Satyajeet Marar

Democrat Senator Schumer writes off $58,000 in taxes a year thanks to deduction he defends

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Posted by Satyajeet Marar on Thursday, October 19th, 2017, 3:19 PM PERMALINK

Democrats falsely claim that the Republican tax reform framework increases taxes on the middle class, namely because of the elimination of the state and local tax deduction. However, this deduction actually subsidizes upper income earners in high tax states, such as Senate Minority Leader Chuck Schumer (D-N.Y.) who took a $58,000 tax deduction because of SALT.

The democrats push to preserve this deduction is a blatant contradiction with their charge that the tax framework benefits the wealthy.

As noted in publicly available tax records, Senator Schumer deducted over $58,000 in state and local taxes in 2015. The size of this deduction is comparable to the U.S. median household income of $59,000 per year.

At the same time as he is benefiting from SALT deductions, Sen. Schumer is spreading blatant lies about the deduction in an attempt to tie it to middle class tax relief.  For example, Senator Schumer previously claimed that eliminating the deduction “socks it to the middle class,” despite the fact that the deduction is mostly used by upper income earners, a fact noted by the liberal Tax Policy Center.

Democrats even recently voted to preserve SALT in an amendment to the Fiscal Year 2018 budget resolution – a position that conflicts with their accusation that the tax reform framework benefits the wealthy.

These developments come just a month after Schumer called on fellow Democrats to “not go along with a tax plan that includes a tax cut for the folks who need it least.”

Schumer’s stance on the state and local tax deduction is also a sharp contrast to his support for the estate tax or ‘death tax’ – a policy which disproportionately hurts small family businesses and the workers they employ. Schumer’s fellow Democrat Senator Sanford Bishop of Georgia has echoed these concerns, describing the tax as “politically misguided, morally unjustified and downright un-American” because of its impact on small and medium-sized businesses in his rural electorate and across the nation.

These contradictions detract from the misleading ‘class warfare’ narrative championed by Schumer and Senate democrats. They reflect the role that partisan politics plays in undermining badly-needed tax reforms which will provide major relief to America’s middle class and will drive investment, economic growth, job creation and prosperity. 

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Trump Takes Key Step Towards Fixing Obamacare

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Posted by Satyajeet Marar on Friday, October 13th, 2017, 5:08 PM PERMALINK

An Executive Order signed by President Trump aims to expand options and lower costs for Americans by potentially allowing citizens to purchase insurance across state lines. The move is a step towards reforming America’s costly and unsustainable Obamacare system, a system that has cost ordinary Americans and American businesses billions in unfair and oppressive taxes while delivering subpar services.

Under the new order, the Secretary of Labor is directed to consider expanded access to Association Healthcare Plans (AHPs).  Expanding AHPs potentially allowing businesses to band together across state lines to offer their employees better coverage at a cheaper price in a larger, more competitive market. This long-overdue measure is welcome relief for small businesses which have suffered since Obamacare became law in 2010, when over 59% of companies with 25-49 workers offered their workers healthcare coverage. That figure has since dropped drastically by 14% with the number of companies with 1-24 workers offering healthcare coverage similarly dropping by 12% to just 32% today.

Short-term limited duration insurance, or STLDI, will also expand under the order. These plans are not subject to costly Obamacare regulations and are typically much cheaper – just a third of the cost of the cheapest Obamacare plan with broad provider networks and coverage limits. An Obama administration rule limits these plans to a 3 month duration. Repealing this rule will allow millions of Americans to access these plans, delivering immense utility and benefits especially for people between jobs, people in rural areas where coverage networks are limited, people who missed Obamacare’s open enrollment period and those living in thousands of US counties where only a single insurer offers exchange plans. This is a timely step given that by 2018, 1,500 counties of half of all US counties are projected to have only a single insurer offering exchange plans – denying over 2.6 million Americans a choice of insurer.

Finally, the order will aims to expand Healthcare Reimbursement Arrangements. HRAs are non-taxed, employer-funded accounts that reimburse workers for healthcare expenses including co-payments and deductibles. This will put power and control in the hands of millions of Americans who can seek flexible options tailored to their individual healthcare needs. HRAs were once popular among small businesses prior to draconian Obama-era regulations which restricted their use for insurance premiums.

