Senator Wyden Introduces a Tax Hike on Small Businesses

Share on Facebook
Tweet this Story
Pin this Image

Posted by Isabelle Morales on Wednesday, July 21st, 2021, 9:50 AM PERMALINK

Senate Finance Committee Chairman Ron Wyden (D-OR) has introduced the so-called, ‘‘Small Business Tax Fairness Act,’’ which imposes a tax hike on small businesses by limiting the Small Business Deduction. This tax hike would hurt small businesses' ability to reinvest money back into new jobs, higher wages, and business growth at a time when small businesses are just beginning to recover from shutdowns and restrictions. 

Specifically, the bill limits the Small Business Deduction in the Tax Cuts and Jobs Act, which allows pass-through businesses to take a deduction of up to 20 percent for qualified business income that is available under Section 199A. Pass-throughs include sole proprietorships, partnerships, LLCs, and S-corporations. These are entities that are taxed at the individual owner level and are comprised overwhelmingly of small businesses. This provision enables small businesses to invest more in employee compensation, new hires, capital, or other avenues for business growth. If this proposal along with Democrats’ other tax proposals are passed, it would impose for many small businesses a top tax rate of 39.6 percent. 

The majority, or 64 percent, of pass-throughs in 2011 had fewer than five employees while nearly 99 percent had fewer than 500 employees, according to the Congressional Research Service. Of the 26 million businesses in 2014, 95 percent were pass-throughs. Pass-through businesses also account for 55.2 percent, or 65.7 million of all private sector workers.

In this way Senator Wyden’s bill would be a direct tax hike on a major amount of small businesses. 

Further, this deduction has been incredibly helpful for small businesses. According to NFIB’s Small Business Introduction to the Tax Cuts and Jobs: Part I survey, “55 percent of small business owners say that the deduction is “very important” with another 29 percent say it is “somewhat important.”” In fact, 90 percent of small business owners support permanently extending the Small Business Deduction.  

One example of this is the Cranston Material Handling Equipment Corp in McKees Rocks, Pennsylvania: 

“Like many business owners, I pay quarterly estimated taxes,” Cranston testified. “In order to pay those taxes, I take cash from my company each quarter. Those payments suck my working capital right out of my business quarter after quarter. Under the Tax Cuts and Jobs Act’s new Section 199A, I now qualify for a 20 percent deduction on my pass-through income. In real terms, this means I will be able to keep between $1,200 and $2,500 a quarter in my business that I would otherwise have paid in taxes. The ability to keep $5,000 to $10,000 a year in my company is a big deal to a small business owner like me.” 

While characterized by Wyden and other Democrats as a “giveaway” or “loophole” for the wealthy, the Small Business Deduction is limited to prevent taxpayers from taking advantage of the tax code by improperly allocating wage income, which is paid by the individual, as business income. 

One of the main limitations within Sec. 199A is a wage limitation combined with a capital limitation. The wage limitation applies to taxpayers with greater than $315,000 in income for joint filers or $157,500 for single filers and is phased in over the next $100,000 or $50,000, respectively. 

Past this threshold, the 199A deduction is limited to the greater of 50 percent of a business’s W-2 wages or 25 percent of W-2 wages plus a capital limitation of 2.5 percent of the “unadjusted basis” immediately after acquisition of all qualified property. 

At a time when small businesses especially have been hit hard, Senator Wyden’s proposal is out-of-touch, short-sighted, and could be incredibly harmful. There are tens of millions of pass-through businesses, and their 65.7 million workers, that would be harmed by the elimination of the deduction, having serious implications on wages, jobs, and economic growth. 

Photo Credit: New America


Texas Lawmakers Aim To Deliver Property Tax Relief

Share on Facebook
Tweet this Story
Pin this Image

Posted by Dennis Hull on Tuesday, July 20th, 2021, 5:41 PM PERMALINK

Skyrocketing local property tax rates pose an escalating threat to the health of the Texas economy. Many in the Texas Legislature believe that by substituting a broader-based sales tax and limiting government spending growth, much needed property tax relief can be delivered.

Over the last 20 years, data reveals that local property tax burdens across Texas have grown faster than the average taxpayer’s ability to pay for them. Despite the impact of several reforms and buydowns over the years, property tax bills for Texas homeowners rank 7th highest in the nation. And though the state boasts an otherwise friendly business climate, Texas localities levy the 15th worst property tax burden on corporations. In fact, property taxes account for around half of all tax revenue in the state, reaching $70 billion in 2020.

Polling shows Texas families are fed up with the status quo. More than three quarters of Texans say property taxes are a “major burden for them and their family,” according to a recent Texas Public Policy Foundation poll. Onerous property tax burdens hurt low-income earners more than any other group. Since the tax is paid annually and the costs compound over time, property taxes are often an obstacle preventing low-income Texas residents from purchasing their first home. It’s also worth noting that property tax burdens are also borne by renters, as the costs are passed along and factored into monthly rent payments.

