Elizabeth McKee

Grover Norquist and David McIntosh: Use a 25-Year Budget Window to Achieve Permanent Tax Reform

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Posted by Elizabeth McKee on Thursday, June 15th, 2017, 4:20 PM PERMALINK

How can taxpayers get permanent tax reform? ATR president Grover Norquist and Club for Growth president David McIntosh say Congress should use a 25-year budget window, an idea being championed in the Senate by Pat Toomey (R-Pa.). In a Wall Street Journal op-ed this week, Norquist and McIntosh write:

We say extend the budget window to 25 years. Why? Because the people creating jobs and investing in new products think long-term. Depreciation schedules for new plant and equipment often run to 25 years or more.

Lawmakers simply should write this year's budget to say that all tax cuts can last 25 years, which would allow rate reductions to go into effect now and be offset later with revenue from higher growth or spending restraint.

According to Norquist and McIntosh, there is no good reason why budget windows conventionally last 5, 7, or 10 years. They write:

The idea of modifying the time frame isn't new, and it certainly isn't radical. The budget window was expanded in fiscal year 1995 from five years to seven. Congress used the 10-year window for the first time in 2000, but then went back to five years again as recently as 2007.  

Together, Norquist and McIntosh have arrived at a proposal that may slice through the many obstacles to tax reform, unraveling a quagmire they liken to the legendary Gordian knot. “Extending the budget window to 25 years,” they write, “would cut the Gordian knot, unravel the Byrd rule, and allow serious tax reform to create millions of jobs in the years to come.”

Read the full op-ed here

 

Photo Credit: Gage Skidmore

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Norquist: GOP Tax Reform Will Change the World


Posted by Elizabeth McKee on Monday, June 12th, 2017, 12:51 PM PERMALINK

ATR president Grover Norquist appeared on CNN Newsroom with Fredricka Whitfield to tax reform. Norquist noted the establishment media has failed to mention that the House and Senate are meeting consistently, several times per week to advance tax reform.

Norquist said Trump and Congress are at a consensus on the major components of pro-growth tax reform:

This summer, this fall, by September, you'll have both the Obamacare repeal reform and significant tax reform. The consensus items are what's impressive: 15 or 20% corporate rate. 15 or 20% business taxes on people who pay through their individual taxes - the Subchapter S corporations or partnerships. A lot of small businesses pay taxes that way. The Death Tax - gone. The Alternative Minimum Tax – gone. Doubling the personal exemption for individuals and families.

Fredricka Whitfield, however, seemed doubtful that tax reform will pass. “Well, right, so those are the proposals. Those are the proposals.”

Norquist said: “Those are the ones the House, Senate, and the President agree on. “There are others where there isn’t agreement, but that alone, if you only pass those, it would change the world.”

Watch the full interview here.

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Seattle Passes Staggering New Beverage Tax Despite Opposition from Unions and Businesses

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Posted by Elizabeth McKee on Wednesday, June 7th, 2017, 12:30 PM PERMALINK

The Seattle City Council voted this week to impose a tax on soda and other sugary beverages. Although the excise tax is targeted specifically at sodas, the tax would also affect the price of fruit juice, energy drinks, sweet tea, and even Seattle’s favorite drink: coffee.

Seattle will collect $0.21 cents for every can of soda sold within city limits, or $5.04 for every case (24 cans). The Tax Foundation notes that at 1.75 cents per ounce, Seattle’s new soda tax is eight times higher than Washington’s tax on beer.

The vote comes as a defeat for the 209 local business owners who petitioned the city council to reject the tax. In a letter, these business owners implored:

Your tax stands to increase wholesale costs by more than 60 percent, which wipes out any money we might make and need to survive. Many of the products covered by this proposed tax are products that contribute considerably to the daily revenue we rely upon to help our employees live in the communities where they work, and allow for an equitable lifestyle for themselves and their families.