The order is a welcome step against oppressive and costly Obamacare policy and taxes. Average premiums for individual health insurance plans have doubled between 2013 and 2017 and every state in the country using has seen premiums rise, taking money out of the pockets of ordinary Americans.

Americans also continue to suffer from a swathe of shameless and corrosive Obamacare taxes including Health Savings Account taxes, individual mandate tax, high medical bills tax, health plan tax and even a tax on wheelchairs. The Health Insurance tax hits companies and is invariably passed on to consumers and firms, set to strip $130 billion over 10 years. Families seeking to manage their children’s healthcare needs through a pre-tax Flexible Savings Account face a tax if they exceed the low cap of $2,500. Other taxes are even more absurd – the tanning salon tax singles out these small businesses and has led to the closure of 10,000 tanning salons. A majority of tanning salons are owned by female entrepreneurs. Repealing these taxes will take a heavy and unfair burden off the shoulders of middle-class Americans and the firms who employ them.  

In return for paying these taxes, we’ve received a substandard healthcare system which affords citizens few options and has seen millions of Americans departing Obamacare exchanges whilst copping a hefty legal penalty instead. Over 6.7 million people left Obamacare in 2015 alone. Current exchange enrollment is 60% below what the Congressional Budget Office predicted when the law took effect and 500,000 fewer Americans have enrolled in an Obamacare this year compared to 2016. In a particularly unconscionable state of affairs, over 37% of the households penalized for leaving Obamacare in 2015 made less than $25,000 a year and a whopping 79%  made less than $50,000.

The evidence is clear that oppressive Obamacare policy and the taxes that fund it are hurting the poor, middle-class and those who deserve it the least. Though a welcome step, the Executive Order does not direct the agencies to adopt any particular rules but asks the agencies to consider expanding access to AHPs, STLDI, and HRAs to the extent consistent with law. A full repeal and replacement is the only solution for an unfair and broken system and it is time for congress and the senate to act.


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High Taxes Drive Innovators and Entrepreneurs to Low-Tax States: Study

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Posted by Satyajeet Marar on Wednesday, October 11th, 2017, 1:02 PM PERMALINK

A new study has revealed that America’s top-level inventors and innovators are highly mobile and sensitive to tax reform, migrating out of high-tax states to those offering better conditions. The Federal Reserve Bank of San Francisco study monitored the migration patterns of ‘star scientists’ – those with patents in the top 5% of distribution. It revealed that a mere 1% hike to post-tax incomes in individual US states following a tax cut resulted in a 0.4% increase in the stock of scientists within the state, with similar effects observed for cuts to state corporate tax.

The study is good news for North Carolina, Texas and other states which have lowered or maintained low to non-existent income corporate taxes to attract firms and high-skilled workers. It underscores the reality that high taxes discourage productive behavior, driving away those who create value. These states reap scores of benefits including growth in local high tech or scientific industries and flow-on effects including the creation of more high-quality jobs which grow the state economy and boost both paychecks and living standards.

The researcher’s findings are no surprise. Last year, a similar study found that entrepreneurs were highly sensitive to changes in international tax policy, migrating across borders to countries that welcome their contributions through a favorable tax environment.

It is a lesson the US federal government has learned, with plans to drastically cut America’s massive federal corporate tax rate and eliminate perverse disincentives such as the tax on US multinationals attempting to return home profits generated overseas under the Trump administration’s tax reform framework.

At a recent Senate Finance committee hearing, eminent academics in Economics and Law called for reform, noting  that the current regime failed to create a level playing field by disadvantaging US multinationals against foreign competitors who are not taxed a second time on income they return to their home countries. Professor Itai Grinberg of Georgetown University noted that under the status quo, companies were moving management, research & development and even support jobs overseas – depriving the US economy of skills and innovation while actually eroding America’s tax base.

Studies and experience confirm that tax cuts at the state and national level welcome inventors, entrepreneurs and firms who create value and drive innovation. They lay the groundwork for economic growth and prosperity.

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IRS Continues to Use Outdated IT, Leaving Taxpayers At Risk

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Posted by Satyajeet Marar on Monday, October 9th, 2017, 12:29 PM PERMALINK

The IRS has failed repeatedly in its efforts to modernize its IT systems and is instead using outdated technology that is leaving the personal tax data of millions of Americans at risk.

