Tom Hebert

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.

Photo Credit: Pictures of Money - Flickr


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

Photo Credit: Paulo O


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.

Photo Credit: Gage Skidmore


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.

Photo Credit: Images Money - Flickr


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. 

 

 

Photo Credit: Reizigerin


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

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Posted by Tom Hebert on Thursday, July 9th, 2020, 1:29 PM PERMALINK

ATR has released a letter in support of H.R. 1349/S. 2634, the “Small Business Tax Fairness and Compliance Simplification Act,” bipartisan legislation sponsored by Representatives Darin LaHood (R-Ill.) and Susan DelBene (R-Wash.) and Senators Rob Portman (R-Ohio) and Ben Cardin (D-Md.).

This legislation provides parity to the beauty service industry by extending the 45B tip tax credit to these businesses.

You can read the letter in full here or below:

Dear Member of Congress:

I write in support of H.R. 1349/S. 2634, the “Small Business Tax Fairness and Compliance Simplification Act,” bipartisan legislation sponsored by Representatives Darin LaHood (R-Ill.) and Susan DelBene (R-Wash.) and Senators Rob Portman (R-Ohio) and Ben Cardin (D-Md.). This legislation provides parity to the beauty service industry by extending the 45B tip tax credit to these businesses. All members of Congress should support this legislation.

The 45B tip tax credit allows restaurants and food service establishments to claim a credit to offset the 7.65 percent they pay for FICA and Medicare withholdings collected on employee tips. Since restauranteurs make no money on tips paid directly to employees, it makes sense that employers receive a tax credit for payroll tax they owe on that income.

This legislation would extend the 45B tip tax credit to over 1.2 million businesses in the beauty service industry, including barbers and salons, nail care, aesthetics, and body and spa treatments. It would provide parity with the restaurant industry and could provide thousands of dollars in tax savings per year for these businesses.

The legislation also provides tax simplification through a reporting safe harbor that provides an exemption from IRS examinations for employers who meet certain requirements for educational programs, reporting procedures, compliance with tax law, and recordkeeping.

The Small Business Tax Fairness and Compliance Simplification Act is especially timely because the beauty service industry – comprised largely of small businesses owned by women and minorities – has been hit especially hard by COVID-19. State and local governments uniformly shuttered the industry for months.

Even though many restrictions have been eased, the services the industry provides, like hair and nail care, make the 6-foot social distancing recommendation particularly difficult to follow.

Salons in the reopening process are now facing capacity limits and stringent sanitation requirements. Generous customers are also tipping extra to compensate for lost tips during the shutdown, inadvertently increasing the FICA tax burden for employers that are already facing sharp declines in revenue.

This situation only increases the need for 45B parity so that struggling beauty service businesses have liquidity during this economic downturn and are not being saddled with unnecessary taxation and reporting requirements.

As our economy continues to safely reopen, enacting the “Small Business Tax Fairness and Compliance Simplification Act” will provide tax reduction and parity for salon owners and help small businesses through the pandemic.

Onward,

Grover Norquist
President, Americans for Tax Reform 

Photo Credit: John Williams


Liability Protection Is Essential To Any Phase 4 Coronavirus Package

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Posted by Tom Hebert on Wednesday, July 8th, 2020, 12:59 PM PERMALINK

Lawmakers are beginning to discuss the content of a potential Phase 4 Coronavirus relief package. As these discussions continue, it is vital that pandemic-related liability protections for businesses are included.

If Congress fails to enact such a provision, businesses across all industries will face a tsunami of COVID-19 related lawsuits as they begin to reopen and get Americans safely back to work.

American businesses and workers have faced immense hardship due to the pandemic. State and local governments mandated the closure of tens of millions of businesses all across the country, forcing nearly 50 million Americans out of a job.

Essential businesses that have remained open –– like grocery stores and hospitals –– have worked diligently to keep their customers, employees, and patients safe. These businesses have had to deal with rapidly-changing information on the pandemic, as well as CDC guidance that seems to change every week.

Businesses that have been shuttered –– like bars, restaurants, and salons –– have faced similar pressure. These non-essential businesses have faced sharp declines in revenue, grappled with uncertain reopening timelines, and dealt with employees making more at home than they were in the workplace thanks to Speaker Pelosi’s plan to subsidize welfare over work. 

Failure to offer a liability shield will harm essential and non-essential businesses alike. The looming threat of these suits is already affecting the ability of frontline workers to help the nation through this crisis. Doctors and nurses are afraid to make tough healthcare decisions, and hospitals and nursing homes are afraid that the quality of their care will come under attack.

Make no mistake: trial lawyers are mobilizing to cash in on the crisis by filing lawsuits across wide range of industries. According to the Hunton Andrews Kurth COVID-19 complaint tracker, over 3,200 pandemic-related lawsuits have been filed in all 50 states since January 30th, 2020. As the economy continues to reopen and Americans head back to the workplace, these lawsuits will continue to proliferate.

The concept behind liability protection is simple: if businesses have acted in good faith to keep their customers and employees safe, they should be protected from abusive litigation.  

There is also precedent for such a measure – in the CARES Act, lawmakers included liability protection for respiratory devices approved by the National Institute for Occupational Safety and Health. 

Failing to protect businesses from frivolous lawsuits will endanger our ability to recover. Enacting liability protection is rightly a widely supported, bipartisan proposal:

  • Sens. Kyrsten Sinema (D-Ariz.), Rand Paul (R-Ky.), Deb Fischer (R-Neb.), and Josh Hawley (R-Mo.) have spoken out in favor of such reforms.
     
  • Senate Majority Leader Mitch McConnell (R-Ky.) has called for a five-year, narrowly-crafted liability shield for businesses for Coronavirus-related activities. This window would kick in December 2019 and last through 2024. 
     
