Tom Hebert

ATR Supports Sen. Cruz's "RECOVERY Act"

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Posted by Tom Hebert on Tuesday, September 15th, 2020, 10:15 AM PERMALINK

Senator Ted Cruz (R-Texas) has introduced “The Reinvigorating the Economy, Creating Opportunity for Every Vocation, Employer, Retiree, and Youth (RECOVERY) Act,” legislation designed to help the American economy continue recovering from the Coronavirus pandemic.

Here are several provisions that will help the economy recover and get Americans safely back to work. 

Tax credits for employee testing and personal protective equipment

The RECOVERY Act provides a $150 tax credit to businesses that test their employees for Coronavirus on a biweekly basis for the remainder of 2020. This tax credit provides a direct incentive for employers to implement robust testing programs that keep their employees safe. 

In addition, the Cruz bill establishes several tax credits designed to foster the conditions for businesses to safely reopen and operate. Employers can claim 50 percent of the cost of qualified expenses as a credit against applicable employment taxes on a quarterly basis.

Employers can claim a credit between $500 to $1,000 per employee depending on the size of their business. Qualified expenses include providing personal protective equipment for employees as well as reconfiguring and retrofitting workspaces. 

Right to Test Act and FDA reciprocity 

The RECOVERY Act includes the “Right to Test Act,” legislation that would allow states to approve and distribute Coronavirus tests as long as the state or federal government has declared a public health emergency. This would empower states to bypass FDA approval and drastically ramp up our testing capacity.

We already know what happens when Washington bureaucrats are in charge of developing and producing Coronavirus testing. The Center for Disease Control (CDC) took weeks to develop a Coronavirus test after the pandemic reached our borders, only to contaminate the first round of testing kits and completely botch the rollout. 

The RECOVERY Act also establishes a reciprocal marketing approval process for COVID-19 drugs, biological products, and medical devices. This bill allows the sale of COVID-19 treatments or cures in the United States that have not yet been approved by the FDA if the product has already been approved in other countries.

Product sponsors must meet several criteria in order to sell in the U.S. 

The FDA is notoriously slow at approving new drugs. On average, it takes 90.3 months for pharmaceuticals to go through the development and approval process, imposing immense R&D costs on manufacturers. In the middle of a global pandemic, we simply can’t afford to have the government slow things down more than they already do.

Liability protection for businesses 

The RECOVERY Act establishes a liability shield for businesses operating during the Coronavirus pandemic. 

This provision prevents businesses and/or individuals from being held liable in any Coronavirus exposure action unless the plaintiff can conclusively prove that: 

  • The businesses or individual were not making “reasonable efforts in light of all the circumstances” to comply with all applicable government standards at the time of the alleged exposure. 
  • The business or individual engaged in “gross negligence or willful misconduct” that caused the accidental exposure to COVID-19. 
  • The accidental exposure caused the plaintiff personal injury. 
     

As our economy begins to turn the corner on COVID-19, a liability protection for businesses that have acted in good faith to keep their customers and employees safe is absolutely crucial to getting Americans safely back to work. This provision prevents trial lawyers from cashing in on the crisis with predatory and abusive legislation. 

Payroll tax holiday for employers and employees

The RECOVERY Act temporarily suspends the payroll tax for employers and employees from the date of enactment through the end of 2020. This payroll tax holiday will lower the cost to businesses for hiring new employees, accelerating the reopening process and continuing to get Americans safely back to work.

This legislation builds on President Trump’s payroll tax executive order which deferred Social Security payroll taxes from September 1 to December 31, 2020.  This proposal makes the moratorium permanent so that taxpayers do not have to pay back payroll tax relief next year.

Ways and Means Republican Leader Kevin Brady (R-Texas) has introduced similar legislation in the House of Representatives. 

Indexing capital gains to inflation 

The RECOVERY Act ends the taxation of inflationary gains by indexing the calculation of capital gains taxes to inflation. Under current law, the capital gains tax fails to account for gains that are based on inflation. This unfairly exposes taxpayers to additional taxation. 

For example, an investor makes a capital investment of $1,000 in 2000 and sells that investment for $2,000 in 2017 will be taxed for a $1,000 gain at a top capital gains tax rate of 23.8 percent. After adjusting for inflation, the “true gain” is much lower – just $579. (1,000 in 2000 - $1,421 in 2017).

Ending the inflation tax would also benefit millions of middle class households. ATR looked at Internal Revenue Service data from 2017 (the most recent available data) to determine what percentage of middle class households had a capital gains filing:

  • 25,494,330 American households had a capital gains filing 
  • 13,730,710 (53%) made less than $100k 
  • 20,466,770 (80%) made less than $200k 
     

The breakdown for all 50 states is here

Full business expensing 

The RECOVERY Act would implement permanent full business expensing for qualified property. This would allow businesses to deduct the cost of new investments (machinery, equipment, etc.) in the year they are made. 

There are several benefits to this policy. First, it incentivizes new investment, leading to greater economic productivity, job growth and higher wages. Second, it simplifies the tax code by equalizing the tax treatment of new investments with other business expenses such as wages, rent, and healthcare costs.

In a post COVID-19 world, full expensing will help businesses make vital investments in the coming months and years as they seek to bring workers back, onshore manufacturing capabilities, and ramp up production.

Deregulation 

The RECOVERY Act would enact the “REINS Act,” legislation that overhauls the regulatory process and strengthen Congressional oversight of agency rulemaking. 

