J. Michael Wahlen

ATR Supports S. 1506, A Bill To Protect Foreign Deposits


Posted by J. Michael Wahlen on Tuesday, December 13th, 2011, 1:29 PM PERMALINK

Americans for Tax Reform sent today the following letter to Senator Rubio (R-FL):

On behalf of Americans for Tax Reform, I am pleased to support S. 1506, a bill that would stop the Secretary of the Treasury from requiring banks to report interest paid to nonresident aliens.

It is imperative to the United States’ long-term growth and the stability of our banking system that we continue to attract large amounts of foreign deposits as these investments provide an important capital base for our country.  These deposits require that we maintain the security and privacy of the foreign account holders, however.

By prohibiting the Treasury Department from requiring banks to report interest paid to nonresident aliens, S. 1506 will help maintain and increase the amount of foreign deposits in the United States. Despite the fact that interest collected on U.S bank and credit union accounts by nonresident aliens is not taxable, the Treasury is nonetheless proposing to report the interest paid to their accounts. Reporting these earnings would significantly decrease the privacy of foreign investors and would be a strong step towards taxing their returns.

Were banks to be forced to report this information, the U.S. would face a significant capital flight. A 2004 study by George Mason University suggests that over $88 billion would be divested out of the United States were the Treasury to begin requiring institutions to report this information. Additionally, it would put many investors in countries rife with corruption and inflation in danger by forcing them to withdraw their capital out of the U.S. and invest it domestically. In order to grow our economy and to maintain the stability of our financial system, we must work to keep and attract capital, not to scare it away.

I urge all senators to co-sponsor S. 1506.

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Why Would the IRS Hold a Secret Meeting?


Posted by J. Michael Wahlen on Tuesday, December 13th, 2011, 10:13 AM PERMALINK

On Thursday, December 8th, the IRS held a secret meeting regarding a new tax policy. The hearing was required by law, as the IRS was proposing new legislation, but the IRS did everything in its power to keep it from the public. It only announced the meeting on the 7th, one day earlier, and only allowed people who signed up in advance to attend. Even then, they were not allowed to speak.

The hearing was on the issue of “return free” or “simple return” filing, a proposal under which the IRS would file taxes for the taxpayer and send them either or a return or a bill. The Obama Administration has argued that this method would simplify things for taxpayers and increase efficiency.  That still leaves the question, however, of why the IRS would need to hold a secret meeting on an issue that purportedly benefits tax payers.

The reason for the secrecy is that a “return free” system creates a significant conflict of interest for the IRS. As the current mission of the IRS is to increase tax revenues, giving it the ability to determine how much people owe leaves them with the incentive to come out in their own favor. The administration has argued that $300 billion in tax revenue has been missing, and so it believes that it has found a way to collect it.  In other words, “return free” filing is simply a backdoor method of raising people’s taxes, and a secret meeting is just the use of bare-knuckle tactics to get it passed. 

Fortunately, voters are aware of these tactics and are not having any of it. In a Public Policy Polling (PPP) poll, 71% of voters stated that they do not trust the IRS to prepare their taxes for them.  Additionally, 80% of voters said that they would be less likely to vote for a candidate that supported allowing the IRS to file taxpayer taxes. 

As Grover Norquist pointed out in the New Hampshire Union Leader, even if the IRS is perfectly honest, there is no indication that they are perfectly competent. A sample set of returns by the IRS in 2009 revealed that 29 out of 49 requests filed by the IRS were inaccurately filled out.

Ultimately, there is no excuse for holding secret meetings, especially when it is supporting legislation under the pretense of benefiting taxpayers.  The administration and the IRS must drop the idea of “return free” filing and work towards real tax reform. Real tax reform means lower rates, simplifying the tax code so people can easily file themselves, and flattening the tax code.

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ATR Supports H.R. 3551, The "SSPICE Act"


Posted by J. Michael Wahlen on Wednesday, December 7th, 2011, 3:38 PM PERMALINK

Americans for Tax Reform sent today the following letter to Representative Landry (R-LA):

Dear Representative Landry:

On behalf of Americans for Tax Reform, I am pleased to support H.R. 3551, a bill that would create an opt-in measure for the Payroll Tax Holiday.

The current debate over the payroll tax cut forces Congress to choose between two unacceptable options: taking money away from working families or eroding the strength of Social Security. The “SSPICE Act” resolves this problem by allowing employees to decide themselves whether they wish to lower their tax payments by extending their working years, or to pay a higher rate now and claim their benefits earlier.

H.R. 3551 is a democratic means of allowing workers to keep their earnings without further undermining the solvency of Social Security. Under this law, employees will choose annually whether to accept the tax holiday or to pay the tax up front. Those that take the tax holiday will have their retirement age extended by one month, which will offset the amount that would have been paid into the Social Security fund. Those who choose not to take the tax cut will maintain their current retirement age.

