Biden: “First thing I would do as President is Eliminate the President’s Tax Cut.”
[See also: 75 conservative groups tell congress: "We oppose ANY carbon tax."]
Joe Biden said Monday that the first thing he’d do as president is “eliminate” the Tax Cuts and Jobs Act:
“First thing I would do as president is eliminate the president’s tax cut,” Biden said during the Poor People's Forum in Washington, D.C. on Monday.
[Click here for video]
Biden’s promise to repeal the tax cuts is a promise to raise taxes. If the tax cuts were repealed:
- A family of four earning the median income of $73,000 would see a $2,000 tax increase.
- A single parent (with one child) making $41,000 would see a $1,300 tax increase.
- Millions of low and middle-income households would be stuck paying the Obamacare individual mandate tax.
- Utility bills would go up in all 50 states as a direct result of the corporate income tax increase.
- Small employers will face a tax increase due to the repeal of the 20% deduction for small business income.
- The USA would have the highest corporate income tax rate in the developed world.
- Taxes would rise in every state and every congressional district.
- The Death Tax would ensnare more families and businesses.
- The AMT would snap back to hit millions of households.
- Millions of households would see their child tax credit cut in half.
- Millions of households would see their standard deduction cut in half, adding to their tax complexity as they are forced to itemize their deductions and deal with the shoebox full of receipts on top of the refrigerator.
In Washington, D.C., where Joe Biden spoke, households with the median income of $82,372 received an average tax cut of around $1,990, according to a recent Tax Foundation report.
As noted by the New York Times, thanks to the GOP tax cuts, “Most people got a tax cut.” The NYT also stated: “To a large degree, the gap between perception and reality on the tax cuts appears to flow from a sustained — and misleading — effort by liberal opponents of the law to brand it as a broad middle-class tax increase.”
The Washington Post also stated: “Most Americans received a tax cut.”
More examples of the benefits stemming from the tax cuts are shown in a recent H&R Block report, which states, “overall tax liability is down 24.9 percent on average.” In Biden’s home state of Delaware, the report found that residents received a 24.8% tax cut.
In D.C. - where he made the threat to repeal the TCJA - residents received an 18.0% tax cut.
Biden also lied to the American people when he ran for Vice President in 2008 when he repeatedly said he would not support any form of any tax that imposed even “one single penny” of tax increase on anyone making less than $250,000. Biden shattered that promise upon taking office.
See also:
Bernie Sanders claims people would be “delighted to pay more in taxes”
Biden: Tax Cuts Will be “Gone” If I’m Elected
Kamala Harris: I Will Repeal Tax Cuts “on day one”
Biden again says capital gains tax is “Much too Low”
Biden: Capital gains tax “much too low”
VIDEO: Five Times Biden has Threatened to Repeal Tax Cuts
Biden: “First thing I’d do is repeal those Trump tax cuts.”
Joe Biden broke his middle class tax pledge
“Mayor Pete” Calls for Steep Tax Hike on Homes and Businesses
Kamala Harris Vows Repeal of Tax Cuts “on Day One”
Biden: “When I’m President, if God willing I am, we’re going to reverse those Trump tax cuts.”
Biden Economic Adviser Dodges "Highest corporate tax rate in the world" Question
A key White House adviser today dodged a question as to whether President Biden's corporate tax rate hike proposal -- imposing the highest rate in the developed world -- would make the U.S. less competitive.
Cecilia Rouse, Chair of the White House Council of Economic Advisers, dodged the question during an interview with Fox News Sunday host Chris Wallace:
Chris Wallace: "Ms. Rouse, don't you think that we are going to be less competitive if we have the highest corporate tax rate in the world, as opposed to in the middle of the industrial world? Doesn't that just necessarily say we've become less competitive?"
Ms. Rouse: [Awkward Pause] followed by [blah blah blah dodge]
Click here or below to view:
Indiana Residents Will Get Stuck with Higher Utility Bills Due to Biden Corporate Tax Rate Hike
If Biden and the Democrats enact a corporate income tax rate increase, they will have to explain why they just increased your utility bills
If President Biden and congressional Democrats hike the corporate income tax rate, Indiana households and businesses will get stuck with higher utility bills. Democrats plan to impose a corporate income tax rate increase to 28%, even higher than communist China's 25%. This does not even include state corporate income taxes, which average 4 - 5% nationwide.
Customers bear the cost of corporate income taxes imposed on utility companies. Corporate income tax cuts drive utility rates down, corporate income tax hikes drive utility rates up.
