ATR Leads Coalition Letter Opposing IRS Financial Reporting Requirement

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Posted on Thursday, October 7th, 2021, 2:45 PM PERMALINK

Today, Americans for Tax Reform led a coalition letter in opposition to the proposed new reporting regime to have the IRS collect the account inflows and outflows for bank, loan, and investment accounts as well as Venmo, CashApp, and PayPal accounts. President Biden’s plan will result in the targeting and harassment of middle class families along with small and medium sized businesses. The letter was signed by almost 40 organizations.

You can read the letter below or here:

The undersigned organizations write in opposition to the proposed new reporting regime to have the IRS collect the account inflows and outflows for bank, loan, and investment accounts as well as Venmo, CashApp, and PayPal accounts. The Biden administration has proposed subjecting every account exceeding gross inflows and outflows of $600 to this proposal while Senate Democrats have suggested a threshold of $10,000. Either way millions of working-class families including many making less than $400,000 per year will be impacted by this proposal.

This proposal is part of President Biden’s plan to give the IRS $80 billion in new funding over the next decade and hire 87,000 new IRS agents. While Democrats claim they want to go after “the rich” and large corporations, this new reporting regime suggests they will target and harass middle class families and small and medium sized businesses.

Moreover, the reporting requirements impose a burden on banks, the cost of which will be passed on to their customers. It is likely that this cost will be borne most by those at the margin of the banking system, some of whom will be forced out of the system to join the ranks of the underbanked and unbanked.

There are also significant potential privacy violations with this new proposal. The plan could put the data security and personal information of taxpayers at risk at a time that the IRS has repeatedly proven it cannot safeguard taxpayer data.

Several months ago, ProPublica announced that 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.

Unfortunately, this is not an isolated incident. For decades, the IRS has proven incapable of protecting taxpayer data and acting in an impartial way. The IRS has had multiple, serious security breaches, has had employees leak sensitive taxpayer information to the public, and the agency has been caught discriminating against organizations and taxpayers for political gain. 

This malfeasance even extends to existing financial reporting. A 2017 Treasury Inspector General for Tax Administration (TIGTA) report found that the IRS routinely skirted or ignored due process requirements when investigating taxpayers for violating the $10,000 currency transaction requirements that exist under the Bank Secrecy Act. The IRS Criminal Investigations Division (IRS-CI) utilized this reporting to investigate taxpayers that they suspected may be violating the law.

TIGTA found that most of these investigations were fishing expeditions – just 8 percent of taxpayers investigated were found to have broken the law. Instead, the inspector general uncovered numerous examples of IRS overreach including violations of the Eighth Amendment and failure to provide the taxpayer of their basic rights including considering reasonable explanations for exceeding the threshold, providing the purpose of the interview, proper agent identification, and that a seizure of their property took place. 

The IRS has a long record of failing to do its job and targeting and harassing taxpayers. This proposed new financial reporting regime would provide another way for the agency to target taxpayers or lead to taxpayer data being leaked or stolen. Lawmakers should stand with taxpayers and reject this proposal.

Sincerely,

Grover Norquist
President, Americans for Tax Reform

Lisa B. Nelson
CEO, ALEC Action

Bob Carlstrom
President, AMAC Action

Brooke L. Rollins 
President and CEO, America First Policy Institute

Dick Patten
President, American Business Defense Council

Phil Kerpen
President, American Commitment

Brent Wm. Gardner 
Chief Government Affairs Officer, Americans for Prosperity 

Ryan Ellis 
President, Center for a Free Economy

Jeffrey Mazzella 
President, Center for Individual Freedom 

Andrew F. Quinlan 
President, Center for Freedom and Prosperity 

Tom Schatz 
President, Citizens Against Government Waste 

Iain Murray 
Vice President for Strategy, Competitive Enterprise Institute 

Matthew Kandrach 
President, Consumer Action for a Strong Economy 

David McIntosh
President, Club for Growth

Katie McAuliffe 
Executive Director, Digital Liberty 

Jeremy Cerone 
CEO, EliteSafe Inc. 

Adam Brandon 
President, FreedomWorks 

George Landrith
President, Frontiers of Freedom

Garrett Bess
Vice President, Heritage Action for America 

Jon Caldara
President, Independence Institute

Carrie Lukas 
President, Independent Women's Forum 

Heather R. Higgins 
CEO, Independent Women's Voice 

Andrew Langer 
President, Institute for Liberty 

Tom Giovanetti
President, Institute for Policy Innovation

Seton Motley
President, Less Government

Charles Sauer
President, Market Institute

Pete Sepp 
President, National Taxpayers Union 

Keith Erf 
New Hampshire State Representative (Hillsborough 2) 

David Miller 
Southwest Ohio Center Right Chair

Brandon Dutcher 
Senior Vice President, Oklahoma Council of Public Affairs 

Tom Hebert 
Executive Director, Open Competition Center 

Bryan Bashur
Executive Director, Shareholder Advocacy Forum

Saulius “Saul” Anuzis  
President, 60 Plus Association  

Jim Martin  
Founder/Chairman, 60 Plus Association 

Lorenzo Montanari
Executive Director, Property Rights Alliance

Karen Kerrigan 
President & CEO, Small Business & Entrepreneurship Council 

David Williams  
President, Taxpayers Protection Alliance 

Kevin Roberts
CEO, Texas Public Policy Foundation
 

Photo Credit: Cliff from Arlington, Virginia, USA, CC BY 2.0 <https://creativecommons.org/licenses/by/2.0>, via Wikimedia Commons

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Iowa Companies Will Face Higher Taxes Than China and Europe if Dem Bill Passes

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Posted by John Kartch on Thursday, October 7th, 2021, 2:44 PM PERMALINK

Iowa companies will get stuck with higher taxes than China and Europe if the Democrats' reconciliation bill is enacted.

