Trump FY 2021 Budget Expands Health Savings Accounts to Working Seniors

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Posted by Alex Hendrie on Monday, February 10th, 2020, 1:50 PM PERMALINK

President Trump’s Fiscal Year 2021 budget calls for expanding tax advantaged Health Savings Accounts (HSAs) by allowing working seniors eligible for Medicare to continue using their account. This will reduce taxes, promote patient centered healthcare, and encourage robust saving.

Since they were created in 2004, HSAs have become a popular and successful vehicle for individuals to spend and save their own money for a wide array of healthcare needs. However, under current law, workers who are Medicare eligible are not allowed to contribute to an HSA even if they have an HSA qualified plan. The budget fixes this needless restriction.

HSAs are used in conjunction with low premium, high deductible health insurance plans and can be used to pay for many expenses, including doctor visits, prescription drug costs, and hospital care.

Today, HSAs are used by almost 30 million American families and individuals. Annual contributions to an HSA in 2020 are capped at $3,550 for an individual and $7,100 for a family. Both an individual and employer can make contributions.

HSAs have been successful in promoting efficient healthcare spending that prioritizes consumer driven healthcare over one-size-fits-all care. 

Funds are controlled by the individual and follow them between jobs, creating an incentive to spend funds wisely. Research shows that families and individuals that utilize HSAs spend less on health care and use fewer medical services without forgoing necessary primary and preventative care.

HSAs can be a significant vehicle to pay for healthcare expenses. An HSA user can accumulate as much as $600,000 after contributing to an account for 40 years assuming a rate of return of 5 percent, according to the Employee Benefit Research Institute. 

HSAs also reduce taxes for American families. HSAs offer triple tax benefits to users – contributions made are tax free, investments are earned tax free, and payments made for qualifying health expenses are tax free.

Allowing Medicare-eligible seniors to continue using their HSAs will continue the success of these tax advantaged accounts in promoting healthcare savings and lowering taxes.

Photo Credit: Flickr - Gage Skidmore


Trump FY 2021 Budget Repeals EV Tax Credit

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Posted by Alex Hendrie on Monday, February 10th, 2020, 1:29 PM PERMALINK

President Trump’s Fiscal Year 2021 budget proposal calls for repeal of the Electric Vehicle Tax Credit.

This is the right policy. The EV credit is regressive, wasteful, and distortionary tax policy that arbitrarily benefits one type of car over others.

The tax code should promote economically efficient decisions by limiting the number of distortionary provisions. The electric vehicle tax credit directly undermines this goal and should be repealed as part of revenue neutral or revenue reducing tax reform.

Under current law, the EV tax credit grants a taxpayer purchasing a qualifying vehicle a credit of between $2,500 and $7,500 depending on the vehicle sold. The credit is capped at 200,000 vehicles per manufacturer at which point it begins to phase out.

This credit is highly regressive with a majority of the benefits of this credit go to residents of wealthy, blue states. Almost 80 percent of the credit goes to those making $100,000 or more per year. 

Further, according to 2019 projections of electric vehicle sales in the United States, California will account for over 61 percent of all EV sales in the nation. California’s clear domination of EV market share occurs despite the fact that California only accounts for roughly 12% of all licensed U.S. drivers.

Unsurprisingly, this type of tax subsidy is unpopular with the American people with 67 percent of voters oppose subsidizing electric vehicles.

The credit is also rife with waste and fraud. A recent report by the Treasury Inspector General for Tax Administration (TIGTA) found “the IRS does not have effective processes to identify and prevent erroneous claims.” Between 2014 and 2018, roughly 16,500 taxpayers received $73.8 million in potentially erroneous EV tax credits. A previous 2011 report found that as many as one in five EV credits claimed went to individuals who did not qualify for the credit.

Senators Ron Johnson (R-Wis.), Chuck Grassley (R-Iowa), and John Barrasso (R-Wyo.) led a letter last month urging for more information on these fraudulent claims.

Congress should follow the lead of the President repealing the EV credit as part of revenue-neutral tax reform.

Photo Credit: Flickr - Gage Skidmore


President Trump’s FY 2021 Budget Calls for Further Middle Class Tax Relief

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Posted by Alex Hendrie on Monday, February 10th, 2020, 1:09 PM PERMALINK

President Trump’s Fiscal Year 2021 budget calls for further tax relief for American families through the extension of the individual Trump tax cuts.

Thanks to the Trump tax cuts, a family of four earning the median income of $73,000 is seeing a reduction of federal income taxes of $2,000 – a 60 percent cut. Similarly, a single parent with one child making the median income of $41,000 is seeing a $1,300 tax cut, a 73 percent reduction in federal income taxes. 

