The Grover Norquist Show: Donald Trump’s Tax Plan: Pro-Growth and Pro-Simplification
Grover Norquist analyses Donald Trump’s newly unveiled tax plan. Trump gives Americans a deal they can’t refuse, almost. With what Grover calls “Ronald Reagan” style growth, the Donald’s plan should give the United States 4 percent a year in economic growth. Trump’s plan is consistent with the Taxpayer Protection Pledge. The plan details four different tax brackets for individuals, lowering capital gains, lowering business taxes, and repealing taxes that were meant to be repealed several generations ago. Grover says that the plan would make us more competitive for business amidst the global market. Norquist even goes as far to say, “Trump’s plan is dead center of Reagan Republican thinking, when it comes to what would create growth in the United States.” To find out more, tune into the episode 35 of the Grover Norquist show, and don’t forget to email, tweet, or leave a comment for Grover to let him know what you think.
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Wyoming Should Reject Regressive & Damaging Tobacco Tax Hike
Americans for Tax Reform today wrote to Wyoming lawmakers, urging them to oppose HB55, legislation that would increase the highly regressive tobacco excise tax on cigarettes and moist loose tobacco.
ATR Director of Consumer Issues, Tim Andrews, wrote: “This highly regressive tax hike would hurt struggling Wyoming families at the time they can afford it least, and do nothing to reduce smoking rates. Evidence shows that increasing the tobacco tax further would have no impact on smoking rates, would hurt struggling families and businesses and would be a boon to black market criminal syndicates. Furthermore, as consumers simply shift to the black market, states have consistently failed to raise the revenue that has been projected to be raised from such tax hikes meaning the touted benefits of this bill will never be realized”
Andrews added that “As families and businesses struggle during the Covid-induced economic downturn, it is simply unconscionable to burden them with further tax increases that would benefit no-one except for criminal syndicates”
HB55 would also increase taxes on smokeless tobacco, a vital harm reduction tool proven to be 90-95% less harmful than traditional tobacco. The FDA has authorized manufacturers to market smokeless tobacco as a harm reduction tool saying its use compared to cigarettes “puts you at a lower risk of mouth cancer, heart disease, lung cancer, stroke, emphysema, and chronic bronchitis.”
Andrews concluded “To increase taxes on a product authorized by the FDA as a reduced risk product – leading to more people continuing to smoke combustible cigarettes – would violate every rule of appropriate public health policy. Small increases in projected revenue should never come at the expense of human lives.”
The full letter can be downloaded here.
Photo Credit: Free Grunge Textures
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Letter: WY Lawmakers Should Reject “Unearned” Income Tax
In a letter to members of the Wyoming Legislature, Grover Norquist, president of Americans for Tax Reform, urged lawmakers to oppose any and all efforts to raise taxes this year.
At a time when most republican-controlled states are looking to provide tax relief, it seems that at least three major tax hikes will be debated in Wyoming:
House Bill 138 would impose a tax on income earned from investments, destroying Wyoming’s pro-taxpayer, pro-growth reputation and paving the way for a full-blown state income tax.
HB 26 would increase the state fuel tax by nearly 40 percent, taking an additional $60 million a year from the hardworking taxpayers of Wyoming at a time when they can least afford it.
HB 55 would increase the highly regressive tobacco excise tax on cigarettes and moist loose tobacco, disproportionately harming the state’s most vulnerable populations.
To read the letter, click here.
March 1, 2021
To: Members of the Wyoming House of Representatives
From: Americans for Tax Reform
Re: Oppose HB 138, HB 26, and HB 55
Dear Representative,
On behalf of Americans for Tax Reform (ATR) and our supporters across Wyoming, I thank you for your public service in these challenging times and urge you to use the 2021 legislative session to enact policies that will help households and employers recover from the pandemic-driven downturn. By crafting a new budget that avoids tax increases, you can send a clear message to job creators, investors, and site selectors that Wyoming will remain a no income tax state with a competitive tax climate. Not even a pandemic-driven recession can change that.
Oppose House Bill 138, the “Unearned” Income Tax
Wyoming is one of eight states that boast the absence of any kind of an individual income tax. In addition to allowing taxpayers to keep more of their hard-earned money, no income tax states are much more attractive to businesses looking to expand, investors looking for opportunities in growing economies, and families looking for greater prosperity.
