Natalie De Vincenzi

ATR Supports H.R. 523, The Debt Transparency and Accountability Act

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Posted by Natalie De Vincenzi on Tuesday, February 7th, 2017, 9:00 AM PERMALINK

Representative Kenny Marchant (R-Texas) has introduced the Debt Transparency and Accountability Act, H.R. 523. This legislation creates a clear framework for holding the administration accountable for any increase in the debt and requires the Treasury Secretary to produce options for reducing the debt. This bill passed in the last Congress with bipartisan support, so legislators on both sides of the aisle should have no problem in supporting this key piece of legislation.

This legislation requires the Treasury Secretary to appear before the House Ways and Means and the Senate Finance Committee between 21 and 60 days before it is anticipated that the debt limit will be reached. Specifically, the Secretary will be required to present a detailed report outlining the nation’s financial state while also proposing substantive reforms.

Firstly, the Secretary will be required to report on the current state of the debt (including historical levels of debt, current composition of debt, and future debt projections).

Secondly, this bill will require the administration to propose detailed proposals to reduce the debt in the short-term, medium-term, and long-term.

Thirdly, the legislation requires the administration to project how increasing the debt limit will affect future spending, debt service, and the strength and stability of the U.S. dollar as the international reserve currency.

Lastly, the Secretary will be required to report projections of the long-term sustainability of mandatory entitlement programs including Social Security, Medicare, and Medicaid. 

In addition, the legislation requires the Treasury Secretary to present progress reports on efforts to reduce the debt when returning to Congress to ask for future debt ceiling increases.

The Debt Transparency and Accountability Act creates a clear, yet comprehensive framework that any administration must follow to reduce federal debt when requesting a debt limit increase. By requiring the submission of a detailed report and comprehensive plan before Congress, H.R. 523 ensures that increasing the debt ceiling only occurs as part of a framework of serious proposals to reform the nation’s finances and chart a pathway toward fiscal responsibility. Americans for Tax Reform supports this legislation and urges all members of Congress to support or cosponsor this bill.

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Global Trade Accountability Act Reasserts Congressional Authority

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Posted by Natalie De Vincenzi on Monday, February 6th, 2017, 10:00 AM PERMALINK

The power to impose tariffs and regulate foreign commerce is not granted to the executive branch, but rather to Congress under Article 1, Section 8 of the United States Constitution. Presidents are granted the power to negotiate international trade agreements, but that does not include imposing tariffs. Yet over the years, Congress has consistently allowed the President to raise tariffs and restrict imports, heeding much of its congressional authority to the executive branch.

Congress must reassert its authority through the Global Trade Accountability Act, S. 177, introduced by Sen. Mike Lee (R-UT). This important piece of legislation will reinforce Congressional oversight and accountability of any trade decisions made by the Executive Branch.  Americans for Tax Reform along with 13 other free market groups wrote a letter to members of Congress urging them to support S.177, the Global Trade Accountability Act. Read the letter here or below.

Congress will be able to ensure that we don’t head down the path of protectionism we once historically did. There is a reason why our nation was set up to have checks and balances.  This piece of legislation is merely reaffirming the principles our nation has already established.

It is imperative that the U.S. pursues the best trade policy possible and strengthens international trade relations.  International trade is directly linked to millions of jobs across all 50 states. In 46 of the 50 states, trade-related jobs account for more than one-quarter of ALL jobs. In total, more than 1 in 5 jobs, or close to 41 million are reliant on trade. In fact, these workers earn 15-20 percent more than jobs in industries not tied to trade. Free trade is critical to the American economy and is an essential component to guaranteeing a high standard of living for all Americans.

Open Letter to the House and Senate:

Protect Families and Businesses from Unnecessary Tax Increases: Enact the Global Trade Accountability Act

 

February 2, 2017

 

To Members of Congress:

We the undersigned free market organizations, representing millions of hardworking Americans, urge you to support S. 177, the “Global Trade Accountability Act,” introduced by Sen. Mike Lee (R-UT). If enacted, the legislation would strengthen Congressional oversight and accountability of trade-related decisions made by the Executive Branch.

