Tom Hebert

Congress Should Pass Rep. Davis' "Permanent Tax Cuts for Americans Act"

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Posted by Tom Hebert on Monday, March 19th, 2018, 1:30 PM PERMALINK

The Tax Cuts and Jobs Act was a historic piece of legislation that brought real relief to over 90% of Americans.

Between 2018 and 2025, Americans will see a $1.17 trillion tax reduction as a result of the bill. In 2018, a family of four earning $73,000 will see over $2,000 in tax cuts, while a single parent with one child earning $41,000 per year will see $1,304 in tax cuts.

Despite the desperate attempts by the Democrat Party to smear the Tax Cuts and Jobs Act as Armageddon, the numbers show otherwise.

For a family of four, an extra $2,000 per year is a lot of help. That money can put more food on the table, gas in the car, or pay for a family vacation. These savings may be crumbs to Nancy Pelosi, with her $30 million net worth, but they have been extraordinarily helpful to average Americans.

Unfortunately, procedural hurdles have prevented lawmakers from making these provisions permanent. If Congress does nothing, these important tax cuts will sunset in 2026.

Congressman Rodney Davis (R-Ill) has introduced legislation to alleviate this problem. H.R. 4886, the “Permanent Tax Cuts for Americans Act,” would make these temporary tax cuts a permanent reality for the American people. [Read ATR's letter in support of H.R. 4886 here]

The provisions include some of the most beneficial aspects of the GOP tax bill. The following provisions would become a permanent part of the tax code if H.R. 4886 is signed into law:

  • A $12,000 standard deduction for an individual, or a $24,000 standard deduction for a family. If allowed to sunset, the standard deduction would revert to $6,000 for individuals or $12,000 for a family.
  • The reduction of nearly every income tax bracket, a tax cut of $1.2 trillion between 2018 and 2025.
  • A $2,000 Child Tax Credit (CTC). If allowed to sunset, the CTC would revert to $1,000 per child.
  • A 20% deduction for pass-through businesses, which are largely small businesses.
  • An $11 million death tax exemption. If allowed to sunset, the exemption would revert back to $5.49 million.
  • An increase in the Alternative Minimum Tax exemption so that it only hits families earning $1 million or more, a tax cut of $572 billion between 2018 and 2025.

The individual tax reductions in the GOP tax bill have helped American workers and families. These provisions are vital to the Tax Cuts and Jobs Act’s success, and byzantine procedural constraints shouldn’t keep them from becoming permanent.

All members of Congress should support H.R. 4886 and make these tax cuts permanent for all Americans.

[Read ATR's letter in support of H.R. 4886 here]

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Trump Economy Added 313K Jobs in February

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Posted by Tom Hebert on Friday, March 9th, 2018, 11:01 AM PERMALINK

The Trump economy added 313,000 jobs in February, smashing expectations and defying Democrats who said tax reform and regulatory reform would not grow the economy. Trump’s economy has created over 3 million jobs since his inauguration, with The Department of Labor also reporting that average hourly private-sector earnings were up 2.6% from this time last year.

With the economy performing better than analysts forecasted, the stock market is also roaring. The Dow Jones Industrial Average jumped by nearly 200 points after this morning’s announcement, indicating record consumer confidence and a renewed faith in the American economy.

February also saw 155,215,000 Americans employed, a record Trump has shattered eight times since being in office. Real disposable income is the highest since 2015, another gain from the Trump tax cuts.

Unemployment remains level at 4%, marking the 5th month in a row that the unemployment rate is at a 17 year low. Additionally, February was the best month for goods-producing industries in two decades, as 1/3rd of job growth was in mining, logging, construction, and manufacturing. The labor force participation rate has increased by over 800,000 workers, the largest single-month jump in 15 years.

It is no coincidence that the Trump economy has been successful. We have long known that tax cuts create jobs and boost the economy, despite the naysayers in the Democrat party that cried Armageddon when President Trump signed the tax bill into law.

The tax cuts have been a boon to everyday Americans, 90% of whom are seeing more take home pay since the federal withholding tables were adjusted. Tax reform has also lowered utility bills for millions of Americans, and 401k values are on the rise.

ATR’s John Kartch has kept a list of all the benefits from the Trump tax reform bill on our website. So far, over 400 companies have announced pay raises, bonuses, or additional employee benefits because of the tax bill. These benefits have helped over 4 million Americans so far, and more companies are being added to the list each day.

