22nd, 2021, 9:45 AM PERMALINK

In 2018, nearly 500 churches hosting homeschool groups in all 50 states, specifically those hosting Classical Conversations communities, received letters informing pastors that they were breaking the law. By accommodating these homeschool groups, the letter-writer accused the churches of violating the IRS’s 501(c)(3) income tax exemption, thereby jeopardizing not only their nonprofit status but also making them vulnerable to property tax liability.

In response to this threat, many churches no longer permit any outside groups to utilize their facilities. However, some state lawmakers are beginning to take action in response, passing legislation to clarify that churches can host homeschool groups without jeopardizing their tax exempt status. That’s what lawmakers in Oklahoma did in 2020. Their counterparts in other state legislatures should follow suit in 2021.

The issue at hand is not whether a group using the property is a for-profit or nonprofit organization. The issue is whether the use of the property by the group is an exempt or nonexempt purpose.

In order to avoid unnecessary restrictions on facilities that can be used by homeschooling groups, state lawmakers should amend their tax codes to clarify that the use of exempt church property may be utilized by for-profit organizations for educational purposes. Existing state laws generally support such usage, but some laws have more ambiguous language that could cause tax assessors to make inconsistent or incorrect evaluations.

Clarification legislation here would provide property tax assessors more guidance as they do their work and significantly reduce the possibility that a church could lose its property tax exempt status under state law for allowing a homeschool group to use its property.

State lawmakers in Oklahoma have already successfully amended their tax codes with such clarifying language. The clarification bill in Oklahoma, HB 2504, was enacted in May 2020. This clarification has brought peace of mind and confidence to several Oklahoma church leaders who now allow homeschool groups to use their church buildings again.

Americans for Tax Reform encourages governors and lawmakers in other states to follow Oklahoma’s lead by enacting similar clarification legislation protecting churches and other places of worship from unjust and incorrect property tax assessments.