  • President Trump supports Leader McConnell’s proposal.
     
  • House Minority Leader Kevin McCarthy (R-Calif.) has also indicated that liability protections is a red line for passing any new Coronavirus legislation, saying that “no bill would pass without it.” 
     
  • Director of the National Economic Council Larry Kudlow has said that businesses should not be held liable for “trial lawyers putting on false lawsuits.” 


Congress should pass liability protection into law to ensure businesses do not face a torrent of predatory litigation from greedy trial lawyers looking to cash in on the Coronavirus pandemic. Failure to do so would discourage businesses from safely reopening and thwart our economic recovery.

 

Photo Credit: ttarasiuk


Trump Trade Deal Enters Into Force July 1

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Posted by Tom Hebert on Monday, June 29th, 2020, 11:22 AM PERMALINK

After a multi-year ratification process, the United States-Mexico-Canada Trade Agreement (USMCA) enters into force on July 1st, delivering on President Trump's promise to update trade agreements for the benefit of the American worker. 

As the focus turns toward carefully reopening the country and getting Americans safely back to work, this is welcome good news for the American economy. 

The USMCA is a much-needed update to the 25-year-old North American Free Trade Agreement (NAFTA). The global economy has changed significantly since NAFTA was ratified in 1992. The new USMCA recognizes this reality and modernizes trade relations between the three nations to better fit the 21st century global economy. 

The July 1st date is the culmination of a multi-year ratification process by the U.S., Canada, and Mexico:

  • On November 30, 2018, the initial USMCA agreement was signed by the U.S., Canada, and Mexico.
  • On December 19, 2019, the final agreement was signed by the U.S., Canada, and Mexico.  
  • On January 29, 2020, the U.S. ratified the agreement after passing both chambers of Congress.
  • On March 13, 2020, Canada ratified USMCA.
  • On April 3, 2020 Mexico ratified USMCA.
     

The trade agreement will increase wages, increase GDP by $68.2 billion, and create 176,000 jobs, according to the International Trade Commission’s report.  It will also increase U.S. exports to Canada by $19 billion, and to Mexico by $14 billion.  The Tax Foundation estimates that these positive economic effects are identical to a 4% corporate tax cut.

The trade deal is going to help revitalize the automotive industry. The Office of the United States Trade Representative estimates that USCMA ratification would add $34 billion in new automotive manufacturing investment, $23 billion in new annual purchases of U.S. automotive parts, and 76,000 jobs in the next five years.

The USMCA will also help American farmers. The increased market opportunities for Americans is projected to increase agriculture exports by more than $314 million. Through USMCA negotiations, Canada agreed to open market access to American farmers who wish to sell dairy, poultry, and eggs in Canada. In return, Canada will have access to American dairy and peanut products. The industry would benefit from stabilization of international markets, especially the U.S.’s two biggest trading partners that buy close to 2/3 of U.S. agricultural exports.

Finally, the Trump trade deal brings trade into the 21st century with numerous provisions on e-commerce, cross-border data flows, and encryption. This is the first trade agreement in U.S. history to include these protections.

Ultimately, the USMCA will help American workers, businesses, and innovators all across the country as the pandemic runs its course.

Photo Credit: Gage Skidmore


ATR Supports Rep. Curtis HSA Expansion Legislation

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Posted by Tom Hebert on Friday, June 19th, 2020, 9:00 AM PERMALINK

Reps. John Curtis (R-Utah) and Kendra Horn (D-Okla.) have introduced legislation that expands access to Health Savings Accounts and adds to the list of qualifying expenses for HSAs.

ATR supports this legislation and urges its swift passage.

HSAs are tax-advantaged savings vehicles for individuals to save and spend their money on a variety of healthcare needs. HSAs have become widely popular since their creation in 2004, with over 30 million American families and individuals using HSAs today to help meet their healthcare expenses.

Currently, there is a mandate that any American wanting to open or contribute to an HSA must be on a high-deductible health plan (HDHP). This restricts how funds can be spent and which plans qualify for HSAs, denying millions of Americans a chance to save and invest using these accounts.

The Curtis bill eliminates this mandate by decoupling HSAs from HDHPs, allowing 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.

This change will especially benefit high-risk populations like seniors that consume greater levels of healthcare and spend more money on prescription drugs.

This legislation is especially timely during the Coronavirus pandemic. Removing this rigid mandate will improve public health and help millions of Americans have access to care in a time of self-quarantine to prevent the spread of COVID-19.

Sen. Ted Cruz (R-Texas) and Rep. Ted Budd (R-NC) have also proposed decoupling HSAs from HDHPs for the duration of COVID-19 in the Pandemic Healthcare Access Act. ATR led a coalition of over 30 organizations in support of that legislation, which you can view here.

In addition, the Curtis bill adds to the list of qualifying expenses for HSAs, including:

  • Nutrition supplements
  • Telehealth services, which is currently only allowed for the duration of the pandemic
  • Premium payments for individuals in individual marketplace plans that do not quality for federal cost-sharing subsidies
  • Up to $500 for home gym equipment and $100 per month towards a gym membership

Taken together, these additional provisions will allow HSA users more flexibility in spending their funds for common healthcare expenses.

Finally, the Curtis bill allows dependents over the age of 16 to invest in HSAs, allowing Americans to begin saving and investing for their healthcare needs at a young age. The bill also increases the annual contribution limit for families and individuals to the annual out-of-pocket limit for the plan year.

Ultimately, the Curtis bill enacts numerous commonsense provisions that will expand access to HSAs for millions of Americans and give them greater flexibility in saving and investing for their healthcare needs. In the middle of a global pandemic, this legislation is a strong step towards improving public health and getting Americans the care they need.

Photo Credit: ttarasiuk


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