Electric, gas, and water companies must get their billing rates approved by the respective state utility commissions. When the 2017 Tax Cuts and Jobs Act cut the corporate income tax rate from 35% to 21%, utility companies worked with officials to pass along the tax savings to customers, including at least 17 Indiana utilities.
Working with the Indiana Utility Regulatory Commission, Duke Energy Indiana, Indiana-Michigan Power, Northern Indiana Public Service Company, Vectren Energy Delivery of Indiana, Inc., Midwest Natural Gas Corporation, Fountaintown Gas Company, Inc., South Eastern Indiana Natural Gas Company, Inc., American Suburban Utilities, Inc., Indiana American Water, Ohio Valley Gas Corporation, Indianapolis Power & Light, Aqua Indiana, Inc., Boonville Natural Gas Corporation, Community Natural Gas Company, L.M.H. Utilities Corporation, Indiana Natural Gas Corporation, and Indiana Utilities Corporation passed along tax savings to their customers.
Aqua Indiana, Inc.: As noted in this May 16, 2018 Indiana Utility Regulatory Commission order:
The tax rate embedded in the utility's recurring rates is 35%. The utility requests to reduce its recurring rates to reflect the new 21 % tax rate per the Tax Cuts and Jobs Act of 2017.
Duke Energy Indiana: As noted in this June 28, 2018, Inside Indiana article excerpt:
Plainfield-based Duke Energy Indiana has reached a settlement with the Indiana Office of Utility Consumer Counselor and other parties regarding the disbursement of savings to customers from the passage of the Tax Cuts and Jobs Act. The utility says customers will receive approximately $142 million in annual savings.
The OUCC says when the legislation went into effect in January, the federal tax rate for most investor-owned utilities fell from 35 percent to 21 percent. As a result, the average residential customer will see their monthly bill reduced by about 5 percent, or $7.33, in 2018.
"The federal tax act is an opportunity for us to lower customer bills and help offset future rising costs," said Duke Energy Indiana President Melody Birmingham-Byrd. "We’ve reached an agreement to pass along tax savings embedded in our electric rates over the next two years. It’s a constructive agreement that reduces rates while still preserving our credit quality, which is important for keeping customer bills low."
Indiana-Michigan Power: As noted in this May 31, 2018, AP article excerpt:
The Indiana Utility Regulatory Commission approved an order Wednesday allowing the Fort Wayne-based company to boost its Indiana customers’ rates about 7.3 percent, allowing it to raise $96.8 million in new revenue.
The Journal Gazette reports Indiana Michigan Power had initially sought a 20 percent rate increase to generate $263 million in new revenue.
That was reduced under a settlement between the company, Indiana’s state consumer advocate and several cities, companies and advocacy groups.
Some of the decrease was also attributed to the recent federal tax cuts.
Northern Indiana Public Service Company: As noted in this wane.com article excerpt:
Merrillville-based Northern Indiana Public Service Co. announced Monday it was changing its request that was submitted in September to the state utility commission. The change reduces the rate increase NIPSCO is seeking from nearly 23 percent to about 19 percent.
The company says that would mean about $26 million less a year in increased billing charges to its some 820,000 gas customers.
Vectren Energy Delivery of Indiana, Inc.: As noted in this June 1, 2018 Indiana Utility Regulatory Commission filing:
Vectren North shall return the Tax Regulatory Liability to its retail customers through a separate component (the “Tax Refund Credit”) to be established in Cause No. 44430 TDSIC 9 to be initiated by October 2, 2018. The Tax Refund Credit shall be designed to return the Tax Regulatory Liability to customers over a six month period and be incorporated into Vectren North’s Compliance and System Improvement Adjustment (“CSIA”) mechanism. As the amounts recorded for the Tax Regulatory Liability are captured by Rate Schedule by taking the change in base rates multiplied by the actual throughput for this period, Vectren North will refund the Tax Regulatory Liability by Rate Schedule. Vectren North shall provide the other Settling Parties workpapers demonstrating the calculation of the Tax Refund Credit within the CSIA by August 2, 2018. Any over- or under-recovery associated with the Tax Refund Credit will be captured within subsequent CSIA filings as a CSIA variance
Midwest Natural Gas Corporation: As noted in this June 19, 2018 Indiana Utility Regulatory Commission filing:
Midwest is proposing a volumetric refund to customers that is class specific. We believe the refund should occur in the same four calendar months, of 2019, it was created in 2018. This gives us the best opportunity to refund the over collection back to the customers that created it, generally in proportion to their contribution. Spreading it over all 12 calendar months tends to favor industrial customers with a significant summer base load over the weather-sensitive customers that helped create the refund. The refund will be divided over the GCA estimated sales volumes, which are generally based upon the average of several years. At the end of April 2019, we would reconcile the refund dollars, with any differences being included in GCA variances at that time.