Photo Credit: Gage Skidmore

Norquist: Tariffs Are Taxes

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Posted by Tom Hebert on Monday, March 5th, 2018, 1:41 PM PERMALINK

In an interview on CNBC’s “Squawk Box” Monday morning, Americans for Tax Reform President Grover Norquist expressed concern with President Trump’s proposal to levy global tariffs on steel and aluminum. 

“Tariffs are taxes,” said Norquist. “They are very disruptive. Trade wars are civil wars, and the losers are both Americans.”

While Trump should be commended for working to ensure the U.S. has better trade deals, using tariffs as leverage is a dangerous negotiating tactic.

"There is something to be said for … rattling the cages and disrupting things,” Norquist explained. “But more people get damaged than get helped in these tariff wars.”

Imposing tariffs steel and aluminum will increase the cost of numerous products and threatens American jobs and wages. These tariffs could offset the benefits to American families from the GOP tax bill. Since President Trump signed the Tax Cuts and Jobs Act into law, 90 percent of Americans have received more take-home pay, and over 400 companies have announced pay raises, bonuses, or additional benefits for employees.

Photo Credit: Gage Skidmore

Congress Should Pass Rep. Noem's "Harmful Tax Prevention Act"

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Posted by Tom Hebert on Friday, March 2nd, 2018, 2:35 PM PERMALINK

Obamacare taxes have disproportionately harmed middle-class families and small businesses. Rep. Kristi Noem (R-SD) has introduced important legislation in order to mitigate the negative impacts of Obamacare taxes.

H.R. 4894, the Harmful Tax Prevention Act, would delay implementation of the health insurance tax (HIT) for 2018 provided an insurer gives a rebate to customers. If allowed to remain in place, the HIT will hit American middle-class families and small businesses the hardest.

The HIT is a tax levied on insurance premiums, meaning that the cost of the tax is passed directly onto consumers. According to the American Action Forum, half of the HIT is paid by families earning less than $50,000 a year. Ultimately, the tax hits over 11 million households that purchase their insurance through an Obamacare market. Additionally, the tax hits 23 million households that are covered through their jobs, and will raise premiums by $5,000 over the next decade.

The economic impact of the HIT is devastating. Next year, the tax will cost taxpayers approximately $14.3 billion. Over the next decade, the HIT will cost taxpayers upwards of $150 billion.

Small businesses will also be hit hard if Congress fails to delay the HIT. According to the National Federation of Independent Business, the tax could cost up to 286,000 in new jobs and cost small businesses $33 billion in lost sales by 2023.

Rep. Noem’s bill avoids this catastrophe by delaying the implementation of the costly health insurance tax. While it is imperative that Congress repeals all Obamacare taxes, this bill is a crucial step in passing health insurance reform in 2018.

Congress should pass H.R. 4894 as as standalone bill or as part of a comprehensive package. By supporting the Harmful Tax Prevention Act, lawmakers can offer immediate relief to millions of Americans by delaying the HIT.

[Read ATR’s letter in support of H.R. 4894 here]

Photo Credit: Gage Skidmore

IRS Evades Regulatory Accountability Through Self-Imposed Exemption From Oversight

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Posted by Tom Hebert on Wednesday, February 21st, 2018, 3:17 PM PERMALINK

The Internal Revenue Service actively avoids scrutiny of its activities by exempting its rulemaking from Congressional and administrative oversight and procedures. Based on an agency interpretation of federal law, the IRS has decided that it is allowed to publish regulations without an analysis of the economic impact of such rules.

As noted in a recent study by the Cause of Action Institute, the IRS has avoided scrutiny through creative interpretation of oversight laws. Federal agencies are typically required to follow a set of rules to ensure that their rulemaking wisely utilizes taxpayer resources. These oversight devices attempt to minimize bureaucratic abuse by requiring agencies to disclose the economic impact of their regulations to Congress and the American people.

The IRS first started claiming that its regulations have no economic impact in response to the 1980 Regulatory Flexibility Act (RFA), which was designed to mitigate the compliance costs of federal regulations on small businesses. The RFA states that if a proposed regulation could have a large economic impact on small businesses, the agency must consider alternatives that would leave small businesses unharmed.

The RFA also contains a Congressional amendment specifically designed to cover IRS regulations, but the IRS has shirked its duty to comply with the RFA since Congress passed the law. The IRS has broadened its self-exemption from economic impacts to all impacts, including record-keeping and other reporting burdens. That means that IRS regulations can impact small businesses while completely evading oversight from Congress or the White House.

In the Internal Revenue Manual, a document the IRS uses to guide its compliance with oversight mechanisms, the agency bizarrely claims that its rules have no economic impact. This reading allows the IRS to avoid sharing information with Congress, the executive branch, and the American people. The IRS has never offered an adequate justification for this self-exemption.