Article I, Section 8 of the United States Constitution gives Congress the authority to impose tariffs and regulate foreign commerce. Article II of the Constitution gives the President the power to negotiate international trade agreements. Over time, Congress has ceded much of its authority to establish and raise tariffs and restrict imports to the Executive Branch as long as certain conditions are met. This current arrangement gives the Executive Branch virtual carte blanche to raise tariffs or otherwise restrict imports in a manner that could trigger a costly and unnecessary trade war.

Consistent with Article I, Section 8 of the Constitution, and similar in process to the REINS Act, the Global Trade Accountability Act would require Congressional approval of proposed Executive Branch trade measures aimed at raising tariffs or restricting imports.  In short, it would allow Congress to assert its Constitutional authority over trade policy when appropriate.

Trade policy has been unfairly maligned in recent years, but make no mistake: protectionism has an ugly history in the United States. The Smoot-Hawley tariffs of 1930 deepened and prolonged the Great Depression. Since World War II, however, a bipartisan consensus emerged and the United States began working to liberalize foreign trade between nations. This has paid enormous dividends both domestically and abroad. Regrettably, the specter of protectionism is higher today than it has been at any point since the Depression. The Global Trade Accountability Act can prevent the United States from slouching toward protectionism. That is why we strongly urge you to pass S. 177, the Global Trade Accountability Act.

Sincerely,

Brandon Arnold, Executive Vice President
National Taxpayers Union

Grover Norquist, President
Americans for Tax Reform

Norm Singleton, President
Campaign for Liberty

David McIntosh, President
Club for Growth

Iain Murray, Vice President of Strategy
Competitive Enterprise Institute

Adam Brandon, President
FreedomWorks

Matt Kibbe, President
Free the People

Tom Giovanetti, President
Institute for Policy Innovation

Lisa Nelson, President
The Jefferson Project

Jerry Taylor, President
Niskanen Center

Lori Sanders, Outreach Director
R Street Institute

David Williams, President
Taxpayers Protection Alliance

Berin Szoka, President
TechFreedom 

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Medicare Part D Already Works

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Posted by Natalie De Vincenzi on Friday, February 3rd, 2017, 10:30 AM PERMALINK

Medicare Part D is an example of the free market ensuring lower costs and greater access to care. Preventing government bureaucrats from interfering with private-sector negotiations allows pharmacy benefit managers (PBMs), pharmaceutical manufacturers, and pharmacies to negotiate lower drug prices and reduce overall healthcare costs amongst themselves.

Too often, government-created programs spend more than projected. But, Medicare Part D is an exception, saving taxpayers billions of dollars. The CBO estimated in 2005 that Part D would cost $172 billion in 2015, but it has cost less than half that – just $75 billion.

The government shouldn’t mess with a program that isn’t broken, and doing so would do almost nothing to address runaway federal spending. Instead this proposal would decrease access to life-saving medicines and increase costs to the healthcare system over the long term.

In a letter to Representatives, ATR President Grover Norquist, together with CAGW President Tom Schatz and NTU President Pete Sepp urged Congress to not interfere with Medicare Part D. The letter can be found here or below.

 

February 2, 2017
U.S. House of Representatives
Washington, D.C.  20515

Dear Representative,

On behalf of the more than 1.8 million members and supporters of our respective organizations, we urge you to oppose any attempts to change the successful and cost-saving process by which drug prices are negotiated for Medicare Part D.

When Congress created Part D, a non-interference clause was included to prevent the secretary of Health and Human Services (HHS) from interfering with the robust private-sector negotiations that occur among pharmacy benefit managers (PBMs), pharmaceutical manufacturers, and pharmacies.  PBMs use a variety of methods, such as acquiring price concessions from both brand-name and generic drug manufacturers, rebates, and networks of more affordable pharmacies to lower drug costs for beneficiaries.  PBMs also work with patients on drug adherence to keep them out of hospitals and doctors’ offices, which also helps to reduce healthcare costs.