The Democrats' reconciliation bill will saddle Iowa with a combined federal-state corporate tax rate of 33.7% vs. China's 25%.

The bill will also put Iowa companies at a competitive disadvantage vs. Europe: The European average corporate tax rate is 19%.

"As the country tries to recover from a once-in-a-century pandemic, Democrat Cindy Axne must decide if she wants to stick residents with higher taxes than China and Europe," said Grover Norquist, president of Americans for Tax Reform.

The Democrats' $3.5 trillion bill will impose the largest tax increase since 1968. It will raise individual income taxes, small business taxes, corporate taxes, and capital gains taxes.

If passed, the combined federal-state capital gains tax rate for Iowa residents would be 37.62% vs. China's 20%.

The burden of the corporate tax rate hike will be borne by workers in the form of lower wages, and by households in the form of higher prices. Higher corporate tax rates will also raise utility bills.

The non-partisan Joint Committee on Taxation recently affirmed in congressional testimony that the corporate tax rate hike will fall on "labor, laborers."

Testifying before the House Ways & Means Committee, JCT Chief of Staff Thomas A. Barthold said:

"Literature suggests that 25% of the burden of the corporate tax may be borne by labor in terms of diminished wage growth."

WATCH:

Economists across the political spectrum agree that workers bear the brunt of corporate tax increases. And 25% is on the very low end.

According to Stephen Entin of the Tax Foundation, labor (or workers) bear an estimated 70 percent of the corporate income tax. He wrote in 2017:

"Over the last few decades, economists have used empirical studies to estimate the degree to which the corporate tax falls on labor and capital, in part by noting an inverse correlation between corporate taxes and wages and employment. These studies appear to show that labor bears between 50 percent and 100 percent of the burden of the corporate income tax, with 70 percent or higher the most likely outcome."

A 2012 paper at the University of Warwick and University of Oxford found that a $1 increase in the corporate tax reduces wages by 92 cents in the long term. This study was conducted by Wiji Arulampalam, Michael P. Devereux, and Giorgia Maffini and studied over 55,000 businesses located in nine European countries over the period 1996-2003:

"We identify this direct shifting through cross-company variation in tax liabilities, conditional on value added per employee. Our central estimate is that $1 of additional tax reduces wages by 92 cents in the long run. The incidence of a $1 fall in value added is smaller, consistent with our wage bargaining model."

A 2015 study by Kevin Hassett and Aparna Mathur found that a 1 percent increase in corporate tax rates leads to a 0.5 percent decrease in wage rates. The study analyses 66 countries over 25 years and concludes that workers could see a greater reduction in wages than the federal government raises in new revenue from a corporate income tax increase:

"We find, controlling for other macroeconomic variables, that wages are significantly responsive to corporate taxation. Higher corporate tax rates depress wages. Using spatial modelling techniques, we also find that tax characteristics of neighbouring countries, whether geographic or economic, have a significant effect on domestic wages."

A 2006 study by William Randolph of the Congressional Budget Office found that 74% of the corporate tax is borne by domestic labor:

"Burdens are measured in a numerical example by substituting factor shares and output shares that are reasonable for the U.S. economy. Given those values, domestic labor bears slightly more than 70 percent of the burden of the corporate income tax."

A 2007 study by Alison Felix estimated that a 1 percentage point increase in the marginal corporate tax rate decreases annual wages by 0.7 percent. She concluded that the wage reductions are over four times the amount of collected corporate tax revenue:

"The empirical results presented here suggest that the incidence of corporate taxation is more than fully borne by labor. I estimate that a one percentage point increase in the marginal corporate tax rate decreases annual wages by 0.7 percent. The magnitude of the results predicts that the decrease in wages is more than four times the amount of the corporate tax revenue collected."

A 2012 Harvard Business Review piece by Mihir A. Desai notes that raising the corporate tax lands “straight on the back” of the American worker and will see a decline in real wages:

"Because capital is mobile, high tax rates divert investment away from the U.S. corporate sector and toward housing, noncorporate business sectors, and foreign countries. American workers need that capital to become more productive. When it’s invested elsewhere, real wages decline, and if product prices are set globally, there is no place for the corporate tax to land but straight on the back of the least-mobile factor in this setting: the American worker."

Even the left-of-center Tax Policy Center estimates that 20 percent of the burden of the corporate income tax is borne by labor:

"In calculating distributional effects, the Urban-Brookings Tax Policy Center (TPC) assumes investment returns (dividends, interest, capital gains, etc.) bear 80 percent of the burden, with wages and other labor income carrying the remaining 20 percent."