The IRS rule exemption affects the American people in two ways. First, it allows the IRS to avoid sharing information between federal agencies, Congress, and the White House. Second, it allows the IRS to avoid disclosing the economic impact of its policies to the public.

This exemption dates back to an agreement between the Office of Management and Budget (OMB) and the IRS from 1983, wherein the OMB exempted the IRS from review. Until recently, the memorandum documenting this agreement was secret. A 1993 executive order (E.O. 12866) from President Clinton maintained the IRS’s exemption from OMB review.

A recent study from the Government Accountability Office (GAO) confirmed that this agreement has not been revisited in over 25 years. The GAO reports that the Obama administration did not alter the terms of the deal between the IRS and the OMB when reaffirming Clinton’s executive order in 2011. There is no evidence that the current administration has revisited the secret deal.                                      

Senators Johnson and Lankford have recently sent letters to the White House Office of Information and Regulatory Affairs asking the office to investigate the IRS’s self-exemption. 

If every agency conducted itself like the IRS, it would effectively nullify the Administrative Procedure Act’s notice and comment requirements for new regulations. No government agency should be above the law. It is past time for the White House to demand that all IRS regulations be checked with the Office of Information and Regulatory Affairs. The career bureaucrats in the IRS simply cannot be trusted to protect small businesses from onerous regulations.

Photo Credit: Tim Evanson

President Trump’s Budget Plan Reduces IRS Funding by $738,000,000

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Posted by Tom Hebert on Monday, February 12th, 2018, 3:37 PM PERMALINK

President Donald Trump’s Fiscal Year 2019 Budget reduces IRS funding by approximately $738 million, a 6.1% drop from the amount of funding the agency received in FY 2017.

President Trump’s budget proposes $11.1 billion for the IRS, with an additional $362 million proposed for upgrades in enforcement and cybersecurity. Last year, the agency received $12.2 billion in taxpayer dollars.

While IRS bureaucrats claim the agency is underfunded, the IRS has proven time and time again that it cannot properly use the resources it already gets. In recent years, the IRS has been plagued with numerous scandals that have severely damaged the agency’s credibility.

The most famous of these scandals was IRS employee Lois Lerner’s systemic targeting and harassment of conservative groups in order to sideline them from participating in the 2012 election. This rampant abuse of power should be proof enough that the agency has a history of bad judgment when it comes to spending taxpayer money. 

The IRS has also made a number of lesser-known mistakes when allocating resources. According to a recent TIGTA report, the IRS rehired 200 employees that the agency had previously fired for misconduct. One rehired employee was previously fired for threatening a coworker, another several rehired employees were previously fired for mishandling taxpayer information and falsifying documents.

The IRS also has enough money to waste 500,000 hours a year on “union activities,” burning through a total of $23.5 million in taxpayer funds so that IRS union bosses can do union work on the clock. The IRS also gave 57 contracts valued at $18.8 million to 17 companies that owed back taxes or had a felony conviction. The IRS cannot convincingly plead poverty while wasting taxpayer resources on union bosses and tax cheats.

The IRS has clearly proven itself to be an irresponsible steward of taxpayer funds. President Trump’s budget wisely recognizes that the agency does not need additional funding.

Photo Credit: Gage Skidmore

Congress Should Pass Rep. Noem's "Ensuring Integrity Within the IRS Workforce Act"

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Posted by Tom Hebert on Monday, January 29th, 2018, 2:39 PM PERMALINK

Under President Obama's watch, the IRS proved that it plays by different rules than the private sector. Not only is the IRS incapable of performing its basic duties, the agency is plagued by corruption, mismanagement, and rampant politicization. 

A simple step President Trump can take in order to clean up the IRS is to force the agency to reexamine its hiring practices [Read ATR's letter in support of H.R. 3500]. Much of the IRS workforce is seasonal in order to assist the agency during tax season. Between January 2015 and March 2016, the IRS hired 7,500 employees, 2,000 of which had previously worked for the agency.

Evidently, the IRS does not notice or care when an employee has been previously fired by the agency for misconduct in the workplace. According to an independent audit of the IRS by the Treasury Inspector General of Tax Administration (TIGTA), the IRS rehired over 200 employees between January 2015 and March 2016 that had been previously fired for misconduct by the IRS. In other words, a staggering 10% of the IRS’s rehired employees had previously been fired for misconduct by the agency.

The litany of charges against the delinquent employees is vast, ranging from threatening coworkers to illegally accessing taxpayer information and falsifying documents. 7% of rehired employees experienced further misconduct issues within a year of their rehiring.  