Americans for Tax Reform is adjuring Texas legislators to pass tax reform aimed at reducing property tax burdens during this summer’s special session. One option, last proposed in HB 958, would limit government spending over the next decade to buy down school district Maintenance and Operations (M&O) taxes using the surplus dollars. Constituting a whopping 43% of the state’s property tax revenue, an elimination of the M&O tax would mean tens of billions in relief for Texans. If growth in state spending were limited to 4% per biennium, with most of the surplus directed toward school district property taxes, M&O costs would be totally expunged in about a decade, putting those dollars back into the pockets of Texas families.

Another proposal, though recently defeated in the legislature, would substitute M&O property taxes with an expanded sales tax. Vance Ginn, chief economist at the Texas Public Policy Foundation, points out that Texas sales taxes have grown at far lower rates than property taxes. While personal income increased by 157% from 2001 to 2020, property taxes went up by 181%. Sales tax collections, meanwhile, rose by just 133%.

Every year, Texas provides more than $43 billion in exemptions, exclusions, and discounts to the sales tax base. By getting rid of many of those special exceptions written into the tax code, Ginn argues, the state would significantly raise its sales tax revenue and provide a more level playing field.

In fact, significantly reducing property taxes through the elimination of sales tax exemptions would actually lead to an overall reduction in the total state and local sales tax rate, thanks to the tens of billions in additional revenue. “We can eliminate nearly half the tax burden in Texas, that’s the key part,” Ginn points out. “You’re cutting the property tax dramatically, and actually lowering the rate from 8.25 percent today for state and local taxes down to 8.21%.”

These two property tax reform options recently proposed in the Texas Legislature would stimulate economic growth and job creation, according to economists at Rice University’s Baker Institute. Just the first year of gradually replacing property taxes with sales taxes could contribute to a $14.3 billion increase in economic output and 217,000 new jobs. Meanwhile, Texas could see a $12.5 billion increase in economic output and 183,000 new jobs after the first year of buying down M&O property taxes using the dollars saved from limits on government spending.

Reduced property taxes in Texas would lead to greater household after tax income, lower rent payments, and other economic benefits for Texas residents. By rectifying onerous property tax burdens, Texas lawmakers can fix one of the two greatest flaws – the other being the imposition of the margins tax – in what is otherwise one of the most competitive business tax climates in the U.S.

Photo Credit: Matthew T Rader

More from Americans for Tax Reform


Jonathan Kanter Would Abandon Consumer Welfare Standard As Antitrust Top Cop

Share on Facebook
Tweet this Story
Pin this Image

Posted by Tom Hebert on Tuesday, July 20th, 2021, 5:00 PM PERMALINK

President Joe Biden has nominated antitrust attorney Jonathan Kanter to lead the Department of Justice’s Antitrust Division. Kanter, who has slammed the long-held consumer welfare standard as “judicial activism,” is the wrong choice to lead the Antitrust Division. 

A chorus of leading Democrats immediately praised Kanter’s nomination. Sen. Elizabeth Warren (D-Mass.) tweeted that Kanter has been a leader in “[strengthening] competition in our markets.” Left-wing academic Zephyr Teachout said that Kanter is an “extraordinary choice.” Reps. Jerry Nadler (D-N.Y.) and David Cicilline (D-R.I.), leaders in the House effort to weaponize antitrust law, also praised his nomination. 

From day one, the Biden Administration and the Democrat Party have not dealt in good faith on antitrust policy, especially with nominations. Lina Khan was confirmed last month in a 69-28 vote, with 21 Republican Senators voting in favor of her confirmation. 

Khan’s confirmation was an unprecedented bait-and-switch operation. Biden nominated Khan to serve as an FTC commissioner, not as chair, and withheld that information throughout the entire nomination process. Hours after the confirmation vote, Biden elevated Khan to FTC Chair, blindsiding Republicans. 

Given this lack of transparency and good faith, no Republican should vote to hand the Biden administration another antitrust victory.  

The DOJ Antitrust Division shares antitrust enforcement authority with the FTC, and Kanter has called Khan a leader of a “new golden age of antitrust enforcement.” This is troubling given that Khan has worked aggressively to shed all bipartisan limits on the FTC’s antitrust authority with barely a month on the job. 

Additionally, Kanter is a longtime opponent of the consumer welfare standard that has undergirded antitrust law for over four decades. Under the standard, antitrust cases are generally only brought against companies that are harming consumers through tangible effects like high prices, reduced product quality, or lack of choice. Antitrust enforcers must also consider whether there is a procompetitive justification for the business conduct in question, and whether the conduct results in countervailing benefits to consumers and competition. 

