Isabelle Morales

Ways and Means Dems Reject Commonsense Amendments to $3.5 Trillion Blowout

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Posted by Isabelle Morales on Thursday, September 16th, 2021, 3:40 PM PERMALINK

Democrats on the House Ways and Means Committee voted against numerous commonsense amendments introduced by Republican members throughout the four-day long markup of the $3.5 trillion tax and spend reconciliation plan.

If this legislation is signed into law, it will raise taxes on working families and small businesses. It will make America less globally competitive, increase the cost of goods and services, and eliminate jobs including high-paying manufacturing jobs.

Below are ten commonsense amendments that Democrats rejected. 

1. Democrats voted against ensuring the corporate rate is competitive with China and the rest of the world. Specifically, they rejected Rep. Kevin Brady’s (R-Texas) “Build Back Better in America, not China” amendment which would have prevented several tax hikes that will put America at a competitive disadvantage with foreign competitors. Under the Democrats’ plan, the U.S. federal and state corporate tax rate would be 31 percent, significantly higher than China’s corporate tax rate is 25 percent and the OECD average rate in 23.5 percent.

2. Democrats voted in support of a tax break for well-funded, elite universities. Democrats voted against Rep. Tom Reed’s (R-N.Y.) “No Tax Shelters for Ivy League Elites” which would have prevented $2.5 billion loophole for wealthy Ivy League universities. This provision effectively rewards the institutions with the largest endowments. 

3. Democrats opposed an amendment preventing a high global minimum tax on U.S. businesses before ensuring China enacts a minimum tax of its own. Rep. Devin Nunes’s (R-Calif.) "Stop Shipping Jobs to China" amendment would have prevented increasing taxes on the global intangible low-taxed income (GILTI) regime until China enacts a global minimum tax of its own. It also would have prevented the GILTI rate from being a rate higher than China’s.  

4. Democrats voted against protecting Americans from being harassed and targeted by the IRS. Rep. Mike Kelly’s (R-Pa.) "Protecting Families and Small Businesses from a Supercharged IRS" amendment would have prevented the IRS from creating a new reporting regime that forces the disclosure of any business or personal account that exceeds $600. Not only would this include the bank, loan, and investment accounts of virtually every individual and business, but it would also include third-party providers like Venmo, CashApp, and PayPal.

5. Democrats voted in favor of reinstating tax shelters for blue-state millionaires instead of funding cancer research. Rep. Adrian Smith’s (R-Neb.) "Cancer Cures Instead of SALT Tax Shelters for Millionaires" amendment would have funded cancer research and extend middle-class tax cuts instead of reinstating the full SALT tax deduction for wealthy people in blue states, a $400 billion tax break that many Democrats want to include in the reconciliation bill. 

6. Democrats voted in favor of a $96 billion tobacco & vaping tax hike that will hit low- and middle-income Americans.  Rep. Drew Ferguson’s (R-Ga.) “Preserving Personal Choices” amendment would have prevented this $96 billion tax hike. Increasing tobacco taxes is a clear violation of President Biden’s pledge to not raise taxes on anyone making less than $400,000 a year.

7. Democrats refused to ensure that their tax increases wouldn't reduce U.S. employment and investment. Rep. Mike Kelly’s (R-Penn) “Return to Full Employment in America” amendment would have required the Treasury Secretary certify that Democrats’ tax increases won’t reduce U.S. employment and investment. Many of the tax hikes being pushed by Democrats will harm the economy. For instance, 70 percent of the corporate income tax is borne by workers through lower wages and less jobs, while increasing the capital gains rate will reduce investment and slow growth.

8. Democrats voted against ensuring their drug price controls wouldn't shift pharmaceutical investment and jobs to China. Rep. Darin LaHood’s (R-Ill.) "Standing Up to China" amendment would require H.R. 3, legislation to impose a 95% tax on medicines and foreign reference pricing wouldn’t shift medical innovation and manufacturing jobs to China. Nationwide, the pharmaceutical industry directly or indirectly accounts for over four million jobs across the U.S and in every state, according to research by TEconomy Partners, LLC. The average annual wage of a pharmaceutical worker in 2017 was $126,587, which is more than double the average private sector wage of $60,000.