"Democrats would be wise to oppose any tax increase," said Norquist.


Virginia Companies Will Face Higher Taxes Than China and Europe if Dem Bill Passes

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Posted by John Kartch on Thursday, October 7th, 2021, 2:36 PM PERMALINK

Virginia companies will get stuck with higher taxes than China and Europe if the Democrats' reconciliation bill is enacted.

The Democrats' reconciliation bill will saddle Virginia with a combined federal-state corporate tax rate of 30.9% vs. communist China's 25%.

The bill will also put Virginia companies at a competitive disadvantage vs. Europe: The European average corporate tax rate is 19%.

Virginia is home to 22 Fortune 500 companies which provide jobs for tens of thousands of households.

"As the country tries to recover from a once-in-a-century pandemic, Virginia's congressional Democrats must explain why they want to stick residents with higher taxes than China and Europe," said Grover Norquist, president of Americans for Tax Reform.

The Democrats' $3.5 trillion bill will impose the largest tax increase since 1968.  It will raise individual income taxes, small business taxes, corporate taxes, and capital gains taxes.

If passed, the combined federal-state capital gains tax rate for Virginia residents would be 37.55% vs. China's 20%.

The burden of the corporate tax rate hike will be borne by workers in the form of lower wages, and by households in the form of higher prices. Higher corporate tax rates will also raise utility bills.

The non-partisan Joint Committee on Taxation recently affirmed in congressional testimony that the corporate tax rate hike will fall on "labor, laborers."

Testifying before the House Ways & Means Committee, JCT Chief of Staff Thomas A. Barthold said:

"Literature suggests that 25% of the burden of the corporate tax may be borne by labor in terms of diminished wage growth."

WATCH:

Economists across the political spectrum agree that workers bear the brunt of corporate tax increases. And 25% is on the very low end.

According to Stephen Entin of the Tax Foundation, labor (or workers) bear an estimated 70 percent of the corporate income tax. He wrote in 2017:

"Over the last few decades, economists have used empirical studies to estimate the degree to which the corporate tax falls on labor and capital, in part by noting an inverse correlation between corporate taxes and wages and employment. These studies appear to show that labor bears between 50 percent and 100 percent of the burden of the corporate income tax, with 70 percent or higher the most likely outcome."

A 2012 paper at the University of Warwick and University of Oxford found that a $1 increase in the corporate tax reduces wages by 92 cents in the long term. This study was conducted by Wiji Arulampalam, Michael P. Devereux, and Giorgia Maffini and studied over 55,000 businesses located in nine European countries over the period 1996-2003:

"We identify this direct shifting through cross-company variation in tax liabilities, conditional on value added per employee. Our central estimate is that $1 of additional tax reduces wages by 92 cents in the long run. The incidence of a $1 fall in value added is smaller, consistent with our wage bargaining model."

A 2015 study by Kevin Hassett and Aparna Mathur found that a 1 percent increase in corporate tax rates leads to a 0.5 percent decrease in wage rates. The study analyses 66 countries over 25 years and concludes that workers could see a greater reduction in wages than the federal government raises in new revenue from a corporate income tax increase:

"We find, controlling for other macroeconomic variables, that wages are significantly responsive to corporate taxation. Higher corporate tax rates depress wages. Using spatial modelling techniques, we also find that tax characteristics of neighbouring countries, whether geographic or economic, have a significant effect on domestic wages."

A 2006 study by William Randolph of the Congressional Budget Office found that 74% of the corporate tax is borne by domestic labor:

"Burdens are measured in a numerical example by substituting factor shares and output shares that are reasonable for the U.S. economy. Given those values, domestic labor bears slightly more than 70 percent of the burden of the corporate income tax."

A 2007 study by Alison Felix estimated that a 1 percentage point increase in the marginal corporate tax rate decreases annual wages by 0.7 percent. She concluded that the wage reductions are over four times the amount of collected corporate tax revenue:

"The empirical results presented here suggest that the incidence of corporate taxation is more than fully borne by labor. I estimate that a one percentage point increase in the marginal corporate tax rate decreases annual wages by 0.7 percent. The magnitude of the results predicts that the decrease in wages is more than four times the amount of the corporate tax revenue collected."

A 2012 Harvard Business Review piece by Mihir A. Desai notes that raising the corporate tax lands “straight on the back” of the American worker and will see a decline in real wages:

"Because capital is mobile, high tax rates divert investment away from the U.S. corporate sector and toward housing, noncorporate business sectors, and foreign countries. American workers need that capital to become more productive. When it’s invested elsewhere, real wages decline, and if product prices are set globally, there is no place for the corporate tax to land but straight on the back of the least-mobile factor in this setting: the American worker."

Even the left-of-center Tax Policy Center estimates that 20 percent of the burden of the corporate income tax is borne by labor:

"In calculating distributional effects, the Urban-Brookings Tax Policy Center (TPC) assumes investment returns (dividends, interest, capital gains, etc.) bear 80 percent of the burden, with wages and other labor income carrying the remaining 20 percent."

