Clock Expires on Dangerous New York “Anti-Trust” Expansion, For This Year…

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Posted by Sheridan Nolen on Monday, July 26th, 2021, 3:49 PM PERMALINK

Late this session the Twenty-First Century Anti-Trust Act (SB 933), passed the New York State Senate 43-20 on June 7, but avoided a vote in the Assembly. It did not make it over the finish line, but it made progress after its initial version was drafted in 2020.    

The wide-ranging bill would broaden the scope of conduct subject to antitrust enforcement, increase the penalties imposed on individuals and corporations found to violate the law, and incentivize class action lawsuits. If enacted, these changes would dramatically increase the liability exposure of corporations. While purportedly aimed at Amazon and Google, these policies punish success for any business in any industry.

What makes this mess of a policy especially dangerous is that it would set a de facto standard for the rest of the country. Any company that keeps doing business in New York would have to bend over backwards to comply with the new rules, and appease state regulators, impacting their operations beyond just New York. 

Under the proposed “dominance” rule, a company is presumed dominant if they have 40% of the market as a seller, or 30% as a buyer – so their competitors would control most of the market, yet that company would be considered “dominant.”  

Under U.S. law a company is considered a monopoly if they have controlled two-thirds of a market for an extended period of time, and that position is unlikely to change. Its conduct is not considered anticompetitive unless it can be shown to harm consumers.   

New York’s bill also says evidence of a dominant position includes “unilateral power to set wages,” or contractual provisions that restrict workers from moving from their current employer to a competitor. Companies would have to notify the state if they planned a merger or acquisition exceeding $8 million as well.   

Evidence is not limited to these factors, so actions could be brought based on actions not covered in the bill. This leaves the definition of “dominance” unclear. It could have state courts looking to European courts for guidance on how to implement the standard – dragging down U.S. economic growth to the weak growth of Europe. 

The many companies that fall afoul of this broad new standard would face harsh penalties, jacked up fines, and lawsuits.  

Violations would be a class C felony with a fine of up to $100,000 or imprisonment of up to 15 years. The federal maximum sentence for an individual is 10 years. Corporate offenses would be subject to fines of up to $100 million, current statute allows for fines up to only $1 million. Criminal offenses by individuals would be punishable by up to 15 years in prison—an increase from 4 years under existing New York law, and substantially greater than the federal maximum of 10 years. Corporate offenses would be subject to fines of up to $100 million, versus a current maximum penalty of $1 million.

On top of crushing job creators with fines and prison, the legislation would invite a feeding frenzy for trial lawyers. 

There would be a significantly broader range of offenses as compared to existing state and federal law, making New York courts a haven for contingency-fee-driven antitrust litigation. In other words, individual citizens would be incentivized to bring class-action lawsuits against companies who allegedly abused their “dominant” position.  

Supporters of the legislation, like the Teamsters union, praise the legislation for addressing abuses by companies with dominant positions. Opponents, are arguing that it will drive business out of the state and punishes success. Lev Ginsburg, senior director of government affairs for The Business Council of New York State said: “We are essentially punishing success and we are prohibiting all kinds of ordinary pro-competitive conduct.” 

New York State is home to 10% of the Fortune 500. This legislation would make their success illegal. 

If companies cease operations in New York, residents will lose jobs and economic opportunity. The state would likely lose tax revenue, as well. If the companies stay the rest of the nation will be held hostage by greedy New York regulators. 

This is a disaster of a bill that must be defeated for the good of consumers in New York, and across the country. 

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User Beware: Chinese Government Stockpiling Private Business Data

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Posted by Katie McAuliffe on Monday, July 26th, 2021, 1:50 PM PERMALINK

The increasing list of Chinese companies, particularly in the tech space, being reined in by the Chinese government should have US officials worried about more than just investing. It is now crystal clear that Chinese businesses must comply in all matters with the Communist Party: business leaders will be muzzled, data privacy is non-existent, and foreign owners’ have no property rights.   

After Chinese ride hailing company Didi’s tumultuous IPO, US senators called for SEC investigations as to whether Didi mislead the public, but the more revealing story remains the lengths to which China will go to exercise control over its companies and the data they keep.   

Chinese ride-hailing company, Didi, raised $4.4 billion by listing its shares on the New York Stock Exchange on June 30th, marking the biggest US IPO by a Chinese company since 2014. Shortly thereafter, on July 2nd and 4th, the Cyberspace Administration of China (CAC) rolled out orders to remove Didi from app stores and announced an on-sight probe that would also involve police, tax authorities, the market competition regulator, and regulators for natural resources and transport. This is the first time a government cloaked in secrecy publicly announced an investigation involving staff based within a company.  

By the following Wednesday, Didi's market value tumbled to $57 billion, down from nearly $70 billion on its first day of trading, prompting the senators’ calls for investigation.  