9. Democrats refused to certify that new regulations and tax hikes on the energy sector wouldn't lead to increased oil and gas production by foreign competitors. Rep. Jodey Arrington’s (R-Texas) “No Giveaways to Polluting Countries” amendment would have required that the Treasury Secretary certify that Democrats' hikes on oil and gas would not reduce U.S. energy independence and increase oil and gas production in Russia, China, Venezuela, or Iran. The oil and gas industry supports 11.3 million total American jobs across all 50 states and accounts for nearly 8 percent of GDP. In 2017, jobs in the oil and gas sector paid an average salary of $102,000, 85 percent higher than the average private sector salary.  

10. Democrats voted against keeping intellectual property and jobs in the United States. Rep. Kevin Hern’s (R-OK) “Offshore Tax Haven Reduction” amendment would have struck down the repeal of the deduction for foreign-derived intangible income (FDII). If this tax increase goes into effect, it will ship American intellectual property and jobs overseas, creating long-term economic damage to the country. It will undermine American competitiveness and benefit foreign countries like China that provide extensive and generous tax credits and subsidies to incentivize IP. 

Photo Credit: "US Capitol Dome on an Overcast Evening" by John Brighenti licensed under CC BY 2.0

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Study: Democrats’ $3.5 Trillion Bill Will Lead to Up To 324 Fewer New Medicines

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Posted by Isabelle Morales on Wednesday, September 15th, 2021, 2:25 PM PERMALINK

Democrats’ drug price controls in the $3.5 trillion blowout would lead to 167 to 324 fewer new drugs, according to an issue brief by Tomas J. Philipson and Troy Durie at the University of Chicago. 

Within their $3.5 trillion reconciliation package, Democrats have included H.R. 3, legislation that government price controls on American medical innovation. Specifically, it creates a 95 percent excise tax on manufacturers and imposes an international reference pricing scheme that directly imports foreign price controls into the United States.  

According to Philipson and Durie’s brief, this provision would lead to a 29.2 to 60 percent reduction in R&D spending, which translates to 167 to 324 fewer new drug approvals: 

We calibrate that the price controls implemented in the United States would lead to a 29.2 to 60.0 percent reduction in R&D from 2021 to 2039. This equates to $952.2 billion to $2.0 trillion in lost R&D spending and 167 to 342 fewer new drug approvals during this period. This means annual new drug approvals will be 11.7 to 24.0 percent lower per year from 2021 to 2029 and 45.0 to 92.4 percent lower from 2030 to 2039. 

Though these estimates are significantly higher than the CBO’s, the authors explain that their estimate is conservative:  

We discuss how these findings, as well as findings from other studies, differ from CBO (2019), which finds only 37 fewer new drug approvals over this time period, which is 550.2 to 1,024 percent lower than our estimates. Our estimates are conservative as the entire evidence base is considered and not only the evidence base for the more R&D sensitive US market. 

These results are severe, but not surprising. H.R. 3 arbitrarily sets the prices of medicines based off the prices in six countries which utilize socialist price controls in their healthcare systems: Australia, Canada, the United Kingdom, France, Germany, and Japan. 

These countries’ access to care is, inevitably, lower. For instance, Canadian patients wait an average of 19.8 weeks from referral to treatment. In the UK, at any one time, 4.5 million patients were waiting to see a doctor or receive care. By comparison, 77 percent of Americans are treated within four weeks of referral, while just 6 percent wait more than two months. 

Further, Americans have access to far more medicines than other countries. According to research by the Galen Institute, 290 new medical substances were launched worldwide between 2011 and 2018. The U.S. had access to 90 percent of these cures. By comparison, the United Kingdom had access to 60 percent of medicines, Japan had 50 percent, and Canada had just 44 percent. 

In trying to be more like foreign countries with socialist policies, Democrats will restrict Americans’ access to life-improving and life-saving medicines. Hundreds of new cures will not be developed in the future which will harm American patients and the healthcare system.

Photo Credit: "Medicine" by The Focal Project is licensed under CC BY-NC 2.0

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VIDEO: JCT Confirms Dem Corporate Tax Hike Hits Workers

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Posted by John Kartch, Isabelle Morales on Tuesday, September 14th, 2021, 3:48 PM PERMALINK


Today the Joint Committee on Taxation confirmed that corporate tax rate hikes diminish the wages of workers. Testifying before the House Ways & Means Committee, JCT Chief of Staff Thomas A. Barthold said:

"Literature suggests that 25% of the burden of the corporate tax may be borne by labor in terms of diminished wage growth."

Congressman Mike Kelly (R-Pa.) then asked, "Who is going to bear the brunt of this [Democrat corporate income tax hike]?

