Mike Palicz

Airline Rescue Package Should Provide Tax Relief

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Posted by Mike Palicz on Thursday, March 19th, 2020, 1:09 PM PERMALINK

On Wednesday, President Trump announced that the airline industry “would be the number one priority” for a federal assistance package in response to a demand drop-off following government restrictions on travel to combat the Coronavirus outbreak.

The airline industry now faces a dire situation as flight cancellations are rapidly outpacing new flight bookings. Industry trade groups are estimating that revenue loss could total $113 billion globally. In response to the crisis, Treasury Secretary Steven Mnuchin was on Capitol Hill Tuesday meeting with Senators to discuss the terms of a rescue package for the industry.

As the Trump administration and Congress weigh options for an aid package, providing tax relief for airline companies should be at the forefront of policy options.

Specifically, this would include the temporary repeal of excise taxes paid by airline companies. This would include excise taxes on jet fuel, cargo and passenger tickets. Providing relief on excise taxes would also crucially increase consumer demand that has plummeted from the virus’s outbreak. Taxes currently make up over 20% of the cost of a domestic airline ticket. Temporary tax relief will lower airfare costs to increase consumer demand after the outbreak is contained and travel restrictions are lifted. 

Rebates of these same excise taxes that have already been paid by airlines should also be considered. Monthly Treasury reports show that collections of these taxes paid into the Airport and Airway Trust Fund totaled close to $4.3 billion through February. Given the sharp demand drop off experienced in March, it is reasonable to assume that total collections thus far are not significantly higher. Currently, the trust fund has an uncommitted balance approaching $6.5 billion. This means a rebate of excise taxes already collected in 2020 could be paid for with the uncommitted balance of the trust fund.

Given the AATF is funded on a user fee model, the principle should be maintained in reverse to fund any airline relief package. This will reduce the need to fund a package with transfers from general revenue, thus reducing the burden placed upon taxpayers in any relief package.

Photo Credit: Jason O'Halloran

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DOT waives hours of service regulations for truck drivers providing relief to Coronavirus outbreak

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Posted by Mike Palicz on Monday, March 16th, 2020, 12:43 PM PERMALINK

As part of the Trump Administration’s response to the Coronavirus, The U.S. Department of Transportation will exempt commercial truck drivers transporting emergency medical supplies from regulations limiting how many hours they can drive.

In a statement released Friday, the Federal Motor Carrier Safety Administration (FMCSA) announced a national emergency declaration to provide hours-of-service regulatory relief to commercial vehicle drivers transporting emergency relief in response to the nationwide Coronavirus (COVID-19) outbreak.

This deregulatory action will allow greater flexibility for truck drivers transporting goods such as necessary medical supplies, testing equipment, hand sanitizer, disinfectants and food required for emergency restocking of stores. This action from DOT and FMCSA is part of a larger effort from the Trump administration to reduce regulatory burdens obstructing relief for the Coronavirus outbreak.

Jim Mullen, FMCSA Acting Administrator, thanked President Trump and DOT Secretary Elaine Chao for their leadership in reducing hours-of-service- regulations.

“Because of the decisive leadership of President Trump and Secretary Chao, this declaration will help America’s commercial drivers get these critical goods to impacted areas faster and more efficiently. FMCSA is continuing to closely monitor the Coronavirus outbreak and stands ready to use its authority to protect the health and safety of the American people.”  - FMCSA Acting Administrator Jim Mullen.  

Americans for Tax Reform previously led a coalition of free-market organizations calling for FMCSA to ease hours-of-service regulations imposed upon commercial truck drivers. Such rules impose a top-down, one-size-fits-all approach to regulation where bureaucrats in Washington mandate when drivers must take a break from driving, rather than relying on professional drivers to make that decision for themselves. 

ATR applauds this decision from the Trump administration to provide regulatory relief to commercial vehicle drivers transporting emergency relief in response to the Coronavirus. This action will make crucial supplies and goods more available to the public in a critical time of need.

You can find the full FMCSA emergency declaration on trucking hours-of-service here.
 

Photo Credit: Randen Peterson

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ATR Urges Congress to Reject Any Gas Tax Hike

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Posted by Mike Palicz on Monday, February 3rd, 2020, 4:11 PM PERMALINK

Today, Americans for Tax Reform sent a letter to Members of Congress urging them to reject any increase to the federal gas tax.