The IRS’s negligence in rehiring these employees is egregious. A prior TIGTA report stated that “…one employee was rehired after being removed by management for abusing leave, despite the fact that IRS personnel files included the notation ‘do not rehire.’” The IRS has consistently refused to adjust its hiring practices in response to previous TIGTA audits that uncovered similar misconduct. According to the most recent audit: “IRS officials stated that they did not update hiring policies based on our prior report because…it would be cost prohibitive to do so… However, a formal cost-benefit analysis was not performed to reach this conclusion.”

It is clear that the IRS does not have a comprehensive system to prevent rehiring problematic employees. Rep. Kristi Noem (R-SD) has introduced H.R. 3500, the Ensuring Integrity Within the IRS Workforce Act, which would prohibit the IRS from rehiring employees previously fired for misconduct issues. [Read ATR's letter in support of H.R. 3500]

“This is about having a basic respect for hardworking taxpayers,” said Noem. “If the IRS won’t instill commonsense hiring practices within the agency, we will work to write them into law.”

This bill is a commonsense solution to a problem that shouldn’t even exist in the first place. In a time of declining faith in our institutions, it is imperative to have high-integrity employees dealing with sensitive taxpayer information. This bill is essential in ensuring that employees that have been fired for misconduct don’t get a second chance to wreak havoc. [Read ATR's letter in support of H.R. 3500]

Photo Credit: Gage Skidmore

Tax Reform Should Kill The Individual Mandate

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Posted by Tom Hebert on Tuesday, December 12th, 2017, 3:24 PM PERMALINK

The Tax Cuts and Jobs Act is a powerfully pro-growth bill that will bring much-needed tax relief to middle class Americans. The bill is jam-packed with provisions that will boost wages and turbocharge the economy. Almost all Americans will see a tax cut from this bill, with annual savings of approximately $1,200 a year.

The bill reduces the corporate tax rate to 20%, which studies show would boost wages by at least $4,000 in the long run. The bill also offers relief from the death tax, which is a boon to family businesses all across the country. The bill doubles the standard deduction from $6,000 to $12,000, allowing Americans to earn more tax-free income. One of the best achievements of the tax reform bill is that it repeals Obamacare’s individual mandate, one of the most regressive and harmful taxes in American history.

Under current law, individuals are legally required to purchase health insurance, whether through an employer or through Obamacare’s failing insurance marketplaces. If an individual cannot afford to buy health insurance because of Obamacare’s artificially high costs, he will have to pay the individual mandate tax.

In order to avoid paying the tax, an individual must submit proof of insurance when he files his federal tax returns. The penalty for not having health insurance in 2017 is $695 per adult or 2.5% of household income, whichever is higher. The penalty for a family of four is $2,085. Without this enormous burden, families could use that extra $2k a year to buy gas, groceries, or other necessities. This repeal would mean a lot to them.

IRS data from 2015 reveals some shocking statistics about who actually shoulders the burden of the individual mandate tax. In tax year 2015, 6,665,480 households paid a total of $3,079,255,000 in individual mandate tax penalties. 79% of those households have a yearly income of less than $50,000. 37% of those households have a yearly income of less than $25,000.

The fact that nearly 40% of the burden of the individual mandate tax falls on those making less than $25,000 obliterates the argument that Obamacare allows all Americans to access affordable health care.

Contrary to popular belief, repealing the individual mandate would not cause 23 million Americans to lose health insurance. This is a deliberate misrepresentation of the facts by Democrats and the mainstream media. Repealing the individual mandate would allow those 23 million individuals to choose whether or not they want to buy health insurance.

The bill also does not repeal the Obamacare premium tax credit. All it does is repeal the individual mandate, which is a tax on individuals, not health insurance plans. The individual mandate simply allows the government to keep a failing health care law on life support by stealing money from low-income Americans.

The Senate should be commended for including the individual mandate repeal in its version of the Tax Cuts and Jobs Act. This is one of many tax cuts for middle and low income individuals in the Republican tax plan. As conferees from both chambers of Congress get together to iron out the differences between the House and Senate bills, they should include the individual mandate repeal in the final text. Repealing the individual mandate would be the best Christmas gift the middle class could ever ask for.

Photo Credit: Charles Fettinger

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White House Study: 20 Percent Corporate Tax Will Boost Middle Class Wages By At Least $4,000 Per Year

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Posted by Tom Hebert on Friday, October 20th, 2017, 5:11 PM PERMALINK

The 20 percent corporate tax rate presented by the Republican tax reform framework would increase average household income by at least $4,000 a year, according to a recent White House study. The study, released by the Council of Economic Advisers, makes a strong case for cutting the corporate tax rate as a way to turbocharge economic growth and boost wages for the middle class.