Barthold replied:

"Labor. Laborers."

WATCH:

Economists across the political spectrum agree that workers bear the brunt of corporate tax increases. And 25% is on the very low end.

According to the Stephen Entin of the Tax Foundation, labor (or workers) bear an estimated 70 percent of the corporate income tax:

"Over the last few decades, economists have used empirical studies to estimate the degree to which the corporate tax falls on labor and capital, in part by noting an inverse correlation between corporate taxes and wages and employment. These studies appear to show that labor bears between 50 percent and 100 percent of the burden of the corporate income tax, with 70 percent or higher the most likely outcome."

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:

"We identify this direct shifting through cross-company variation in tax liabilities, conditional on value added per employee. Our central estimate is that $1 of additional tax reduces wages by 92 cents in the long run. The incidence of a $1 fall in value added is smaller, consistent with our wage bargaining model."

A 2015 study by Kevin Hassett and Aparna Mathur found that a 1 percent increase in corporate tax rates leads to a 0.5 percent decrease in wage rates. The study analyses 66 countries over 25 years and concludes that workers could see a greater reduction in wages than the federal government raises in new revenue from a corporate income tax increase:

"We find, controlling for other macroeconomic variables, that wages are significantly responsive to corporate taxation. Higher corporate tax rates depress wages. Using spatial modelling techniques, we also find that tax characteristics of neighbouring countries, whether geographic or economic, have a significant effect on domestic wages."

A 2006 study by William Randolph of the Congressional Budget Office found that 74% of the corporate tax is borne by domestic labor:

"Burdens are measured in a numerical example by substituting factor shares and output shares that are reasonable for the U.S. economy. Given those values, domestic labor bears slightly more than 70 percent of the burden of the corporate income tax."

A 2007 study by Alison Felix estimated that a 1 percentage point increase in the marginal corporate tax rate decreases annual wages by 0.7 percent. She concluded that the wage reductions are over four times the amount of collected corporate tax revenue:

"The empirical results presented here suggest that the incidence of corporate taxation is more than fully borne by labor. I estimate that a one percentage point increase in the marginal corporate tax rate decreases annual wages by 0.7 percent. The magnitude of the results predicts that the decrease in wages is more than four times the amount of the corporate tax revenue collected."

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:

"Because capital is mobile, high tax rates divert investment away from the U.S. corporate sector and toward housing, noncorporate business sectors, and foreign countries. American workers need that capital to become more productive. When it’s invested elsewhere, real wages decline, and if product prices are set globally, there is no place for the corporate tax to land but straight on the back of the least-mobile factor in this setting: the American worker."

Even the left-of-center Tax Policy Center estimates that 20 percent of the burden of the corporate income tax is borne by labor:

"In calculating distributional effects, the Urban-Brookings Tax Policy Center (TPC) assumes investment returns (dividends, interest, capital gains, etc.) bear 80 percent of the burden, with wages and other labor income carrying the remaining 20 percent."

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10 “Woke” Items in Democrats’ $3.5 Trillion Blowout

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Posted by Isabelle Morales on Monday, September 13th, 2021, 6:30 PM PERMALINK

While Democrats’ $3.5 trillion reconciliation package contains major tax hikes and spending increases, it also contains numerous provisions of dubious origin. These provisions reveal Democrats’ priorities: carving out giveaways to the Left’s base by spending on “woke,” wasteful initiatives.  

Below are just 10 of these perplexing items. 

1. Fake News Tax Handout for Reporters at “Local” Newspapers with up to 750 Employees

The proposal creates a tax credit for “local newspapers” with up to 750 employees – a largely left-of-center group of workers.  

It gives an employment tax credit of up to $12,500 per person for reporters at “eligible” newspapers. As a section-by-section analysis from the Ways and Means Committee details

“The credit amount is equal to 50% of wages for each of the first 4 calendar quarters, and 30% of wages for each calendar quarter thereafter. Eligible local newspaper publisher is any employer that is in the trade or business of publishing a local newspaper that serves the needs of a regional or local community and who employs no more than 750 employees.”  

This payroll credit would cost $1.3 billion. The vast majority of newspapers in the country have fewer than 750 employees. Likely beneficiaries include The Malibu Times, Aspen Times and the Vineyard Gazette serving the progressive playground of Martha’s Vineyard.