The consumer welfare standard protects the competitive process, not individual competitors in a marketplace from being beaten by rival firms. This neutral application of antitrust law fosters the robust competition that delivers better prices and better choices for all Americans.

Kanter would abandon the consumer welfare standard, which developed through decades of common law and expert consensus, in favor of a European-style antitrust approach that ignores harm to consumers and focuses on harm to inefficient competitors. Kanter has slammed the consumer welfare standard as “judicial activism” and “central planning,” and argued that courts should not consider economic efficiency when ruling on antitrust cases. 

Antitrust law before the consumer welfare standard was an incoherent mess, and all manner of routine business conduct was considered presumptively unlawful. Enforcers attacked companies purely for their size while ignoring benefits they delivered to American shoppers. Philosopher-king judges handed down incoherent rulings designed to punish political enemies or reward political allies. Famously, Supreme Court Justice Potter Stewart remarked that the only consistency he could find in antitrust law was that “the government always wins.” 

The left wants to destroy the consumer welfare standard precisely because it is a bulwark against judicial activism. Without the standard in place, antitrust law would revert back to the broken tradition of the mid-20th century. Companies afraid of abusive antitrust litigation would pull their punches with competing with rivals, robbing us of the robust competition that delivers the best choices and lowest prices for all Americans. Government bureaucrats would win, American shoppers would lose. 

If confirmed, Kanter would work hand-in-glove with Lina Khan to attack the consumer welfare standard and turn the clock back decades on antitrust law. For these reasons, no Republican should vote to confirm Kanter.

Photo Credit: New America


Lessons We Should Learn About Pandemics and Government Policy on this Week’s “Leave Us Alone” Podcast

Share on Facebook
Tweet this Story
Pin this Image

Posted by Epiphany Ramirez on Tuesday, July 20th, 2021, 1:24 PM PERMALINK

Over the past year, the COVID-19 pandemic has crushed hundreds of thousands of small businesses and caused millions of Americans to lose their jobs. Politicians and public health officials across the country only exacerbated the problem with their myriad of restrictive and overreaching lockdown policies. The next few years will be crucial to America’s economic recovery.  

To discuss what lessons conservatives should learn from COVID-19 and the failure of government polices meant to address the pandemic, ATR President Grover Norquist invited Phil Kerpen onto last week’s episode of Leave Us Alone

On long-term emergencies and extended Governor power, Kerpen clarifies:  

“When something is an emergency for this month and then the next month and then the next month and you get into years, you’ve lost your whole system of government if you have one man rule by dictate by the governor. Rather than things going through the legislative channels and your elected officials having an opportunity to vote on them. We cannot tolerate essentially open-ended rule by dictate by governors.”  

On state government mandated shutdowns, Kerpen explains: 

“The best predictor of whether you have any type of restriction over the past year was the party of the Governor more so than the level of COVID or anything else.  Democrats showed they were extremely restrictionist and they were for every lockdown measure and mask mandate you could imagine.” 

On the true effectiveness of lockdowns, Kerpen emphasized:  

“The kind of lockdown that might actually work, I don’t think is actually possible to be implemented. The kind that we had accomplished nothing except imposing massive economic suffering.” 

Listen to the full episode below: 

 

Leave Us Alone with Grover Norquist is a weekly video and audio podcast found on all major podcast streaming services: 


Biden’s $600 Financial Reporting Requirement Could Lead to Even More Violations of Taxpayer Rights

Share on Facebook
Tweet this Story
Pin this Image

Posted by Isabelle Morales on Monday, July 19th, 2021, 4:45 PM PERMALINK

The IRS Criminal Investigation Division (IRS-CI) regularly violated taxpayers’ rights and skirted or ignored due process requirements when investigating taxpayers for allegedly violating the $10,000 currency transaction reporting requirements, according to a 2017 report by the Treasury Inspector General for Tax Administration (TIGTA). In addition, less than one in ten investigations uncovered violations of tax law.

These findings should be alarming to taxpayers given that President Biden has proposed creating a new comprehensive financial account information reporting regime which would force the disclosure of any business or personal account that exceeds $600. Not only would this include the bank, loan, and investment accounts of virtually every individual and business, but it would also include third-party providers like Venmo, CashApp, and PayPal.

Under the Bank Secrecy Act, financial institutions are currently required to report transactions exceeding $10,000 or multiple transactions in aggregate of $10,000 in a single day. TIGTA examined 306 investigations undertaken by IRS-CI between 2012 and 2014 for violating this law, where a total of $55.3 million assets were seized. During the audit, the sample size was narrowed to 278 investigations, as several did not meet the criterion for inclusion.