As such, it is of the utmost importance that you reject House Bill 138, the so-called Unearned Income Tax. If implemented, this bill would jeopardize Wyoming’s pro-taxpayer, pro-growth reputation by imposing an income tax on income earned from investments.
As more and more people and jobs continue to move into states that do not impose income taxes, more and more states, including Arizona, Mississippi, and West Virginia, are looking for ways to put their income taxes on the path to zero. This movement towards no income taxes is so strong that New Hampshire, which is often mistaken for a no income tax state because it does not tax wage income, recognizes that it needs to act now to remove its interest and dividend income tax if it wants to remain competitive into the future. Gov. Chris Sununu has called for a five-year phase out of the I&D tax in his budget proposal.
HB 138 would cause Wyoming to pick up the asterisk that currently appears by New Hampshire’s name when it is included on the list of no income tax states, and that is only the beginning. Cleverly called the “Unearned Income Tax” in hopes of reducing alarm, HB 138 is a giant step towards a full-blown income tax in Wyoming. This is not a door you want to open.
ATR strongly opposes HB 138 and urges lawmakers to vote NO.
Oppose House Bill 26, Fuel Tax Hike
I urge you to reject House Bill 26, legislation that would increase the state fuel tax by 9 cents per gallon, taking the rate from 24 cents per gallon to 33 cents per gallon. This whopping 37.5 percent increase would take an additional $60 million a year from the hardworking taxpayers of Wyoming at a time when they can least afford it.
Adding insult to injury, HB 26 would also give Wyoming the unwelcome distinction of being tied for the second-highest fuel tax in the region. Colorado, Montana, South Dakota, and Utah would tax fuel at lower rates.
ATR strongly opposes HB 26 and urges lawmakers to vote NO.
Oppose House Bill 55, Tobacco Tax Hike
I urge you to reject House Bill 55, legislation that would increase the highly regressive tobacco excise tax on cigarettes and moist loose tobacco, disproportionately harming the state’s most vulnerable populations at a time when they can least afford it.
Data has consistently demonstrated that tobacco tax increases have no statistically significant impact on the prevalence of smoking among those with household incomes of less than $25,000. Seventy-two percent of smokers are from low-income communities, and to increase taxes on people unable to quit as they are struggling with the costs of the COVID-19 pandemic will put unnecessary hardship upon families who are already struggling to make ends meet.
Further, cigarette tax hikes promote black markets for smuggled tobacco products – often run by sophisticated, multi-million-dollar criminal syndicates – and consistently result in revenues coming in far lower than projected. When neighboring Utah raised their tobacco tax, smuggling doubled to over 20% of the market. In other states it is already over 50%. As a result, only three out of the 32 state tobacco tax increases studied met tax revenue estimates.
In addition, increasing the tax on smokeless tobacco would do irreparable harm to public health as well as the effort and objective of reducing smoking rates in Wyoming. According to the peer reviewed Harm Reduction Journal, “literature reviews have estimated that users of snus have at least 90–95 percent less smoking-related mortality, with minimal reduction in life expectancy, if any at all. The health benefits of smokers who completely transition to snus use are similar to those reported for smoking cessation.”
As a result, the FDA has authorized manufacturers to market their product with the following statement: “Using General Snus instead of cigarettes puts you at a lower risk of mouth cancer, heart disease, lung cancer, stroke, emphysema, and chronic bronchitis.” To increase taxes on a product authorized by the FDA as a reduced risk product – leading to more people continuing to smoke combustible cigarettes – would violate every rule of appropriate public health policy. Small increases in projected revenue should never come at the expense of human lives.
ATR strongly opposes HB 55 and urges lawmakers to vote NO.
Sincerely,
Grover Norquist
President
Americans for Tax Reform
Photo Credit: Kent Kanouse
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Oklahoma Legislators Should Reject Devastating Tax on Vaping
Americans for Tax Reform wrote to Oklahoma legislators today in opposition to HB 2876 which would increase taxes on life-saving reduced risk tobacco alternatives such as e-cigarettes.
ATR Director of Consumer Issues, Tim Andrews, wrote:
"This anti-science bill would have a devastating impact on public health throughout the State, and lead to an increase in tobacco-related deaths. Further, aside from the public health harm caused by increasing taxes on a product proven to save lives, this bill would also cause considerable economic harm, particularly given the present pandemic-related economic downturn."