"Democrats would be wise to oppose any tax increase," said Norquist.


Coalition Urges Senate Republicans to Reject Democrat Antitrust Trap

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Posted by Tom Hebert on Thursday, October 7th, 2021, 2:26 PM PERMALINK

Americans for Tax Reform and a coalition of 30 conservative and free market groups and activists joined a letter in opposition to the Senate Democrat plans to pass a package of European-style antitrust regulations. Even though the left labels this effort as “antitrust reform,” these bills are hardly antitrust bills. Instead, they are regulatory bills that give Biden bureaucrats sweeping new power to reshape the economy in service of their progressive social agenda.

You can read the full letter below or here:

Dear Senator, 

Recent media reports have indicated that Senate Democrats are crafting a package of European-style antitrust regulation. 

Some left-wing politicians are attempting to convince conservatives that weaponizing antitrust law is the solution to legitimate anger over Big Tech censorship. In reality, such politicians are not acting in good faith, and these bills would increase the political and government abuse of conservatives. 

Even though the left labels this effort as “antitrust reform,” these bills are hardly antitrust bills. They are regulatory bills that give Biden bureaucrats sweeping new power to reshape the economy in service of their progressive social agenda. 

We urge you to reject any proposal that politicizes antitrust law or gives unelected bureaucrats even more power to control the economy.

The Senate legislation follows a package of six antitrust bills spearheaded by Rep. David Cicilline (D-R.I.) and reported out of the House Judiciary Committee in June.

The Cicilline package targets so-called “covered platforms” with over 50 million users and market capitalization/net sales of over $600 billion. As soon as a company has the audacity to grow larger than this government-determined size, it gets whacked with a slew of onerous new regulations.

One bill would allow the government to break up targeted companies that operate a business line that a bureaucrat deems to be a “conflict of interest.” Another would prevent targeted companies from selling or providing private-label products in their marketplaces, depriving shoppers of products they value at a lower cost than name-brand products.

An additional bill would ban targeted companies from making any new mergers and acquisitions, choking off a critical pathway to success for innovative startups. To keep track of all these new restrictions, another bill sets up secret government committees to monitor the activities of each targeted company.

Clearly, none of these bills address conservative censorship concerns. Instead, the package is a brazen power grab that gives Biden bureaucrats sweeping new authority to regulate the economy. While these bills are clearly geared towards the technology sector, the left wants to regulate every industry “from cat food to caskets.” This is just the beginning.

If these bills became law, companies fearful of abusive antitrust litigation would pull punches when competing with rival firms, robbing shoppers of the low prices and best choices that open competition delivers. Putting innovative American companies in a Mother-May-I relationship with the government would squash innovation and kill economic growth as we dig out from the pandemic.

Conservatives have long believed that antitrust law should be a scalpel used to rectify consumer harm, not a sledgehammer that bureaucrats and trial lawyers can use to advance their progressive social agenda. The left’s antitrust “reforms” would do just that.

As negotiations continue on a Senate antitrust package, we urge you to reject any legislation that politicizes antitrust law or gives the Biden administration even more power. Doing so would harm shoppers, stunt economic growth, and increase political abuse of conservatives.

Sincerely, 

Grover Norquist
President, Americans for Tax Reform

Phil Kerpen
President, American Commitment

Brent Wm. Gardner
Chief Government Affairs Officer, Americans for Prosperity

Dick Patten
President, American Business Defense Council

Kevin Waterman
Chair, Annapolis Center Right Coalition Meeting

Robert H. Bork Jr.
President, Antitrust Education Project

Jim Martin
Founder and Chairman, 60 Plus Association

Saulius “Saul” Anuzis
President, 60 Plus Association

Andrew F. Quinlan
President, Center for Freedom and Prosperity

Jessica Melugin
Director of the Center for Technology and Innovation, Competitive Enterprise Institute

Chuck Muth
President, Citizens Outreach (Nevada)

Katie McAuliffe
Executive Director, Digital Liberty

Carrie Lukas
President, Independent Women's Forum

Heather R. Higgins
CEO, Independent Women's Voice

Steve Moore
Distinguished Visiting Fellow, Institute for Economic Freedom

Tom Giovanetti
President, Institute for Policy Innovation

Dr. J. Robert McClure
President & CEO, James Madison Institute

Rodolfo E. Milani
Founder & Chairman, Miami Freedom Forum

William O’Brien
Former Speaker, NH House of Representatives
Co-chair, New Hampshire Center Right Coalition

Doug Kellogg
Executive Director, Ohioans for Tax Reform

Tom Hebert
Executive Director, Open Competition Center

Lorenzo Montanari
Executive Director, Property Rights Alliance

Wayne Brough
Director of Technology & Innovation, R Street Institute

Mike Stenhouse
CEO, Rhode Island Center for Freedom and Prosperity

Bryan Bashur
Executive Director, Shareholder Advocacy Forum

Karen Kerrigan
President & CEO, Small Business & Entrepreneurship Council

Kerri Toloczko
Chair, SWFL Center Right Coalition

Patrick Hedger
Vice President of Policy, Taxpayers Protection Alliance

Rusty Cannon
President, Utah Taxpayers Association

Casey Given
Executive Director, Young Voices

Photo Credit: Martin Falbisoner, CC BY-SA 3.0 <https://creativecommons.org/licenses/by-sa/3.0>, via Wikimedia Commons


ATR Op-Ed in Townhall: Dem Investment Tax Will Hurt Everyday Investors

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Posted on Thursday, October 7th, 2021, 12:15 PM PERMALINK

In an op-ed published in Townhall this week, ATR Federal Affairs Manager Bryan Bashur highlighted the detrimental effects a tax on exchange-traded funds (ETFs) would have on retail investors.