TIGTA found that only 8 percent of investigations uncovered violations of tax law. In many cases, IRS-CI had not considered reasonable explanations from those investigated, property owners were not adequately informed of their rights nor informed of seizure of their property, and outcomes in cases lacked consistency, violating the Eighth Amendment to the Constitution. 

Given these findings, a new reporting regime that includes the financial accounts of virtually every business and individual could see countless new cases of taxpayer abuse.

Very few taxpayers investigated by IRS-CI were found to have violated tax law.

Taxpayers investigated by IRS-CI were found to have violated tax law in just 21 of the 252 cases, or 8 percent. Similarly, out of the 278 cases, only 26, or 9 percent, of investigations established that funds came from an illegal source or was involved in another illegal activity.

Instead of establishing tax crimes, it appears that many of these investigations were merely IRS-CI fishing expeditions.

Businesses that dealt with a high number of currency transactions, such as retail, wholesale, service, automobile, restaurant, and gas stations were the primary targets for seizures. This involved the seizing of deposits into a bank account and blocking withdrawals from a bank account, which would likely have disrupted owners’ ability to run their business.

Many of these owners explained that funds withdrawn were simply used for business purchases. Over 90 percent of them were telling the truth.  

Interviews with property owners were primarily conducted after seizures.  

TIGTA found that in 92 percent of cases, interviews were conducted after the seizure of the interviewee’s property, oftentimes on the same day. This is important, as judges did not receive any information from interviews before making their probable cause determination.

In many cases, with explanations given by property owners, judges’ decisions would have been affected. 

This history of seizing property with little to no information outside of simple banking patterns should be alarming to taxpayers, given that the IRS is proposing to force the collection of new banking patterns.

IRS-CI did not consider reasonable explanations given by property owners. 

In many cases, there was little or no evidence that property owners’ reasonable explanations were considered by the IRS-CI. In fact, in 54 of the 229 investigations, owners provided reasonable explanations, such as “depositing business funds, withdrawing funds for inventory purchases, or conducting transactions under $10,000 due to insurance policy restrictions.”

In most instances, TIGTA found no evidence that CI attempted to verify the property owners’ explanations. 

In other cases, the property owners provided other types of reasonable explanations, such as “friends or unidentified bank representatives told them to conduct transactions under $10,000, they did not want to handle more than $10,000 cash due to the time and “hassle” of filling out forms, a desire to avoid bank fees, or for personal safety reasons.”

Again, TIGTA found no evidence that CI considered the defense offered or tried to verify them.  

CI procedures require that all “realistic” defenses are considered before a seized asset is forfeited. Against the rights of these owners, CI agents failed to even verify realistic defenses. Given the failure to follow procedure here, there is a compelling case that these owners’ Fourth Amendment right against unreasonable searches and seizures was violated. 

Taxpayers under investigation were not adequately informed of pertinent information, such as the purpose of the interview, proper agent identification, and that a seizure of their property took place. 

In 171 of 229 cases, special agents did not properly identify themselves as assistants to the United States Attorneys’ Office (USAO) when they were assisting on an investigation or TIGTA did not find evidence they did. This violates the Internal Revenue Manuals (IRM), which states, “that IRS employees... should advise those contacted that they are acting as assistants to the attorney for the government in conjunction with an investigation.” 

In 106 of 229 cases, the agents did not state the purpose of the interview or TIGTA did not find evidence they did. IRM procedures in Title 26 cases require special agents to advise the property owner regarding the purpose of the contact.  

For 181 of 229 cases, TIGTA identified a problem with the information provided to the property owner about the seizure. In 110 cases, the property owners were not informed until the end of the interview that a seizure took place. In 60 cases, the property owners were not informed that a seizure took place. As the TIGTA report explains, “For Title 26 cases, the IRM procedures requires special agents to advise the property owner regarding the purposes of the contact, and we believe this also relates to the requirement in Title 26 cases for special agents to advise the property owner that a seizure took place.” 

Outcomes in cases lacked consistency, violating the Eighth Amendment to the Constitution. 

The Eighth Amendment to the Constitution of the United States, precludes excessive fines and requires that penalties be proportionate to the offense. Additionally, under 18 U.S.C. § 983(g)(1), “a court is required to consider whether a forfeiture is proportional to the gravity of the offense giving rise to it.” 

TIGTA explains that many of the individual outcomes in seizure cases were disproportionate to the conduct of the taxpayers and were disproportionate to the outcomes in cases of similarly situated taxpayers.

Worse, outcomes did not appear to be consistently determined by the facts of the cases but rather by how willing a taxpayer was to engage in costly litigation against the government and the potential of a criminal prosecution if no settlement was reached.