In the letter, ATR President Grover Norquist states:

“It should be clear to Congress that the public is already paying more than its fair share in gas taxes. American drivers are forced to pay an average tax of 48.06 cents per gallon when combining federal and state gas taxes, according to the U.S. Energy Information Administration. The government has no business asking consumers to pay more in taxes."

The letter comes shortly after a House Ways and Means Committee hearing was held to discuss funding for the $760 billion infrastructure proposal introduced by House Democrats last week.

Please see below for the full content of the letter or click here.

Dear Members of Congress,

Americans for Tax Reform urges lawmakers to reject any increase to the federal gas tax. Raising the gas tax will disproportionately harm lower- and middle-income Americans while encouraging further wasteful spending.

According to the Congressional Budget Office, raising the tax rate on gasoline would “impose a proportionally larger burden, as a share of income, on middle- and lower-income households,” while also imposing “a disproportionate burden on rural households.” Additionally, the CBO found that raising the gas tax would increase the cost of everyday consumer goods that “would increase the relative burden on low-income households, which spend a larger share of their income (compared with higher-income households) on food, clothing, and other transported goods.”

It should be clear to Congress that the public is already paying more than its fair share in gas taxes. American drivers are forced to pay an average tax of 48.06 cents per gallon when combining federal and state gas taxes, according to the U.S. Energy Information Administration. The government has no business asking consumers to pay more in taxes.

Raising the gas tax would also have a severe impact on the U.S. economy. For example, a gas tax hike of 25 cents in 2020 would cause an average employment shortfall of 62,150 jobs, peaking at a shortfall of 364,000 jobs in 2040, according to the Heritage Foundation. According to Strategas Research Partners, 60% of the federal income tax cut would be wiped out by a $0.25 gas tax increase and rising prices.

The gas tax is not a user fee. Supporters of a gas tax hike often incorrectly claim that the gas tax is a user-fee. This wrongly ignores that every 2.86 cents of the 18.4 cent federal gas tax is diverted to mass transit and that over 28% of Highway Trust Fund revenue is siphoned off to pay for non-highway programs. Misuse of HTF revenue has even included diverting funds to pay for squirrel sanctuaries and to finance driving simulators. Instead of increasing taxes on consumers, Congress should prioritize cutting such wasteful spending and ending revenue diversions.

Lawmakers can find further savings through suspending the Davis-Bacon Act, which needlessly increases the cost of infrastructure projects. The Davis Bacon Act requires contractors working on government projects to be paid “prevailing wages.” However, the Department of Labor uses a highly flawed methodology which sets prevailing wages 22 percent above market rates. The CBO estimates that repealing Davis-Bacon would save $12 billion in discretionary outlays by reducing construction cost.

Rather than raising taxes and digging further into the pockets of American drivers, Congress should instead prioritize spending reforms that ensure existing revenues are spent wisely.  

Onwards,

Grover G. Norquist

President, Americans for Tax Reform

 

Photo Credit: Chris Potter

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10 Things 2020 Dems Would Ban for a "Climate Crisis"

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Posted by Mike Palicz, Jordan Leppo on Thursday, January 30th, 2020, 12:55 PM PERMALINK

The 2020 Democratic Primary has revealed the environmental radicalism of the Democratic candidates. As voting is set to begin next week in Iowa, it is worth highlighting all of the things the Democratic field has promised to ban in the name of a "climate crisis." From the natural gas, coal and nuclear energy that powers and heats our homes down to everyday items like plastic bags and straws, Democrats have promised to ban it all. 

  1. Nuclear Power: Despite producing roughly 20 percent of the nation’s electricity, nuclear energy has been in the crosshairs of major Democratic candidates. Elizabeth Warren has called to ban the construction of new nuclear plants and to ultimately end nuclear energy, stating “we won't be building new nuclear plants. We will start weaning ourselves off nuclear and replace it with renewables." Likewise, Bernie Sanders’ climate plan calls for an end to building new nuclear plants and enacts a “moratorium on nuclear power plant license renewals.” Former New York Mayor Mike Bloomberg told the Washington Post, “no new plants at this time.”

 

  1. Gas-powered cars: Senator Sanders has backed legislation to ban the sale of gas-powered cars by 2040. In addition to an outright ban on purchasing gas-powered cars, Sanders would spend $2 trillion in taxpayer dollars to put Americans in electric vehicles. At a campaign event, Elizabeth Warren told a crowd "by 2030, no more cars with carbon emissions." Warren added that she would also disallow the building of homes with carbon emissions by 2028 and ban electricity produced with carbon emissions by 2035. 