Andrews noted the ever-growing body of research showing vapor products are an effective harm reduction tool for adults looking to quit smoking: "E-Cigarettes are proven to be 95% safer than combustible tobacco and more effective than any other quit smoking aid. Extrapolating from a large-scale analysis by the US's leading cancer researchers and coordinated by Georgetown University Medical Centre, if a majority of smokers in the state of Oklahoma made the switch to vaping, close to 100,000 lives would be saved. In seeking to tax these life-saving products, these bills place lives in jeopardy.
HB 2876 not only fails to incentivize smokers to quit their deadly habit, it actively punishes them for doing so. Andrews noted that "As the price of a product increases, at its use decreases. In previous instances, levying taxes on vaping products has been proven to increase smoking rates as people shift back to deadly combustible cigarettes. Minnesota is serving as a case study on this already. After the state imposed a tax on vaping products, it was determined that it prevented 32,400 additional adult smokers from quitting smoking. Small increases in projected revenue should never come at the expense of human lives.”
The full letter can be read here.
Photo Credit: Vaping360.com
Warren’s Wealth Tax Will Give Massive New Powers to IRS, Doubling Its Size
Senator Elizabeth Warren’s (D-Mass.) legislation to impose a $3 trillion wealth tax would give the IRS $100 billion in additional funding over the next 10 years. This would double the size of the IRS.
If just a fraction of this new funding was spent on new IRS employees, it could lead to tens of thousands of new agents and auditors.
Warren’s proposal would disproportionately increase funding for “enforcement,” which includes funding for audits and criminal investigations, instead of “taxpayers services,” which includes funding for taxpayer advocacy, assistance, and education.
IRS funding for taxpayer services in FY 2019 was $2.6 billion Warren’s bill would increase this funding by $10 billion over 10 years. On the other hand, Warren would provide a $70 billion increase in enforcement funding over 10 years, compared to FY 2021 funding of $5.2 billion.
This new funding can be found on page 14 of Sen. Warren’s legislation:
SEC. 4. INTERNAL REVENUE SERVICE FUNDING.
(a) IN GENERAL.—Subchapter A of chapter 80 of the 15 Internal Revenue Code of 1986 is amended by adding at the end the following new section:
SEC. 7813. AUTHORIZATION OF APPROPRIATIONS.
‘There are authorized to be appropriated to the Secretary for fiscal years 2022 through 2032—
(1) for enforcement of this title, $70,000,000,000
(2) for taxpayer services, $10,000,000,000
(3) for business system modernization, $20,000,000,000.
According to the Bureau of Labor Statistics, the median pay of a “Tax Examiners and Collectors, and Revenue Agents” is $54,890 per year. If even $5 billion of Warren’s $100 billion in funding was used to hire new IRS workers, it would more than double the size of the agency and add more than 80,000 new government bureaucrats.
Warren’s wealth tax would also impose a 40 percent exit tax on any American that renounces their citizenship with net worth over $50 million. It would take aim at Americans living overseas by expanding tax penalties and reporting requirements that exist under the Foreign Account Tax Compliance Act (FATCA). Even the Washington Post editorial board said this arrangement "conveys a certain authoritarian odor," as it binds people to the United States with severe financial consequences for deciding to leave.
Several countries have repealed their wealth taxes because of the numerous problems associated with them. In 1995, 15 countries had a wealth tax, 11 of which failed and were repealed. The countries that have repealed their wealth taxes are Sweden, Denmark, the Netherlands, Austria, Finland, France, Germany, Iceland, Luxembourg, Ireland, and Italy. In addition to cost of enforcement, which Austria cited specifically, and the difficulty of valuing assets, these countries also found that the tax was ineffective at combating wealth insecurity.
The wealth tax is also wholly unconstitutional. Article 1, Section 9, Clause 4 states: "No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken."
It is abundantly clear that a wealth tax is a direct tax. Federalist No. 36 explained that taxes on “houses and lands” were direct taxes. Supreme Court majorities have said on at least seven occasions that federal taxes on real property are “direct taxes.” With this condition in mind, it is also clear that Warren’s plan would not be apportioned based on state population, making it inconsistent with Article 1, Section 9.
Next, the wealth tax may become the next tax that begins by hitting “the rich” and ends up hitting far more people than originally intended. Congress enacted the Alternative Minimum Tax (AMT) in 1969 following the discovery that 155 people with adjusted gross income above $200,000 had paid zero federal income tax. The AMT grew so large that it was projected to tax nearly 30 million Americans (20 percent of filers) in 2010.