If we pass on this regressive tax to our customers, it will dramatically raise the cost of groceries for working families who are already spending a large portion of their paychecks on increased rents, property taxes and car tabs. Under this proposal, the $.99 two liter bottle would increase to $2.35. This is a huge hit to anyone’s budget and ultimately makes Seattle even less affordable, especially for those located in minority communities.

The legislation made unlikely allies of business owners and labor unions, who recognize that beverage taxes kill jobs in convenience stores, restaurants, and other industries. Rick Hicks, the Treasury-Secretary of Teamsters Local 174, writes, “We at the Teamsters cannot and do not support a tax that will put hardworking members of our communities out of a job.”

In 2016, Philadelphia enacted a similar tax, voting to tax soda products at a rate of 1.5 cents per ounce. Although this tax was smaller than Seattle’s tax and did not affect juice, tea, or coffee products, the Philadelphia tax still caused some local businesses to lay off as many as 20% of their employees. Philadelphia business owner Jeff Brown told Bloomberg, “I would describe the impact as nothing less than devastating."

Seattle Mayor Ed Murray, however, is hopeful rather than fearful that the beverage tax will decrease consumer demand. In order to convince the city council to pass the legislation, Mayor Murray cited a Berkeley study that found soda taxes decrease soda sales by 10%. Apparently, Murray is unconcerned about how decreasing beverage demand will affect small business owners and their employees.

Perhaps the most onerous aspect of the new tax is the city council’s paternalistic attitude toward Seattle residents. By enacting a beverage tax, the city of Seattle has declared, “Citizens don’t know what’s good for themselves, so the government needs to change their behavior.” Certainly, there are healthier options than a Coke, an Arizona iced tea, or even a glass of Sunny D, but drinking these beverages affects only oneself. Along with costing jobs, imposing a beverage tax undermines individual agency by implying that personal nutrition is subject to government censure.

It is difficult to escape the irony of Seattle imposing a tax on Starbucks beverages. As the Tax Foundation’s Scott Drenkard tweeted:

 

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Norquist on Infrastructure: State and Local Governments Should Adopt Open Competition Laws Now

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Posted by Elizabeth McKee on Tuesday, June 6th, 2017, 2:38 PM PERMALINK

Grover Norquist appeared as a panelist today at the 7th Annual Summit on the Economy, speaking on the topic of “Understanding Debt in the Context of Tax Reform and Economic Growth.” The panel included Maya MacGuineas and Richard Vague, and was moderated by the Wall Street Journal’s Gregory Ip.

Norquist urged governments to immediately adopt open competition laws. He pointed out that state and local regulations prohibit competition and drive up the cost of restoring American infrastructure. He explained:

“If you were to rebuild all the water pipes, both the sewage and clean water in the country, it’s about $1.3 trillion. There are laws that were passed over the last years in many cities and states that require, they say, ‘If you have pipes in our city, they have to be made of this material and they have to be this big.’ Other cities have open competition, they say, ‘Well, we’ll tell you what we need and how strong it has to be. We won’t tell you what to make it out of. We won’t tell you what company to buy it from. And we don’t tell you what industry is going to make a profit off of it.’

And when you look at cities that had open competition and compare them to ones with closed competition, to redo the whole country - the $1.3 trillion - you save about $380 billion by moving to open competition. So why would anybody consider spending a penny of federal money on infrastructure, on pipelines, when cities and states pass [these] laws . . . Laws which drive up the costs by 28% of fixing water pipes need to be repealed at the state and local level before anybody should ask the federal government for money.”

Norquist continued, “Let everybody compete. Don’t have these corporate welfare laws that are designed to advantage Fred over Mary . . . There’s a bunch of reform that needs to be done and there’s no reason not to do it. Why pay billions more for infrastructure than necessary?”

According to Norquist, both tax reform and deregulation are possible under the Trump administration. He asserted, “If you look at Trump’s picks for FCC, FDA, FERC, NLRB, there is a wave of deregulation that has been begun and will continue. That will be every bit as important to the economy as tax cuts.”