The CAC almost immediately announced similar investigations that also included blocking new user sign-ups into truck-hailing app Full Truck Alliance and recruiting app Boss Zhipin, both of which listed on the NYSE in June. No details publicly provided; the CAC only cited suspected violations of China’s national security and cyber security laws.  

While Didi may not operate in the United States it operates on a scale similar to Huawei internationally. In May 2021 testimony to the US-China Economic and Security Review Commission, Dr. R Evan Ellis of the US Army War College said “Didi’s advance in [Latin America], combined with the financial, positional, and other information collected on its clients, also presents a largely unrealized intelligence risk in the region on a scale similar to that presented by Huawei.”  

Didi’s privacy policies in Latin American (Argentina, Colombia, Chile, Mexico, Panama, PeruDominican Republic, Costa Rica, and Ecuador) state that personal data will be stored in the US—or any other part of the world where there is an entity controlled by Didi aka China. In other nations with close ties to America like BrazilJapanSouth AfricaAustralia and New Zealand, Didi’s privacy policy is minimal or non-existent. Mexican authorities have already called into question Didi data transfers with China and how that could affect their elected officials and foreign diplomats, as have Argentinian news organizations.  

China’s Measures on Automobile Data Security clarify that “important data” for the purposes of ride-hailing platforms, like Didi, include data on the flow of people and traffic in sensitive areas; data on aggregate traffic volume and flows; and any other data that Didi might collect that the government comes to determine is relevant to national security.  

That means all data stored by any Chinese company can and will be transferred to the Chinese government should the request be made.   

This is a serious risk to the US, our allies, and Americans abroad, especially American diplomats who might unwittingly be using these applications. Trip information includes locations, trip times and passenger information that can reveal private meetings and daily schedules linked directly to an individual’s financial data. Data gathered from trip information that is not anonymized and pooled in aggregate can paint a vivid picture of an individual or group’s habits and possible future patterns.   

While, Senators Marco Rubio (R-Fl.), Chris Van Hollen (D-Md.), Masha Blackburn (R-Tenn.), and John Kennedy (R-La.)  are right to question the IPO process, we should look even more carefully at the data stewardship of Chinese companies.  

China is not hiding their intentions either. State-run media are backing up the government’s actions saying “an internet giant absolutely cannot have a better command than the state of the super-database that is Chinese people’s personal data."    

This is not to say the US should in engage in full-scale data localization tactics. Cross border data flows remain important for general commerce and for a fully functioning internet, but as China continues to disrupt the playing field and becomes increasingly aggressive on data collection and localization, our elected officials should remain on guard.  


Photo Credit: Jordan Harrison

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Democrats Peddle Fake News to Repeal Trump Tax Cuts

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Posted by Regina Kelley on Monday, July 26th, 2021, 12:08 PM PERMALINK

President Joe Biden and congressional Democrats claim that the 2017 Trump Tax Cuts and Jobs Act (TCJA) was a giveaway to the rich. Not only do they want to reverse the tax cuts, but they are also proposing trillions of dollars in tax increases. In order to rewrite history and pave the way for tax hikes, Democrats have repeatedly lied about the GOP tax cuts by claiming that the wealthy saw significant tax cuts and the middle class saw little or no benefit. 

House Speaker Nancy Pelosi (D-Calif.) has described the TCJA as a “tax scam” that went to the wealthiest people in the country, while President Biden has claimed the vast majority of the bill went to the top one-tenth of one percent of wage earners.

In reality, the TCJA grew the pre-COVID economy and cut taxes for the middle class and small businesses. The TCJA expanded the child tax credit from $1,000 to $2,000, and doubled the standard deduction to $24,000 for married couples filing jointly, and $12,000 for single filers. Businesses across the country provided their workers with bonuses, wage raises, increased 401(k) matches and more employee benefit programs. 

Under the legislation, a family of four with a median income of $73,000 saw a $2,000 tax cut, a 60 percent reduction in federal income tax. Similarly, a single parent with one child making $41,000 saw a $1,300 tax cut.

In 2018, Americans with incomes between $50,000 and $100,000 saw their tax liability drop by twice as much as Americans with income above $1 million: 

  • Americans with adjusted gross income (AGI) of $50,000 to $74,999 saw a 13.2 percent reduction in average tax liabilities between 2017 and 2018. 
  • Americans with AGI of between $75,000 and $99,999 saw a 13.6 percent reduction in average federal tax liability between 2017 and 2018. 
  • Americans with AGI of $1 million or above saw a 5.8 percent reduction in average federal tax liability between 2017 and 2018, less than half the tax cut seen by Americans with AGI between $50,000 and $100,000. 


While the middle-class saw their liability drop, the top one percent ended up paying a higher percentage of all income taxes after the TCJA’s passage. In 2018, the top one percent paid 40 percent of all income taxes; before the TCJA was enacted, they paid 38 percent of all income taxes. 