Our corporate tax rate is the highest in the developed world. At a staggering 35 percent, our corporate tax rate stifles innovation and renders U.S. firms unable to compete in the global market. This insanely high rate has stagnated American wage growth. During the Obama Administration, the real median wage in the U.S. only grew an average of six-tenths of a percent per year. As wages have stagnated for American workers, corporate profits have skyrocketed, topping out at 11 percent per year over the past eight years.

Studies show that there is a direct correlation between the statutory corporate tax rate and wage growth. Countries that have a lower corporate tax rate are more attractive for businesses to invest in. Between 2012 and 2016, the 10 countries in the OECD with the lowest corporate tax rates experienced dramatic wage growth. During that same interval, 10 countries with the highest corporate tax experienced wage stagnation, including the United States.

Cutting the corporate tax rate would alleviate wage stagnation in the long run. The bulk of the wage growth would occur after the corporate tax reform has fully taken hold. Conservative estimates have the average household income with a 20 percent corporate tax rate increasing by $4,000. Optimistic estimates have the average household income increasing by $9,000 in wage and salary income alone.

A 20 percent corporate tax rate would also allow companies to repatriate their U.S. corporate profits. In 2016, U.S. multinationals chose not to bring $299 billion of their foreign-earned income back to the United States because of the prohibitively high corporate tax rate. When a high corporate tax rate discourages U.S firms to repatriate profits, foreign-earned income cannot be used to benefit American workers. Indeed, when U.S. firms invest their capital overseas, the demand for U.S. workers decreases.

Cutting the corporate tax rate is a win-win for workers and businesses alike. U.S. businesses will be more willing to repatriate foreign-earned income, allowing them to invest their capital in American workers. While not usually thought of as beneficial to U.S. workers, cutting the corporate tax rate directly boosts middle class wages. Over the long run, a 20 percent corporate tax would boost middle class wages by at least $4,000 per year. The recent tax reform framework accomplishes this goal. 

Photo Credit: Eric Salard

Trump Ends Illegal CSR Payments In Victory For Constitution

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Posted by Tom Hebert on Tuesday, October 17th, 2017, 3:12 PM PERMALINK

President Trump has directed the Department of Health and Human Services to end the illegal and unconstitutional “Cost-Sharing Reduction” (CSR) payments to insurance companies under Obamacare. By restoring the power of the purse to Congress (where it belongs), Trump’s decision upholds the rule of law and our constitutional system of checks and balances.

Congress never appropriated the CSR payments, as we’ve written. A 2016 report from the House Ways and Means Committee and the House Energy and Commerce Committee revealed that the Obama Administration initially submitted a CSR appropriations request for Fiscal Year 2014, but later withdrew it and began making payments illegally. The Obama Administration then begun illegally shifting funds from a separate appropriation to make the payments. Even Obama’s IRS, the same scandal-tarnished crew that targeted conservative groups applying for tax-exempt status, expressed concern that the CSR payments were illegal.

In 2016, a federal court ruled that the CSR payments were illegal. The payments are clearly an unlawful, unconstitutional bailout for insurance companies, and were obviously made without a Congressional appropriation to keep Obamacare on life support.

The CSR payments were made to insurance companies to reduce the cost of health insurance for families struggling with Obamacare’s enormously high premiums. These illegal CSR payments clearly failed at keeping premiums low, since Obamacare has raised premiums by approximately 60 percent since it became law.

Obamacare has saddled lower-income Americans with more than just high premiums. Obamacare also contains $1 trillion in new or higher taxes. If Congress fails to act, the Health Insurance Tax (HIT) will hit Americans on the first of next year. The health insurance tax is a tax on health insurance premiums. According to the American Action Forum, the HIT alone will cause premiums to rise over $5,000 over the next decade, and families making less than $50,000 will shoulder half the tax burden. 

Additionally, the CBO estimates that the individual mandate tax has cost American taxpayers over $4 billion a year. The Obamacare Chronic Care Tax, an egregious income tax hike on middle class families making an average of $53,000 a year, is projected to cost taxpayers $35 billion over 10 years.

Struggling families everywhere are dealing with skyrocketing premiums and less choice in health care plans. Congress should act swiftly to end Obamacare, and replace it with a patient-driven, market-based system that will expand choice and encourage innovation. By ending the illegal CSR payments, Trump has affirmed his commitment to dismantling Obamacare and restoring the rule of law.

Photo Credit: Gage Skidmore

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