These competitive, private-sector negotiations have been instrumental in making Medicare Part D an all-too-rare example of a government-created program whose expenditures have been significantly less than projected.  In 2005, the Congressional Budget Office (CBO) estimated that Part D would cost taxpayers $172 billion in 2015; instead the cost was $75 billion.

Critics of the current process for determining drug prices claim that there either are no real negotiations or that the secretary should be given the authority to negotiate.  The first claim is patently false.  In regard to allowing the secretary to negotiate prices, CBO has stated that changing the non-interference clause would have a negligible impact on costs, unless HHS established a formulary, which would lead to a restrictive, limited list of medications eligible for reimbursement by Medicare.  In other words, there would be price controls on the drugs, and some medications that are now covered by the program would be cut off.

According to the Center for Medicare and Medicaid Services, there were 41 million beneficiaries enrolled in the Medicare Part D program in 2015.  A July 2016 Healthcare Leadership Council survey found that 92 percent of seniors reported that their plan was convenient to use; 88 percent were satisfied with their prescription drug coverage; 86 percent said their plan works well and without hassle; 84 percent reported it was important to them to have a variety of plans to compare and choose from; and, 80 percent stated their plan was a good value.

Price controls never work as advertised and cause more problems than they solve.  Medicare Part D is working more effectively than originally anticipated and is helping to keep taxpayer costs under control. The government should not interfere with something that is not broken.

Sincerely,

Grover Norquist
President, Americans for Tax Reform

Tom Schatz
President, Council for Citizens Against Government Waste

Pete Sepp
President, National Taxpayers Union

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U.S. Should Pursue Bilateral Trade Agreement with United Kingdom

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Posted by Natalie De Vincenzi on Tuesday, January 31st, 2017, 9:00 AM PERMALINK

A bilateral free trade agreement between the United States and United Kingdom would be extremely beneficial. Not only do the U.S. and U.K. have a strong commitment to one another that would be strengthened by this agreement, a trade deal would produce immense economic benefits.

President Donald Trump has expressed concerns with the current state of trade but has also committed to passing strong bilateral free trade agreements that benefit American workers and families. A U.S.-U.K. free trade agreement should be the first step in achieving the trade goals of the new administration.  Congressman Charlie Dent (R-PA) and Congressman Mark Walker (R-N.C.) have introduced a resolution, H.Res.60, that would pressure the Trump admiration to pursue a bilateral free trade agreement. President Trump should have no hesitation in supporting this resolution as he has expressed the prospect of such an agreement as favorable, considering it a “top priority” of the United States.

While free trade has come under scrutiny in recent years, conceptually it produces immense economic benefits.  Free trade agreements allow the elimination and reduction of tariffs—or taxes on trade—as well as other discriminatory measures such as trade quotas.  

Fewer barriers on American exports means less money taken by foreign governments out of the pockets of workers and business owners seeking to trade overseas. Fewer barriers on imports into the U.S. results in more competition and access to a greater range of products at lower prices for consumers across the country, guaranteeing a higher standard of living for Americans. 

The U.S. economy is heavily reliant on trade, so it is imperative that we have sound bilateral agreements with our major trading partners. Trade-related jobs account for more than one-quarter of ALL jobs in almost every state and a total of 41 million jobs across the country are tied to trade. These jobs pay on average 15-20 percent more than jobs in industries not tied to trade.

The United Kingdom has historically been a major stakeholder and investor in the United States and has also served as a major market for U.S. goods. Following the UK’s “Brexit” vote, there has been much uncertainty as to whether the United Kingdom and the United States can retain the strong economic and cultural ties they share. 

Passing Representative Dent and Representative Walker’s U.S.-U.K. trade deal would be a step towards strengthening these meaningful ties by starting the conversation for a bilateral trade agreement. Such a conversation would provide much-needed certainty and stability in the global economy and foster a smooth transition for the United Kingdom to exit the European Union. 