2. Big Labor Tax Break 

Sec. 138514 provides for an above-the-line deduction for up to $250 in “dues” to a labor organization. This deduction would be distortionary tax policy that does little or nothing to help the majority of middle-class families. It is a more harmful and favorable version of the union dues deduction that existed before the GOP tax cuts repealed it.  

The tax deduction the TCJA repealed allowed employees to deduct any unreimbursed expenses (including union dues) that exceeded 2 percent of their adjusted gross income. However, this distortionary deduction was repealed as part of a trade-off that resulted in lower taxes for the middle class across the board. Now, the Left is artificially trying to buttress union membership and fill their political war chests, as union political giving almost entirely flows to Democrats. 

This deduction would cost $4.25 billion in revenues.  

3. Solar Subsidies to “Promote Environmental Justice”

In yet another edition of, “Why is the government paying for this?”—This provision in the bill expands the energy credit for solar facilities in low-income communities, in which “the Secretary makes an allocation of environmental justice solar capacity limitation.” 

In determining which solar facilities to choose, the Secretary is directed to consider the greatest health and economic benefits, wage and employment benefits, and “community engagement” the facility conducts. Projects would receive an additional 10 percent credit if the solar facilities are in low-income communities, or an additional 20 percent credit if a project is “a qualifying low-income residential building project or a low-income economic benefit project.” 

The extension, modification, and increase in this energy credit would cost $63.9 billion

4. $15 Billion for “Energy-Efficient” Doors and Windows 

The reconciliation package would replace a $500 lifetime cap on nonbusiness energy property credits with an annual $1,200 credit. This credit allows up to $600 in credits for energy efficient windows and skylights and up to $500 for energy efficient doors.  

This provision also increases the percentage of the credit for installing qualified energy efficiency improvements from 10 percent of the cost to 30 percent. There is no reason the government should be subsidizing individuals’ door and window replacements.  

5. Tax Credit for Electric Bikes  

Sec. 136407 establishes a 15 percent refundable tax credit for electric bicycles. Under this law, taxpayers could claim a credit of up to $1,500 for electric bicycles costing as much as $8,000 per bike. As a reminder, a tax credit is a dollar-for-dollar reduction in your tax liability.   

The Joint Committee on Taxation estimates that this provision alone could cost $7.43 billion. 

In 2020, the e-bike market was valued at $23.89 billion. This single provision in the Democrats’ plan spends one-third of the entire value of the e-bike market. 

6. Tax Breaks for Elite, Well-Funded Private Universities

Sec. 137702 of this bill would reduce, potentially down to zero, excise tax on investment income of private colleges and universities depending on the amount of financial aid they offer their students. Notably, universities who can provide a lot of grants and scholarships are typically universities with the largest endowments: for example, universities like Harvard and Yale.  

The amount of tax imposed would be reduced based on the aggregate amount of qualified aid awards provided by the institution in relation to the aggregate undergraduate tuition and fees received by the institution. This phaseout would reduce tax revenues by $2.34 billion 

7.  Investments in the “Green Workforce” 

In Title 5 of this bill, “Investment in the Green Workforce,” Democrats spend $10 billion funding perplexing, niche credits: 

  • Sec. 136501 allows the Secretary to allocate an additional $2.5 billion in credits for the advanced energy project credit. About $400 million in credits each year would be reserved for projects in “automotive communities.” Automotive communities, in this bill, are defined as communities that have “experienced major job losses in the automotive manufacturing sector.” This is an apparent handout for unionized autoworkers. 
  • Sec. 136502 provides a credit for up to 10 percent of the labor costs incurred by a taxpayer in installing “mechanical insulation property into a mechanical system which was originally placed in service not less than 1 year before the date on which such mechanical insulation property is installed.” Huh? 

 

8. Refundable Credit for “Environmental Justice” Programs  

Democrats provide a substantial refundable credit for “environmental justice programs” under Sec. 136601 of the bill. 

This provision creates a capped refundable competitive credit of $1 billion for each year from 2022 through and including 2031 to institutions of higher education for environmental justice (EJ) programs. The base credit is 20 percent of costs spent within five years by the higher education institution; however, for HBCUs and minority-serving institutions (MSIs), this credit could cover 30 percent of costs.   

9. Repealing Social Security Number Requirement to Qualify for Child Tax Credit (CTC) 

Sec. 137102 would eliminate the Social Security Number requirement for qualifying children, which was added by the GOP tax cuts, opening the credit up to more abuse.  