Not only does this measure resolve the current dilemma in Congress, it also helps to shore up Social Security over the long-term by decreasing its unfunded liabilities. The Social Security Administration’s Chief Actuary has concluded that the SSPICE Act would reduce unfunded obligations in Social Security by $2.1 trillion. This makes the act a sound way to bolster Social Security without more taxpayer dollars and without deferring the benefits of those who cannot afford it.

I urge all Members of Congress to co-sponsor H.R. 3551.

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ATR Supports H.R. 1173, A Bill To Repeal The CLASS Act.


Posted by J. Michael Wahlen on Monday, December 5th, 2011, 5:42 PM PERMALINK

Americans for Tax Reform sent today the following letter to House Speaker Boehner (R-OH):

On behalf of Americans for Tax Reform, I am urging you to consider H.R. 1173, a bill which would repeal the accounting gimmick known as the “CLASS Act” before the end of the year.

A deliberate fraud was perpetrated on the American people in the jobs-killing Obamacare law. One of the justifications for this bill not “costing” as much was the inclusion of the “CLASS Act,” a new and under-funded (after the first decade) entitlement program that everyone acknowledged was unworkable. The Obama Administration itself confirmed that the CLASS Act was fatally-flawed on October 14, 2011. As a result, the CLASS Act is administratively-dormant, but still part of the law.

It is important to make sure that the CLASS Act does not remain on the books as a “loaded gun” in the future. That’s why it’s important to repeal the CLASS Act to prevent it from ever going into effect. This should be a part of the larger effort to repeal the entire Obamacare law.

The repeal of this law must be considered now, as the Congressional Budget Office has currently scored the repeal as having no cost. Should this law be left on the books, Health and Human Services could attempt to revive the law at any point, making a later repeal quite costly. For this reason, it is important that the CLASS Act is repealed immediately.

I would urge you to bring H.R. 1173 to the House floor before the end of this year.

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ATR Supports H.R. 1834, A One Year Repatriation Tax Reduction


Posted by J. Michael Wahlen on Monday, December 5th, 2011, 5:12 PM PERMALINK

Americans for Tax Reform sent today the following letter to Representative Boustany (R-LA):

On behalf of Americans for Tax Reform, I am pleased to support H.R. 1834, a bill that would create a one-year tax reduction on repatriated overseas earnings of U.S. employers.

The U.S. is one of the only countries in the world that taxes income earned overseas by her own taxpayers.  The amount that must be paid to the IRS is the difference between the U.S. corporate income tax rate of 35% (tied for highest in the developed world), and the tax already paid overseas.

By temporarily reducing the tax on money brought home, this bill will bring back hundreds of billions of dollars that can be used to invest in America and hire American workers.  The punitive repatriation tax incentivizes companies to keep earnings overseas.  Today, $1.4 trillion is sitting in foreign bank accounts, effectively unable to come to the U.S. because of this anti-competitive tax treatment.  Industry estimates calculate that alleviating this tax burden in 2012 will result in a capital inflow to the United States of at least $800 billion.

Over time, the U.S. must move from a “worldwide” tax regime that seeks to tax U.S. employers all over the world.  Instead, we should adopt a “territorial” regime which only seeks to tax profits earned within the United States.  This is the system our global competitors use, and it’s an essential step toward making our country a good place to create jobs and do business. Repatriation is a good step in the direction of territoriality, and should be seen as progress toward that goal.

I urge all Members of Congress to co-sponsor H.R. 1834.

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Fidelity Data Shows Success of 'Auto' Features from 2006 Pension Protection Act


Posted by J. Michael Wahlen on Friday, December 2nd, 2011, 1:35 PM PERMALINK

Yesterday, Fidelity Investments released its third-quarter 401(k) data which showed the tremendous effects on personal savings rates that the Personal Protection Act (PPA) had in the five years since it was passed in 2006. 

The goal of the PPA had been to shore up employee pension plans, which were often underfunded. The previous law left many employers to choose a Defined Benefits plan, in which employee pensions were pooled together and managed by the company. This created significant problems as pensioners and management frequently disagreed as to whether or not the size of the pool was large enough to cover everyone.

The PPA changed the pension laws to encourage employers to develop Defined Contribution plans. Rather than grouping employees’ pensions, Direct Contribution plans set up individual accounts that could be carried over from one company to another largely tax free. Additionally, auto-enrollment was developed, allowing employers to automatically begin contributing to employee’s retirement accounts. These two effects meant a significant increase in personal savings rates and significantly more protection for retirees.