It is crucial that the Trump administration take action on this resolution and start the discussion for a U.S.-U.K. bilateral trade agreement.

 

 

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The Death Tax Should Be Repealed in 2017

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Posted by Natalie De Vincenzi on Thursday, January 26th, 2017, 12:38 PM PERMALINK

The Death Tax should be repealed this year as a part of much-needed, pro-growth tax reform. At its core, this tax is extremely unfair, forcing families to pay a tax on their loved one’s family-owned businesses or farms.

At a steep 40 percent rate, those hit by the Death Tax must give up a portion of their loved one’s legacy because of the tax. The truly wealthy can avoid the tax through an army of accountants, attorneys, and charitable planners, but those who are hit hardest generally are first and second generation small business owners and cannot afford the same tax avoidances the wealthy, like Hilary Clinton, use. Americans for Tax Reform along with 131 other organizations wrote a letter to Congress urging immediate and permanent repeal of the Death Tax.

Repeal of the Death Tax is not only common-sense, but it would also spur economic growth. In 2016, the Tax Foundation estimated that repeal of the Death Tax would create 150,000 jobs. Additionally, the  Joint Economic Committee reported that the Death Tax has suppressed over $1.1 trillion of capital in the United States’ economy since being introduced. Much of this comes from small businesses, who are the core of America’s economy. This loss of capital ultimately results in fewer jobs and lower wages for American workers.

In addition, the Death Tax contributes a miniscule amount of revenue relative to the size of federal government. In all, it makes up only one half of one percent of all federal revenue. Because the Death Tax is so economically destructive, almost all the revenue lost would be offset by increased economic growth. As noted by the Tax Foundation, repealing the Death Tax would result in $240 billion in lower taxes over a decade. However, the economic growth created by repealing the Death Tax would produce $221 billion in federal revenue because of increased wages and more jobs.

The majority of Americans oppose the Death Tax and support its repeal. Countless polls have proven that a majority of Americans would support full and permanent repeal of the Death Tax.  

Senator John Thune (R-S.D.) and Representative Krisiti Noem (R-S.D.). have introduced legislation, S. 205/ H.R. 631, The Death Tax Repeal Act of 2017, to permanently repeal the Death Tax. ATR urges all members of Congress to support and co-sponsor these bills. Likewise, executive and congressional leaders have been at the forefront of this debate. Both the House GOP tax blueprint and the plans released by President Trump have both called for the repeal of the Death Tax.  

As the President and Congress are moving forward with pro-growth tax reform, the repeal of the Death Tax should be a vital part of reform. 

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Reforming the IRS Should be on The Agenda in 2017

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Posted by Natalie De Vincenzi on Tuesday, December 13th, 2016, 9:00 AM PERMALINK

In addition to overhauling the tax code by lowering rates, simplifying the system, and updating the code, the House GOP “Better Way” Tax Reform Blueprint outlines several reforms aimed at creating a more efficient, less-abusive IRS.

The GOP’s outline for a new IRS transforms the way in which the agency operates with a new “service first” mission, the creation of a taxpayer bill of rights, and structural changes to the agency. Given the unaccountability exhibited by employees and officials in past years, changes to the agency are long overdue.

History of Failure and Abuse

The modern IRS has a history of failing to fulfill its basic responsibilities to taxpayers. Most notably, the IRS applied improper, politically motivated scrutiny to tea party and conservative organization during the Obama presidency. As a result of this scrutiny, Congressional investigations revealed that the agency granted just one conservative non-profit tax exempt status over a three year period between 2009 and 2012. 

Following this, IRS Chief Commissioner John Koskinen deliberately misled the public and failed to provide crucial information into the investigation surrounding the political targeting while under oath before Congress.

Koskinen and other IRS officials have also claimed the agency is underfunded, with one official even claiming that the agency was “struggling to keep the lights on.” But the facts say otherwise – the agency has proven time and time again that it cannot be trusted to wisely spend taxpayer dollars.