10. Credit for Contributions to a Public Universities’ Research Infrastructure Projects 

Middle-class Americans aren’t the usual donors to colleges and universities. Especially not when it comes to project-specific donations. Nonetheless, Democrats are creating a credit for contributions to public universities’ research infrastructure projects. 

The “public university research infrastructure credit” is an amount equal to 40 percent of the qualified cash contributions made by a taxpayer during such taxable year for a qualifying project. The credit amounts allocated to a certified educational institution for all projects cannot exceed $50,000,000 per year, and the total amount of qualifying project credit amounts that may be allocated can be up to $500,000,000 for each 2022 through 2026 – or $2.5 billion in total. 

Photo Credit: Gage Skidmore

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Dems to Impose 26.5% Federal Corporate Tax Rate, Higher Than China

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Posted by Isabelle Morales on Sunday, September 12th, 2021, 5:45 PM PERMALINK

Congressional Democrats are about to unveil a federal corporate income tax rate hike from 21% to 26.5%. This would leave the U.S. at a competitive disadvantage vs. China and Europe.

A 26.5% federal corporate tax rate would result in a combined federal and state rate of 31%, higher than China and higher than America's major economic competitors. The developed world average (OECD) is 23.5%.

U.S. Federal + State Tax Rate Under Democrat Plan: 31% 

China's Corporate Tax Rate 25% 

Developed World (OECD) Average National + Subnational Rate: 23.5%

"Raising the corporate tax rate is Biden's next big mistake," said Grover Norquist, president of Americans for Tax Reform. "A corporate tax hike will decrease wages, increase prices, and hurt American competitiveness."

The Democrat proposal is contrary to the wishes of voters who want the U.S. corporate income tax rate to be competitive with China, according to polling conducted by HarrisX.

After voters were informed that China has a 25 percent corporate rate, they were asked “At what level should the US set the corporate tax rate?” Among all respondents, the median answer was 21 percent.

A Corporate Tax Hike Would Hit Small Businesses Organized as C-Corporations

As noted by the Small Business Administration Office of Advocacy, there are 31.7 million small businesses in the U.S. Of those, 25.7 million have no employees, while 6 million have employees. Of these 6 million small employers, 16.8 percent, or over 1 million of these businesses are classified as c-corporations. The SBA classifies a small employer as any independent business with fewer than 500 employees.

A recent study from the U.S. Chamber of Commerce found that 1.4 million small businesses organized as C-corporations will get hit by Biden's corporate tax rate hike.

Biden claims his tax plan makes large corporations pay their “fair share.” However, the plan will raise taxes on many small businesses that are structured as corporations.

Workers Will Bear the Burden of an Increased Corporate Tax Rate

Such a hike will cause businesses to invest less in the United States and more overseas (or not at all), resulting in fewer job opportunities and lower wages for American workers:

  • 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. 
  • 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.  

 

A Corporate Income Tax Hike Would Increase the Cost of Goods and Services

Raising the corporate income tax would cause prices to increase for American consumers in a couple ways. A 2020 study by the National Bureau of Economic Research found that 31% of the corporate tax falls on consumers. Additionally, customers directly bear the cost of corporate income taxes imposed on utility companies. In this way, customers would have to pay more for their utility use. 

Already, inflation levels are rising. Consumer prices increased by 5.4 percent on an annualized basis in July, according to the Bureau of Labor Statistics (BLS). In January 2021, before Joe Biden took over the presidency, annual inflation was at a stable 1.4 percent. If Americans are struggling to afford goods and services now, they certainly will be after the corporate income tax is implemented.

A 26.5% Corporate Tax Rate Would Threaten American Life Savings

A corporate tax increase will threaten the life savings of families by reducing the value of publicly traded stocks in brokerage accounts or in 401(k)s. Individual investors opened 10 million new brokerage accounts in 2020 and at least 53% of households own stock. In addition, 80 million to 100 million people have a 401(k), and 46.4 million households have an individual retirement account.  

President Biden and Democrats continually claim their tax hikes will hold middle class families and small businesses harmless. However, the facts do not support this case. If Democrats have their way and raise taxes, millions of main street businesses, low- and middle-income workers, and retirees will be hit. Lawmakers must reject the 26.5% corporate income tax rate hike.