 

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Connecticut Considers New Tax Even as High Rates Cause Taxpayers to Flee

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Posted by Elizabeth McKee on Tuesday, June 6th, 2017, 12:08 PM PERMALINK

Connecticut’s wasteful spending and regular tax hikes have triggered an exodus from the state, with high-income earners fleeing to sunny, low-tax Florida. Tax revenues are falling, and even Democratic Governor Dan Malloy acknowledges that tax increases are no longer a solution to shrink the state’s runaway deficits. Nonetheless, state legislators plan to impose yet another new tax, and are deciding whether to install electronic tolls on Connecticut’s roads.

Although Connecticut House Speaker Joe Aresimowicz has postponed debate on the bill twice already, Aresimowicz expects it to come up again in the state’s special legislative session.

The new tax is intended to offset reductions in gas tax receipts, which have been declining as cars become more fuel-efficient. Connecticut legislators fear that as electric cars become more popular, gas tax revenues will continue to decrease. However, the legislature has no plans to abolish the $0.40/gallon tax. Along with the new toll, Connecticut drivers will continue to pay the sixth-highest gas tax in the country.

Other Connecticut taxes, too, are among the highest in the nation; Connecticut collects the second-highest state and local taxes per capita, taking in an average of $2,172 per person. According to the Tax Foundation, the state also has the ninth-highest property taxes, the third-highest cigarette taxes, and is the only state with a gift tax.

People vote with their feet, and this onslaught of taxation is causing Connecticut’s wealthiest citizens to run, not walk, from the state. Surveys show that more people are leaving Connecticut than arriving, and retirees make up 21% of this outbound migration. Forbes reports:

Instead of remaining in Connecticut and putting much of their wealth into government coffers, many wealthy families are electing to move to one of the 36 states that does not have an estate tax – or to one of the 49 states that does not have a gift tax.

Connecticut is home to business moguls like Ray Dalio and Steven Cohen, whose combined annual income reaches over $2 billion. The New York Times writes:

Kevin B. Sullivan, commissioner of the Connecticut Department of Revenue Services, said about five or six of the highest earners could have a “measurable impact on the revenue stream” . . . He said the state was holding discussions with other top earners in hopes of keeping them.

Connecticut’s current fiscal year, which ends this month, will conclude with a $400 billion deficit. Budget shortfalls have prompted Moody’s, S&P, and Fitch to downgrade Connecticut’s credit rating.

In the face of this crisis, the worst decision Connecticut lawmakers can make is to create yet another new tax.

Senator L. Scott Frantz, a Greenwich Republican, told the Hartford Courant tolls are unpopular in his district. "People do not like them in our neck of the woods, especially because we're close to the border,'' Frantz said. "They don't like the idea. They think it's another tax.”

 

Photo Credit: HD_Vision

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Grover Norquist Educates “Science Guy” Bill Nye about the Real Costs of Paris Climate Deal


Posted by Elizabeth McKee on Thursday, June 1st, 2017, 5:05 PM PERMALINK

Grover Norquist appeared on MSNBC Live with Stephanie Ruhle today to debate the Paris climate accord with Bill Nye, the self-proclaimed “Science Guy.”

Norquist explained the agreement benefits foreign countries at the expense of American workers:

The 190 countries you’re talking about, a great many of them are going to be receiving cash, American tax dollar cash, which they get because they voted for the plan and if they say the right things politically. So why would you be surprised that third-world dictatorships around the globe say, ‘let’s do it – because you’re paying us.’

[Europe] made a decision to increase their own costs of energy. They don’t want a more competitive United States. And China, which is building 350 new coal plants and has plans for another 800 because they’re not hamstrung by this agreement. China would love to see us shackle ourselves to the desk and not be able to compete. Europe would prefer that we not compete. Everyone’s interests are quite in line except for American workers’.

A study by NERA Economic Consulting found compliance with the Paris agreement would cost the United States 6.5 million jobs by 2040. The agreement would drive up energy prices, leading to a $5,000 loss in annual income for every household in America.

Nye, who holds a bachelor’s degree in Mechanical Engineering, ridiculed the argument that national resources might be better spent securing American jobs than complying with the Paris agreement. He implored, “Climate change affects us tomorrow. Climate change affects everyone in the world because we all share the air.”