The House Ways and Means Oversight Subcommittee conducted a hearing last week exploring the IRS’s IT practices following the news that the agency awarded a $7.25 million contract to Equifax just a week after that company was responsible for a major data breach compromising confidential data of 145 million American taxpayers.

Alarmingly, neither IRS Chief Information Officer Gina Garza, nor Jeffrey Tribiano, Deputy Commissioner for Operations Support, were aware that the contract with Equifax was signed until the morning of the hearing.

As noted by David Powner, Director of IT Management Issues at the Government Accountability Office, this represents a major breakdown in IRS management as CIO’s are required by law to approve major IT contracts such as the one awarded to Equifax:

“CIOs should approve the IT budget, they should approve major IT contracts, that’s a provision in the law… I can tell you right now that was put in there because of this stuff [referencing the Equifax funding granted by the IRS].”

This breakdown represented just one example of how the IRS’s modernization efforts have failed. When asked by Rep. Tom Rice (R-SC) if anyone on the panel thought that the modernization efforts of the IRS have been acceptable – every witness agreed the IRS is falling far short and failing taxpayers.

Describing the incident as an “abject failure”. Rep Jackie Wolorski (R – IN) called for structural change in the IRS, noting that the organization was in need of “major reform”.

The Equifax data breach should come as no surprise as IRS practices have been investigated by independent watchdogs on a number of occasions.

  • Last year, a TIGTA review found that the IRS’s outdated systems were leaving taxpayer data at risk, noting that “the use of outdated operating systems may expose taxpayer information to unauthorized disclosure, which can lead to identity theft.  Further, network disruptions and security breaches may prevent the IRS from performing vital taxpayer services, such as processing tax returns, issuing refunds, and answering taxpayer inquiries.” 
  • Another review revealed that poorly articulated and badly enforced data retention policies were responsible for the destruction of laptops and critical records, hindering the ability of taxpayers to hold the agency accountable. 
  • Concerns about the IRS’s mishandling of private information have prompted the GOP’s proposed Taxpayer Bill of Rights, designed to protect (amongst other things), the privacy and confidentiality of American taxpayers by holding the agency accountable and affording taxpayers a means of redress.
  • The Oversight Committee found that the IRS has retained outdated 20th-century technology that puts citizen data at risk instead of developing or implementing integrated cloud technology which is the industry standard.

Given the agency’s clear failure to modernize its IT systems, it is clear that reforms are needed to ensure that the IRS is held accountable to everyday Americans and is properly completing its responsibilities. 

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Speaker Paul Ryan Explains How Tax Reform Makes Your Taxes Simpler Next Year

Posted by Satyajeet Marar on Thursday, October 5th, 2017, 5:35 PM PERMALINK

Speaker of the House Paul Ryan recently sat down for a Facebook Live chat with ATR President Grover Norquist to discuss plans to radically reform America’s cumbersome and uncompetitive tax system - making it simpler and fairer for American families, workers, and businesses.

Speaking to Grover, Ryan flagged a number of reforms including the doubling of the standard deduction and consolidating the current 7 tax brackets into just 3 – 12, 25 and 35 percent. The change will bring income earners into lower brackets, allowing workers in all brackets to take home more of their own money. Many of those on low incomes will fall into the 0% bracket and won’t need to pay income tax at all. With so many lower and middle income Americans shouldering an ever-growing tax burden, the changes offer respite to those who need it the most.

But the reforms also radically simplify the system. 9 out of 10 US taxpayers currently need to enlist accountants to complete their taxes. Removing complex itemized deductions in favor of a simple doubled standard deduction allows taxpayers to replace complicated, multiple-page forms with a simple postcard-sized return. These returns can be filled out in minutes rather than days, with no professional help. 

Grover also asked Speaker Ryan about his commitment to ATR’s Taxpayer Protection Pledge – a written commitment to taxpayers to oppose and vote against all income tax increases. Over 1,400 officials nationwide have taken the pledge. Ryan, a signatory since 1998, noted that the reforms are consistent with his commitment by ensuring that no individuals or businesses are worse off as all deductions and credits eliminated are met or exceeded by a matching tax cut.

Speaker Ryan and the current administration should be commended for making badly needed tax reform a priority. These timely changes will attract investment, create jobs, foster competition and grow the paychecks of working people nationwide.  

A brief summary of the uniform tax reform framework can be viewed here.

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