Fountaintown Gas Company, Inc.: As noted in this November 2, 2018 Indiana Utility Regulatory Commission filing:
Fountaintown has proposed to refund the over collection of tax funds from January 1, 2018 through April 30, 2018 by refunding $81,293. Fountaintown has proposed that such refund occur through a tracking mechanism that will begin in January 2019 and run through April 30, 2019 in order to refund the over collection as closely as possible to the customers by class who paid such over collection. The OUCC agrees to both the amount and the proposed tracker mechanism. Based on the evidence of record, we find that the over collection between January 1, 2018 and April 30, 2018 in the amount of $$81,293 should be refunded to the customer classes as proposed by Fountaintown. This refund of over collected tax dollars will begin in January 2019 and run through April 30, 2019 in order to more closely match the refund to the customer who provided such funds.
South Eastern Indiana Natural Gas Company, Inc.: As noted in this May 17, 2019 Indiana Utility Regulatory Commission memorandum:
South Eastern requests to revise portions of its IURC No. G-11 tariff to reflect the amortization of $176,222 in Excess Accumulated Deferred Income Taxes over 19.65 years as a result of the Commission’s investigation into the impacts of the Tax Cuts and Jobs Act of 2017 and the subsequent Order in Cause No. 45032 S13. The rate adjustment will result in $8,968 being amortized annually and will lead to a $12,324 annual reduction to South Eastern’s revenue requirement after being adjusted for taxes and fees.
American Suburban Utilities, Inc.: As noted in this December 10, 2018 Indiana Utility Regulatory Commission filing:
The rate reduction took effect for all bills that were rendered on July 1, 2018. Accordingly, there are five months for which service was billed after the tax cut at the prior rates, because ASU bills in arrears. He provided a total estimated deferred liability of $79,042.72. ASU proposed to divide this amount by 3 and for each of the first three months after the Phase 3 tariff in Cause No. 44676 is effective, to provide a bill credit equaling one-third of the deferred liability. In this way, the Phase 3 tariff will step in over four months rather than one. He testified that ASU expected to file the Phase 3 tariff before the end of 2018, but that if for some reason the tariff had not been submitted before March 31, 2019, ASU would file a tariff to reflect a one-time credit to exhaust all of the deferred liability in a single month.
Indiana American Water: As noted in this June 26, 2020 Indiana American Water press release:
Indiana American Water announced today that its water customers across the state will soon start seeing lower monthly bills. The decrease, which amounts to approximately $1.04 per month (2.77 percent) for a residential customer using 4,000 gallons per month, is the result of the resolution of certain accounting issues related to the Tax Cuts and Jobs Act (TCJA) of 2017.
Ohio Valley Gas Corporation: As noted in this November 15, 2018 Indiana Utility Regulatory Commission filing:
The Parties have agreed that OVG should pay the excess accumulated deferred amount of $4,012, 142 to its customers over 34.25 years based on the average rate assumption method ("ARAM"). The first such refund payments will be reflected on customer bills starting January 1, 2019. Consistent with ARAM, the amount of the annual payment will vary each year and be implemented through a separate adjustment to OVG's volumetric rates for utility service ("EDIT Tracker") based on customer allocations and rate design approved in OVG's most recent base 2 rate case. The baseline EDIT Tracker for each of the next 35 calendar years is shown on the attached Exhibit A titled "EDIT Annual Amounts to be Returned." These baseline trackers will be further adjusted by February 15 of each year after 2019 to true-up the amounts returned the previous year in comparison to the target amount on which the EDIT Tracker for that previous year was based.
Indianapolis Power & Light: As noted in this October 31, 2018 Indiana Utility Regulatory Commission press release:
Today, the Indiana Utility Regulatory Commission (Commission) issued an Order in the Indianapolis Power & Light (IPL) rate case, Cause Number 45029. The Order included the Commission’s approval of a settlement agreement filed by most of the parties involved in the case. In the Order, the Commission authorized the utility to implement rates designed to produce additional annual revenue of approximately $43.877 million. The utility’s original request was for $124.491 million. In February 2018, IPL lowered its request from the original $124.491 million to $96.731 million following the passage of the federal Tax Cuts and Jobs Act of 2017 (TCJA). As stated in the approved settlement agreement, IPL will also provide an additional credit of $14.3 million to customers over two years to reflect the impact of the TCJA on IPL’s current rates for the period before new base rates go into effect. The Commission has previously approved a $9.51 million credit in the specific tax investigation case for this utility.