In fact, an MIT report found that even if all of the commitments of the Paris agreement are upheld, those pledges will only prevent 0.2°C of warming. The Paris agreement, it seems, is a costly plan that fails to make any significant impact on the climate.

Grover Norquist emphasized that while we may all share the air, we do not all share the costs of the Paris agreement. He remarked:

According to this treaty, Chinese and Indian coal doesn’t seem to affect anything because they’re not limited. We’re signing an agreement that handcuffs ourselves. This is not reasonable.

Watch the full clip here.

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CBO Uses Failed Model to Score AHCA

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Posted by Elizabeth McKee on Tuesday, May 30th, 2017, 3:33 PM PERMALINK

The Congressional Budget Office (CBO) analysis for the House-passed American Health Care Act (AHCA) predicts that the legislation will reduce taxes by $992 billion over the decade, a big win for taxpayers. The CBO score also says that 23 million will lose health insurance in the next decade, however CBO has a history of failure when it comes to predicting health coverage. Over the past few years, the CBO model has proven to be highly flawed as they previously overstated the number of Obamacare enrollees by over 100% (or 12 million Americans). Bizarrely, the CBO continues to use the same failed model to evaluate the AHCA.

In 2012, the CBO estimated that by 2017, 25 million Americans would enroll in Obamacare. The actual number of plans selected in that time was less than half the CBO’s projection, totaling just 12.2 million. Even the 12.2 million number likely overstates the success of Obamacare as this number included enrollees that failed to pay their health care premiums.


 

Moreover, the CBO does not use the actual number of Obamacare enrollees (approximately 12.2 million) to determine how many people will lose coverage under the AHCA. Instead, it bases its analysis on the CBO 2016 enrollment prediction for 2018 (18 million).

As ATR President Grover Norquist explains, CBO’s numbers differ greatly from reality: “they're counting the numbers who lose health care from numbers that don't exist. They're really working off of their own previous lousy numbers, which they haven't fixed."

If the CBO report were correct, millions more people would lose health insurance in one year with the AHCA than gained health insurance over the many years of Obamacare. This result is illogical and clearly inaccurate.

Previous scores by the CBO, too, have vastly overstated the number of Americans who would lose coverage as a result of Obamacare repeal. Avik Roy, President of the Foundation for Research on Equal Opportunity, argues in Forbes Magazine that the CBO overemphasizes the role of the individual mandate in a person’s decision to enroll in health insurance. Roy writes:

CBO on the other hand believes that, due to the AHCA’s repeal of the individual mandate, 14 million people would choose to go uninsured in 2018, and 16 million in 2019. Of the 14 million accounted for in the 2018 figure, 6 million would drop out of the individual market, 5 million from Medicaid, and 2 million from employer-based coverage.

Remember that Medicaid is basically free to the eligible enrollee. There are no premiums, and almost no co-pays or deductibles. The value of the Obamacare Medicaid subsidy is about $6,000 per enrollee per year. And yet, CBO believes that 5 million people will only enroll in Medicaid because the individual mandate forces them to. Given the difficulties in enforcing the mandate for low-income populations, this is highly unlikely.

Roy estimates that the CBO’s famed estimate that 24 million people would lose health insurance under the AHCA may be off by as many as 19 million people.

According to a report by Department of Health and Human Services (DHS), the CBO makes other vital miscalculations affecting their health care predictions. The report notes:

CBO’s misplaced belief in the power of the individual mandate to compel young and healthy people into markets has caused them to underestimate premium hikes. Early state filings for 2018 have reflected increases of 20-50%, while the CBO baseline projected a much more stable exchange market. The CBO uses this assumption to claim that AHCA premiums will be higher over the next two years.”

The CBO ignores the fact that premiums are increasing under the status quo system of Obamacare, instead misattributing these higher rates to the AHCA.

In fact, the average premium for an individual has increased by 105% since 2013.