 

  1. Plastic Straws: Although she has now terminated her campaign, Senator Kamala Harris called for a ban on plastic straws at the CNN Climate Town Hall. Likewise, Mayor Pete Buttigieg declared that those who use plastic straws are responsible for climate change and “part of the problem” along with those who eat hamburgers.  

 

  1. Plastic bags: At a campaign event in Iowa on January 2nd, 2020, Joe Biden agreed “100 percent” with a nationwide ban on plastic bags. Responding to a question from the audience, Biden responded by saying, “I agree with you 100 percent. We should not be allowing plastic. What we should do is phasing it out.” 

 

  1. Coal Power Plants: At a New Hampshire campaign rally in December of 2019, former Vice President Joe Biden proposed terminating the jobs and economic anchor of thousands of workers of coal-mining communities as part of his plan to combat climate change. Biden said that “Anybody who can go down 300-3,000 feet in a mine sure as hell can learn how to program as well. Anybody who can throw coal into furnace can learn how to program for God’s sake.”

 

  1. Fracking: Sanders’ website proposes the complete ban of importing and exporting fossil fuels, as Sanders believes that it will “end incentives for extraction around the world.” Elizabeth Warren has also told the Washington Post that she supports a ban on fracking.

 

  1. Offshore drilling: Presidential-hopeful Bernie Sanders has explicitly stated on his campaign website that he is serious about banning offshore drilling. Sanders’ website states, “If we are serious about moving beyond oil toward energy independence… then we must ban offshore drilling…Congress must not open new areas to offshore oil drilling and ban drilling in the Arctic Circle and the Arctic National Wildlife Refuge.” Elizabeth Warren has also said she would “end offshore drilling on day one.”

 

  1. Pipeline Building: When talking to a voter in New Hampshire, Joe Biden stated that he would end both the practice of fracking and the building of new pipelines across America.  Sanders has expressed similar hostility towards pipelines, promising to shutdown both the Keystone and Dakota Access pipelines while in the past saying "We can't afford to build new pipelines that lock us into burning more fossil fuels." 

 

  1. Exporting fossil fuels: Bernie Sanders’ climate plan would outright ban the import and export of fossil fuels, including coal and natural coals. Elizabeth Warren has also signaled her support ending fossil fuel exports and would ban the exportation of crude oil. Candidates Tulsi Gabbard and Steyer also support ending fossil fuel exports.

 

  1. Fossil Fuel production on federal lands: From 2017 data,  42 percent of coal, 24 percent of crude oil and 13 percent of natural gas production occur on federal lands. Yet, Elizabeth Warren has promised she will enact a “total moratorium” on fossil fuel extraction on federal lands. Joe Biden’s climate plan calls for “banning new oil and gas permitting on public lands and waters.” Michael Bloomberg has said he will “immediately end all new fossil fuel leases on federal land.”  Bernie Sanders is the bill sponsor of the Keep It in the Ground Act and has stated that “we must keep oil, gas, and coal in the ground.” Amy Klobuchar has also stated her support for ending fossil fuel extraction on federal lands.

Photo Credit: Gage Skidmore


Dems Want to Blow $86 Billion on Government-Built Broadband

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Posted by Mike Palicz on Wednesday, January 29th, 2020, 4:30 PM PERMALINK

In their "infrastructure" plan released today House Democrats proposed spending $86 billion in taxpayer money for a government-built broadband scheme. Americans for Tax Reform has documented the extensive track record of failure from government involvement in broadband networks which limit competition and consumer choice.

Democrats called for $80 billion for government-deployed broadband and another $5 billion for sweetheart low-interest loans given out to “eligible entities” that are left undefined in the plan.

For context of how significant of an increase in government spending this would be, the Federal Communications Commission (FCC) spent a combined $1.5 billion on Broadband deployment throughout the first three years of the Trump presidency.

The proposal is strikingly similar to 2020 Presidential candidate Elizabeth Warren’s call to spend $85 billion on broadband deployment. Warren’s plan calls for the creation of a taxpayer funded "federal Office of Broadband Access" with "publicly-owned and operated networks."

Of course, Democrats offered no plan on paying for their broadband plan, or the rest of the infrastructure proposal which totals a $760 billion spending spree over a 5-year period. However, in other portions of the framework Democrats suggest raising revenue through “user-based mechanisms” and direct subsidy bonds which likely implies raising the gas tax and debt financing.