For example, the agency made the costly and illegal decision to hire a litigation-only white shoe law firm for over $1,000 an hour to audit Microsoft. As noted by Congressional investigators, this was completely unnecessary -- the agency has 40,000 employees dedicated to enforcement efforts and access to the IRS office of Chief Counsel or a Department of Justice attorney for audits. But instead, the agency chose to hire an expensive law firm for at least $2.2 million.

The waste doesn’t end there. Other investigations have caught the IRS wasting over 500,000 hours, or $23.5 million a year on union activities, and show that they gave 57 contracts worth a total of $18.8 million to corporations that had federal tax debt or a felony conviction.

Need for A Service First Mission

Quality service has never been a priority for the IRS. In recent years, this has become only more pronounced as frustrated and confused taxpayers seeking help by calling the IRS have found themselves “courteously disconnected” – the term the agency uses when it cannot take your call. According to the National Taxpayer Advocate, in 2015, the IRS not-so-courteously disconnected 8.8 million taxpayers. 

Needs for customer service at the IRS have reached such dire levels partly because we have such a complicated tax code, which stretches to 74,608 pages long.  From 2010 to 2015, average wait times have tripled from 10.8 minutes to more than 30 minutes according to the Government Accountability Office (GAO). Additionally, GAO reported that during fiscal year 2015 the IRS had offered “the lowest level of telephone service”. Only 38% of taxpayers who called were able to reach an IRS representative.

Most taxpayers fear being audited and they deserve to receive all the help they need. By refocusing on a “service first” mission, taxpayers can lessen their fears knowing full well that they will get the help they need.

Taxpayer Bill of rights

One way the IRS can better respect taxpayers is through an enshrined “taxpayer bill of rights,” as the House GOP plan proposes. The plan lays out ten rights that taxpayers should expect from the IRS. These include:

• Be informed

• Quality service

• Pay no more than the correct amount of tax

• Challenge the position of the IRS and be heard

• Appeal a decision of the IRS in an independent forum

• Finality

• Privacy

• Confidentiality

• Retain representation

• A fair and just tax system

Having quality rights and having them specifically laid out in such a form will enable taxpayers to hold the IRS accountable for their actions and ensure that taxpayers and their information are treated properly. Taxpayers will be guaranteed the basic rights most Americans would say should be automatically expected.  

The IRS has proven itself to be a potentially-dangerous arm of federal power.  It’s important that the natural authority given to agencies like the IRS be checked with strong protections for ordinary, everyday taxpayers.

Organizational Reform for the Agency

Reforms outlined in the Better Way plan also propose streamlining the organizational structure to the agency. While the tax code is overly complex, so too is the IRS inefficiently structured. One solution to this is separating the agency into multiple units – a families and individuals unit, a business unit, and a small claims court.

• The families and individuals unit will focus on providing state of the art customer service so that taxpayers can get efficient help and answers to their tax questions.

• The business unit will focus on administering the new tax code for businesses of all sizes and types, including specialists with expertise on the issues facing start-up entrepreneurs and small businesses and specialists with expertise on the issues facing large domestic companies and American-based global corporations.

• The “small claims court” unit will be independent of the new IRS. This will allow routine disputes to be resolved more quickly, so that small businesses no longer spend more in legal fees to resolve a dispute with the IRS than the amount of tax that was at stake.”

Just as a taxpayer bill of rights enshrines the service that taxpayers must receive, these structural reforms will ensure that the agency is in a better position to do its job.

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IRS Employees Putting Taxpayer Info At Risk with Un-encrypted Emails

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Posted by Natalie De Vincenzi on Friday, November 18th, 2016, 3:44 PM PERMALINK

IRS employees sent numerous emails with unencrypted taxpayer data, in violation of the agencies email policies, according to a report by the Treasury Inspector General for Tax Administration (TIGTA). As the report notes, almost half of IRS employees sampled failed to abide by the agency’s email policies. Based on these findings TIGTA estimates that the information of more than 28 million taxpayers could be vulnerable.