Year after year, the observed effects of Obamacare continue to shock and surprise the experts at the CBO. To quote the DHS report:

The Congressional Budget Office is full of great, hardworking folks. But that doesn’t change the fact that they were wrong about Obamacare and they are wrong now. We shouldn’t base our treatment plan on a failed diagnosis, and the CBO’s projections on Obamacare have all been pretty far off the mark.

 

Photo credit: whitehouse.gov

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Norquist: Tax Reform Could Bring 4% Growth Rate


Posted by Elizabeth McKee on Tuesday, May 30th, 2017, 3:10 PM PERMALINK

Grover Norquist, president of Americans for Tax Reform, appeared on CNBC’s Squawk Box this morning to discuss tax reform, which Norquist asserts will pass this year.

According to Norquist, there is considerable GOP consensus when it comes to tax reform:

“The only thing that isn’t going to happen is the status quo . . . The consensus in the House and the White House is fairly broad . . . There's a consensus to go to 15% or 20% on the corporate rate. There's a consensus that subchapter s corporations, pass-through companies, will also get 15% or 20% as well . . . There's an agreement to kill the death tax. There's no disagreement there. There's an agreement to get rid of the alternative minimum tax.

On the topic of full business expensing, Norquist commented, “I think partial [expensing] is a mistake. It's like cutting crab grass instead of pulling it out. We need to go to full and immediate business expensing to lower the cost of capital for new investment.”

Joe Kernen, referring to dynamic scoring as “voodoo economics,” questioned Norquist about whether tax cuts could increase economic growth. Norquist replied:

At the end of every failed Democratic presidency – Carter’s and Obama’s - they massively ramped up the deficit and spent a great deal of money and didn't care about the deficit when they were spending. Then they decided that they cared about the deficit in order to not lower taxes on working men and women in the United States. Carter took that position. Obama took that position. And then each of them, at the end of their term, said, “You know this lousy growth rate we have? That's not me. That's the world.”

The problem is, if you look at Obama's eight years and compare American growth rate versus the European growth rate, for the first six years, we were growing faster. . . It's in the last year and a half we're growing slower than Europe . . . So the idea that our lousy growth rate over the last eight years is some new normal, that's an effort to cover up failure. We do need to go back to the policies that Reagan did, which got you 4% growth.

Watch the full interview here.

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Trump Plan Lays the Groundwork for Biggest Tax Cut in American History

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Posted by Elizabeth McKee on Monday, May 22nd, 2017, 12:26 PM PERMALINK

President Trump released a proposal for “2017 Tax Reform for Economic Growth and American Jobs,” which he labels the “biggest individual and business tax cut in American history.” In its current state, the plan enumerates a series of principles that would reduce the tax burden on American workers and generate new economic growth. In the coming months, the president will work with lawmakers to develop these principles into comprehensive, pro-growth legislation.

Elements of the plan, such as eliminating the death tax, reducing the business tax to 15% and simplifying the tax code, represent the cornerstone of Republican fiscal policy. These policies will make the United States a competitive business environment, end the pattern of stagnation that has been plaguing US economic productivity, and create new federal revenues generated by economic growth. According to the Congressional Budget Office, increasing economic productivity by just 1% over the next decade will strengthen the economy and create $3.15 trillion in additional federal revenue.

These principles represent an encouraging first step toward comprehensive tax reform, but there is room for improvement before Trump’s finalized legislation is unveiled.

First, although Trump’s plan does not directly address full business expensing, allowing businesses to immediately recover costs must be a crucial element of tax reform. If businesses were able to immediately deduct the full value of their capital investments, they would face increased incentives to acquire new machinery and expand productive capabilities.

The Tax Foundation models the effects of expensing over the next decade, reporting:

The model estimates that expensing increases the nation’s stock of plant, equipment and buildings by nearly $4 trillion, an increase of over 14 percent. The added capital raises worker productivity. Wages are about 4 percent higher, and hours worked about 1 percent higher, representing nearly a million full time equivalent jobs. These income gains from growth generate added federal revenues in the long term.