However, because of arcane Senate procedure and the refusal of Democrats to support the tax cuts, the individual tax reductions could only be enacted for 8 years – through 2025.

Many Democrats in Congress and on the campaign trail have proposed repealing these tax cuts. This would be a significant tax increase for American families.

According to the Heritage Foundation, the average American would be almost $27,000 poorer over the next ten years if the tax cuts were repealed. The average family of four would be almost $46,000 poorer.

The Trump budget will make the Trump tax cuts permanent, extending numerous provisions including:

  • The doubling of the standard deduction from $6,000 to $12,000 for an individual and $12,000 to $24,000 for a family. Thanks to this reform, 90 percent of taxpayers are now taking the standard deduction, dramatically simplifying tax compliance as fewer individuals are itemizing.
  • The reduction of nearly every individual income tax bracket.
  • The doubling of the child tax credit from $1,000 to $2,000. The CTC is claimed by roughly 22 million American families.
  • The 20% small business deduction for pass-through businesses (LLCs, partnerships, S-corporations etc.). There are over 26 million pass-through entities in the U.S.
  • The doubling of the death tax exemption from $5.5 million to $11 million. This reform reduced the number of estates owing the death tax from 5,500 to 1,700.
  • An expansion of the thresholds at which the Alternative Minimum Tax hits individuals. Because of this tax cut, the AMT now kicks in when a taxpayer makes annual income of $1 million. The number of families paying the AMT has dropped from 5 million to 200,000.

Photo Credit: Flickr - Gage Skidmore


35 Percent: Buttigieg Wants USA to Have the Highest Corporate Tax Rate in the Developed World

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Posted by John Kartch on Monday, February 10th, 2020, 10:50 AM PERMALINK

On Sunday Pete Buttigieg repeated his call for a drastic tax increase on U.S. companies. He wants to raise the 21% corporate tax rate all the way up to 35% by repealing the Tax Cuts and Jobs Act. This would give the U.S. the highest corporate tax rate in the developed world.

"We can make sure that we reverse the corporate tax cuts of the Trump era and ask the wealthy to pay their fair share," Buttigieg said during a town hall in Nashua, New Hampshire on Sunday.

Buttigieg has formally called for the repeal of the entire Tax Cuts and Jobs Act.

As reported by CNBC on Jan. 10:

His campaign said the plan will be paid for by reforming the capital gains tax and repealing the 2017 GOP tax overhaul, reforms that had been previously disclosed.

Before President Trump signed the Tax Cuts and Jobs Act into law, the U.S. had the highest corporate tax rate in the developed world: 35 percent. The tax cuts permanently reduced the corporate tax rate to a more competitive 21 percent. 

State corporate taxes average 6.0 percent across the U.S., so if Buttigieg reversed the tax cuts he would end up imposing a combined average corporate rate of 41 percent. 

This would give the U.S. a much higher corporate tax rate than the United Kingdom (19 percent), China (25 percent), Canada (26.8 percent), and Ireland (12.5 percent). In fact, Buttigieg’s approach would impose a tax rate much higher than the current combined corporate rate across the 36 member Organisation for Economic Development and Cooperation (OECD), which is currently 23.7 percent.

An increase in the corporate tax rate would also directly raise the cost of utility bills in all 50 states.

In addition, Buttigieg has called for a full repeal of the Tax Cuts and Jobs Act. Such repeal would hit the middle class hard.

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, higher than the United Kingdom (19 percent), China (25 percent), Canada (26.8 percent), and Ireland (12.5 percent). 
  • 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 Indiana, where Buttigieg was the mayor of South Bend, households who made the state average income of $55,476 received a tax cut of around $1,438 according to a recent Tax Foundation report.

Even left-leaning and establishment media outlets confirm the good news arising from the Tax Cuts and Jobs Act:

If you want to stay up-to-date on their threats to raise taxes, visit www.atr.org/HighTaxDems.


Repealing Right-to-Work Would Be Economy-crushing Mistake for Virginia

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Posted by Tabitha Jackson on Sunday, February 9th, 2020, 12:15 PM PERMALINK

Virginia has enjoyed great economic prosperity over the past decades and has been named the best state for business numerous times, but their economy may be in danger since the Democrat-controlled legislature has been pushing the idea of repealing the state’s right-to-work law. Legislation has advanced through the House Labor and Commerce Committee in Richmond.

Virginia’s current right-to-work law provides that no individual will be forced to join a labor union or pay fees to a labor union to work in the place of his or her choice.

According to U.S. Bureau of Labor Statistics, in 2017 union members only accounted for 4.6 percent of wage and salary workers in Virginia.