Photo Credit: 李 季霖

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Poll: 51% Say $3.5 Trillion Tax-and-Spend Plan Will Make Inflation Worse 

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Posted by Isabelle Morales on Friday, September 10th, 2021, 11:35 AM PERMALINK

51 percent of voters believe that Democrats’ $3.5 trillion tax-and-spend plan will make inflation worse, according to a new poll conducted by HarrisX.

The poll was conducted by HarrisX between Sept. 3 - 6 among 1,916 representative registered voters.

Respondents were asked the following:

President Biden and Congressional Democrats are pushing legislation that increases spending and taxes by $3.5 trillion over the next decade. Do you think this will make inflation worse, better, or have no effect? 

  • Better 
  • Worse 
  • No effect 


51 percent of respondents answered, “Worse,” while just 21 percent answered, “Better.” About 27 percent answered, “No effect.” 

The following demographic groups said the $3.5 trillion reconciliation package would make inflation worse:  

  • 55 percent of women 
  • 61 percent of voters making less than $75k 
  • 45 percent of independents 
  • 60 percent of suburban voters 
  • 68 percent of rural voters 
  • 81 percent of Republicans 
  • 72 percent of those 65 years old or older 


Inflation has already been surging. Consumer prices increased by 5.4 percent on an annualized basis in July, according to the Bureau of Labor Statistics (BLS). In January 2021, before Joe Biden took over the presidency, annual inflation was at a stable 1.4 percent

These findings are instructive as Democratic lawmakers push for trillions of dollars in new spending and taxes.  

Click here to view the breakdown of the poll. The poll was commissioned by Americans for Tax Reform. 

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Democrats Pull A Bait-and-Switch on Retirement Savings

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Posted by Isabelle Morales on Thursday, September 9th, 2021, 1:00 PM PERMALINK

As part of the $3.5 trillion tax-and-spend plan, Democrats have proposed a provision which would require companies to automatically enroll workers into retirements plans like IRAs or 401(k)s.  

This draft provision would require that employers direct 6 percent of each employee’s pay into a retirement savings plan, gradually escalating to 10 percent, unless the employee decided to opt out or change their contribution rate. 

In turn, all businesses must offer a retirement plan and then must comply with these specific requirements that create administrative costs. If a company does not comply, they’ll be charged a tax of $10 per employee per day.  

Many have mistakenly described this provision as a “bipartisan” effort, because the automatic enrollment provision was included in the bipartisan ‘Setting Every Community Up for Retirement Enhancement Act of 2021’ or the SECURE Act 2.0. This legislation was introduced in May of this year by Ways and Means Committee Republican Leader Kevin Brady (R-Texas) and Chairman Richard E. Neal (D-Mass.). 

However, the SECURE Act 2.0 contained several incentives and cost-recovery provisions for businesses hit by these new requirements. These provisions are excluded from the automatic enrollment proposal in the $3.5 trillion reconciliation package. 

For example, the SECURE Act 2.0 would have expanded the credit for small employer pension plan startup costs from 50 percent of administrative costs to 100 percent of administrative costs for employers with up to 50 employees. Additionally, it attempted to eliminate outdated barriers on multiple employer plans (MEPs) in order to make them more efficient and less costly, helping small employers offer their own independent plans. The legislation would have also helped promote the saver’s credit to increase utilization, enhance 403(b) plans, offer immediate financial incentives for contributing to a plan, and more.  

To be clear, the “inclusion” of the SECURE Act 2.0 in the reconciliation package is not reflective of the bipartisan, fiscally-responsible, business-friendly version of the original bill, which advanced out of Committee unanimously on a bipartisan basis. In fact, changing this bill so dramatically and including it in the reconciliation undermines the spirit of bipartisanship.  

This is certainly not the first time congressional Democrats have done this. In the original SECURE Act passed in 2019, despite the bill unanimously passing the House Ways and Means Committee, Speaker Nancy Pelosi removed a provision to expand 529 Education Savings Accounts in order to appease teachers' unions and liberals who oppose homeschooling. While Pelosi’s actions in 2019 didn’t serve as a reason to oppose the bill, the changes made in the SECURE Act 2.0 impose an undue burden on businesses without including necessary relief. 

Photo Credit: American Advisors Group

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Biden to Pull Nominee Who Wanted $200 Gun Tax

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Posted by Isabelle Morales, Michael Mirsky on Thursday, September 9th, 2021, 10:21 AM PERMALINK

President Biden will pull his $200-gun-tax-supporting ATF nominee David Chipman, as reported by the Washington Post.