The legislation also includes a provision that permanently repeals regulations that have been waived or suspended during the Coronavirus pandemic and creates a regulatory review commission for Congress to reinstate rules if they are truly needed. If for some reason the regulation is truly needed in order for agencies to function properly, Congress can reinstate the rule after recommendation from the commissions.

Instead of using the crisis to consolidate more power in the federal government’s hands, President Trump and his administration have made deregulation a central part of the Coronavirus response. State and local governments have followed suit, leading to the suspension of over 800 rules and regulations nationwide.

ATR has kept a running list of these waived regulations, which you can view here.

529 expansion 

The RECOVERY Act allows Americans to use 529s for K-12 expenses for students engaged in home learning including students enrolled in public, private, or religious school and students that are homeschooled through the end of 2022. 

529s are tax advantaged savings accounts that allow parents to save and invest after-tax income for education costs. Any money earned through 529 investment is tax-free, making these plans a popular choice for parents looking to save for future education expenses. 

Qualified expenses include curriculum materials, books, online educational materials, tutoring costs, fees for standardized testing, and expenses for students with disabilities.

The coronavirus pandemic has resulted in additional costs for American families stemming from the need to ensure schools openly safely and the implementation of online and distance learning. These new costs are exacerbated by the financial hardships that Americans are experiencing across the country due to a lost job, or reduction in work hours.

Expanding HSAs by enacting the Pandemic Healthcare Access Act 

The RECOVERY Act also includes Senator Cruz’s “Pandemic Healthcare Access Act,” legislation that would allow all healthcare plans to use Health Savings Accounts throughout the Coronavirus pandemic. 

Currently, there is a mandate that any American wanting to open or contribute to an HSA must be on a high-deductible health plan.

Senator Cruz’s legislation would pause this mandate in order to help mitigate the pandemic by Americans in Medicare, Affordable Care Act health plans, TRICARE, the VA, Indian Health Service and any employer plan to use HSAs. It will also help individuals pay for their deductible or any increased health care costs, allow HSA funds to pay for direct primary care, and allow telemedicine below the deductible.

Photo Credit: Gage Skidmore


ATR Supports Sen. Ernst's "End-of-Year Responsibility Act"

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Posted by Tom Hebert on Monday, September 14th, 2020, 9:00 AM PERMALINK

Americans for Tax Reform has released a letter in support of S. 1238, the "End-of-Year Fiscal Responsibility Act," legislation sponsored by Senator Joni Ernst (R-Iowa). S. 1238 caps the amount that federal agencies can spend in the final two months of the fiscal year.

If implemented, S. 1238 will save billions of dollars in taxpayer funds per year and bend Washington towards a path of fiscal restraint. 

ATR commends Senator Ernst for her leadership on fiscal restraint and urges all Senators to co-sponsor this legislation. 

Click here to read the full letter or see below: 

Dear Senator Ernst:  

I write in support of S. 1238, the “End-of-Year Fiscal Responsibility Act,” legislation that caps the amount that federal agencies can spend in the final two months of the fiscal year. If implemented, S. 1238 will save billions of dollars in taxpayer funds per year and bend Washington towards a path of fiscal responsibility.

Americans for Tax Reform commends you for your leadership on fiscal restraint and urges all members to co-sponsor this legislation.

Federal spending is completely out of control. Our national debt is $26 trillion and climbing. Congress has spent nearly $2.5 trillion this year in response to the Coronavirus pandemic, and Democrats want to spend trillions more.

Now more than ever, policymakers and bureaucrats alike have a duty to be responsible stewards of federal resources.

Currently, federal agencies are required to return any unused funding to the Treasury Department by the end of the fiscal year. While this seems like fiscally responsible policy, this system creates a perverse “use-it-or-lose-it” situation where agencies spend billions of dollars in the final two months of the fiscal year.

This is not a hypothetical scenario –during the final seven days of FY 2018, federal agencies spent a whopping $53 billion of taxpayer money on frivolous purchases unrelated to agency function. These purchases include $4.6 million on lobster tail and crab, $2.1 million on games and toys, $1.2 million on playgrounds, and $308,994 on alcohol.

To remedy this, S. 1238 limits an agency’s spending in the final two months of the fiscal year to the average amount the agency spent over the preceding ten months. This simple step will prevent bureaucrats from going on end-of-year spending binges to avoid sending money back to the Treasury.

Ultimately, the End-Of-Year Fiscal Responsibility Act is a commonsense piece of legislation that will save taxpayers billions of dollars in spending every year.

Onward,

Grover Norquist
President, Americans for Tax Reform

Photo Credit: Gage Skidmore


Transparency Rule Should Be Improved To Better Benefit Consumers

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Posted by Alex Hendrie, Tom Hebert on Thursday, September 10th, 2020, 10:45 AM PERMALINK

The Trump Administration has pushed for healthcare transparency that benefits American patients and curbs the opacity of the health system.

To that end, the administration has proposed a rule on “Transparency in Coverage” that is designed to encourage healthcare insurers to be more transparent with patients regarding healthcare costs. 

While this push for healthcare transparency is laudable, components of this proposed rule could undermine efforts to lower healthcare costs for patients all across the country. Although transparency measures are often popular with the American people, it is important that they are not used to force businesses and individuals to give up sensitive information that does nothing to properly inform the public.