Under IRs procedure, employees can only send emails containing taxpayer data if it is properly encrypted. As the report notes:

“IRS employees should never include taxpayer PII/tax return information in electronic mail (e-mail) messages or attachments unless an IRS-approved encryption technology is used.”

However, this was not the case. In a random sample of 80 employees, TIGTA found that 49 percent of employees, failed to follow IRS guidelines. As the report notes:

“39 (49 percent) employees sent a total of 326 unencrypted e-mails containing 8,031 different taxpayers’ PII/tax return information internally to other IRS employees or externally to non-IRS e-mail accounts.”

As the report notes, this poses a serious risk that taxpayer information will be improperly disclosed. The information sent in these emails included personally identifiable information and tax return information. Of most concern, TIGTA identified 51 emails that were sent to non-IRS e-mail accounts and an additional 20 that were sent to personal e-mail accounts.

TIGTA determined that this issue could affect more than 28 millions of taxpayers. According to the report:

“Based on our sample results, we estimate that 11, 416 SB/SE Division employees sent 95,396 unencrypted e-mails with taxpayer PII/tax return information for 2.4 million taxpayers during the four-week period of our sample. If this four-week period is typical, we estimate that more than 1.1 million unencrypted e-mails with taxpayer PII/tax return information of 28.2 million taxpayers could be sent annually.”

This is not the first time the IRS has left taxpayers in danger. In September, TIGTA released a report on the failure of the IRS to ensure the proper return of laptops that contained sensitive taxpayer information by contractors. TIGTA estimated that the IRS had failed to properly document the return of 84.2 percent, or more than 1,000 computers due to be returned by contract employees.

Additionally, last year there was a data breach that left hundreds of thousands of taxpayers’ information exposed after being warned by watchdog groups. Following the hack, TIGTA revealed that the IRS failed to implement 44 recommendations that would improve the IRS’s ability to protect taxpayer information from hackers. Of these 44, ten recommendations were over three years old.

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ATR Submits Comment Opposing Regulation To Increase Death Tax Burden

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Posted by Natalie De Vincenzi on Tuesday, November 1st, 2016, 11:38 AM PERMALINK

Americans for Tax Reform President Grover Norquist today submitted a comment opposing the proposed Treasury regulation that would increase the Death Tax. The proposed regulation would increase the tax burden for many family-owned businesses at a time when opposition to the Death Tax is as strong as ever.

Currently, there are two valuation discounts available to those hit by the Death Tax—a lack of control discount and a lack of marketability discount. The proposed regulations would restrict the use of these discounts in a way that would increase the scope of the tax.

At its core, the Death Tax is widely unpopular, and yet the administration continues to widen the Death Tax burden.  The Death Tax is not fair, is bad for economic growth, and is opposed by the majority of the American people and members of Congress. Congress can stop increases in the Death Tax by passing the Protect Family Farms and Businesses Act, S. 3436, sponsored by Marco Rubio (R-FL), and its counterpart H.R. 6100, sponsored by Rep. Warren Davidson (R-OH). See the comments here or below.

November 1, 2016

The Honorable Jacob J. Lew 
United States Treasury Secretary 
United States Department of the Treasury 
1500 Pennsylvania Avenue N.W. 
Washington, DC 20220 

Re: Estate, Gift, and Generation-Skipping Transfer Taxes: Restrictions on Liquidation of an Interest – REG-163113-02

Dear Secretary Lew:

I write in opposition to the proposed regulation restricting the use of two Death Tax valuation discounts under Section 2704 of the Internal Revenue Code. The proposed changes widen the scope of the Death tax to make it much more difficult for families to claim these two important provisions. As a result, the rule would increase the Death Tax for many families.

The Death Tax hurts economic growth, is unpopular with the American people, and its repeal is supported by a majority of the U.S. House of Representatives. I urge you to side with the will of the American people and withdraw this regulation.