Senate Finance Committee Chairman Ron Wyden (D-Ore.) has proposed to tax ETFs by repealing a provision from statute that allows ETFs to distribute shares in-kind without immediately triggering the capital gains tax.

Notably, Wyden’s ETF tax will break President Biden’s pledge not to raise taxes on Americans earning less than $400,000. Millions of Americans invested in ETFs earn far less than $400,000. As Bashur points out:

According to the Securities Industry and Financial Markets Association (SIFMA), in 2019 there were $4.4 trillion in U.S. ETF assets. Approximately, “9.6 million households, or around 8% of total U.S. households, own ETFs.” In fact, the median income for households owning ETFs is $125,000.

Over the past few years, the growth of ETFs has outpaced mutual funds. A tax on ETFs would stymie this growth and limit any potential opportunities for ETFs to become a more integral investment option for employee retirement plans. Bashur explains that:

Adopting Wyden’s proposal and eliminating the current tax advantage for ETFs could slow investment into ETFs, making them unattractive for any consideration of 401k investment in ETFs. This would limit low-cost options for investors and stymie future innovations for retail investors’ retirement funds.

In recent years, investor interest in ETFs has grown faster than other investment products. From 2000 to 2017, ETFs grew at a compound annual growth rate of 25 percent as compared to mutual funds that grew by only 6 percent over the same period of time. This explosive growth in ETFs is largely due to increased demand for investments that are lower cost, transparent, and offer more liquidity than competitor products.

Moreover, there is ample potential for crypto investors to get involved in innovative ETF products. Bashur states that:

Federal intervention into the tax structure of ETFs could eliminate any potential for new ETFs. For example, Fidelity is in discussions with the Securities and Exchange Commission (SEC) to launch a bitcoin ETF, and Invesco is partnering with Galaxy Digital Holdings to launch new crypto ETFs. While the SEC has not yet approved cryptocurrency ETFs, countries such as Canada, Germany, and Switzerland are taking the lead. Abroad, assets in cryptocurrency ETFs “tripled from $3bn at the end of last year to $9bn as of June.”

Bashur implores members of Congress to oppose a tax on ETFs. In a world of increasingly democratized investment options, taxing ETFs would be a regressive political action that will only shut out retail investor participation in the financial markets.

Click here to read the full op-ed.

Photo Credit: "Rally at US Sen 0122 Senator Ron Wyden" by Edward Kimmel is licensed under CC BY-SA 2.0

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Massachusetts Companies Will Face Higher Taxes Than China and Europe if Dem Bill Passes

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Posted by John Kartch on Thursday, October 7th, 2021, 12:00 PM PERMALINK

Massachusetts companies will get stuck with higher taxes than communist China if the Democrats' reconciliation bill is enacted.

The Democrats' reconciliation bill will saddle Massachusetts with a combined federal-state corporate tax rate of 32.4% vs. China's 25%.

The bill will also put Massachusetts companies at a competitive disadvantage vs. Europe: The European average corporate tax rate is 19%.

Massachusetts is home to 18 Fortune 500 companies, which provide jobs and livelihoods for tens of thousands of households in the state.

"As the country tries to recover from a once-in-a-century pandemic, Massachusetts' congressional Democrats must explain why they want to stick residents with higher taxes than China and Europe," said Grover Norquist, president of Americans for Tax Reform.

The Democrats' $3.5 trillion bill will impose the largest tax increase since 1968. It will raise individual income taxes, small business taxes, corporate taxes, and capital gains taxes.

If passed, the combined federal-state capital gains tax rate for Massachusetts residents would be 36.8% vs. China's 20%.

The burden of the corporate tax rate hike will be borne by workers in the form of lower wages, and by households in the form of higher prices. Higher corporate tax rates will also raise utility bills.

The non-partisan Joint Committee on Taxation recently affirmed in congressional testimony that the corporate tax rate hike will fall on "labor, laborers."

Testifying before the House Ways & Means Committee, JCT Chief of Staff Thomas A. Barthold said:

"Literature suggests that 25% of the burden of the corporate tax may be borne by labor in terms of diminished wage growth."

WATCH:

Economists across the political spectrum agree that workers bear the brunt of corporate tax increases. And 25% is on the very low end.

According to Stephen Entin of the Tax Foundation, labor (or workers) bear an estimated 70 percent of the corporate income tax. He wrote in 2017:

"Over the last few decades, economists have used empirical studies to estimate the degree to which the corporate tax falls on labor and capital, in part by noting an inverse correlation between corporate taxes and wages and employment. These studies appear to show that labor bears between 50 percent and 100 percent of the burden of the corporate income tax, with 70 percent or higher the most likely outcome."