Additionally, the Spanish American War Tax imposed a 3% federal tax on long distance phone service in 1898. This tax was finally eliminated in 2006, after being imposed on countless Americans. Last, the personal income tax promised to be a tax on the wealthiest Americans. It began in 1913 with a top rate of 7% and hit those with a taxable income of over $500,000. Today, roughly half of American families pay the personal income tax.
While President Joe Biden has not yet endorsed the Warren wealth tax, this tax is clearly a priority for many on the Left. Senator Warren was the only Democrat added to the tax writing Senate Finance Committee this year and she has said this legislation to expand the IRS is one of her top priorities. Even so, President Biden will seek “significant increases in IRS enforcement and auditing,” according to Biden Council of Economic Advisers member Jared Bernstein.
The last time the Democrats were in power, the IRS wrongly used its authority to target and harass taxpayers, especially conservative non-profits.
Most notably, the Obama IRS was caught unfairly denying conservative groups non-profit status ahead of the 2012 election.
Lois Lerner’s political beliefs led to tea party and conservative groups receiving disparate and unfair treatment when applying for non-profit status, according to a detailed report compiled by the Senate Finance Committee.
Because of Lerner’s bias, only one conservative political advocacy organization was granted tax exempt status over a period of more than three years:
“Due to the circuitous process implemented by Lerner, only one conservative political advocacy organization was granted tax-exempt status between February 2009 and May 2012. Lerner’s bias against these applicants unquestionably led to these delays, and is particularly evident when compared to the IRS’s treatment of other applications, discussed immediately below.”
Given that Senator Warren’s wealth tax would double the size of the IRS and could lead to tens of thousands of new IRS agents and auditors, the Lois Lerner scandal could be just the beginning.
Photo Credit: Gage Skidmore
Norquist: Biden Administration Should Not Sacrifice American Interests In OECD Negotiations
Ahead of the G20 finance ministers meeting, U.S. Treasury Secretary Janet Yellen announced that the Biden administration is no longer insisting on the 'safe harbor' implementation of Pillar 1 of the OECD's reform of global taxation. The 'safe harbor' provision would let some companies opt out of the new global digital tax regime. Countries like Germany, France, and the European Union that strongly opposed the safe harbor provision, cheerfully welcomed the unilateral concession and announced that an agreement could be reached by the summer.
The following statement can be attributed to Grover Norquist, President of Americans for Tax Reform:
In recent years the world has seen the growing threat of digital services taxes, which --by narrowly defining revenue thresholds and business models--are, designed to target American companies exclusively. These countries are trying to cheat on the existing international rules of taxation by unilaterally laying claim to income that would otherwise be taxed in the United States. Digital services taxes pose unprecedented dangers to tax competition, innovation, American and worldwide economic growth and represent a dramatic and likely irreversible shift for the international tax system.
The OECD process was initiated initially to end these unilateral and discriminatory taxes and prevent a trade war from escalating further. The upcoming meeting of G20 finance ministers is an excellent opportunity for the representatives from France, the UK, India, Indonesia, Canada, Germany, Italy, and other countries that either have already imposed those taxes or have DST legislation in place, to show that they are negotiating in good faith and commit to ending those discriminatory tax measures.
The Biden administration should insist on the termination of those digital services taxes and other discriminatory measures before an agreement that is fair to the United States, American companies and workers, can be reached at the OECD. It is crucial to keep in mind that big-spending EU bureaucrats are already resorting to regulatory and antitrust tactics like the Digital Markets Act and Digital Services Act to undermine U.S. innovation and make American companies subsidize their never shrinking budgets through fines and restrict their ability to compete in the European marketplace.
Secretary Yellen and the Biden administration should not sacrifice American interests, American technological leadership, American jobs, and the American tax base by making damaging unilateral concessions during this process.
Photo Credit: European Central Bank
HB 2454 Would Expand Access to Health Care in Arizona
Arizona could soon become a model state for telemedicine and telehealth.
Rep. Regina Cobb’s House Bill 2454 would remove a number of barriers that block the use of telemedicine and telehealth services in the Grand Canyon State. If implemented, this bill would give Arizonans access to some of the nation's best innovative technologies in the health care industry.