Fidelity’s quarterly results show that both employees and employers have jumped to take advantage of the new Direct Contribution plans. Now, more than half of Fidelity’s 401(k) participants are in an auto-enrolled plan, compared to 16% in 2006.  Auto-enrollment has paid a big role, as only 55% of workers without auto-enrollment participate in savings plans, compared to 82% of those who are automatically enrolled and given the option to leave. This distinction is even more important to younger workers: 76% of Generation Y workers auto-enrolled chose to stay in the plan, verses 20% who chose to opt-in, if not placed in initially. 

Why are these results so important? These dramatic increases in enrollment rates show that individual pension plans and auto-enrollment are the keys to increasing personal savings rates. By setting up individual plans and auto-enrolling people in them, people use them as a savings vehicle to retire. This makes the worker self-reliant, rather than being dependent on the company to manage their retirement.

This last point is underscored by the asset allocation of the plans: today more than 75% of plans are target date funds, designed to become less risky as the worker grows older. Five years ago, only 12% of funds were target date funds, the remainder being short term, implying that the pensioners were not expecting to use this money for retirement. 

These strong results show that the PPA was a rare Congressional home-run. The preference of Direct Contributions and the success of the auto-enroll programs provide a strong model for the future on setting up pensions and retirement programs.

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UPDATE: 30 Free Market Groups Support Repatriation This Year


Posted by J. Michael Wahlen on Wednesday, November 30th, 2011, 1:40 PM PERMALINK

Today, Americans for Tax Reform and 30 other free market groups sent the following letter to Speaker Boehner urging repatriation to be enacted this year:

Dear Speaker Boehner:

It is very likely that Congress will pass a tax revenue bill before the end of this calendar year.  We write to you today to urge that this bill include a provision allowing U.S. employers to “repatriate” money from overseas back home to the United States.

The U.S. is one of the only countries that taxes income earned overseas by her own taxpayers.  A French company earning a profit in the United States pays taxes to the IRS, but never has to pay tax to the French authorities.  An American company earning a profit in France, however, must pay tax to the French government, and then pay an additional tax to the IRS should they want to bring that money back to the United States.  The amount that must be paid to the IRS is the difference between the U.S. corporate income tax rate of 35% (tied for highest in the developed world), and the tax already paid overseas.  Most of the time, this means that employers looking to bring capital back to the United States must pay an additional tax to the IRS of well over 10 percent, and in some cases as high as 35 percent.

Not surprisingly, this punitive tax treatment incentivizes companies to keep earnings overseas.  Today, $1.4 trillion is sitting in foreign bank accounts, effectively unable to come to America because of this anti-competitive tax treatment.  Industry estimates calculate that alleviating this tax burden in 2012 will result in a capital inflow to the United States of at least $800   billion.  That’s non-inflationary, non-stimulus wealth flowing into the country in order to create jobs and invest in America.

This was tried in 2005, and the results were successful.  Over $300 billion flowed into America that year as a result of repatriation.  Because a small tax of 5.25% was imposed, the Treasury received a revenue windfall of nearly $20 billion.  Should a similar repatriation opportunity exist in 2012, it’s reasonable to expect $800 billion to flow into the United States with a Treasury revenue windfall of over $40 billion. 

Over time, the U.S. must move from a “worldwide” tax regime that seeks to tax U.S. employers all over the world.  Instead, we should adopt a “territorial” regime which only seeks to tax profits earned within the United States.  This is the system our global competitors use, and it’s an essential step toward making our country a good place to create jobs and do business. Repatriation is a good step in the direction of territoriality, and should be seen as progress toward that goal.

For the sake of job creation here at home and as a down payment on fixing our broken and anti-competitive tax laws, we urge you to enact repatriation before the year is over.

Sincerely,

60 Plus Association, Jim Martin, Chairman

American Family Business Institute, Dick Patten, President

American Values, Gary L. Bauer, President

Americans for Prosperity, Phil Kerpen, Vice President

Americans for Tax Reform, Grover Norquist, President

CatholicVote.org, Brian Burch, President

Center for Individual Freedom, Jeffrey L. Mazzella, President

Citizen Outreach, Chuck Muth, President

Citizens for Limited Taxation, Chip Faulkner, Associate Director

Citizens for the Republic, Bill Pascoe, Executive Vice President

Club for Growth, Chris Chocola, President

Coalition for a Fair Judiciary, Kay R. Daly, President

Competitive Enterprise Institute, Iain Murray, Vice President

ConservativeHQ, Richard A. Viguerie, Chairman

Cost of Government Center, Mattie Duppler Corrao, Executive Director

Council for Citizens Against Government Waste, Thomas Schatz, President

Florida Center Right Coalition, Richard Watson, Chairman

Free Congress Foundation, James S. Gilmore III, President and CEO

Frontiers of Freedom, George Landrith, President

Georgia Center Right Coalition, Louie Hunter, Chairman

Hispanic Leadership Fund, Mario H. Lopez, President

Institute for Policy Innovation, Tom Giovanetti, President

Less Government, Seton Motley, President

Let Freedom Ring, Colin A. Hanna, President

National Center for Public Policy Research, Amy Mortiz Ridenour, President

National Taxpayers Union, Duane Parde, President

Small Business and Entrepreneurship Council, Karen Kerrigan, President and CEO

Taxpayer Protection Alliance, David Williams, President

The Heartland Institute, Eli Lehrer, Vice President

U.S. Chamber of Commerce, R. Bruce Josten, Executive Vice President 

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ATR Supports S.1880, a Bill to End the Health Insurance Tax