A 2012 paper at the University of Warwick and University of Oxford found that a $1 increase in the corporate tax reduces wages by 92 cents in the long term. This study was conducted by Wiji Arulampalam, Michael P. Devereux, and Giorgia Maffini and studied over 55,000 businesses located in nine European countries over the period 1996-2003:

"We identify this direct shifting through cross-company variation in tax liabilities, conditional on value added per employee. Our central estimate is that $1 of additional tax reduces wages by 92 cents in the long run. The incidence of a $1 fall in value added is smaller, consistent with our wage bargaining model."

A 2015 study by Kevin Hassett and Aparna Mathur found that a 1 percent increase in corporate tax rates leads to a 0.5 percent decrease in wage rates. The study analyses 66 countries over 25 years and concludes that workers could see a greater reduction in wages than the federal government raises in new revenue from a corporate income tax increase:

"We find, controlling for other macroeconomic variables, that wages are significantly responsive to corporate taxation. Higher corporate tax rates depress wages. Using spatial modelling techniques, we also find that tax characteristics of neighbouring countries, whether geographic or economic, have a significant effect on domestic wages."

A 2006 study by William Randolph of the Congressional Budget Office found that 74% of the corporate tax is borne by domestic labor:

"Burdens are measured in a numerical example by substituting factor shares and output shares that are reasonable for the U.S. economy. Given those values, domestic labor bears slightly more than 70 percent of the burden of the corporate income tax."

A 2007 study by Alison Felix estimated that a 1 percentage point increase in the marginal corporate tax rate decreases annual wages by 0.7 percent. She concluded that the wage reductions are over four times the amount of collected corporate tax revenue:

"The empirical results presented here suggest that the incidence of corporate taxation is more than fully borne by labor. I estimate that a one percentage point increase in the marginal corporate tax rate decreases annual wages by 0.7 percent. The magnitude of the results predicts that the decrease in wages is more than four times the amount of the corporate tax revenue collected."

A 2012 Harvard Business Review piece by Mihir A. Desai notes that raising the corporate tax lands “straight on the back” of the American worker and will see a decline in real wages:

"Because capital is mobile, high tax rates divert investment away from the U.S. corporate sector and toward housing, noncorporate business sectors, and foreign countries. American workers need that capital to become more productive. When it’s invested elsewhere, real wages decline, and if product prices are set globally, there is no place for the corporate tax to land but straight on the back of the least-mobile factor in this setting: the American worker."

Even the left-of-center Tax Policy Center estimates that 20 percent of the burden of the corporate income tax is borne by labor:

"In calculating distributional effects, the Urban-Brookings Tax Policy Center (TPC) assumes investment returns (dividends, interest, capital gains, etc.) bear 80 percent of the burden, with wages and other labor income carrying the remaining 20 percent."

"Democrats would be wise to oppose any tax increase," said Norquist.


Matt Dolan Makes “No New Taxes” Commitment in OH U.S. Senate Race

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Posted by Adam L. Radman on Thursday, October 7th, 2021, 8:27 AM PERMALINK

Americans for Tax Reform (ATR) commends State Senator Matt Dolan for signing the Taxpayer Protection Pledge in his race for Ohio’s open U.S. Senate seat. The Pledge is a written commitment to Buckeye State taxpayers that he will oppose and vote against all income 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.

“Ohio voters are looking for solutions that get Americans back to work and grow the economy. I commend State Senator Matt Dolan for signing the Taxpayer Protection Pledge and promising to hold the line on taxes. It’s the first step in jump-starting the economy,” 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. 85% percent of all congressional Republicans have made the written commitment to oppose higher taxes. In contrast, ZERO congressional Democrats have made that promise. 

President Biden has been championing a $3.5 trillion reconciliation bill, which includes the largest tax increase since 1968. These tax hikes will disproportionately hurt workers, retirees, consumers, and small businesses.

“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 encourage all candidates for elected office to make this commitment today,” continued Norquist.

Senator Dolan joins Jane Timken in signing the federal Taxpayer Protection Pledge in the 2022 race for the U.S. Senate seat being vacated by Rob Portman’s retirement. The primary is May 3, 2022, and the filing deadline for candidates is February 2, 2022.

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: Matt Dolan for U.S. Senate

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Pennsylvania Companies Will Face Higher Taxes Than China and Europe if Dem Bill Passes

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Posted by John Kartch on Wednesday, October 6th, 2021, 4:17 PM PERMALINK

Pennsylvania companies will get stuck with higher taxes than communist China if the Democrats' reconciliation bill is enacted.

The Democrats' reconciliation bill will saddle Pennsylvania with a combined federal-state corporate tax rate of 33.8% vs. communist China's 25%.

The bill will also put Pennsylvania companies at a competitive disadvantage vs. Europe: The European average corporate tax rate is 19%.

Pennsylvania is home to 24 Fortune 500 companies. 

"As the country tries to recover from a once-in-a-century pandemic, Pennsylvania's congressional Democrats must explain why they want to stick residents with higher taxes than China and Europe," said Grover Norquist, president of Americans for Tax Reform.