“Arizona is a leader when it comes to innovative policy solutions,” said Grover Norquist, president of Americans for Tax Reform. “It was the first state in the country to grant universal license recognition, making it easier for new residents to get jobs. Now, thanks to Rep. Cobb’s leadership, Arizona could soon become one of the most telemedicine friendly states in the country.”
HB 2454 would change the word “telemedicine” to “telehealth” in Arizona statutes, which is more inclusive of providers that are not physicians. Among other things, this bill would also allow patients and providers to engage in audio-only telephone visits; would allow for the use of asynchronous, or store and forward, telehealth to be used to establish provider-patient relationships and to prescribe; and would allow healthcare providers who are licensed and in good standing in other states to provide telehealth services to Arizonans.
Together, these reforms would be a huge win for patients and consumers across Arizona, as they would no longer be forced to take off of work or school and take on the costs and complications of driving to an in-person appointment. By making it easier for Arizonans to connect with health care providers, HB 2454 would increase the odds of problems being caught while they are small, manageable, less expensive.
“Telehealth helps ensure Arizonans have access to safe and reliable medical services,” tweeted Gov. Ducey in support of the legislation. “It expands resources for those in need and in rural areas, and it helps protect vulnerable populations. Arizona is proud to lead on this issue!”
To fight COVID-19, Gov. Ducey issued orders that allowed Arizonans to temporarily benefit from a number of the reforms included in Rep. Cobb’s bill. In addition to making it possible for Arizonans to access medical providers without having to risk getting sick in a doctor’s office or hospital, those orders were also a big win for people living in rural areas, who may not have great access to health care in general, and those in need specialists located several hours away.
Indeed, a study by the Journal of Medical Internet Research concluded that the vast increase in telehealth medicine users in 2020 was not fueled by COVID-19 concerns, but by visits for other health concerns for patients who had difficulty accessing care.
HB 2454 would make Arizona a national leader in telemedicine and telehealth. This would be a huge win for all Arizonans, as it will increase the number of options for patients, improve quality of care, and naturally drive the costs down.
Photo Credit: NEC Corporation of America
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Letter: HB 629 Would Expand Access to Vision Care in Georgia
Today, the Georgia House Health & Human Services Committee will be discussing House Bill 629, legislation that would make it easier for corrective eyewear prescriptions to be renewed via telemedicine.
In a letter to the committee, Grover Norquist, president of Americans for Tax Reform, urged lawmakers support this important reform, which would remove government-imposed barriers to vision care. “[T]his reform would expand access to and reduce the costs of vision care services in Georgia, making it a huge win for patients, consumers, and taxpayers,” explained Norquist.
To read the full letter, click here.
March 1, 2021
To: Members of the Health and Human Services Committee
From: Americans for Tax Reform
Re: Support House Bill 629
Dear Representative,
On behalf of Americans for Tax Reform (ATR) and our supporters across Georgia, I urge you to support House Bill 629, legislation that would make it easier for corrective eyewear prescriptions to be renewed via telemedicine. If implemented, this reform would expand access to and reduce the costs of vision care services in Georgia, making it a huge win for patients, consumers, and taxpayers.
Under the status quo in Georgia, patients must be sitting in an optometrist’s or an ophthalmologist’s office in order to use telemedicine for vision examinations, also known as online vision tests. This protectionist law, which was put in place by incumbent providers to shut out competition, defeats the purpose of telemedicine. Despite the fact that online vision tests can be done virtually anywhere, Georgians are still required to take off of work or school and take on the costs and complications of traveling to a doctor’s office in order to use this option for prescription renewal.
Contrary to many claims, online vision tests, which are safe and doctor approved, are not intended to replace comprehensive in-person eye exams. Online vision tests can be used in between comprehensive exams to allow patients to renew their prescriptions more conveniently. Online vision tests also make renewing prescriptions more affordable, costing as low as $20 while the in-person eye exams cost an average of $185.
Along with the many benefits it would provide to individuals, HB 629 could also lead to taxpayer savings. Each year, the state of Georgia spends taxpayer dollars on eye care services for government employees and those who receive medical benefits from publicly funded programs. Costs could be drastically lowered if the use of telemedicine for prescription renewal were a more accessible option.