Boonville Natural Gas Corporation: As noted in this April 30, 2018 Indiana Utility Regulatory Commission order:
Boonville requests to revise portions of its IURC No. G-3 tariff reflecting the new tax rate applicable to Boonville as a result of the Tax Cuts and Jobs Act of 2017 for all affected rates and charges in its IURC No. G-3 tariffs.
Community Natural Gas Company: As noted in this April 30, 2018 Indiana Utility Regulatory Commission order:
Community requests to revise portions of its IURC No. G-4 tariff reflecting the new tax rate applicable to Community as a result of the Tax Cuts and Jobs Act of 2017 for all affected rates and charges in its IURC No. G-4 tariffs.
L.M.H. Utilities Corporation: As noted in this June 13, 2018 Indiana Utility Regulatory Commission order:
The tax rate embedded in the utility's recurring rates is 28.91 %. The utility requests to reduce its recurring rates to reflect the new 21 % tax rate per the Tax Cuts and Jobs Act of 2017.
Indiana Natural Gas Corporation: As noted in this April 30, 2018 Indiana Utility Regulatory Commission order:
Indiana Natural requests to revise portions of its IURC No. G-3 tariff reflecting the new tax rate applicable to Indiana Natural as a result of the Tax Cuts and Jobs Act of 2017 for all affected rates and charges in its IURC No. G-3 tariffs.
Indiana Utilities Corporation: As noted in this April 30, 2018 Indiana Utility Regulatory Commission order:
Indiana Utilities requests to revise portions of its IURC No. G-12 Tariff for Gas Service reflecting the new tax rate applicable to Indiana Utilities as a result of the Tax Cuts and Jobs Act of2017 for all affected rates and charges in its IURC No. G-12 Tariff for Gas Service.
Conversely, a vote for a corporate income tax rate hike is a vote for higher utility bills as households recover from the pandemic.
Many small businesses operate on tight margins and can't afford higher heating, cooling, gas, and refrigeration costs. President Biden should withdraw his tax increases.
Three Wins For Consumers & Businesses Over Unaccountable Bureaucrats
Late yesterday, Tennessee lawmakers passed vital consumer protection legislation that would safeguard consumers and businesses from misinformed and unaccountable local government bureaucrats banning life-saving reduced risk tobacco alternatives. This marked the passage of the third such bill in the last week, as Florida and Montana lawmakers similarly took steps to safeguard their citizens from threats arising from local governments.
Recent months have seen a concerted effect by numerous local governments to take advantage of their relative lack of transparency and scrutiny to effectively ban the sale of e-cigarettes. This is despite these products being proven to be 95% safer than combustible cigarettes, more than twice as effective as any other nicotine replacement therapy, and endorsed by over 40 of the world’s leading medical bodies as an effective quit smoking tool. According to Georgetown University Medical Center, e-cigarettes have the potential to save 6.6 million American lives over the next decade.
When local government bureaucrats ignore the science and place their own ideological agenda above the interests of their citizens, it is imperative that state governments step in to protect their citizens. Were these bills not passed, dozens of businesses would have been forced to shut down, hundreds of jobs would have been lost, state governments would have lost significant excise revenue to the black market, and tens of thousands of people who quit smoking would have potentially taken up the deadly habit.
Missouri, Idaho, South Carolina, and Arizona lawmakers are expected to face similar votes in the coming weeks, and in the interests of public health and good government, it is imperative they do so.
Photo Credit: Owen Byrne
More from Americans for Tax Reform
Five Reasons to Reject Biden’s Capital Gains Tax Increase
President Joe Biden has proposed doubling the capital gains tax as part of his so-called “American Families Plan.” Under his proposal, the top federal capital gains tax will be 43.4 percent including a 39.6 percent long-term capital gains rate and the 3.8 percent Obamacare net investment income tax. Biden also calls for increasing taxes on carried interest capital gains.
Here are five reasons Biden’s capital gains tax should be rejected:
1. Biden’s Capital Gains Tax Hikes Will Harm the Economy
The capital gains tax is really a tax on investors and savers. Increasing the tax will increase the cost of capital, decreasing new investment. In turn, this will harm business creation, business expansion, and entrepreneurship, and threaten jobs and wages.
Capital gains taxes are imposed when a taxpayer sells an asset, such as stocks, bonds, or real estate. The tax is imposed on the difference between the purchase price, or cost basis, and the sale price.