This policy would unleash a new era of investment and economic growth, and help Trump to live up to his campaign promise of bringing back American manufacturing.

Second, tax reform will be most successful if it is permanent. Permanency in tax policy creates a culture of certainty that allows business owners to establish clear expectations for the future. Grover Norquist, in a statement to the House Ways and Means Committee, explained, “Certainty means a business owner can plan ahead to invest without concern for their ability to afford the investment and cash flows in the future.”

While members of Congress may still be deliberating on tax reform, the American people are ready for action. According to a poll released by Fox News, 73% of Americans and 61% of Democrats want to see tax reform passed this year. The president plans to galvanize this popular support by hosting roundtables, traveling the country, and bringing industry experts to Washington.

The Trump administration’s dedication to tackling tax reform reflects an historic moment in the course of the United States economy. The GOP must seize this opportunity by enacting tax policies that will restart economic growth and improve the business climate for American entrepreneurs. 

 

Photo Credit: Gage Skidmore

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Highest-Paid Governor Thinks Taxpayers are Freeloaders

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Posted by Elizabeth McKee on Friday, May 19th, 2017, 11:35 AM PERMALINK

The highest-paid governor in the nation, California Governor Jerry Brown, thinks opponents of his $52 billion dollar gas tax hike are “freeloaders.”

The statement comes in response to California Assemblyman Travis Allen’s efforts to keep taxpayer dollars in the hands of the individual. The assemblyman has spearheaded a movement to delay the implementation of a $52 billion tax increase, demanding that the tax first be subject to a ballot measure.

Governor Brown, who makes over $190,000 per year ($52,685 more than the average gubernatorial salary), had harsh words for the assemblyman and his supporters in a speech last week.

The Orange County Register reports:

“The freeloaders — I’ve had enough of them,” Brown said, adding that the approved tax and fee hikes bring those charges to the level they were 30 years ago if adjusted for inflation. “They have a president that doesn’t tell the truth and they’re following suit.”

At 38 cents per gallon, Californians currently pay the seventh highest gas taxes in the country. Beginning November 1, that figure is set to increase by over 30%. At the same time, vehicle registration fees will increase by up to $175.

Brown continued, “Roads require money to fix. Republicans say there’s a magic source of money — it doesn’t exist . . . You want to borrow money and pay double? Or do nothing? Or take money from universities?”

Roads do require money to fix, as Californian taxpayers are well aware. A recent study by the Reason Foundation reveals California spends a stunning $419,090 per state-controlled mile of highway; in comparison, South Carolina spends just $35,286.

Still, throwing money at a problem is not a substitute for good governance. Despite immense transportation spending, a 2016 study by the national transportation research group TRIP finds that only 21% of California roads are in good condition. The Reason Foundation ranks California 42nd in the nation in highway performance and cost-effectiveness.

In fact, a report by the California State Auditor accuses the California Department of Transportation of having weak cost controls that create “opportunities for fraud, waste, and abuse.” The report exposes:

“[T]he maintenance division never implemented a budget model (model) that it paid $250,000 to develop in 2009. Use of that model would have allowed the maintenance division to identify the resources needed to maintain highways . . . although the maintenance division never implemented its model, the division has been reporting to the Legislature that it is using this sophisticated model.”

Not subject to the increased gas taxes will be bicyclists, who utilize California’s roadways but do not pay for their maintenance. California allocates $7.2 million annually to the Bicycle Transportation Authority, which builds and maintains bike lanes and ensures secure bicycle parking. Yet, according to Governor Brown, overtaxed motorists are the “freeloaders.”

California Assemblyman Matthew Harper writes, “Our roads are in terrible shape, but it is not because of a lack of funding, it is because many in Sacramento would rather grab more money than spend what they already have.”

Meanwhile, Governor Jerry Brown is content to blame California’s crumbling infrastructure on the “freeloading” taxpayer. Brown expects that, in the end, Californians will support his $52 billion tax hike. “Maybe people like gravel roads, but I don’t think so.”

 

 

Photo Credit: NASA HQ Photo

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