HB 629, by tearing down government-imposed barriers to vision care, will make corrective eyewear prescription renewal more accessible and affordable for Georgia residents. This reform would be particularly beneficial for lower income families, those living in rural areas, and for all people between ages 18 and 50, the segment of the population whose prescriptions change very little and do not require an office visit every year simply to have their prescription renewed.
ATR supports HB 629 and urges you to vote YES.
Sincerely,
Grover Norquist
President
Americans for Tax Reform
Photo Credit: Les Black
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ATR Leads Coalition Opposing a $15 Minimum Wage Tax
Today Americans for Tax Reform submitted a letter along with 16 other organizations to the U.S. Senate in opposition to a $15 minimum wage tax.
Recently, Senators Ron Wyden and Bernie Sanders proposed a tax on businesses that do not pay their workers a wage of $15 per hour. This came after the Senate Parliamentarian ruled against including a $15 minimum wage hike in the American Rescue Plan.
Thankfully, Democrats abandoned this alternative plan yesterday. It is unlikely, though, that this is the last time this proposal will be brought up by Congressional Democrats. In this way, Americans for Tax Reform strongly opposes any and all efforts to tax businesses who do not pay their workers a wage of $15 per hour.
This tax would likely have identical effects to a minimum wage increase. It would reduce jobs, increase automation, and crush small businesses. It is disappointing to see Democrats pushing such a radical, contractionary agenda, especially during an economic downturn when businesses are already struggling to stay afloat.
You can read the letter below.
March 1st, 2021
Dear Senator:
On behalf of millions of taxpayers across the country, we write to express our opposition to the proposal by Senate Finance Chairman Ron Wyden and Senate Budget Chairman Bernie Sanders to implement a tax on businesses that do not pay their workers a wage of $15 per hour.
According to press reports, Democrats have abandoned this job killing tax increase over concerns that it would be difficult to implement, easy to avoid, and deeply unpopular. This is welcome news.
As you know, the non-partisan Congressional Budget Office recently estimated that a $15 wage mandate would eliminate up to 2.7 million jobs. The decision to abandon this tax, as well as the recent ruling by the Senate parliamentarian that a national $15 minimum wage mandate does not comply with Senate budget reconciliation rules, is a relief to workers and small businesses who would have been harmed by efforts to double the minimum wage during a pandemic.
We remain deeply concerned by Democrat proposals to implement a massive tax hike on American employers that would kill jobs and harm the economy during a pandemic. If enacted into law, these types of proposals would also serve would also serve as a precedent to selectively target taxpayers based on any number of factors. Lawmakers should reject any effort to use the tax code to enact discriminatory or selective taxes.
Moving forward, we call on all members of Congress to reject both the overt efforts to implement job-killing national wage mandates, as well as any attempts to institute a backdoor national wage mandate by raising taxes on American businesses.
Sincerely,
Grover Norquist
President, Americans for Tax Reform
Brent Wm. Gardner
Chief Government Affairs Officer, Americans for Prosperity
Bethany Marcum
CEO, Alaska Policy Forum
Andrew F. Quinlan
President, Center for Freedom and Prosperity
Ryan Ellis
President, Center for a Free Economy
Thomas A. Schatz
President, Citizens Against Government Waste
Chuck Muth
President, Citizen Outreach
David McIntosh
President, Club for Growth
Michael Saltsman
Managing Director, Employment Policies Institute
Adam Brandon
President, FreedomWorks
Carrie Lukas
President, Independent Women's Forum
Heather R. Higgins
CEO, Independent Women's Voice
Seton Motley
President, Less Government
Brandon Arnold
Executive Vice President, National Taxpayers Union
Tom Hebert
Executive Director, Open Competition Center
James L. Martin
Founder/Chairman, 60 Plus Association
Saulius "Saul" Anuzis
President, 60 Plus Association
David Williams
President, Taxpayers Protection Alliance
Photo Credit: Pictures of Money
Dems Rushing Through Small Biz Tax Paperwork Mandate in Biden Spending Bill
Congressional Democrats are sneaking through new reporting requirements that will increase tax complexity for independent contractors, small businesses, and freelancers. They have included this proposal in the 200 page manager’s amendment to President Biden’s $1.9 trillion stimulus bill. This is another attempt by the Left to exploit the COVID-19 crisis by passing unrelated policy measures long desired by progressives.
The provision in question would lower the reporting threshold to $600 or more for 1099-K reporting and eliminates the transactions threshold. Currently, one is only required to report when there is more than $20,000 in sales and more than 200 transactions in a year. The proposal also extends the 1099-K reporting to "specified electronic payment processors."