The few cases where structuring cash transaction was proven, often through owners’ own admission, is where the most disproportionate outcomes were identified: 

“The most disproportionate outcomes identified for our sample results included cases for which the property owners were criminally charged and entered into plea agreements solely for legal source structuring. In nine cases from our sample, legal businesses and their owners were indicted for structuring cash transactions for which there was no evidence of any unlawful conduct other than structuring. The businesses included water amusement parks, pharmacies, used car sales, and coin and stamp dealers.” 

Disproportionate outcomes are a tell-tale sign of a violation of Eighth Amendment rights, as these rights demand proportionate penalties for the offense itself. The IRS-CI’s practice of determining outcomes by taxpayers “risk tolerance” is a dreadful, egregious violation of their rights.  

TIGTA found numerous cases where IRS-CI failed to uncover tax crime, violated taxpayers’ due process rights, failed to notify taxpayers of pertinent information, and improperly determined outcomes in violation of the Constitution.

Given that these investigations were conducted due to possible violations of the $10,000 currency transaction threshold, the Biden proposal to create an entirely new reporting regime for financial accounts that exceed $600 should be alarming to taxpayers. If this proposal is implemented, it is inevitable that we will see new cases of the IRS targeting and harassing taxpayers.

Photo Credit: IRS-CI


New York City Council Proposal Places Consumer Privacy at Risk and Hurts Small Businesses

Share on Facebook
Tweet this Story
Pin this Image

Posted by Karl Abramson on Monday, July 19th, 2021, 3:57 PM PERMALINK

Earlier this morning, Americans for Tax Reform wrote to New York City’s council, urging them to oppose Intro 2311, a bill that would force meal delivery services to share private consumer data with restaurants. 

Intro 2311 would be a disaster for consumers and businesses, placing consumer security and safety and risk, and exposing small family-owned restaurants to significant legal liability” said Director of Consumer Issues Tim Andrews. “With no privacy safeguards in place, customer’s private details could be sold to third parties without their consent, restaurant staff could know the personal addresses of customers subjecting them to stalking and harassment, as has occurred in other countries, and the lack of any security provisions means consumer private data could be easily hacked.” 

Andrews continued: “This Bill is not only bad for consumers; it is bad for businesses. Family-owned restaurants don’t have the resources to protect their data from being extorted in increasingly common ‘ransomware’ attacks. Security breaches would not only harm users, but they could also force small businesses to cease operations as a result of multi-million-dollar legal liability costs, in addition to the inevitable loss of customers.” 

Andrews added: “Consumer data is one of the most valuable assets of the modern era. To allow restaurants to sell this private information to credit firms, banks, political campaigns, or unscrupulous bad actors with no privacy protections whatsoever violates every rule of sound public policy. Should the very delivery firms that were responsible for keeping restaurants in businesses, and families fed, throughout the pandemic be forced to turn over their valuable data for free to businesses unable to manage it securely, all New Yorkers will suffer as a result."

The full letter can be read here

Photo Credit: Jörg Schubert

More from Americans for Tax Reform


Lisa Scheller First to Sign “No New Taxes” Pledge in PA-07 Race

Share on Facebook
Tweet this Story
Pin this Image

Posted by Epiphany Ramirez on Monday, July 19th, 2021, 2:37 PM PERMALINK

Americans for Tax Reform (ATR) commends congressional candidate Lisa Scheller for becoming the first candidate in Pennsylvania’s Seventh Congressional District election to sign the Taxpayer Protection Pledge, a written commitment to Keystone State taxpayers that they will oppose and vote against all tax hikes. 

Candidates running for public office like to say they will not raise taxes, but often turn their backs on the taxpayer once elected. The idea of the Taxpayer Protection Pledge is simple enough: Make them put their no-new-taxes rhetoric in writing, so the promise is much harder to break. 

For those candidates who refuse to sign the Pledge, voters should wonder why this politician chooses to leave the door open to tax hikes. 

“Pennsylvania voters are looking for solutions that get Americans back to work and grow the economy. Signing the Taxpayer Protection Pledge and holding the line on taxes is the first step in that process,” said Grover Norquist, President of Americans for Tax Reform 

There are currently 178 Pledge signers in the U.S. House and 44 Pledge signers in the U.S. Senate. 88 percent of all congressional Republicans have made the written commitment to oppose higher taxes. In contrast, ZERO congressional Democrats have made that promise.  

President Joe Biden has already promised a slew of tax increases – totally over $3.42 trillion. These tax hikes range from repealing the Trump tax cuts to an increase in the Death Tax and higher energy taxes. 