There are two central problems with this rule. First, the rule forces insurers to disclose negotiated rates to consumers, proprietary financial information that is integral to their business operations. This would do nothing to better inform consumers and could actually drive up costs by allowing third parties to leverage the proprietary information. Second, the rule mandates the creation of internet portals for consumer use, subjecting insurers to stringent government mandates and onerous regulations. A better approach would be to work with the private sector on increasing utilization of existing portals.

Overview of the Proposed Rule

In June 2019, President Trump issued Executive Order (EO) 13877 with the goal of empowering patients to choose the healthcare that is best for them. The EO directed several Departments to issue Advanced Notices of Proposed Rulemaking (ANPRM) to solicit comments from stakeholders on a proposal to require healthcare providers, health insurance issuers, and self-insured group health plans to provide patients with information about expected out-of-pocket costs before they receive care. 

In November, the Departments of Health and Human Services (HHS), Treasury, and Labor instead issued a Notice of Proposed Rulemaking (NPRM) on “Transparency in Coverage.” 

If implemented, the proposed rule would mandate commercial health plans to create an internet-based tool to supply patients with a cost estimate of their out-of-pocket expenses before they receive care from a provider. These internet portals would be subject to strict regulation by the Departments that issued the rule, and would likely impose hundreds of millions of dollars in regulatory costs on the healthcare system. 

The rule details seven elements that plans must disclose to healthcare consumers:

  1. Estimated cost-sharing liability: an estimate of the total out-of-pocket cost a patient is responsible for paying for a covered item or service under the terms of their healthcare plan or coverage.
     
  2. Accumulated amounts: the amount of financial responsibility the consumer has incurred up to the date of request for cost-sharing information.
     
  3. Negotiated rate: the contractually-agreed upon amount of money that providers accept as full payment for covered items or services.
     
  4. Out-of-network allowed amount: the maximum amount a provider would pay for an out-of-network item or service, including the consumer’s cost-sharing liability. 
     
  5. Items and services content list: for a service that is subject to a bundled payment arrangement, the issuer must display a list of covered items and services and the consumer’s cost-sharing liability for those services.
     
  6. Notice of prerequisite to coverage: if applicable, the issuer would indicate if a covered item or service is subject to a prerequisite for coverage, like concurrent review or prior authorization. 
     
  7. Disclosure notice: issuers must provide several disclosure notices, including ––
  • A statement indicating that consumers may be balance billed by out-of-network providers. 
  • A statement indicating that actual charges may be different than the cost-sharing estimate. 
  • A statement indicating other necessary disclaimers, like when the estimate expires or whether rebates or discounts impact prescription drug estimates.
     

While much of this information should be disclosed to consumers, a significant amount of it already is disclosed through existing tools developed by insurers. However, the disclosure of negotiated rates should not be disclosed as it forces businesses to release proprietary financial information that is of little use to patients but is akin to the intellectual property of insurers.

Disclosure of Negotiated Rates Is Meaningless to Consumers and Could Drive Up Costs for Patients and Families

Accessing negotiated rates is essentially meaningless for consumers because they do not reflect the out-of-pocket costs consumers pay. This requirement distracts from what is really important –– the direct cost to patients and overall quality of care. 

Deciphering negotiated rates would be difficult for even the most sophisticated healthcare consumer. Consumers would have to enter billing codes and other complex data into the government-mandated internet portals to access the negotiated rates that are useless to them in the first place. Patients and families have enough to deal with in trying times without having to decipher files that can only be read by machines. 

Instead of reducing costs, the proposed rule could have the opposite effect of driving healthcare costs up for consumers all across the country by forcing insurers to disclose negotiated rates for in-network services.

Negotiated rates are the proprietary financial information of the parties to the contract -- healthcare providers and insurers, so this proposed rule is akin to using government power to force companies to release their intellectual property to competitors. The biggest beneficiary of disclosing negotiated rates would be third parties and consultants, who could stand to receive a windfall using the proprietary financial information of healthcare plans to game the system and make profit.

This is not hypothetical -- in 2015, the Federal Trade Commission (FTC) looked at the impact that negotiated rate disclosure would have on patients and concluded that transparency can drive up prices. As the report notes:  

Too much transparency can harm competition in any industry, including health care. Typically, health care providers (hospitals, outpatient facilities, physician groups, or solo practitioners) compete against each other to be included on a health plan’s list of preferred providers. When networks are selective, providers are more likely to bid aggressively, offering lower prices to ensure their inclusion in the network. But when providers know who the other bidders are and what they have bid in the past, they may bid less aggressively, leading to higher overall prices.

Transparency in private markets isn’t just a problem that affects healthcare. In the 1990s, the Danish government forced manufacturers of ready-mix concrete to disclose their negotiated rates to consumers. The result? Concrete prices rose 15 to 20 percent. As companies realized what other bidders were charging for their product, they colluded to raise prices.

Ultimately, disclosure of negotiated rates undermines the ability of insurers and providers to deliver the best quality care to consumers at the lowest possible price. When negotiated rates are disclosed, the absence of selective networks discourages vigorous competition.

If the impetus for competition is gone, negotiated rate disclosure could even create a perverse incentive for collusion, which would drive up prices for patients. Any transparency proposal should not force disclosure of negotiated rates.

Internet-based tools fail to drive down costs 

The second issue with the proposed rule is that it forces insurers to create new internet portals subject to stringent government mandates and regulations. While consumers should be able to view data in a readily available way, insurers have already created similar internet portals, so this mandate is unnecessary and could force the creation of duplicative portals. 

In addition, this mandate could centralize control within the federal government and impose hundreds of millions of dollars in additional regulatory costs on the private sector.