The Democrats' $3.5 trillion bill will impose the largest tax increase since 1968.  It will raise individual income taxes, small business taxes, corporate taxes, and capital gains taxes. If passed, the combined federal-state capital gains tax rate for Pennsylvania residents would be 34.87% vs. China's 20%.

The burden of the corporate tax rate hike will be borne by workers in the form of lower wages, and by households in the form of higher prices. Higher corporate tax rates will also raise utility bills.

The non-partisan Joint Committee on Taxation recently affirmed in congressional testimony that the corporate tax rate hike will fall on "labor, laborers."

Testifying before the House Ways & Means Committee, JCT Chief of Staff Thomas A. Barthold said:

"Literature suggests that 25% of the burden of the corporate tax may be borne by labor in terms of diminished wage growth."

WATCH:

Economists across the political spectrum agree that workers bear the brunt of corporate tax increases. And 25% is on the very low end.

According to the Stephen Entin of the Tax Foundation, labor (or workers) bear an estimated 70 percent of the corporate income tax. He wrote in 2017:

"Over the last few decades, economists have used empirical studies to estimate the degree to which the corporate tax falls on labor and capital, in part by noting an inverse correlation between corporate taxes and wages and employment. These studies appear to show that labor bears between 50 percent and 100 percent of the burden of the corporate income tax, with 70 percent or higher the most likely outcome."

A 2012 paper at the University of Warwick and University of Oxford found that a $1 increase in the corporate tax reduces wages by 92 cents in the long term. This study was conducted by Wiji Arulampalam, Michael P. Devereux, and Giorgia Maffini and studied over 55,000 businesses located in nine European countries over the period 1996-2003:

"We identify this direct shifting through cross-company variation in tax liabilities, conditional on value added per employee. Our central estimate is that $1 of additional tax reduces wages by 92 cents in the long run. The incidence of a $1 fall in value added is smaller, consistent with our wage bargaining model."

A 2015 study by Kevin Hassett and Aparna Mathur found that a 1 percent increase in corporate tax rates leads to a 0.5 percent decrease in wage rates. The study analyses 66 countries over 25 years and concludes that workers could see a greater reduction in wages than the federal government raises in new revenue from a corporate income tax increase:

"We find, controlling for other macroeconomic variables, that wages are significantly responsive to corporate taxation. Higher corporate tax rates depress wages. Using spatial modelling techniques, we also find that tax characteristics of neighbouring countries, whether geographic or economic, have a significant effect on domestic wages."

A 2006 study by William Randolph of the Congressional Budget Office found that 74% of the corporate tax is borne by domestic labor:

"Burdens are measured in a numerical example by substituting factor shares and output shares that are reasonable for the U.S. economy. Given those values, domestic labor bears slightly more than 70 percent of the burden of the corporate income tax."

A 2007 study by Alison Felix estimated that a 1 percentage point increase in the marginal corporate tax rate decreases annual wages by 0.7 percent. She concluded that the wage reductions are over four times the amount of collected corporate tax revenue:

"The empirical results presented here suggest that the incidence of corporate taxation is more than fully borne by labor. I estimate that a one percentage point increase in the marginal corporate tax rate decreases annual wages by 0.7 percent. The magnitude of the results predicts that the decrease in wages is more than four times the amount of the corporate tax revenue collected."

A 2012 Harvard Business Review piece by Mihir A. Desai notes that raising the corporate tax lands “straight on the back” of the American worker and will see a decline in real wages:

"Because capital is mobile, high tax rates divert investment away from the U.S. corporate sector and toward housing, noncorporate business sectors, and foreign countries. American workers need that capital to become more productive. When it’s invested elsewhere, real wages decline, and if product prices are set globally, there is no place for the corporate tax to land but straight on the back of the least-mobile factor in this setting: the American worker."

Even the left-of-center Tax Policy Center estimates that 20 percent of the burden of the corporate income tax is borne by labor:

"In calculating distributional effects, the Urban-Brookings Tax Policy Center (TPC) assumes investment returns (dividends, interest, capital gains, etc.) bear 80 percent of the burden, with wages and other labor income carrying the remaining 20 percent."

"Democrats would be wise to oppose any tax increase," said Norquist.


Maine Companies Will Face Higher Taxes Than China and Europe if Dem Bill Passes

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Posted by John Kartch on Wednesday, October 6th, 2021, 3:44 PM PERMALINK

Maine companies will get stuck with higher taxes than China and Europe if the Democrats' reconciliation bill is enacted.

The Democrats' reconciliation bill will saddle Maine with a combined federal-state corporate tax rate of 33.1% vs. communist China's 25%.

The bill will also put Maine companies at a competitive disadvantage vs. Europe: The European average corporate tax rate is 19%.

"As the country tries to recover from a once-in-a-century pandemic, Senator Angus King and Representatives Chellie Pingree and Jared Golden must explain why they want to stick residents with higher taxes than China and Europe," said Grover Norquist, president of Americans for Tax Reform.

The Democrats' $3.5 trillion bill will impose the largest tax increase since 1968.  It will raise individual income taxes, small business taxes, corporate taxes, and capital gains taxes.