“Voters have a right to know where candidates stand on taxes before heading to the voting booth. The Taxpayer Protection Pledge is a simple litmus test that tells voters I’ll work to protect your wallet. I applaud Lisa Scheller for her commitment to the taxpayers of Pennsylvania and I encourage all candidates running in this race to make the same commitment today,” continued Norquist.  

New candidates sign the Taxpayer Protection Pledge regularly. For the most up-to-date information on this race or any other, please visit the ATR Pledge Database

Photo Credit: The Morning Call


Maine's New Recycling Law Is a Regressive Tax That Will Harm Consumers

Share on Facebook
Tweet this Story
Pin this Image

Posted by Dennis Hull on Monday, July 19th, 2021, 12:35 PM PERMALINK

Low-income Mainers are already struggling with record high inflation and the twelfth highest state and local tax burden in the country. But a recycling law signed by Governor Janet Mills on Tuesday will make matters worse for those residents with higher prices at the grocery store and on other goods, doing the most harm to families who can least afford the higher costs.

The new program, known as Extended Producer Responsibility (EPR), will charge packaging manufacturers for collecting and processing recyclable materials, in addition to fees for discarding non-recyclable packaging. The Maine Department of Environmental Protection will set a packaging fee schedule on producers based on the per-ton costs of recycling their materials.

While environmentalists and other proponents of the program claim it will lead to funding for new recycling equipment and more efficient procedures, there is no evidence the new law will reduce the amount of trash in landfills. Nor will it improve recycling technology or allow for local tax relief, as some backers of the EPR program have claimed.

Instead, the EPR program will serve as a regressive, hidden tax as producers shift their higher costs onto consumers. Dr. Calvin Lakhan, a researcher at York University in Toronto, estimates that consumer prices will skyrocket anywhere from $99 million to $134 million every year as a result of the EPR program. For a family of four in Maine, monthly costs are estimated to rise between $32 and $59, thanks to higher costs on products that use disposable packaging.

Though the burden is concealed and indirect, all Maine residents will ultimately bear the economic consequences of the EPR legislation. But for low-income individuals and families, who already struggle to afford basic necessities, higher prices at the grocery store will have a far weightier impact.

From May 2020 to May 2021, Maine saw inflation of 6.6% – the largest rise in the final demand index since the Bureau of Labor Statistics started tracking the figure in 2010. Compared to a national rate of 4.9% over that same period, low-income Mainers are already struggling more than their friends and family in other states. The EPR program will cause even further price inflation during a period when those residents would be better served with tax relief.

At the same time that Governor Mills is imposing what is effectively a regressive tax hike, she’s shunning efforts to tax upper income filers. Lawmakers considered several bills to increase taxes on the wealthy during this year’s legislative session in Maine. LD 498 would have hiked the top income tax rate from 7.15% to 10.15%, an increase of more than 41%, while another bill would have raised the corporate tax rate from 8.93% to 12.4%. But even if they had passed, those bills would never have become law due to Governor Janet Mills’ firm opposition to the proposals.

While she won’t support a direct, progressive tax hike on the wealthy, Governor Mills takes little issue with imposing a hidden, regressive one that harms her poorest residents the most. Mills will have a tough time defending that duplicitous decision against her potential Republican challengers in 2022.

Maine was the first to impose an EPR fee scheme, but it may soon have company. Oregon lawmakers recently passed a similar EPR program under SB 582, which is awaiting Governor Kate Brown’s signature. That bill would raise recycling costs by 30% while only raising the recycling rate by 3%, according to a letter signed by nearly 40 manufacturing and business groups. Like in Maine, those higher costs will be passed on to consumers with higher prices for basic goods, many of which use disposable packaging. If Governor Brown blesses the program with her signature, Oregon will become the second state in the nation to impose a regressive recycling tax on its residents.

Expect lawmakers and governors in other states will continue to pursue EPR legislation in the coming years. This effective regressive tax first enacted in Maine should serve as a cautionary tale to avoid, and not a model for other states to emulate, though progressives will certainly try.

Photo Credit: Blahedo


Removal of $40 Billion in Extra IRS Funding From Senate Bill is Win for Taxpayers

Share on Facebook
Tweet this Story
Pin this Image

Posted by Alex Hendrie on Friday, July 16th, 2021, 3:05 PM PERMALINK

Media reports indicate that $40 billion in new funding for the IRS has been removed from the bipartisan Senate infrastructure proposal. The purpose of this new IRS funding is not to help taxpayers navigate the tax code or receive better customer service, but to raise $100 billion in new revenues. It would have empowered the IRS to audit and harass millions of American families, self-employed people, and small businesses including cash heavy businesses like nail-salons, barbershops, and food trucks.