If the administration wants to give consumers access to data, agencies could partner with the private sector to increase utilization of already created tools. However, private stakeholders should have the flexibility to design these tools free of government mandates.

Existing tools have done little to directly reduce healthcare costs for consumers, as noted by several studies. For instance, a 2016 JAMA study shows no correlation between online price transparency tools and reduced consumer healthcare spending. The study focused on two large U.S. employers representative of multiple market areas that offered employees an internet-based transparency tool. 

After adjusting for demographic effects and health characteristics, being offered the tool was associated with a $59 increase in mean out-of-pocket spending for patients. The study also found that employees were largely uninterested in using the tool, with only 10 percent using it at least once. 

A recent report from the Massachusetts Attorney General’s office backs up the JAMA study. The report advises policymakers to “temper expectations that consumer-driven health care price transparency tools will reduce overall health care cost growth.” The report also found that consumers use these tools relatively infrequently, and that consumers generally do not seek to hold plans to the estimates they receive. 

Clearly, the problem with online pricing tools is that they are not widely used, not whether they are widely available. Policymakers should focus on expanding utilization of price disclosure tools rather than creating new, duplicative government portals.

Conclusion

The Trump Administration’s focus on putting patients first is admirable. On the surface, encouraging more transparency in healthcare is a commonsense way to lower prices for patients. 

However, two concerning parts of the proposal could drive up healthcare costs for patients and impose massive burdens on insurers.  

Forcing insurers to disclose negotiated rates would make public proprietary information that is meaningless to patients, but very meaningful to consultants who could see significant financial benefit from being able to game the system.

In addition, stringent government requirements mandating creation of internet-based tools would place onerous burdens on insurers. Resources could be better spent ensuring that utilization of existing tools increase. 

While the intent of the proposed rule is laudable, changes should be made to the rule before proceeding with implementation. Moving forward, the administration should ensure transparency measures are targeted toward helping patients and reducing costs. 

Photo Credit: American Life League


Trump Economy Adds 1.4 Million Jobs As Coronavirus Recovery Continues

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Posted by Tom Hebert on Friday, September 4th, 2020, 10:49 AM PERMALINK

The economy is continuing to recover strongly from the Coronavirus pandemic, with 1.4 million jobs added in August as businesses continue to reopen. The Trump economy has now recovered nearly half of the jobs lost to the Coronavirus pandemic since March. 

The unemployment rate dropped nearly two percentage points from 10.4 percent to 8.4 percent, according to the August jobs data released today by the Bureau of Labor Statistics. 

The August jobs numbers again beat estimates, which projected 1.32 million jobs added and a 9.8 percent unemployment rate. The 8.4 percent unemployment rate is by far the lowest since the beginning of the pandemic. 

Job creation in May, June, July, and August has met or exceeded industry expectations. In those four months, job creation beat expectations by a combined 12.2 million jobs.  

The labor force participation rate increased slightly to 61.7 percent in August. The number of Americans on furlough also dropped by 7.1 million, and Americans on temporary layoff dropped by a third to 6.2 million. 

These gains include 249,000 retail jobs, 197,000 professional and business services, and 174,000 jobs in leisure and hospitality as bars and restaurants reopen. The economy also added 29,000 manufacturing jobs in August. 

While more work remains to be done, these strong economic indicators show that President Trump’s pro-growth agenda of tax cuts and regulatory relief are the way to recover from the pandemic. 

Instead of expanding government, the Trump administration has responded to the pandemic by repealing regulations. All told, over 700 regulations have been suspended or waived at the federal, state, and local level.

Moving forward, if Congress decides further COVID-19 relief legislation is necessary, it should be narrow and targeted in scope. Efforts by Democrats House Speaker Nancy Pelosi to pass trillions of dollars in further legislation should be rejected.

Photo Credit: Gage Skidmore


Ending the Inflation Tax on Capital Gains Will Help Millions of Middle Class Americans

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Posted by Tom Hebert on Tuesday, August 11th, 2020, 3:30 PM PERMALINK

President Donald Trump has announced that he is "seriously considering" cutting the capital gains tax.

President Trump should use his executive authority to index capital gains taxes to inflation, a tax cut that would benefit millions of middle income households. 

ATR looked at Internal Revenue Service data from 2017 (the most recent available data) to determine what percentage of middle class households had a capital gains filing:

  • 25,494,330 American households had a capital gains filing 
  • 13,730,710 (53%) made less than $100k 
  • 20,466,770 (80%) made less than $200k 
     

In Pennsylvania, more than one million households had a capital gains filing in 2017.  58 percent of those households made less than $100,000, and 83 percent made less than $200,000.

These results are just from one year. Imagine how many middle income households would be helped over the course of a decade by ending the inflation tax.

The breakdown for all 50 states is below. 