As shown in an ATR infographic, government-owned broadband networks have an abysmal track record.

Proponents of big government typically sell Government Owned Networks (GONs) as providing competition and additional choices. In reality, however, this nice-sounding idea never works as planned.

In addition to the initial construction cost of building out a basic fiber network, frequent and expensive technology upgrades are necessary in order to remain current in such an innovative field. Government entities rarely consider this fact, however, and thus grossly underestimate the true costs of a GON.

Government entities also overestimate the demand for a GON. Despite having access to a government-owned and operated network, most consumers choose to remain with their trusted private sector provider. Overestimated demand and underestimated costs is a recipe for a financial gap that taxpayers will always be forced to fill. 

In addition to the financial risks at stake, GONs also jeopardize access to new technologies. Unlike government, private sector providers cannot charge below the cost of service because it would drive them out of business. As if control of the permitting process and possession of regulatory authority were not enough of an advantage, government entities would also able to charge consumers below the cost of service since they can subsidize costs with tax dollars.

This manufactured “competition” with government would discourage private providers from expanding and investing in areas where GONs are present, as their odds of success would be hindered by competing with an entity that does not need to turn a profit. Since it is vigorous competition between private providers that spurs innovation, improves quality of service, and drives consumer prices down, GONs would lead to fewer choices for consumers, outmoded technology, and deteriorating service.

For example, Tennessee alone has had several GONs that have either failed outright or are currently being propped up. These cautionary tales (and the GON failure in nearby Bristol, Virginia) can be found on the infographic linked here and on the list below:

Fayetteville, Tennessee:

Fayetteville Public Utilities rolled out its broadband network in 2000, spending more than $11 million. While it is technically cash flow “positive,” Fayetteville’s GON would take more than 60 years – as much as double the useful life of the network – to make money.

Memphis, Tennessee: 

In 2001, the Memphis Light, Gas, and Water Division’s GON, Memphis Networx, was made available to the public. Fewer than 5 years later, it was clear that this undertaking was a big financial mistake, and by 2007, the GON was sold off to a private company at a $20.5 million loss on its $32 million investment.

Bristol, Virginia:

The Bristol Virginia Utility Authority began is GON, OptiNet, in 2002. Despite being improperly subsidized by BVU’s electric revenues, it still failed to turn a profit and was eventually sold at a loss of more than $80 million. A federal criminal investigation was launched into OptiNet, revealing that along with the improper subsidies, BVU officials also illegally saved the network hundreds of thousands by undercharging it for pole attachments, and also falsified invoices and took kickbacks.

Pulaski, Tennessee:

In 2005, Pulaski Electric System poured around $8.5 million into building out its GON, PES Energize. Despite being a cash flow positive project, its rate of return is so poor that it would take somewhere between 450 and 500 years to break even.

Morristown, Tennessee:

In 2006, Morristown Utility Systems rolled out its GON, MUS Fibernet, for more than $25 million. Over the years, interest in this GON has been so low that it cannot cover basic operational costs, and will never break even.

Tullahoma, Tennessee: 

The Tullahoma Utilities Authority started its municipal broadband network, lightTUBe, in 2007 for around $17 million. Since there were already numerous private providers serving this small town, it is unsurprising to learn that lightTUBe has not attracted many subscribers. LightTUBe’s rate of return is so low that it would take more than 100 years to pay off its debts.

Clarksville, Tennessee:

In 2007, the Clarksville Department of Electricity rolled out its fiber network, which was originally projected to cost $40,200,000. Between construction cost overruns and basic operation expenses that it could not afford to cover, CDE was forced to borrow an additional $20 million. Clarksville’s GON has lost so much money over the years that it will never be able to stand on its own.

Chattanooga, Tennessee:

In 2008, Chattanooga’s Electric Power Board began its fiber-to-the-home service. Including a $50 million loan from the EBP’s electric power division that was used to finance initial planning, $162 million in local revenue bonds that were used to finance the construction, and a one-time $111.5 million subsidy from the federal government, it would take more than 680 years – well beyond its useful life – for this GON to break even.

Photo Credit: Sean MacEntee

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New Study Confirms the Obvious: PFC Hike Would Raise Airline Ticket Prices.