Families hit with the Death Tax are allowed two discounts when determining the value of their estate: a lack of control discount and a lack of marketability discount. A lack of control discount can be claimed when a family holds a minority ownership stake in an asset, resulting in the asset holding less value on the open market. A lack of marketability discount applies when an asset held by the family cannot easily be liquidated because of market barriers.

 At a basic level, Americans know that the Death Tax is not fair. It is a tax you pay on savings you have already paid taxes on at least once, and potentially more than once. Those who are hit hardest generally are first and second generation small business owners, because the truly wealthy can avoid the tax through an army of accountants, attorneys, and charitable planners.

The Death Tax is bad for jobs and the economy. This regulation would disproportionately affect family businesses and threaten to put many out of business. The IRS has historically valued family businesses higher than CPA firms, resulting in higher estate and gift taxes for the family. According to the Tax Foundation, repealing the Death Tax would create 159,000 jobs and significantly increase wages, GDP, and capital investment.

The intense opposition to the Death Tax is unquestionable. In poll after poll, the Death Tax has consistently been opposed by nearly 70 percent of adults, registered voters, and likely voters. The House of Representatives even voted to repeal the Death Tax last year with a bipartisan vote of 240-179.  

I urge you to listen to the voices of the American people and the elected Congress and work to repeal the Death Tax and withdraw this regulation.

Onward,

Grover G. Norquist
President, Americans for Tax Reform

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ATR Supports H.R. 6246, the Retirement Inflation Protection Act of 2016

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Posted by Natalie De Vincenzi on Friday, October 28th, 2016, 2:19 PM PERMALINK

Americans for Tax Reform sent a letter today supporting H.R. 6246, the Retirement Inflation Protection Act of 2016. Conservatives have consistently championed lowering or outright repealing the capital gains tax. The House GOP has spearheaded this effort with a proposal to reduce the top rate to 16.5 percent. On the other hand, presidential candidate Hillary Clinton wants to increase the capital gains tax.  

H.R. 6246 protects seniors from inflation-induced capital gains taxes, which would be even higher under a Clinton presidency. The IRS puts seniors at a disadvantage because it does not distinguish between value gained from government-created inflation and the real gains made from an asset. As a result, seniors often pay more in capital gains taxes than they should be. The Retirement Inflation Protection Act of 2016 would fix this discrepancy by indexing capital gains for inflation.

This bill is a major step towards lowering capital gains taxes and ensuring that the American people are not exploited by the IRS. Ideally, taxes on capital gains for everyone should be lowered or repealed. ATR fully supports H.R. 6246. See the letter here or below.

October 28, 2016

The Honorable Tom Emmer
United States House of Representatives
503 Cannon House Office Building
Washington, D.C. 20515

Dear Congressman Emmer,

I write in support of H.R. 6246, the Retirement Inflation Protection Act of 2016, legislation that will index the capital gains tax to inflation for Americans over the age of 59.5 years. All Members of Congress should support this important, pro-taxpayer legislation.

If an investor purchases a stock for $100, and later sells that same stock for $400, he must report and pay taxes on a $300 capital gain.  However, some of that gain is merely due to the effects of inflation over the years.  In many cases, much or all of a capital gain is merely inflation.  With an historical inflation rate of 3%, inflation halves the real value of all assets every 24 years.  While this is bad enough, it adds insult to injury to have to pay taxes merely on inflated gains.

The Retirement Inflation Act will fix this problem for seniors by indexing capital gains taxes to inflation for those aged 59.5 and above, the same age that you can begin withdrawing from retirement accounts.  The legislation does so by multiplying the adjusted basis of the asset by the GDP deflator -- the change in inflation that took place while the asset was held.

Because the IRS does not account for differences between government-created inflationary value and the real value of a capital gain, it does not represent the true capital gains that one would receive while holding the asset.

This important piece of legislation will ensure that seniors can better be financially self-sufficient. After decades of accumulating assets, they should not be penalized on the gains from long-term investments.