Alabama 
237,850 households had a capital gains filing
134,560 (57%) made less than $100k
198,770 (84%) made less than $200k 

Alaska
52,090 households had a capital gains filing 
26,910 (51%) made less than $100k 
43,130 (82%) made less than $200k

Arizona
493,700 households had a capital gains filing 
283,840 (57%) made less than $100k
412,790 (84%) made less than $200k

Arkansas
156,360 households had a capital gains filing 
95,290 (61%) made less than $100k
133,610 (85%) made less than $200k

California
3,164,570 households had a capital gains filing
1,483,910 (47%) made less than $100k
2,335,870 (74%) made less than $200k

Colorado 
557,710 households had a capital gains filing 
290,200 (52%) made less than $100k
446,340 (80%) made less than $200k

Connecticut
383,770 households had a capital gains filing
186,810 (49%) made less than $100k
290,480 (76%) made less than $200k

Delaware
79,320 households had a capital gains filing
43,240 (55%) made less than $100k
66,360 (84%) made less than $200k

Florida
1,671,930 households had a capital gains filing 
960,130 (57%) made less than $100k
1,359,950 (81%) made less than $200k

Georgia
612,040 households had a capital gains filing
312,530 (51%) made less than $100k
479,210 (78%) made less than $200k

Hawaii
118,500 households had a capital gains filing
67,270 (57%) made less than $100k
101,300 (85%) made less than $200k

Idaho 
130,670 households had a capital gains filing
77,770 (60%) made less than $100k
108,880 (83%) made less than $200k

Illinois
1,124,230 households had a capital gains filing
593,720 (53%) made less than $100k
902,930 (80%) made less than $200k

Indiana
447,230 households had a capital gains filing
275,530 (62%) made less than $100k
386,120 (86%) made less than $200k

Iowa 
278,830 households had a capital gains filing
173,830 (62%) made less than $100k
245,420 (88%) made less than $200k

Kansas
244,970 households had a capital gains filing
148,030 (60%) made less than $100k
210,480 (86%) made less than $200k

Kentucky 
243,280 households had a capital gains filing 
148,590 (61%) made less than $100k
209,010 (86%) made less than $200k

Louisiana 
244,760 households had a capital gains filing
139,460 (57%) made less than $100k
203,150 (83%) made less than $200k

Maine
110,320 households had a capital gains filing
70,280 (64%) made less than $100k 
96,330 (87%) made less than $200k

Maryland
506,630 households had a capital gains filing
229,920 (45%) made less than $100k
388,000 (77%) made less than $200k

Massachusetts
718,080 households had a capital gains filing
333,920 (47%) made less than $100k
532,420 (74%) made less than $200k 

Michigan 
792,020 households had a capital gains filing 
480,120 (61%) made less than $100k
677,810 (86%) made less than $200k

Minnesota
562,350 households had a capital gains filing
314,770 (56%) made less than $100k
467,420 (83%) made less than $200k

Mississippi
114,930 households had a capital gains filing
68,780 (60%) made less than $100k
98,460 (86%) made less than $200k

Missouri
476,520 households had a capital gains filing
295,190 (62%) made less than $100k
411,850 (86%) made less than $200k

Montana
104,190 households had a capital gains filing
69,520 (67%) made less than $100k
92,820 (89%) made less than $200k

Nebraska 
181,550 households had a capital gains filing 
112,880 (62%) made less than $100k 
159,320 (87%) made less than $200k

Nevada
185,410 households had a capital gains filing
106,470 (57%) made less than $100k
153,150 (83%) made less than $200k

New Hampshire
138,010 households had a capital gains filing
72,600 (53%) made less than $100k
112,020 (81%) made less than $200k

New Jersey
919,180 households had a capital gains filing
434,750 (47%) made less than $100k
690,050 (75%) made less than $200k

New Mexico 
118,500 households had a capital gains filing
71,230 (60%) made less than $100k
102,300 (86%) made less than $200k

New York 
1,749,140 households had a capital gains filing
920,440 (53%) made less than $100k
1,368,100 (78%) made less than $200k

North Carolina
711,010 households had a capital gains filing
393,900 (55%) made less than $100k
584,080 (82%) made less than $200k

North Dakota
76,010 households had a capital gains filing
45,980 (60%) made less than $100k
66,380 (87%) made less than $200k

Ohio
871,480 households had a capital gains filing
530,690 (61%) made less than $100k
746,060 (86%) made less than $200k

Oklahoma
211,550 households had a capital gains filing
124,580 (59%) made less than $100k
177,450 (84%) made less than $200k

Oregon
367,640 households had a capital gains filing
210,410 (57%) made less than $100k
308,170 (84%) made less than $200k

Pennsylvania 
1,131,880 households had a capital gains filing
656,800 (58%) made less than $100k
942,780 (83%) made less than $200k

Rhode Island
87,160 households had a capital gains filing
47,550 (55%) made less than $100k
72,420 (83%) made less than $200k

South Carolina
322,640 households had a capital gains filing
184,710 (57%) made less than $100k
271,290 (84%) made less than $200k

South Dakota
84,850 households had a capital gains filing
54,310 (64%) made less than $100k
74,780 (88%) made less than $200k

Tennessee 
384,010 households had a capital gains filing
219,170 (57%) made less than $100k
316,210 (82%) made less than $200k

Texas
1,657,150 households had a capital gains filing
802,760 (48%) made less than $100k
1,259,020 (76%) made less than $200k

Utah 
191,520 households had a capital gains filing
105,750 (55%) made less than $100k
158,600 (83%) made less than $200k

Vermont
66,280 households had a capital gains filing
41,690 (63%) made less than $100k
58,010 (88%) made less than $200k

Virginia 
734,100 households had a capital gains filing
338,010 (46%) made less than $100k
565,840 (77%) made less than $200k

Washington 
714,380 households had a capital gains filing
346,160 (48%) made less than $100k
552,960 (77%) made less than $200k

West Virginia
83,390 households had a capital gains filing
53,700 (64%) made less than $100k
73,510 (88%) made less than $200k

Wisconsin
568,430 households had a capital gains filing
360,460 (63%) made less than $100k
500,340 (88%) made less than $200k

Wyoming
51,980 households had a capital gains filing
31,580 (61%) made less than $100k 
44,970 (87%) made less than $200k

Photo Credit: SalFalko


ATR Supports Rep. Steil’s “Fiscal Transparency Act”

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Posted by Tom Hebert on Wednesday, July 29th, 2020, 2:45 PM PERMALINK

Congressman Bryan Steil (R-Wis.) has released H.R. 7602, the “Fiscal Transparency Act,” legislation that would increase agency transparency and encourage fiscal accountability in an era of runaway federal spending. ATR supports this legislation and urges its passage.