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Posted by Mike Palicz on Tuesday, January 21st, 2020, 12:33 PM PERMALINK

Last week, Congress released a new study on airport infrastructure funding. The study in part focuses on the impact of the Passenger Facility Charge (PFC) – a government-imposed fee collected from enplaned passengers at commercial airports controlled by local and state governments. Revenue earned through the PFC program is used to fund airport improvement projects and is currently capped at $4.50 per enplanement at a maximum of $18 per round trip.

The study comes as Congress is expected to consider raising the PFC in the coming weeks. As taxes and fees already account for over 20% of the cost of a domestic airline ticket, Congress should be focused on reducing this burden placed upon consumers rather than adding to it. Americans for Tax Reform has continuously opposed efforts to raise the PFC and urges lawmakers to reject any effort to raise the cap on the PFC.

Key findings from the study:

  1. Raising the PFC cap will increase ticket prices for airline travelers - The study concludes that “an increase in the PFC cap would likely result in higher ticket prices for passengers traveling through airports that raised their PFC collections.” This finding is in line with a past study conducted by the Government Accountability Office which also concluded raising the PFC cap would increases ticket prices, causing “reduced passenger demand” that “could also marginally slow passenger growth and therefore the growth in revenues to the Airport and Airway Trust Fund (AATF).”

 

  1. Inflation is an invalid argument to raise the PFC – The authors of the study note that although inflation has caused the purchasing power of a dollar of PFC revenues to erode, aggregate PFC revenues have grown to outpace inflation. Here is the finding straight from the report:

 

“It is important to note that increases in the number of airports that charge a PFC, the number of airports that charge the maximum allowable PFC of $4.50, and the number of passengers at these airports have resulted in the inflation-adjusted value of total PFC collections increasing over time despite declines in the value of a single passenger’s PFC.”

Translation: airports collectively have greater purchasing power from their total PFC collections in 2018 than they did in 2000, the last time the PFC cap was raised.

  1. No evidence the PFC promotes competition between airlines – Proponents of raising the PFC cap often claim a higher PFC would promote competition between airlines as projects funded from PFC revenues don’t require the same sign-off from airlines that alternative funding sources necessitate, thus handing more control over airport expansion decisions back to airports. Airports, the argument goes, would then be less beholden to large airlines benefiting from restrictive leases of gates and other essential facilities.

 

However, it remains unclear that there is any data backing up this pro-competition assertion from those advocating for a PFC hike. The authors of the study point out that they are “not aware of any analysis that estimates the effect of PFCs on competition or prices at airports or city markets.”

In fact, reality has proven the PFC to have the opposite effect, adding an additional barrier for smaller airline companies who operate under an ultra-low-cost business model. These smaller airlines have the most price-sensitive customers with a high demand-elasticity in reaction to price-increases. Higher ticket fees hit them hardest. This explains why ultra-low-cost carriers such as Spirit Airlines have testified in Congress against raising the PFC.   

This argument against raising the PFC is only bolstered by the fact that the study’s authors concluded their analysis “cannot determine whether an individual PFC project affects competition and prices.” However, the study did find that “any effects of individual PFC projects are, on average, small relative to other factors, such as local economic conditions and airline hubbing decisions,” and that “no single PFC project is likely to significantly alter the competitive landscape in an individual market.” While PFC funded projects are unlikely to alter competition, the higher ticket prices caused by fee hikes will disproportionately impact smaller airlines, thus damaging competition between airline companies.  

Despite these findings, the authors of study recommend raising the PFC and do so with no compelling reason offered.

While recommending that the PFC cap be raised from $4.50 per enplanement to $7.44 for passengers – a staggering 65% fee hike – the authors state, “We are not aware of compelling evidence or data justifying a particular level for a new cap. Any number could be chosen, but we note that if the $4.50 cap had been indexed to inflation in 2000 using the Producer Price Index for construction materials, it would now be set at $7.44.”

Despite completely debunking the inflation argument in their own study (as outlined above in key findings) the authors almost comically conclude that the PFC should be raised anyway. Rather than laying out a case justifying such a drastic fee hike for American travels, the authors just throw their hands in the air and highlight that this is what the cap would be had Congress initially pegged the PFC to inflation, which lawmakers at the time deliberately chose not to do.

Americans for Tax Reform urges lawmakers to reject this recommendation from the authors of the study and to protect American travelers and consumers from inflated ticket prices resulting from even more government taxes and fees. After all, as the authors themselves states, there is no “compelling evidence or data” justifying a hike to the PFC.