The states that border Virginia including all have right-to-work laws. Repealing Virginia’s right-to-work law would put existing and future employees at a great disadvantage compared to Virginia’s neighboring states.

The National Institute for Labor Relations Research found in 2019 that the percentage growth in number of people employed in right-to-work states was 10.8%, compared to 5% in forced-unionism states. This same study also showed that the growth in number of residents aged 35-54 was 1.5% in right-to-work states, well forced-unionism states actually lost 7.9% of their residents in that age group.

Right-to-work laws are not anti-union. Rather, they are freedom of association, which is the foundation that a union’s right to organize is based.

Repealing this law would be a hit to Virginia’s economy and forcing workers to join or pay dues to a union just to get or keep a job is not logical.

Photo Credit: Wikimedia Commons

More from Americans for Tax Reform


Joe Biden: "We Are Going To Get Rid of Fossil Fuels"

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Posted by John Kartch on Saturday, February 8th, 2020, 6:02 PM PERMALINK

Joe Biden said during a rally this week that he wants to "get rid of fossil fuels."

Biden said:

"We are going to get rid of fossil fuels."

Referring to protestors who interrupted the event, Biden said:

"That's okay, these guys are okay, they want to do the same thing that I want to do, they want to phase out fossil fuels and we're going to phase out fossil fuels.

Biden also said there would be "no more coal plants."

Biden's hostility to energy industry workers is nothing new, either. In December he suggested if coal miners lose their job due to his policies they should learn to code.

Biden has also said “we should put them in jail” when talking about fossil fuel executives.

Biden also endorsed a carbon tax on the American people, which will force households to pay much higher gasoline, heating, and cooling bills. 

Biden has also endorsed a fracking ban. If elected, Biden's fracking ban will devastate the economies of several battleground states, as noted by Steve Moore in the Wall Street Journal:

Curtailing U.S. oil and gas production would be economically disastrous. At least $1 trillion of U.S. economic output is related to the shale revolution, and more than 1.5 million Americans are employed by the industry. A PricewaterhouseCoopers study for the American Petroleum Institute found that at least four million American jobs are tied to the shale oil and gas revolution in areas like auto production, construction, petroleum engineering, pipe fitting, service stations, steel production and trucking.

Democrats' quest to eliminate these jobs would hurt them in the swing states they'll need to win to unseat President Trump. Ohio and Michigan have a combined total of more than 400,000 workers in the shale industry. Pennsylvania has another 320,000. Colorado and Florida each have more than 200,000 workers in oil and gas.

Pittsburgh has become a global energy hub, and whole towns in Ohio and Pennsylvania that were once left for dead have been revitalized thanks to shale gas and related industries.

Then consider Texas. Liberals have long wanted to turn the Lone Star State blue, or at least purple. But nearly two million Texans are employed in oil and gas and related industries. Many hard-hat workers and truckers employed in the oil-rich Permian Basin earn more than $100,000 a year with overtime. How do you win in and around Houston, Dallas and Midland with a platform that opposes oil and gas?

The truth is, if a Democrat is elected in 2020, they would ban nuclear energy, gas powered cars, plastic straws, plastic bags, coal power plants, fracking, offshore drilling, pipeline building, exporting fossil fuels, and more. 

To view the many tax hikes being pushed by the 2020 candidates visit www.atr.org/HighTaxDems

 


Amy Klobuchar Calls for An "Opioid Tax"

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Posted by John Kartch on Friday, February 7th, 2020, 9:58 PM PERMALINK

Amy Klobuchar on Friday called for a new "Opioid Tax" during the ABC Democrat debate.

"We can put a 2 cents per milligrams tax on opioids that brings in another $40 billion," Klobuchar said.

However, Klobuchar's tax on opioids would end up hurting those who use the medicine for legitimate purposes, since the burden of the tax would be borne by the consumer.

A report by Alex Brill and Women In Government shows that "the tax would do little to discourage inappropriate use, could have the unintended consequence of promoting illicit opioids for some, and would raise the cost of health care generally.”

New CDC data show that illicit fentanyl is what is killing people today.

As ATR has previously noted, a tax on opioid medicine would in fact make the illegal synthetic drug types even more attractive to the people suffering from addiction. 

Klobuchar's proposal is dangerous and would end up only harming more people by punishing them for using medicine needed for legitimate purposes.

To view the many tax hikes being pushed by the 2020 candidates visit www.atr.org/HighTaxDems


Biden: I Will Raise Capital Gains Taxes

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Posted by John Kartch on Friday, February 7th, 2020, 9:17 PM PERMALINK

Joe Biden once again called for an increase in the capital gains tax during the NBC Democrat presidential debate tonight.