Federal spending is completely out of control. Our national debt is $26 trillion and climbing. Thanks to the unprecedented federal spending on several Coronavirus relief packages, the national deficit for FY2020 hit an all time high of $2.74 trillion in June.

As negotiations begin on another potential COVID-19 relief package, spending will continue to grow at an unsustainable pace. Now more than ever, taxpayers need to know precisely how their money is being spent.

The Fiscal Transparency Act requires each agency to create a simple, publicly-available online portal available at USAspending.gov.

Each portal will contain:

  • An explanation of what the agency does
  • A structural organization chart complete with the number of full-time employees
  • Data on the agency’s spending, including the agency’s share of the total federal budget and the percentage that each agency component accounts for out of the total agency budget
  • Breakdown of mandatory and discretionary spending and other financial information
     

Having this data available to the public in an easily accessible format will increase government transparency and raise public awareness on our nation’s fiscal health. In an era of unprecedented government spending, implementing the Fiscal Transparency Act of 2020 is a commonsense step towards fiscal responsibility and transparency.

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Next COVID-19 Package Should Include Ways and Means GOP Proposals

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Posted by Alex Hendrie, Tom Hebert on Wednesday, July 29th, 2020, 2:35 PM PERMALINK

House Republicans on the Ways and Means Committee have released a package of legislation that will help American workers and businesses as we recover from the Coronavirus pandemic.

Within this package is several bills that will help incentivize new investment which will help the American economy recover and create jobs for American workers. As lawmakers continue negotiating the next Coronavirus relief package, they should include these proposals. 

Proposals include:

The Accelerate Long-Term Investment Growth Now (ALIGN) Act, introduced by Rep. Jodey Arrington (R-Texas). This legislation would make full business expensing permanent, simplifying the tax code and giving businesses the equivalent of a zero percent rate on new investments.

Full business expensing reduces taxes by allowing businesses to deduct the cost of new investments (machinery, equipment etc.) in the year they are made. Full expensing incentivizes growth, increases productivity, creates jobs, and raises wages. In a post COVID-19 world, expensing will help businesses make vital investments as they seek to bring workers back, onshore manufacturing capabilities, and ramp up production.

The American Innovation and Competitiveness Act, introduced by Rep. Ron Estes (R-KS). This legislation would make R&D expensing permanent to encourage more U.S. investment.  If Congress fails to act, this provision will expire at the end of 2021.

Much like full business expensing of new investments, full R&D expensing creates an incentive to increase capital investment, which leads to stronger economic growth, more jobs, and higher wages. If Congress fails to extend this provision, the resulting reduction of R&D spending will directly lead to 23,400 fewer jobs each year in the first five years and almost 60,000 jobs each year thereafter.

The Pushing Research & Development Into Hyperdrive by Doubling the R&D Tax Credit, introduced by Rep. Jackie Walorksi (R-IN). Currently, taxpayers can take a credit for qualifying research and development. Generally, the credit varies between 20 percent, 14 percent, or 6 percent, depending on alternative calculations and on the size of the company.

This legislation doubles each credit, which will encourage more American investment, to help grow the economy. Jobs tied to R&D are quality, high paying jobs. In 2017, the average wage for R&D related jobs was $134,978 – 2.4 times higher than the average wage, according to the Bureau of Labor Statistics. Doubling the R&D tax credit will help create more of these quality jobs.

The Coronavirus Relief for Working Seniors Act, H.R. 6554, introduced by Rep. Jackie Walorski (R-Ind.). Currently, American seniors who qualify for Old Age and Survivors Insurance (OASI) benefits are not entitled to full benefits if they earn income from outside work over the Retirement Earnings Test (RET) threshold. This penalizes seniors who wish to remain in the workforce after they have reached retirement age. 

This legislation would temporarily eliminate the penalty on working seniors that earn at or below the taxable maximum ($137,700) in 2020. This would allow beneficiaries who have lost retirement savings as a result of the pandemic to offset those losses by re-entering the workforce without penalty. As the focus remains on safely reopening the economy, this legislation also empowers retirees that wish to help their communities by re-entering the workforce.

The Advanced Medical Manufacturing Equipment Credit, introduced by Rep. Brad Wenstrup (R-Ohio). This legislation establishes a 30 percent tax credit for new investment in advanced manufacturing or machinery used in the U.S. to manufacture drugs, medical devices, or biological products. The credit phases down to 20 percent in 2028, 10 percent in 2029, and phases out in 2030. 

If implemented, this legislation will build on the success of the Tax Cuts and Jobs Act by supporting domestic innovation and encouraging American manufacturing. Investment in advanced manufacturing will also create high-paying jobs for American workers. 

The Domestic Medical and Drug Manufacturing Tax Credit, introduced by Rep. Brad Wenstrup (R-Ohio). This legislation creates a 10.5 percent tax credit on the net income from the domestic manufacturing and sales of active pharmaceutical ingredients (API) and medical countermeasures.