Capital gains taxes create double taxation on corporate income as it is an additional layer of tax on business income. First, businesses pay the corporate income tax on their earnings. Second, the investor pays the capital gains tax on dividends received or stocks when they are sold. This double taxation discourages savings, suppresses productivity, and discourages investment. It acts as a barrier to job creation, wage growth, and economic growth.
2. Doubling the capital gains rate would make the United States less competitive
The combined state/federal capital gains rate in the U.S. is already higher than many competitors. The U.S. currently has a combined capital gains rate of over 29 percent inclusive of the 3.8 percent Obamacare tax and the 5.4 percent state average capital gains rate. Under Biden, this rate would approach 50 percent. This would give the U.S. a capital gains tax that is significantly higher than foreign competitors:
OECD Simple Average: 18.4%
OECD Weighted Average: 23.2%
China's Capital Gains Rate: 20%
United States Now: 29.2% (20% + 3.8% Obamacare tax + 5.4% state average)
United States Under Joe Biden: 48.8% (39.6% + 3.8% Obamacare tax + 5.4% state average)
Under Biden’s plan, taxpayers in California will pay a top capital gains tax rate of 56.7 percent (39.6% + 3.8% + 13.3% California state rate = 56.7%). New Yorkers will pay a top capital gains rate of 52.2%, while New Jersey taxpayers will pay a top capital gains tax rate of 54.14%.
3. Biden’s Carried Interest Tax Hike Would Harm Savers across the Country
In addition to raising the capital gains tax, Biden would increase taxes on carried interest capital gains. Not only would this have the same negative impact as the capital gains tax increase, but it will also threaten the retirement savings of Americans across the country.
Carried interest is simply the tax treatment for investment made by private equity investors. Private equity is an investment class structured as a partnership agreement between an expert investor and individuals with capital.
Private equity seeks to invest in companies with growth potential and, as a result, has the potential to deliver strong returns. In fact, according to a recent study, private equity returned gains exceeding 15 percent over 10 years.
Because of these strong gains, private equity is a popular and reliable investment strategy for Americans across the country. The largest investor in private equity is public pension funds, which have collectively invested an estimated $150 billion in private equity. As noted by one study, 165 funds representing 20 million public sector workers have invested an average of 9 percent of their portfolios in private equity.
The financial security these returns provide to American savers including firefighters, teachers, and police officers will be threatened if lawmakers raise taxes on carried interest capital gains.
4. Biden’s capital gains tax hike could reduce revenues
The capital gains tax creates a “lock-in” effect. Because the tax only applies when a taxpayer sells the asset, a high capital gains rate discourages individuals from selling in order to delay having to pay the tax.
As noted by Lawrence Lindsey in a Wall Street Journal op-ed, raising the capital gains tax rate to 43.4 percent would make the cap gains rate significantly higher than the revenue-maximizing rate. The revenue-maximizing rate is the highest rate a tax can be before government starts losing revenue.
While there is dispute over what this rate is, there is broad agreement that it is significantly higher than Biden’s 43.4 percent. For instance, the Joint Committee on Taxation puts the revenue-maximizing capital gains rate at 28 percent, while others, including Lindsey argue it is 10 points lower, at around 18 percent.
Case in point - an analysis by the Penn Wharton Budget Model found that raising the capital gains tax rate to 43.4 percent in isolation would reduce federal revenues by $33 billion over the next decade.
Historically, when the capital gains tax was cut, revenue increased. When the capital gains tax is low, investment increases, stock prices increase, and revenue goes up. The inverse is of course true.
In 1997, Congress cut the capital gains tax rate from 28 to 20 percent. Revenue estimators expected to collect $285 billion of capital gains tax revenue for fiscal years 1997-2000. However, tax revenues came in at $374 billion, 31 percent higher than revenue estimators suggested.
Similarly, as part of a larger tax bill in 2003, the capital gains tax rate was reduced from 20 to 15 percent. In 2003, JCT/CBO anticipated the government would collect $327 billion of capital gains tax revenue over the next 5-years. However, the government collected $537 billion. Not only does this mean that tax revenues were “higher than expected,” but tax revenues exceeded the pre-tax cut forecast. During that time there was no loss to the Treasury.
5. Democrats have recognized the damage caused by a high capital gains tax rate
In recent years, President Barack Obama and Senator Chuck Schumer railed raising the capital gains rate to the 43.4 percent rate proposed by Biden.