Posted by J. Michael Wahlen on Tuesday, November 22nd, 2011, 11:51 AM PERMALINK

Americans for Tax Reform sent today the following letter to Senators John Barrasso (R-Wyoming) and Orrin Hatch (R-Utah):

On behalf of Americans for Tax Reform, I am pleased to support S. 1880, a bill that would end the health insurance tax (HIT) included in the Affordable Healthcare Act.

Having passed ObamaCare and seen what was in it, it is clear that the Act is neither affordable nor an improvement in our healthcare. To make matters worse, ObamaCare has significantly contributed to the stagnation of our economy. Among the many reasons for the Affordable Care Act’s job-killing effect is the HIT, which raises healthcare expenses for small businesses thereby forcing them to cut jobs.

By eliminating the health insurance tax, S. 1880 will free up capital for small businesses to hire more employees. This HIT is a levy on insurers that provide full insurance packages based upon the amount of their “net premiums”. Insurance companies have already vowed to pass this tax, valued at $8 billion in 2014 alone, onto their customers in this market, 87% of which are small businesses. For this reason, small businesses will bear the brunt of the HIT.

We cannot both take money away from small businesses, the backbone of the economy, and expect the economy to grow at the same time. In fact, the National Federation of Independent Businesses estimates that this tax will cost the U.S. economy nearly 250,000 jobs and $30 billion in lost sales over the next decade. With the unemployment rate over 9%, we cannot afford to incur these losses. To protect our small businesses and grow our economy, we must end the health insurance tax.

I urge all senators to co-sponsor S. 1880. 

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ATR Supports S.1873, a Bill to Allow Companies to Expense, Not Depreciate, Investments


Posted by J. Michael Wahlen on Thursday, November 17th, 2011, 12:25 PM PERMALINK

Americans for Tax Reform sent today the following letter to Senator Richard  G. Lugar (R-Indiana): 

On behalf of Americans for Tax Reform, I am pleased to support S. 1873, a bill that would allow businesses to continue to expense, rather than depreciate, capital investments for an additional year.

It is clear that the economic policies of the Obama Administration have failed. Rather than providing incentives for businesses to grow, the President has deemed U.S businesses “lazy” and called for higher taxes on them. As a result, our economy continues to struggle, with unemployment hovering over 9%. We cannot continue to wait on President Obama for our economy to grow.

By allowing companies to expense all new capital expenditures, S. 1873 provides an economic incentive for businesses to invest and grow. This change in the tax code benefits businesses by allowing them to write off capital investments in the year they were purchased, freeing up cash-flows immediately that would have been spread out over the life of the asset. The result is that businesses get the full value of their investment from the write-off, rather than having much of it lost to inflation over the subsequent years.

This bill provides a strong incentive for businesses to make the large capital investments that are needed to grow the economy and to make our economy more innovative. Ultimately, to increase our competitiveness we must give our businesses the incentive to compete, and this bill is an important step in that direction.

I urge all senators to co-sponsor S. 1873. 

  

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ATR Support S.1738, The Economic Growth and Jobs Protection Act


Posted by J. Michael Wahlen on Friday, October 21st, 2011, 9:23 AM PERMALINK

Americans for Tax Reform sent today the following letter to Senator John Cornyn (R-Texas):

On behalf of Americans for Tax Reform, I am pleased to support S. 1738, a bill that would lower taxes, creating economic growth and higher employment.

With the recent failing of the CLASS Act, it has become even clearer that ObamaCare is poorly conceived and hurting the economy. Among the many reasons for the Affordable Care Act’s job-killing effect is the 3.8% surtax on ‘investment income’.

By eliminating this surtax, S.1738 will encourage investors to use their savings to grow the U.S. economy by investing in businesses. During this downturn, it is especially important that the U.S. economy attract new investments to create new businesses and to sustain competitive ones. This is the only way to get our economy growing once again, and to create jobs for the millions who are unemployed. We cannot do this with the high rates of taxation ObamaCare creates.

The independent Institute for Research on the Economics of Taxation has shown that the 3.8% surtax would lower economic growth by over 1.3%, and decrease investments by over 3.4%. With high unemployment and unstable financial markets, we cannot afford these losses. For this reason, we need to lower, not raise, taxes on investments.

I urge all senators to co-sponsor S. 1738.
 

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