"I'm going to raise the capital gains rate so that you pay capital gains at what your tax rate is," Biden said.

Raising the capital gains tax isn't a new issue for Joe Biden, who has said that "every single solitary person" would be required to pay a 40 percent tax on capital gains.

Raising the capital gains tax would harm Americans’ ability to build a nest egg and hurt the value of their homes, farms, and businesses.

Biden’s comments and his long Senate voting record mean voters should expect him to push for capital gains tax hikes if elected. During his time in the Senate, Biden consistently voted against tax cuts on capital gains.

In 2003, Biden voted against the reduction in the capital gains rate from 20 percent to 15 percent. In 2005 and 2006, Biden voted against extending the 15 percent rate.

In 2012, then-Vice President Biden and President Obama insisted the cap gains rate revert to 20 percent.

Biden and Obama then piled on another 3.8 percent capital gains tax hike -- the Net Income Investment Tax -- one of the many tax increases in Obamacare. The 3.8 percent tax hike took effect Jan. 1, 2013.

Currently, long-term capital gains are taxed at zero percent, 15 percent, or 20 percent, depending on income level.

Households subject to Obamacare’s 3.8 percent Net Income Investment Tax end up paying a 23.8% rate. And under Biden’s cap gains scheme, such households will face a 43.4 percent rate.

If you want to stay up-to-date on Democratic candidates and their threats to raise taxes, visit www.atr.org/HighTaxDems.


Biden Calls Out Sanders on Medicare for All: "The idea that middle class taxes aren't going to go up is just crazy."

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Posted by John Kartch on Friday, February 7th, 2020, 9:12 PM PERMALINK

Joe Biden hit Bernie Sanders over his Medicare for All plan during the ABC Democrat presidential debate tonight.

"Bernie says that we have to bring people together and that we have to have Medicare for All. And he says he "wrote the damn thing" but he's unwillling to admit what that will cost...How much is it going to cost? Who is going to pay for it? It will cost more than the entire federal budget we spend now. More than the entire budget. The idea that middle class taxes aren't going to go up is just crazy," Biden said.

At one point last year, Biden said that Sanders Medicare for all plan  "is totally unrealistic and can’t be done."

Biden went on to press Sanders on how much his healthcare plan costs since he hasn't given Americans a price tag for the plan.

While Sanders refuses to give a price tag for his plan, he is quick to place the cost burden on the American people. 

Previously, Biden has given credit to Sanders for being “honest” about his Medicare for All plan, admitting that taxes on the middle class would go up as a result.

Sanders has said that he plans to tax all income over $29,000 to help cover the cost for Medicare for All, which has an estimated cost of $32 trillion to $36 trillion.

If you want to stay up-to-date on their threats to raise taxes, visit www.atr.org/HighTaxDems.


Trump Economy Adds 225K Jobs In January

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Posted by Tom Hebert on Friday, February 7th, 2020, 11:00 AM PERMALINK

President Donald Trump’s economy added 225,000 jobs in January, smashing industry expectations and defying Democrats who said that tax cuts and deregulation were no longer spurring economic growth.

Wage growth for American workers has been at or above 3 percent for the past 18 months, according to the Bureau of Labor Statistics (BLS) report. BLS also highlighted “notable job gains” in industries like construction, transportation, and warehousing. Prior to this streak, wages had not reached 3 percent growth during the previous 10 years. Workers are also experiencing higher wage growth than managers.

In 35 of the past 38 months since Trump was elected, businesses have added more than 100,000 jobs a month. 

The unemployment rate ticked up slightly to 3.6 percent as Americans flooded the job market last month. The labor force participation rate increased to 63.4 percent, the highest level in seven years. 

January’s job growth wildly outpaced expectations by economists surveyed by Dow Jones, who predicted that January would only see 158,000 jobs added. Jobs numbers for November and December were also revised upwards. 

The main takeaway from this jobs report is clear — Trump’s economic agenda is working for American workers. The Republican Tax Cuts and Jobs Act is continuing to grow the economy over two years after Trump signed it into law. 

Businesses have responded to the tax cuts by giving employees higher wages and creating new employee benefit programs, while utility companies are passing tax savings onto consumers in the form of lower rates.

Families are also seeing direct tax reduction – a family of four with annual income of $73,000 (median family income) will see a tax cut of more than $2,058, a 58 percent reduction in federal taxes. 

The establishment press attributed this impressive job growth to the weather. This is nonsense. President Trump’s economic agenda delivered yet another month of strong jobs growth for workers all across the country.

Photo Credit: Gage Skidmore


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