In a 2008 CNBC interview with Maria Bartiromo, President Obama said he opposed raising the capital gains tax to “confiscatory rates” which he defined as above 28 percent. As he noted:
“Here's my belief, that we can't go back to some of the, you know, confiscatory rates that existed in the past that distorted sound economics. And I certainly would not go above what existed under Bill Clinton, which was the 28 percent… My guess would be it would be significantly lower than that.”
Similarly, in 2012, Senator Chuck Schumer (D-NY) rejected doubling the capital gains tax rate to 39.6 percent, the same rate that President Joe Biden is expected to soon propose. As Schumer noted:
“Now, if you are returning the top income rate to Clinton-era levels, as I have proposed, I do think it is too much to treat capital gains the same as ordinary income,” Mr. Schumer said. “We don’t need a 39.6% rate on capital gains.”
Photo Credit: jlhervas
Congress and the SEC Should Not Tax and Regulate Short Selling
The recent Reddit-fueled GameStop stock surge shined the spotlight on the investing strategy of short selling. While Congressional Democrats were quick to single out short sellers as one of the villains in this story, their push to impose new regulations and taxes is a solution in search of a problem.
The truth is, short sellers are a product of a well-functioning market. Lawmakers should reject any effort to restrict or ban short selling.
To sell a stock short, investors borrow shares of a company from another investor, typically broker-dealers. Short sellers then sell the borrowed shares directly on the market. Later, when the borrowed shares must be returned, they repurchase the same number of shares borrowed and return them to the broker. Instead of buying low then selling high, short sellers’ profit from the difference when they sell high and then repurchase low.
There is nothing sinister about this practice. Instead, it occurs when investors believe that a company is overvalued.
Following the GameStop rally and the media’s focus on the story, Sen. Elizabeth Warren (D-Mass) issued a statement condemning the “casino-like” speculation done by short sellers and demanded SEC involvement. The House Financial Services Committee also hosted two separate hearings on the practice of short selling. These concerns are misguided.
Short selling can soften the effects of a market crash. Despite the left's effort to convince the public otherwise, short selling is not responsible for market crashes and economic downturns. Some investors will short a stock when they think it is overvalued. Other investors, as shown as the recent rallies in GameStop and other companies, will buy a stock they think is too heavily shorted. Both practices help promote efficient investing and provide information to markets, ultimately softening the blow of a downturn.
For example, the 2008 market crash could have been far more widespread if short sellers hadn’t recognized the housing market was overvalued. Arbitrarily restricting this trading through new taxes or regulations will likely lead to severe pain if the country experiences another crash.
Short selling can expose fraud which others failed to find. Short selling serves a market purpose -- the work of short sellers incentivizes the discovery of significant fraud that financial auditors and regulators fail to find. Economists have shown that information from short sellers support price discovery within markets, which helps educate investors.
Short selling has been used to expose fraud and illegal activity on numerous occasions:
- Jim Chanos, president of Kynikos Associates, notably profited from shorting Enron after observing significant insider selling and reading through questionable energy trading contract disclosures in regulatory filings.
- Nate Anderson at Hindenburg Research published a short report raising concerns about claims the electric car manufacture Nikola was making and their ability to timely produce vehicles. His research included gathering recorded phone calls, text messages, private emails, and behind-the-scenes photographs to highlight dozens of false and misleading statements made by Nikola and its founder Trevor Milton.
- Muddy Waters Research’s Carson Block sold short the fraudulent Chinese café chain Luckin’ Coffee after analysts recorded over 10,000 hours of store traffic video and found that Luckin inflated its revenue numbers based on customer traffic that did not exist.
Short selling comes with significant risk, just like any other investment. Far too many politicians refer to short selling as predatory, with an inevitable profit to be made on the backs of others. This is entirely misguided. Just like other investments, short sellers are taking a significant risk.
During the GameStop rally, Melvin Capital lost almost $6 billion in capital from its short position. Investors who bet against Tesla in 2020 lost $38 billion as the electric carmaker’s stock surged during the pandemic.
Additionally, short sellers' careers depend on them remaining credible; otherwise, their research reports and disclosures would not be taken seriously. Thus, concerns about purely predatory short selling, and the success of those endeavors, are empty.
Short sellers provide value to the market by investigating corporate malpractice and fraud and should be welcomed as a third-part check for healthy markets. In other words, short selling is a feature, not a bug, of a well-performing market.
Congress and regulators should refrain from restricting or banning short selling, they harm price discovery mechanisms and interfere with market due diligence.
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One Million Small Businesses Will See Higher Taxes Under Biden Plan to Raise Corporate Tax
Biden’s plan to raise the corporate tax rate from 21 percent to 28 percent could raise taxes on 1 million small businesses across the country.