In the perfect world, capital gains taxes should be adjusted for inflation for everyone. Americans who choose to invest wisely should not be punished for the profits they make. Capital gains taxes are taxes on income that has already been subject to the income tax and therefore discourages investment.

Passage of the Retirement Inflation Protection Act will ensure that the smart investments made by seniors are not eroded through inflation. All members of Congress should have no hesitation supporting and co-sponsoring this important legislation.

Onward,

Grover G. Norquist
President, Americans for Tax Reform

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30 Years Is Too Long Since Tax Reform

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Posted by Natalie De Vincenzi on Saturday, October 22nd, 2016, 9:45 AM PERMALINK

Thirty years ago today, President Ronald Reagan signed into law the Tax Reform Act of 1986– which became the largest simplification of the U.S. Tax code in history. Prior to 1986, the federal tax code was a complex mess of brackets, deductions, and credits totaling over 26,300 pages.
 
Some of the laws major achievements were:

  • The reduction of the top marginal individual income tax rate from 50 percent to 28 percent
  • A reduction of the corporate income tax rate from 46 percent to 34 percent
  • Reducing the total number of income brackets from 14 to 2

 

While Reagan achieved a significant victory with his reforms, they did not far outlive his presidency. Starting with President H.W. Bush, the top marginal tax rate was raised from 28 percent to 31 percent. President Clinton took it a step further raising the top rate to 39.6 percent. After a brief stint at 35 percent under President George W. Bush, President Obama returned the rate to 39.6 percent.

It has been thirty years too long. Our tax code desperately needs reform.

The Tax Code is Too Complex

Since 1955, the federal tax code has increased six-fold, from 409,000 words to 2.4 million words. Countless regulations have increased the tax burden on Americans and it’s time that time and money are spent doing what you want to do, not working to comply with the government. According to the Tax Foundation, Americans will spend 8.9 billion hours and $409 billion complying with IRS tax filing requirements this year. U.S. businesses and individual income tax returns make up the majority of the hours spent complying, clocking in at 2.8 billion hours and 2.6 billion hours respectively. It’s too complex and it’s too long.

The Tax Code is Uncompetitive

The tax code is the worst in the world. The U.S corporate tax rate is 39 percent, whereas the global average is 25 percent. The tax rate has barely changed since 1986 and since then, other countries have cut their rates aggressively. The U.S. rate is two to three times higher than its direct competitors, like Canada (26.3 percent), the U.K. (20 percent), and Ireland (12.5 percent).

Additionally, the U.S. is only one of six OECD countries that still utilizes a worldwide system of taxation. American businesses overseas are required to pay taxes in the country it earned the income in and then pay U.S. taxes on the remaining income, essentially double-taxing American businesses.  This system of double taxation puts American businesses at an immense disadvantage, as they are competing with businesses who utilize the more modern territorial system of taxation. Ultimately, the costs of the worldwide system of taxation are passed onto employees, as much as 75 percent of the costs can be passed onto workers.  

Congress Must Again Pass Pro-Growth Tax Reform

Pro-growth tax reform that cuts rates for all need not be viewed as costing the government money. As noted by the Congressional Budget Office, every 0.1 percent of higher economic growth equates to $286 billion in extra federal revenue, meaning an increase from 2 percent average growth to 3 percent growth would have economic benefits and would help resolve the government’s overspending problem.

House Republicans in their “Better Way” blueprint have introduced ways to simplify the puzzling tax code and fix our competitiveness problem. To simplify the code, House Republicans have proposed a way so that taxpayers can file their taxes on as little as a postcard. To fix, House Republicans suggest reducing the U.S. corporate rate to 20 percent, which is lower than the global average, and creating a territorial system of taxation. A 20 percent rate, like the blueprint calls for would create more than 600,000 full time jobs and increase GDP by more than 3 percent over the long term. If passed into law, these solutions will make American’s lives easier and ensure that our businesses can again compete in the global economy. 

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