Chipman supported the Biden-endorsed $200 gun tax and a ban on future sales of AR-15s and many semiautomatic firearms (one round fired per trigger pull for those in the media who don't know). Under the policy, even such firearms in private possession would need to be sold to the government or the owner would have to submit a $200 tax per gun and per magazine, along with fingerprints, a photograph, and an invasive multi-page application.

This tax is a violation of Biden's pledge against any tax increase on anyone making less than $400,000 a year.

Chipman, nominated by Biden on April 7, confirmed these positions during a Senate hearing:

"I prefer a system where the AR-15 and other assault weapons are regulated under the National Firearms Act."

Chipman also told the House Judiciary Committee on Sept. 25, 2019:

“One option would be to require the registration of all existing assault weapons in civilian hands under the National Firearms Act, while banning the future manufacture and sale of these firearms."

As was detailed on Biden’s campaign website:

Biden will also institute a program to buy back weapons of war currently on our streets. This will give individuals who now possess assault weapons or high-capacity magazines two options: sell the weapons to the government, or register them under the National Firearms Act.

This triggers the $200 tax.

The Biden campaign site also stated:

As president, Biden will pursue legislation to regulate possession of existing assault weapons under the National Firearms Act.

Given there are nearly 18 million AR-15s privately owned in the United States, gun owners could potentially be forced to pay a collective $3.6 billion in taxes. This figure doesn’t even include other firearms the left considers “assault weapons” and the additional magazines many gun owners would have to register.

Working families would find themselves incapable of paying for the ability to exercise a constitutional right.

Under the Biden policy, any magazine that holds more than 10 rounds is a “high capacity” magazine. If a household owns two rifles and two magazines, they would be forced to pay a Biden gun tax of $800 total just to keep what they currently own.


Poll: 80% Oppose Tax Hikes Coming Out of Pandemic

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Posted by Isabelle Morales on Thursday, September 9th, 2021, 10:00 AM PERMALINK

[To schedule a media interview on this topic, contact John Kartch at jkartch@atr.org]

By an 80-20 margin voters oppose tax increases as the U.S. comes out of the pandemic, according to a new poll conducted by HarrisX.

The poll was conducted by HarrisX between Sept. 3 - 6 among 1,916 representative registered voters. 

Respondents were asked the following: 

As the US comes out of the coronavirus pandemic and economic problems it caused, which comes closest to your view? 

  • Now is the right time to raise taxes for new spending projects. 
  • Now is not the right time to raise taxes because many businesses and individuals have not yet recovered. 


80 percent of respondents answered, “Now is not the right time to raise taxes because many businesses and individuals have not yet recovered,” while just 20 percent answered, “Now is the right time to raise taxes for new spending projects.” 

By strong majorities, the following demographic groups said now is not the right time to raise taxes: 

  • 86 percent of women
  • 85 percent of voters making less than $75k
  • 83 percent of independents
  • 82 percent of suburban voters
  • 74 percent of Hispanic voters
  • 71 percent of urban voters
  • 70 percent of Biden voters
  • 69 percent of Democrats


These findings are instructive as Democratic lawmakers push for trillions of dollars in new spending and taxes. 

Click here to view the breakdown of the poll. The poll was commissioned by Americans for Tax Reform.

Biden Seeks Largest Tax Increase Since 1968

Democrat Tax Hikes Will Hit 2 Million Small Businesses

Biden's Tax Hike on U.S. Companies Will Leave America at a Competitive Disadvantage

Biden's Second Death Tax Will Kill Family Farms

How Biden's Corporate Tax Hike Will Raise Utility Bills

 

 

 

Photo Credit: 401(K) 2012

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SALT Cap Repeal Demand Exposes Dem Tax Hypocrisy

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Posted by Isabelle Morales on Wednesday, September 8th, 2021, 8:50 AM PERMALINK

Rep. Suozzi Threatens to Oppose $3.5 Trillion Package if SALT Deduction Cap is not Repealed 

As Democrats claim the wealthy do not pay enough taxes, they continue to fight for a six-figure tax break for wealthy Americans in blue states: removing the cap on the State and Local Tax (SALT) deduction.  

Yesterday, Congressman Tom Suozzi (D-N.Y.) announced that he still stands by his commitment to oppose any changes in the tax code unless the SALT deduction cap is removed.  