While the removal of $40 billion in IRS funding from the Senate package is a win for taxpayers, President Biden and Congressional Democrats are pushing to include $80 billion in new funding for the agency in the partisan $3.5 trillion proposal that will be passed through budget reconciliation. This funding would add 87,000 new IRS agents that Biden claims will squeeze taxpayers for an additional $787 billion. 87,000 IRS agents could fill Nationals Park twice.

Any new IRS funding should be alarming given the IRS has a history of incompetence and corruption. In fact, just a few weeks ago, the progressive group ProPublica announced it had the tax returns of thousands of taxpayers stretching back 15 years. This sensitive taxpayer data was either obtained through an unauthorized leak by an IRS employee or through a data breach – either way the IRS failed to safeguard taxpayer information.

65 Percent of Voters say the IRS has Too much Power

A June 19 - 22 Fox News National Survey of 1,001 registered voters asked if the IRS has "too much power." 65 percent said yes, 31 percent said no. The same question asked in June 2019 produced a result of 60 percent yes, 34 percent no.

More IRS Funding Will Mean Thousands of New IRS Agents  

Legions of new IRS agents will be unleashed for invasive and time-consuming audits of middle class Americans and small businesses.   

As previously reported by CNBC, experts say a fattened-up IRS would go after small businesses that necessarily depend on cash transactions:

Certain small businesses may face an audit under the plan.

“I think the industries that should be concerned are those in cash,” said Luis Strohmeier, a Miami-based CFP and partner at Octavia Wealth Advisors.

He expects the agency to scrutinize cash-only small businesses like restaurants, retail, salons and other service-based companies.]

Even Obama-era IRS chief John Koskinen – a longtime advocate of increasing the IRS budget – thinks President Joe Biden’s proposal to increase IRS funding by $80 billion is too much.  

As reported by the New York Times:  

“I’m not sure you’d be able to efficiently use that much money,” Mr. Koskinen said in an interview. “That’s a lot of money.”  

Rather than fix the agency's longstanding mismanagement, ineptitude and abuse problems, Biden's approach will make the problem worse.

IRS Funding is Yet Another Way to Funnel Taxpayer Money into Democrats’ Campaigns.  

New IRS funding will be a boon for the union that represents IRS employees. This union overwhelmingly supports Democrat candidates so new IRS funding will also shovel more money into Democrat campaign coffers:   

  • The left-wing National Treasury Employees Union represents 150,000 taxpayer-funded federal employees across 31 departments and agencies. The NTEU is famous for aggressive use of lawsuits in order to advance Democrat union priorities.   
     
  • NTEU collects dues from roughly 70,000 IRS employees, nearly half of NTEU’s total membership.  
     
  • NTEU shovels 97 percent of their money into Democrat campaign coffers. In the 2019-2020 campaign cycle, NTEU’s political action committee raised $838,288. Out of $609,000 in spending on federal candidates, an overwhelming 97.04 percent went to Democrats.   
     
  • IRS employees regularly perform Democrat union work on the taxpayer dime. In fiscal year 2013, IRS employees spent over 500,000 hours on union activity, costing taxpayers $23.5 million in salary and benefits. To add insult to injury, the IRS had at least 40 out of 201 workers solely devoted to union activities that made $100,000. In 2019, 1,421 IRS and other Treasury Department employees spent 353,820 hours of taxpayer-funded union time (TFUT), costing $19.77 million in salary and use of government property.

 

Under Biden, the IRS Will Snoop on Your Venmo Account, Bank Accounts, and more. 

The Biden administration also wants to sic the IRS on your Venmo account and bank accounts. As part of the proposal, banks and third-party payment providers, like Venmo and CashApp would be required to report ALL account holders’ aggregate account outflows and inflows to the IRS.  

President Biden claims that this proposal is designed to “crack down on millionaires and billionaires who cheat on their taxes.” However, it is unclear how monitoring Venmo accounts – many of which are held by younger Americans – contributes to this goal. The average Venmo transfer amount is $60 and is popular among young people, with over 7 million Venmo users belong in the 18-34 age group. For users who have undergone identity verification, the weekly spending limit is $7,000. These trends exist for most third-party payment providers. It is hard to see how millionaires and billionaires are using Venmo or CashApp to launder mass amounts of money.  

The IRS will use these powers against Americans of all income levels. Requiring banks and third-party payment providers to report this kind of information is an indefensible invasion of privacy. Giving the IRS access to this private information is a disaster waiting to happen.  

New IRS Funding Would Reward Incompetence and Irresponsibility.  

The IRS has proven time and time again it cannot spend responsibly and complete the most basic of tasks. The agency needs reform, not more money and more power.   