By lowering the tax burden, this legislation incentivizes increased domestic production of these important medical products and greater preparedness for a future public health emergency. This credit is also limited to the wages allocable to domestic production, which supports good, high-paying American jobs. 

Bringing Back American Jobs Through IP Repatriation, introduced by Rep. Darin LaHood (R-Ill.). Currently, American companies with significant overseas operations face a huge tax burden if they want to repatriate and bring their intellectual property (IP) back home.

This legislation would allow American companies that wish to come back to the United States to bring home any IP developed offshore without any immediate tax cost. Since this only applies to IP held on the date of enactment, it encourages companies to bring their IP home in the near future and discourages further migration of high-tech jobs outside the U.S. If implemented, this bill would build on the Tax Cuts and Jobs Act’s promise to restore competitiveness and grow our economy.

See also: 

ATR Supports Rep Schweikert’s "Invest Now Act"

ATR Supports The “Small Business Tax Fairness and Compliance Simplification Act”

Ways and Means Republicans Release Healthy Workplace Tax Credit Act

Ways and Means Republicans Release Legislation to Encourage Startup Medical Development

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ATR Supports Rep Schweikert’s "Invest Now Act"

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Posted by Tom Hebert on Friday, July 24th, 2020, 10:55 AM PERMALINK

House Ways and Means Committee Republicans have released several proposals designed to incentivize economic growth in the wake of the COVID-19 pandemic.

To that end, Congressman David Schweikert (R-Ariz.) has introduced the “Invest Now Act,” legislation that would reduce the capital gains tax rate for certain assets acquired in calendar year 2020. If implemented, this legislation would spur long-term investment and economic growth so that we can continue recovering from the pandemic.

The Invest Now Act creates a capital gains tax “holiday,” or reduced rate, for certain assets acquired in calendar year 2020. These assets are eligible for a reduced capital gains tax rate of 5 percent.

Assets eligible for this reduced 5 percent rate must meet the following criteria: 

  • Acquired in calendar year 2020
  • Held for 5 years or more
  • Currently subject to the 15 percent or 20 percent capital gains tax rate
  • Not involved in “wash sales,” wherein taxpayers sell an asset at a loss, then buy a nearly-identical asset within 30 days of the original sale.
     

The capital gains tax is levied on the profit made from the sale of certain assets. Taxpayers must pay a 15 or 20 percent capital gains tax on the difference between the original purchase price of an asset and the sale price of an asset. Former President Obama implemented a 3.8 percent surtax on capital gains, bringing the top effective capital gains tax rate to 23.8 percent. 

The capital gains tax is double taxation, as it hits income that has already been subjected to the individual income tax. When taxpayers reinvest income into the economy, it increases economic productivity and growth, leading to the creation of more jobs and increasing wages.

In order to better encourage long-term investment and economic growth, lawmakers should look to reduce or eliminate this double taxation wherever possible. According to the Tax Foundation, outright elimination of the double taxation of capital gains would increase household income across the board by an average of 3.8 percent, would lead to 2.7 percent higher GDP, and would create more than 500,000 new jobs. 

By cutting capital gains taxes, the Invest Now Act will help encourage new investment, leading to much-needed economic growth, more jobs, and higher wages. With lawmakers looking for policies to regrow the economy from the COVID-19 pandemic, they should be sure to include this legislation in any forthcoming Coronavirus relief package.

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Next Coronavirus Package Should Not Bail Out States For Past Mistakes

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Posted by Tom Hebert on Tuesday, July 21st, 2020, 5:00 PM PERMALINK

Lawmakers and the Trump Administration have begun negotiations on another Coronavirus relief package.

As policymakers consider options to help the American people through the pandemic, Congress should not use the crisis as an excuse to let states off the hook for decades of fiscal mismanagement. If lawmakers insist on providing more aid to states and localities, it should be tied to strict conditions to ensure federal dollars are not wasted on frivolous expenses unrelated to the pandemic.

Even though Congress has already spent trillions of dollars responding to the pandemic, Democrats want to spend trillions more.

In March, Congress passed the $2 trillion “Coronavirus Aid, Relief, and Economic Security” (CARES) Act, the largest relief package in American history. In April, Congress authorized $310 billion in additional funding for the CARES Act’s Paycheck Protection Program (PPP) in the “Paycheck Protection and Health Care Enhancement Act,” pushing the cumulative Coronavirus relief Congress has already authorized to nearly $2.5 trillion.

The Democrat-controlled House of Representatives recently passed Speaker Nancy Pelosi’s “Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act,” a $3 trillion wishlist of long-held liberal priorities completely unrelated to fighting the Coronavirus pandemic.

The HEROES Act contains a blueprint for how Democrats would let irresponsible blue states off the hook for past mismanagement if they had full control.

The Pelosi plan contains a $500 billion bailout to states, a $375 billion bailout to local governments, and $40 billion in bailouts to tribal and territory governments.

On top of this $915 billion no-strings-attached bailout slush fund, Pelosi calls for $81 billion in enhanced Medicaid funding and $100 billion for “dedicated expenses” that would not have existed prior to the pandemic, adding up to $1.08 trillion in total bailout cash.

$714 billion of the Pelosi bailout cash is deemed “flexible,” which means that states can use it to backfill budget gaps  and subsidize projects completely unrelated to fighting COVID-19.

The total $1.08 trillion bailout approximately equals the amount of revenue that states collected in FY2019. Moody’s projects that state and local governments are expected to lose a combined $482 billion across FY2020 and FY2021, making this allocation more than double what states are projected to lose in revenue.