Photo Credit: Eric Salard

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President Trump Speeds Up Infrastructure Permitting with NEPA Reform

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Posted by Mike Palicz on Thursday, January 9th, 2020, 5:33 PM PERMALINK

The White House Council on Environmental Quality released a proposed rule this morning updating National Environmental Policy Act (NEPA) regulations. The proposed rulemaking would streamline outdated regulations that delay and block the development of critical infrastructure projects across the country as they await permitting.

Reaction from Grover Norquist, President of Americans for Tax Reform:

 “NEPA regulations slowed down infrastructure projects under the Obama administration, creating an average delay of four years for needless paperwork--contrary to CEQ's guidance under the Reagan administration limiting the permitting process to one year.

It should never take four years for the government to issue a permit to build a bridge. Crucial infrastructure projects should receive their environmental review in a timely manner and be based solely on the merits of the project. Today’s proposal from CEQ is a significant step forward.”

Key provisions of proposed rulemaking:

  • Establishing time limits for completion of environmental impact statements (EISs) to two years and completion of environmental assessments (EAs) to one year.
  • Allows applicants to assume a greater role in preparing EISs under agency supervision.
  • Requires a single record of decision (ROD) for EISs involving multiple agencies.
  • Provides new direction on whether NEPA applies to a project.
  • Provides a clarifying definition that a proposed project’s effects must be “reasonably foreseeable” and have a reasonably close relationship to the proposed action that is casual.

Photo Credit: The White House

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Warren’s GND Plan Spends $100 Billion on Other Countries’ Infrastructure

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Posted by Mike Palicz on Friday, December 20th, 2019, 6:08 PM PERMALINK

Elizabeth Warren’s plan for a Green New Deal will spend upwards of $100 billion of U.S. taxpayer money to build infrastructure in foreign countries, according to an analysis released today by the Warren campaign.

The analysis, conducted by the progressive think tank Data for Progress, provides further insight into a pillar of Warren’s Green New Deal plan which she titles the Green Marshall Plan. Warren has kept the details of her Green Marshall Plan vague, with her website stating only that it “includes a new federal office dedicated to selling American-made clean, renewable, and emission-free energy technology abroad and a $100 billion commitment to assisting countries to purchase and deploy this technology.”

However, today’s release of the new analysis makes clear that Warren seeks to achieve this goal mainly by using U.S. taxpayer dollars to pay for infrastructure projects in other countries.

Here it is straight from the Memo released by Warren’s own campaign:

“As with the original Marshall Plan, this may initially function largely as aid to countries rebuilding their infrastructure to address climate change.”

Using $100 billion in taxpayer funds to build infrastructure outside the United States should raise the eyebrows of every American taxpayer. For context, total revenues in 2018 to our own Highway Trust Fund only totaled $41 billion. Yet under a Warren presidency, the U.S. will spend twice this amount on infrastructure projects for foreign countries.

Given the U.S. Highway Trust Fund is currently projected to have a cumulative revenue shortfall of $74.5 billion by 2025, Elizabeth Warren should be asked to explain why her plan would use $100 billion on the infrastructure of other countries.

Photo Credit: Gage Skidmore

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ATR Joins Coalition Warning of New Railroad Price Controls

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Posted by Mike Palicz on Thursday, December 5th, 2019, 5:58 PM PERMALINK

Today, Americans for Tax Reform joined a coalition of free-market organizations warning Congress of potential new government price controls on America’s freight railroads.

In a letter, the coalition emphasized the importance of the upcoming Surface Transportation Board (STB) hearing on railroad revenue adequacy and urged Congress to provide “close oversight of the STB and its remaining authorities.”

Specifically, the signed groups raised concerns regarding the STB’s possible changes to revenue adequacy determinations that may be used to create new heavy-handed railroad regulations. Such changes could allow the government to determine that a railroad is earning excessive revenue and consequently serve as justification for instituting a new price control mechanism to set maximum freight weights. Using revenue adequacy in this manner would run counter to the deregulatory agenda that saved the private railroad industry from the brink of collapse during the 1970s.