Blue State Democrats have repeatedly pushed for this tax cut:

  • 11 Democrats on the tax-writing Ways and Means Committee wrote a letter to the White House urging that the next major legislative package includes a repeal of the SALT deduction cap. These members included Reps. Bill Pascrell (D-N.J.), Tom Suozzi (D-N.Y.), Mike Thompson (D-Calif.), John B. Larson (D-Conn.), Danny K. Davis (D-Ill.), Earl Blumenauer (D-Ore.), Brian Higgins (D-N.Y.), Judy Chu (D-Calif.), Bradley S. Schneider (D-Ill.), Jimmy Panetta (D-Calif.), and Jimmy Gomez (D-Calif.).   
      
  • Rep. Suozzi led three other members, Reps. Bill Pascrell (D-N.J.), Mikie Sherrill (D-N.J.), and Josh Gottheimer (D-N.J.), to make the “No SALT, No Deal” pledge.   
      
  • Nearly the entire New York congressional Democrat delegation said they’d “stand ready to oppose any tax legislation that does not fully restore the SALT deduction,” apart from Reps. Alexandria Ocasio-Cortez (D-N.Y.) and Kathleen Rice (D-N.Y.).   
      
  • Senate Democrats reaffirmed their support for tax breaks for the wealthiest Americans in blue states when they all voted against Sen. Chuck Grassley’s (R-Iowa) recent amendment to prevent the lifting of the SALT deduction cap in the $3.5 trillion reconciliation bill. 
     

In 2017, the Republican Tax Cuts and Jobs Act (TCJA) capped the SALT deduction at $10,000 in order to pay for much needed tax relief for working- and middle-class Americans. Democrats from high-tax blue states are desperate to repeal the SALT cap because their constituents balk at the true tax burden from living in these states. Repealing the SALT deduction cap would shield taxpayers from bad state tax policy.  

Many Democrats blatantly lie when claiming that the SALT deduction cap harms the middle class. Rep. Suozzi claimed in his announcement that, “The cap on the SALT deduction has been a body blow to the state and middle-class families of New York.” This is not true.  

In reality, a majority of Americans do not claim the SALT deduction, or any deduction for that matter. Instead, they claim the standard deduction. In 2018, 133 million American taxpayers (or 87% of filers) claimed the standard deduction. These taxpayers deduct zero state and local taxes. In addition, most middle-income taxpayers in blue state saw a significant tax cut. According to IRS Statistics of Income Data, the average taxpayer in both New York State and New Jersey earning between $50,000 and $200,000 saw a tax cut between 2017 and 2018.  

Many on the left have already acknowledged that the SALT cap does little or nothing to benefit the middle class. For instance:  

  • The New York Times described the SALT deduction as “The Tax Cut for the Rich That Democrats Love.”   
      
  • The Center for American Progress has stated that repeal of the SALT cap “should not be a top priority” as it would “overwhelmingly benefit the wealthy, not the middle class.”   
      
  • Referring to repealing the SALT deduction, Rep. Alexandria Ocasio-Cortez said, "I think it's just a giveaway to the rich... and I think it's a gift to billionaires."   
      
  • Senator Bernie Sanders (I-Vt.) recently criticized efforts to repeal the SALT cap, arguing that it “sends a terrible, terrible message... You can't be on the side of the wealthy and the powerful if you're gonna really fight for working families.”   
      
  • The left-of-center Tax Policy Center found that the top 1 percent of households would receive 56 percent of the benefit of repealing the SALT cap, and the top 5 percent of households would receive over 80 percent of the benefit. The bottom 80 percent of households would receive just 4 percent.   
      
  • The Brookings Institution explained that almost all (96 percent) of the benefits of SALT cap repeal would go to the top quintile, 57 percent would benefit the top one percent (a cut of $33,100), and 25 percent would benefit the top 0.1 percent (for an average tax cut of nearly $145,000). Whether or not this is a tax cut for the wealthy is not up for debate—the evidence is clear. 
     

Restoring the full SALT deduction would cost $88.7 billion in lost revenue for 2021 alone, or $400 billion in total, as the cap sunsets in 2026 along with several other tax provisions.

This initiative is especially egregious because, in order to “pay for” this package, Democrats plan to raise the corporate tax, double the capital gains tax, and create a Second Death tax – all policies which would disproportionately hurt workers, consumers, retirees, and small businesses. Increasing taxes on these groups in order to pay for a tax cut for the wealthy is both hypocritical and an awful policy. 

Photo Credit: US House Office of Photography

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