As noted by the Small Business Administration Office of Advocacy, there are 31.7 million small businesses in the U.S. Of those, 25.7 million have no employees, while 6 million have employees. Of these 6 million small employers, 16.8 percent, or 1 million of these businesses are classified as c-corporations. The SBA classifies a small employer as any independent business with fewer than 500 employees.
Biden claims his spending plan makes large corporations pay their “fair share.” However, the plan will raise taxes on many small businesses that are structured as corporations.
Raising the corporate rate will also harm American workers and families in the form of fewer job opportunities, lower wages, and reduced life savings.
As noted by Stephen Entin of the Tax Foundation, labor (or workers) bear an estimated 70 percent of the burden of corporate tax hikes. There is debate over how much workers bear of this tax, with some economists arguing just 20 percent is borne by labor, while others argue 50 percent or even 100 percent of the tax hits workers. But even if we assume that workers bear just 20 percent of the corporate tax, workers will collectively be hundreds of billions of dollars worse off.
These tax hikes will also harm millions of middle class Americans that are invested in publicly traded corporations through the stock market including the 53 percent of American households’ own stock, the 80 to 100 million Americans that have a 401(k) and the 46.4 million households that have an individual retirement account.
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ATR Supports Equal Act
Americans for Tax Reform supports the EQUAL Act – a measure that promotes equality under the law by eliminating unequal mandatory minimum sentences between crack cocaine and powdered cocaine.
Equal and fair treatment under the law is a sacred tenant in the United States. This legislation creates a more equal system by establishing consistent punishments for abusing the same chemical substance, regardless of physical form. That is why a coalition of 28 organizations wrote a letter supporting this legislation.
In 1986, Congress passed the Anti-Drug Abuse Act, which enhanced penalties for drug crimes. This law included separate provisions for cocaine in the powdered form and cocaine in the crack form. Five grams of crack cocaine had the same mandatory minimum sentence as 500 grams of powder cocaine. A ratio of 100:1.
This sentencing ratio was narrowed to about 18:1 with the bipartisan Fair Sentencing Act of 2010. However, any such disparity for possessing a chemically identical substance serves no real-world purpose. The EQUAL Act would eliminate any disparity in the punishment between powdered and crack cocaine.
The enhanced punishments for crack cocaine were designed to target “kingpins” and “middle level dealers,” however research conducted by the U.S. Sentencing Commission found that it primarily impacted low level dealers. Additionally, research has shown that these different mandatory minimums for crack cocaine has resulted in 65% higher sentences for African Americans and Hispanic Americans.
The EQUAL Act also provides the opportunity for pending and past cases to apply for a reduced sentence based off this new change by Congress.
You can learn more about the bill HERE.
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More Effective Criminal Justice System Coming to Tennessee, As Bills to Focus on Work, Treatment Pass
The Tennessee Senate has approved legislation that will bring significant improvements to Tennessee’s criminal justice system by focusing on treating addiction, and getting people leaving the system back to work, among other provisions.
These conservative reforms are a huge win for public safety, and taxpayers. Addiction and not having a job are two major factors that drive people to reoffend. As long as they remain untreated, addicts are more likely to reoffend. Having a decent job is a key factor in reducing recidivism, and poverty is also a leading recidivism factor.
People who have committed low-level offenses are going to be released from incarceration one day. It only makes sense to address their individual issues and set them on a better path when they return to society.
A task force assembled at Governor Bill Lee’s request tackled these issues and offered recommendations, leading to the legislation that just passed (HB 784/SB 767, and HB 785/SB 768).
The legislation removes unnecessary government licensing barriers to work for former offenders, updates community supervision practices to concentrate on risk, and offers alternatives to jail where appropriate, like drug treatment. More serious offenders who currently would be released without supervision, will have one year of supervision added, further protecting public safety.
Governor Lee deserves immense credit for leading the charge on these bills, along with legislative leaders, Speaker Sexton, Senate Majority Leader Johnson, and sponsors, including Rep. Curcio, Rep. Lamberth, Sen. Stevens, Sen. Bowling, and Sen. Yager, among many others who helped these needed reforms become reality.
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Uber and Lyft Drivers Want to Remain Independent Contractors, But Biden Labor Chief Says They Should be Employees
Labor Secretary Marty Walsh today said that most gig workers in the United States should be classified as “employees,” not independent contractors.
“… In a lot of cases gig workers should be classified as employees... in some cases they are treated respectfully and in some cases they are not and I think it has to be consistent across the board,” Walsh told Reuters.