The letter's signers point to comments submitted to the STB by authors of a 2015 study produced at the request of Congress. These comments highlighted several concerns with STB’s proposal including:

  • Arbitrary calculations: “The proposal would establish rate increase caps based on the relationship of a shipper’s rates to a benchmark calculated using costs derived from the inherently arbitrary Uniform Rail Costing System (URCS) and arbitrary allocations of profits that exceed the cost of capital.”
  • Divorced from economic reality: “We are deeply concerned that this approach creates a rate increase constraint that is divorced both from economic reality and from a well-articulated goal that the proposal is designed to achieve.”
  • Contrary to stated intent: “This proposal could move STB rate regulation in the direction of public utility regulation rather than the protection of captive shippers.”

 

To see the full content of the letter, please click here.

Photo Credit: Luke Jones


10 Times the Wind Industry Claimed it Supported Ending Tax Credits for Wind Energy

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Posted by Mike Palicz on Tuesday, November 19th, 2019, 6:09 PM PERMALINK

Today, House Democrats released a green energy tax extenders package filled with various wasteful and distortionary tax provisions. Among the list of green giveaways Democrats expect taxpayers to pay for is the extension of the Investment Tax Credit (ITC) and Production Tax Credit (PTC) for wind energy. House Democrats’ attempt to extend these wind subsidies is in violation of the 2015 bipartisan agreement, known as the PATH Act, which phased out these tax credits in 2019.

The Democrats’ decision to extend these tax credits comes after an intense lobbying effort by the American Wind Energy Association (AWEA), the national trade association for the wind industry. The effort to maintain the industry’s tax credit is a complete reversal of AWEA’s public position, as the association maintained that the industry did not need the continuation of federal tax credits as recently as last November.

Unsurprisingly, the wind industry has gone back on its word and is once again begging for corporate welfare.

Here are ten times the wind industry publicly supported an end to their federal tax credits:

  1. October 10, 2019 - “When we did the phaseout, I strongly supported it," - Mark Goodwin, CEO of developer Apex Clean Energy.
     
  2. September 20, 2019 - “In terms of PTC, I agree [that it “should go away completely”]. I think that the boom-and-bust cycle of the PTC has done the most damage to the stability of the market, and the suppliers also capitalize on that.” – Jonathan Word, Director, Eolus North America.
     
  3. June 14, 2019 – AWEA told Greentech media that rather than seeking a wind-specific incentive, “AWEA is encouraging a widely applicable, transferable technology-neutral tax credit based on carbon emissions” - Bree Raum, AWEA’s Vice President of federal affairs.
     
  4. June 14, 2019 - “I think phasing down the PTC and ITC at a point where we don’t need them anymore is the right choice, the right decision.” - Jose Antonio Miranda, CEO for the Americas at turbine supplier Siemens Gamesa Renewable Energy.
     
  5. June 14, 2019 - “Can we compete without it? Yeah. In the rest of the world we’re not provided with that incentive.” - Chris Brown, president of sales and services in the U.S. and Canada at wind turbine supplier Vestas.
     
  6. November 15, 2018 - “Utilities make 20- and 30-year decisions, and they’ve kind of voted with their pocketbook. We’re ready to compete in a subsidy-free world.” - Chris Brown, President of turbine maker Vestas North America.
     
  7. November 17, 2017 – AWEA applauded the Senate tax proposal for adhering to the 2015 PATH Act which phases out PTC and ITC in 2019. “The wind industry tax reformed ourselves with bipartisan agreement in 2015. The Senate tax proposal gets it right by respecting those terms.” - Tom Kiernan, CEO of the American Wind Energy Association (AWEA)
     
  8.  December 20, 2012 - While advocating for the extension of its tax credit in the 2012 fiscal cliff deal, the American Wind Energy Association told CNN that “the industry can compete against other power sources like coal and natural gas by 2018, so long as the credit doesn't disappear before then.”
     
  9.  December 20, 2012 - “By offering to give up the tax credit eventually, the wind industry is doing its part to reduce the deficit. We need to be leaders in the fiscal challenge facing our country.” - Ellen Carey, a spokeswoman for AWEA.
     
  10. December 12, 2012 - "The industry believes it can achieve the greater economies of scale and technology improvements that it needs to become cost-competitive without the PTC." – AWEA press release supporting 2012 deal to phase out tax credits.
     

BONUS: At the time of this writing, AWEA’s tax policy page on their website still states that the wind industry is prepared for the current phase-out schedule of the ITC and PTC. “Growth in the wind industry is expected to remain strong when the PTC is fully phased-out. Because the PTC has been successful in helping establish a reliable, competitive domestic wind industry, wind will continue to expand capacity and deliver economic benefits for Americans and their communities.”

Photo Credit: Wind Denmark

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