To be clear, states have incurred tremendous costs related to the pandemic. However, Congress has already established a system for states and localities to be reimbursed for pandemic-related expenses. The CARES Act created the Coronavirus Relief Fund (CRF), a $150 billion fund to help state and local governments with unplanned pandemic-related expenses like testing, acquiring and distributing personal protective equipment, and payroll expenses for first responders and other essential employees.

Unlike the CRF, the Pelosi plan contains no limitations on how states should spend this money, so irresponsible states will use this windfall to wash away decades of fiscal mismanagement.

Among other things, greedy blue state lawmakers could use this money to shore up their mismanaged pension systems. In 2017, the state pension gap was $1.28 trillion. This means that states would need $1.28 trillion just for their pension systems to break even.

Federal bailouts in times of crisis has historically led to expansions in state spending, creating a moral hazard and disincentivizing decision-makers from being prudent stewards of taxpayer resources. Following a $20 billion federal bailout for state budgets after a market downturn in 2003, state spending rose by 33 percent in the subsequent five years and state debts increased by 20 percent in the following four years.

As a new Coronavirus package takes shape, lawmakers need to ensure that any new money for assisting state and local governments is narrowly tailored to costs related to COVID-19 mitigation.

No matter how lawmakers decide to assist states and localities, any new funding must come with strict accountability measures to ensure blue-state lawmakers don’t grab federal cash with both hands to clean up past mistakes.

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Lawmakers Should Reject Price Controls In Next Coronavirus Relief Package

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Posted by Tom Hebert on Tuesday, July 21st, 2020, 1:49 PM PERMALINK

Lawmakers and the Trump Administration have started negotiations on another Coronavirus relief package. 

As these discussions continue, it is imperative that Congress reject efforts to use the national emergency as an excuse to impose price controls on our healthcare system as part of surprise medical billing legislation.

Surprise medical billing occurs when an individual receives an unexpectedly high medical bill as a result of being out of network or receiving emergency care. 

Unfortunately, some lawmakers want to address this problem by using the heavy hand of government to set rates for any payments made to out-of-network providers. 

Under this proposal, the government would set a benchmark rate to resolve out-of-network payment disputes between insurers and providers. Benchmark rate-setting would replace private negotiations between insurers and providers with government-set prices, a blatant price control on the healthcare system. 

Fortunately, there are policy alternatives to imposing price controls. 

For instance, the Galen Institute’s Doug Badger and Brian Blase have proposed a solution that would not involve government-imposed price controls. Their approach would amend existing law to establish a truth-in-advertising requirement that would penalize insurers and facilities for not disclosing to patients if a doctor they are seeking treatment from is actually out of network. The proposal also requires providers to supply a good-faith estimate to patients about the cost of a procedure before it occurs.  

Congress is also considering several pieces of legislation that would address surprise billing without imposing harmful price controls:  

  • STOP Surprise Medical Bills Act: a bipartisan measure sponsored by Senators Bill Cassidy, M.D. (R-LA), Michael Bennet (D-CO), Todd Young (R-IN), Maggie Hassan (D-NH), Lisa Murkowski (R-AK) and Tom Carper (D-DE), and co-sponsored by 30 Senators. This bill protects patients from surprise bills and establishes a process for stakeholders to negotiate prices without government-set benchmark rates. The Act also does not supersede the more than 25 states that have already put legislation in place to address surprise billing. 
     
  • S. 4185, sponsored by Senator Roger Wicker (R-Miss.): similar to the STOP Surprise Medical Bills Act, S. 4185 would establish an independent dispute resolution process for air ambulances surprise bills. Air ambulances are a critical component of rural healthcare. 
     

Imposing price controls on the healthcare system is never a good idea but it is even more dangerous now. 

Price controls utilize government power to forcefully lower costs in a way that distorts the economically efficient behavior and natural incentives created by the free market. They are a tool of the left to expand the size and scope of government and are a key part of the socialist Medicare for All proposal being pushed by far-left Members of Congress like Senator Bernie Sanders (I-Vt.) and Alexandria Ocasio-Cortez (D-NY).

Ahead of the 2020 election, Democrats are pushing to expand government healthcare. Imposing price controls on the healthcare system undermines conservative efforts to stop socialized healthcare and paves the way for progress toward Medicare for All.

Fortunately, there is significant opposition from conservatives to price setting and price controls. 75 conservative organizations recently released a letter urging Trump and Republican members of the House and Senate to oppose any price controls.

In addition, Congressman Andy Harris (R-Md.) released a letter signed by 39 conservatives in the House including new White House Chief of Staff Mark Meadows, House Freedom Caucus Chairman Andy Biggs (R-Ariz.), House Judiciary Committee Ranking Member Jim Jordan (R-Ohio), and Republican Study Committee Chairman Mike Johnson (R-La.).

Signers also acknowledged that while Congress should act on surprise billing, any legislation that includes price controls would be a nonstarter. As the letter states: 

“Congress should act on surprise medical billing, but it should avoid top-down price controls that would simply be trading one problem for another.” 

Instead of using the crisis to pass flawed price controls that would move our healthcare system towards the left’s goal of Medicare for All, lawmakers should take a serious, deliberative approach towards solving surprise billing. 

Any forthcoming Coronavirus legislation should be narrowly tailored at helping Americans weather the pandemic, and any healthcare reforms should improve quality and access to care for all patients. 

 

 

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