Several audit reports have demonstrated how the agency’s inability to do its job is due to incompetence, not lack of funding:  

  • A Treasury Inspector General for Tax Administration (TIGTA) report on the 2021 Filing Season found that almost 40 percent of printers were not working at tax processing centers in Ogden, Utah and Kansas City, Missouri. However, in many cases the only thing wrong with the printers is that no employee had replaced the ink or emptied the waste cartridge container: “IRS employees stated that the only reason they could not use many of these devices is because they are out of ink or because the waste cartridge container is full.”  
     
  • This year, despite having funding for new hires, the IRS only achieved 37 percent of their hiring goal. They had trouble onboarding new hires as well, as it was “difficult to find working copiers (as noted previously) to be able to prepare training packages.”  
     
  • In 2016, the IRS has lost track of laptops containing sensitive taxpayer data. TIGTA estimates that the IRS had failed to properly document the return of 84.2 percent, or more than 1,000 computers due to be returned by contract employees.   
     
  • A TIGTA report in 2017 showed that the IRS rehired more than 200 employees who were previously employed by the agency, but fired for previous conduct or performance issues.
     
  • Each year the IRS hangs up on millions of callers -- a practice they refer to as “Courtesy Disconnects.” Currently, if you call the IRS, you have a 1-in-50 chance of reaching a human being.   
     
  • According to the National Taxpayer Advocate’s 2014 Annual Report to Congress the IRS was unable to justify spending decisions. As the report stated: "The IRS lacks a principled basis for making the difficult resource allocation decisions necessitated by today’s tight budget environment.”   
     
  • The agency has repeatedly failed to compile legally required tax complexity reports. These reports are supposed to contain the IRS's specific recommendations on how to make the tax code easier to comply with. Since 1998, the IRS has done so just twice – in 2000 and 2002.   
     
  • In 2015, the IRS was spending $1,000 an hour hiring a litigation-only white shoe law firm for an investigation, despite having over 40,000 employees dedicated to enforcement efforts.    
     
  • In 2015, the agency has been caught red-handed wasting taxpayer dollars on Nerf footballs, the world’s largest crossword puzzle, extravagant $100 dollar lunches, and more.

 

As Norquist wrote in a recent op-ed, “The IRS should not be rewarded for failing to reform, failing to obey the law, failing to fire those who break the law, and spending tax dollars to act as the enforcer for a partisan political machine.”

Photo Credit: Ted Eytan


$3.5 Trillion Democrat Spending Blowout Contains Anti-Worker PRO Act

Share on Facebook
Tweet this Story
Pin this Image

Posted by Tom Hebert on Thursday, July 15th, 2021, 10:30 AM PERMALINK

The $3.5 trillion spending blowout announced by Senate Democrats will include the job-killing “Protecting the Right to Organize Act,” according to media reports. 

The PRO Act would benefit Big Labor at the expense of the American worker. The PRO Act’s inclusion in the spending blowout gives further insight into the Senate Democrats’ proposal, the details of which are below: 

  • The PRO Act nullifies Right to Work laws across the country, which protect 166 million Americans in 27 states. Right to Work laws prevent employers from being able to force workers to join a union as a condition of employment. If Right to Work laws were banned, every American worker would be forced to choose between paying a union boss and putting food on the table.

  • The PRO Act enacts a stringent three-step test that would force independent contractors to reclassify as W-2 employees. This would jeopardize the livelihoods of the more than 59 million Americans that engage in freelance work.

  • Codify the NLRB’s disastrous 2015 Browning-Ferris Industries decision that muddled the definition of “joint-employer,” overturning decades of labor law precedent. If implemented, this would decimate the franchise business model that employs 7.6 million Americans in 733,000 locations.

  • Change union elections to allow union bosses to collect cards from workers to demonstrate support for the union, rather than holding a secret ballot election. If labor bosses fail to unionize a workplace via a secret ballot election, the union can appeal to the NLRB for a second chance to unionize the workplace.

  • Violate worker privacy by forcing employers to give union organizers sensitive employee contact information, including home addresses, cell phone, shift information and landline numbers, and email addresses. This would allow union bosses to intimidate workers into joining unions at homes or workplaces. 

In addition, the PRO Act would increase costs for employers, harming businesses and consumers. According to the American Action Forum, the independent contractor provision would impact 8.5% of GDP and cost between $3.5 billion and $12.1 billion annually. The joint employer provision would cost between $17.2 billion and $33.3 billion annually for the franchise business sector and affect 44% of private sector employees. Finally, the provision that restricts employers from replacing strikers permanently could cost employers an additional $1.9 billion every year.

The PRO Act is a return on the investment of the hundreds of millions of dollars that Big Labor poured into the Democrat party's campaigns to capture the House, Senate, and White House. Employers will be able to force workers into unions as a condition of employment, and union bosses will have access to personal information to bully workers into compliance. Tens of millions of independent contractors would face losing their jobs.


×