This would impact freelancers and independent contractors including freelancers compensated via PayPal, Etsy sellers, Airbnb hosts, Uber and Lyft drivers, food delivery couriers, and others participating in the sharing economy.
This provision would end up harming low- and middle-income contractors, small businesses, and freelancers, many of which have been devastated by the coronavirus pandemic. Implementing new, burdensome reporting rules will only do more damage. It is quite ironic that a provision like this may be included in the so-called “American Rescue Plan.”
The House plans to vote on the stimulus package today, so Democrats are trying to rush these provisions through with no debate or public scrutiny.
Democrats last enacted burdensome new 1099 reporting requirements in Obamacare, when they required businesses to send 1099 forms for all purchases of goods and services over $600 annually.
Soon after this provision was signed into law, the National Taxpayer Advocate raised concerns that these reporting requirements would cause “disproportionate” harm to small businesses and do little to improve tax compliance.
This provision was so unpopular that it was quickly repealed in 2011 with a bipartisan vote of 87 to 12 in the Senate and 314 to 112 in the House. The Obama administration even hailed repeal of the provision a “big win” for small businesses in a press release:
“Today, President Obama signed a law that removes the expanded ‘1099’ reporting requirement from the Affordable Care Act. This is a big win for small businesses.
The SBA and President Obama supported repealing this provision, which would have required businesses to send 1099 forms for all purchases of goods and services over $600 annually. With this bipartisan effort, we have removed a requirement that would have been an undue barrier to small business growth.”
This provision being rushed through today is eerily similar to the Obamacare reporting requirement.
We should not make the same mistakes again. Expanding reporting requirements for 1099-K receivers will harm independent contractors, small businesses, and freelancers. Increasing compliance costs and the regulatory burden on already-struggling workers and small business owners is especially alarming given they have been disproportionately harmed by the pandemic.
Photo Credit: Kentucky Democratic Party
Costly Real-Times Sales Tax Collection Proposals would Hurt Small Businesses
Massachusetts is home to the 16th worst Business Tax Climate in the United States, according to the Tax Foundation. Aside from high taxes and a poorly structured code, small businesses in Massachusetts contend with soaring rent and costly regulatory regimes. Despite all of this and after suffering from a year of economic downturn, pandemic-induced lockdowns, and new expenses, small businesses in Massachusetts face even more new fees and regulations from their state government.
Members of the Massachusetts legislature are again considering a real-time sales tax remittance requirement for retailers, which does not increase revenue for state coffers like other tax grabs, but does impose significant new costs on employers at a time when many businesses are struggling just to stay open. While this misguided proposal wouldn’t raise any new revenue, a real-time sales tax collection and remittance requirement would force businesses to create an entirely new payment system that would saddle employers with new compliance costs, further reducing the job-creating and sustaining capacity of Bay State small businesses while raising new privacy concerns for consumers.
The retail infrastructure required to fully comply with a real-time sales tax remittance mandate does not exist. Current payment processors only collect a final purchase amount and aren’t built to collect the data required to remit a sales tax instantaneously. As a result, the real-times sales tax requirement some on Beacon Hill are calling for would force businesses and financial institutions to build new systems from scratch in order to comply, all to generate no new revenue, just earlier collection. The State Tax Research Institute estimatesthat this process would cost businesses almost 1.2 billion dollars in costs.
Aside from the added costs, the real-time sales tax proposal raises significant consumer privacy and information security questions. The current sales tax collection and remittance system is already a complex web that requires coordination from multiple government agencies and stakeholders. Any new information needed to make a transaction compliant presents another point of attack for bad actors to access even more consumer information.
Forcing the nation’s first real-time sales tax requirement on employers would only serve to make Massachusetts a more costly and less hospitable place to do business and invest. The real-time sale tax proposal being advocated for in Massachusetts would inflict pain on in-state employers, with no gain for state coffers. This misguided policy would create no additional revenue for the state. It would only levy new rules and associated costs for businesses that are just beginning to recover from the adverse effects of the pandemic-driven downturn. Several state legislatures have proposed and eventually rejected instant sales tax remittance because they ultimately understood that it was an onerously expensive and unnecessary policy that brought no new revenue to the state. Massachusetts lawmakers should heed the lessons from those failed attempts.
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