Reclassifying gig workers in this way would be devastating to independent contractors, as many would lose work.
Further, neither rideshare drivers themselves nor the American people consider drivers to be employees. Even more damning, most rideshare drivers don’t want to be employees.
By a 3-1 ratio, Americans consider rideshare drivers to be independent contractors and not employees, according to a landmark Pew Research Center survey.
Pew Research Center conducted a sizable survey of 4,787 American adults and found that most Americans who were aware of the regulatory debate surrounding these areas of the economy do not consider rideshare drivers to be employees, and believe the government should use a light regulatory touch in this area of the economy.
As noted by Pew, most rideshare users do not consider drivers to be employees. In fact, “66% of ride-hailing users think of the drivers who work for these services as independent contractors, while 23% view them as employees of the app or service.”
As noted by Pew, "the clear preference for a light regulatory approach among partisans in all camps is striking."
Similarly, most users consider these to be companies software companies as opposed to transportation companies.
Here is the Pew Research graph that shows these two results:
An Edelman Intelligence survey found that the freedom to be an independent contractor is vital to rideshare and food delivery drivers, as nine out of ten drivers on app-based platforms "began driving because they needed a job where they could control their work hours." About 72 percent of drivers supported California Proposition 22, affirming their right to be an independent contractor, not an employee.
Democratic-leaning Benenson Strategy Group and Republican-leaning GS Strategy Group conducted a survey which found that 77 percent of Drivers say flexibility is more important than receiving benefits. In other words, Drivers prefer flexibility over the benefits of employment by a margin of more than 3-to-1.
It is clear that drivers prefer to keep independent contractor status, therefore maintaining their independence and flexible work schedule. In fact, nearly 70% of drivers would quit if they had to take on a traditional employment role with Uber.
Rideshare services have been revolutionary when it comes to people’s access to transportation, safety, and even health. If the Biden administration is successful, rideshare services will likely become more scarce and more expensive.
By a 5:1 ratio, residents of majority-minority neighborhoods say rideshare services like Uber and Lyft “serve neighborhoods taxis won’t visit" according to the Pew survey.
"Ride-hailing services are seen by minorities as a benefit to areas underserved by taxis," the research found.
Over half (53%) of ride-hailing users living in majority-minority communities communicated to Pew Research Center that ride-hailing provides service to neighborhoods where traditional taxi services are scarce. Only 10% of those respondents disagreed with this statement.
Access to transportation is vital in these areas.
As Sara Heath of Xtelligent Healthcare Media explains, “Rideshare companies, such as Uber and Lyft, are cruising into the healthcare spotlight. As medical professionals focus on improving patient access to care and addressing the social determinants of health (SDOH), these rideshare services are a cheap and effective option for meeting industry needs… For millions of patients across the country, getting a ride to a medical appointment is a genuine challenge. Public transportation can be unreliable or unavailable, many individuals lack access to their own vehicles, and patients may not always be able to secure a ride from a friend or family member at the right time.” According to the CDC, access to transportation is one of the most significant social determinants of health.
It is important that we protect independent contractors’ status as ICs and ensure that their work remains flexible. Both drivers’ livelihoods and users’ access to transportation is at stake.
Photo Credit: Stock Catalog
SURVEY: 61% Of Small Businesses Say PRO Act Will Kill Their Business
A new survey from Alignable shows that 61% of American small businesses say that the left-wing “Protecting the Right to Organize” (PRO) Act will kill their business. The PRO Act is sweeping legislation that will drastically increase organized labor’s power at the expense of the American worker.
The PRO Act nationalizes California’s “ABC” test for independent contractors that would force companies to hire freelancers as W-2 employees. Companies hire freelancers for a variety of reasons, including expertise, specialized skills, or fulfilling a project-based need. Independent contractors all across the country prefer the flexibility of freelancing to the rigidity of a traditional employment arrangement.
The survey shows that a national ABC test could lead to freelancers losing 76 percent of their business. Additionally, 40 percent of businesses said that they would need to turn away work projects that would require freelancers to complete. 45 percent of all small businesses would ultimately be forced to shut down due to the lack of freelancers.
The PRO Act would be devastating for minority-owned businesses, 62 percent of which say they are “vitally or highly dependent” on side hustles to make a living. Similarly, 67 percent of women-owned businesses say they would lose most of their revenue under the PRO Act, along with 45 percent of veteran-owned businesses.
Ultimately, the PRO Act is a very real threat to small businesses across the board. Congress should vote against the PRO Act and all of its provisions if proposed in separate legislation or included in a larger bill.
Photo Credit: Randy von Liski
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