If passed, the combined federal-state capital gains tax rate for Maine residents would be 38.95% vs. China's 20%.

The burden of the corporate tax rate hike will be borne by workers in the form of lower wages, and by households in the form of higher prices. Higher corporate tax rates will also raise utility bills.

The non-partisan Joint Committee on Taxation recently affirmed in congressional testimony that the corporate tax rate hike will fall on "labor, laborers."

Testifying before the House Ways & Means Committee, JCT Chief of Staff Thomas A. Barthold said:

"Literature suggests that 25% of the burden of the corporate tax may be borne by labor in terms of diminished wage growth."

WATCH:

Economists across the political spectrum agree that workers bear the brunt of corporate tax increases. And 25% is on the very low end.

According to Stephen Entin of the Tax Foundation, labor (or workers) bear an estimated 70 percent of the corporate income tax. He wrote in 2017:

"Over the last few decades, economists have used empirical studies to estimate the degree to which the corporate tax falls on labor and capital, in part by noting an inverse correlation between corporate taxes and wages and employment. These studies appear to show that labor bears between 50 percent and 100 percent of the burden of the corporate income tax, with 70 percent or higher the most likely outcome."

A 2012 paper at the University of Warwick and University of Oxford found that a $1 increase in the corporate tax reduces wages by 92 cents in the long term. This study was conducted by Wiji Arulampalam, Michael P. Devereux, and Giorgia Maffini and studied over 55,000 businesses located in nine European countries over the period 1996-2003:

"We identify this direct shifting through cross-company variation in tax liabilities, conditional on value added per employee. Our central estimate is that $1 of additional tax reduces wages by 92 cents in the long run. The incidence of a $1 fall in value added is smaller, consistent with our wage bargaining model."

A 2015 study by Kevin Hassett and Aparna Mathur found that a 1 percent increase in corporate tax rates leads to a 0.5 percent decrease in wage rates. The study analyses 66 countries over 25 years and concludes that workers could see a greater reduction in wages than the federal government raises in new revenue from a corporate income tax increase:

"We find, controlling for other macroeconomic variables, that wages are significantly responsive to corporate taxation. Higher corporate tax rates depress wages. Using spatial modelling techniques, we also find that tax characteristics of neighbouring countries, whether geographic or economic, have a significant effect on domestic wages."

A 2006 study by William Randolph of the Congressional Budget Office found that 74% of the corporate tax is borne by domestic labor:

"Burdens are measured in a numerical example by substituting factor shares and output shares that are reasonable for the U.S. economy. Given those values, domestic labor bears slightly more than 70 percent of the burden of the corporate income tax."

A 2007 study by Alison Felix estimated that a 1 percentage point increase in the marginal corporate tax rate decreases annual wages by 0.7 percent. She concluded that the wage reductions are over four times the amount of collected corporate tax revenue:

"The empirical results presented here suggest that the incidence of corporate taxation is more than fully borne by labor. I estimate that a one percentage point increase in the marginal corporate tax rate decreases annual wages by 0.7 percent. The magnitude of the results predicts that the decrease in wages is more than four times the amount of the corporate tax revenue collected."

A 2012 Harvard Business Review piece by Mihir A. Desai notes that raising the corporate tax lands “straight on the back” of the American worker and will see a decline in real wages:

"Because capital is mobile, high tax rates divert investment away from the U.S. corporate sector and toward housing, noncorporate business sectors, and foreign countries. American workers need that capital to become more productive. When it’s invested elsewhere, real wages decline, and if product prices are set globally, there is no place for the corporate tax to land but straight on the back of the least-mobile factor in this setting: the American worker."

Even the left-of-center Tax Policy Center estimates that 20 percent of the burden of the corporate income tax is borne by labor:

"In calculating distributional effects, the Urban-Brookings Tax Policy Center (TPC) assumes investment returns (dividends, interest, capital gains, etc.) bear 80 percent of the burden, with wages and other labor income carrying the remaining 20 percent."

"Democrats would be wise to oppose any tax increase," said Norquist.


Norquist Challenges Murphy to Put His Pledge to “Not Raise Taxes” in Writing

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Posted on Tuesday, October 5th, 2021, 2:04 PM PERMALINK

At the first gubernatorial debate between sitting New Jersey Governor Phil Murphy and Republican challenger Jack Ciattarelli, Murphy said, “I pledge to not raise taxes.” Americans for Tax Reform President Grover Norquist sent Gov. Murphy a letter and a copy of the Taxpayer Protection Pledge, and offered the following statement:

“New Jersey taxpayers have already been saddled with more than $2 billion in tax hikes and billions in additional debt in just four short years under Governor Murphy.

“Murphy’s promise that he is done raising taxes may be too little too late for Jersey taxpayers. The Governor can show he is serious about this pledge – and not just making an empty election promise – by signing the Taxpayer Protection Pledge and putting the commitment in writing.

“Voters already know Jack Ciattarelli is committed to oppose any tax increases because he signed the Taxpayer Protection Pledge months ago. Murphy can back up his words at the debate by signing the pledge now."

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