The Trump tax cuts also grew the economy leading to a record low poverty rate, low unemployment, increased jobs and wages, and more economic opportunity. After the TCJA, the unemployment hit a record 50 -year low with the lowest ever recorded unemployment rate for Hispanics and African Americans. There were 1.4 million more jobs than people unemployed in 2019 and wages increased by 6.8 percent in one year, as opposed to just a 5 percent growth over Obama’s presidency. 

Even left leaning media outlets have (eventually) acknowledged the tax cuts benefited middle class families. The Washington Post fact-checker gave Biden’s claim that the middle class did not see a tax cut its rating of four Pinocchios. The New York Times characterized the false perception that the middle class saw no benefit from the tax cuts as a “sustained and misleading effort by liberal opponents.”

Despite Democrats’ rhetoric, Republicans delivered savings to the American middle-class when they passed the tax cuts. Ironically, President Biden and congressional Democrats’ plan would actually result in middle-class Americans paying more in taxes. 


Photo Credit: Bill Clark/Pool via AP

Coalition Warns Against Broadband Proposals

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Posted by Katie McAuliffe on Friday, July 23rd, 2021, 3:52 PM PERMALINK

Americans for Tax Reform led a coalition with other center-right organizations flagging concerning developments in the infrastructure bill negotiations. Price controls and rate regulation; dramatic expansion of executive brand and agency authority; and government-controlled internet should never be on the table.

You can read the letter below or click HERE for a full version:

July 23, 2021

RE: Broadband Infrastructure Spending

Dear Senators:

We write to you today over some concerning developments in the bipartisan infrastructure negotiations on broadband. We are guided by the principles of limited government and believe that the flaws in the infrastructure framework go well beyond the issues discussed here. Nonetheless, our present aim is to advocate specifically against proposals that would enact price controls, dramatically expand agency authority, and prioritize government-controlled internet. 

The infrastructure plan should not include rate regulation of broadband services. Congress should not authorize any federal or governmental body to set the price of any broadband offering. Even steps that open the door to rate regulation of broadband services will prove harmful in the long run.  

Nor should Congress continue to abdicate its oversight responsibilities to executive branch agencies like the National Telecommunications and Information Administration. Giving NTIA unchecked authority to modify or waive requirements, renders all guardrails placed by Congress meaningless. There must be oversight of the programs to ensure that taxpayer dollars go toward connecting more Americans to broadband as opposed to wasteful pet projects. 

Historically, attempts by NTIA to close the digital divide through discretionary grants have failed, leading to wasteful overbuilds, corruption, and improper expenditures. The American Recovery and Reinvestment Act of 2009 created the $4 billion Broadband Technology Opportunities Program (BTOP) grant program administered by NTIA. From 2009, when BTOP was instituted, to 2017, at least one-third of all the reports made by the Inspector General for the Department of Commerce were related to the BTOP program, and census data showed that the BTOP program had no positive effect on broadband adoption. And this was with only $4 billion in taxpayer dollars. We cannot afford to make the same mistake with much greater sums.

Legislation must be clear and not create ambiguities that are left to the whims of regulators. While “digital redlining” is unacceptable, the FCC should not be allowed to define the term however it sees fit and promulgate any regulations it thinks will solve problems—real or imagined. Doing so would give the agency carte blanche to regulate and micromanage broadband in any way it desires. This would be an egregious expansion of FCC authority. Moreover, definitions and regulations could change whenever party control of the agency changes, leading to a back-and-forth that creates uncertainty for consumers and businesses. 

Legitimate desire to ensure that low-income Americans have access to broadband infrastructure should not be used as a smokescreen to codify aspects of the recent Executive Order on Competition, which should not be included in any bipartisan infrastructure agreement. Republicans fought hard to support the FCC’s Restoring Internet Freedom Order. Any legislating on the functions and deployment of Internet technologies must move as a standalone bill through regular order with committee review. These questions are far too important to shoehorn into a massive bill without rigorous debate.   

Any funding for broadband buildout must target locations without any broadband connection first, and this should be determined by the Congressionally mandated FCC broadband maps. Congress has oversight over the FCC and the FCC has already conducted several reverse auctions. Reverse auctions get the most out of each taxpayer dollar towards closing the digital divide. Areas where there is already a commitment from a carrier to build out a network, should not be considered for grants, and the NTIA should not be able to override the FCC’s map to redefine “unserved” and subsidize duplicative builds.  

Government-controlled Internet should not be prioritized in any grant program. With few exceptions, government-owned networks (GONs) have been abject failures. For example, KentuckyWired is a 3,000-mile GON that was sold to taxpayers as a $350 million project that would be complete by spring of 2016. Those projections could not have been more wrong.   More than five years past the supposed completion date, fiber construction for KentuckyWired is still “in progress” in some parts of the state and a report from the state auditor has concluded that taxpayers will end up wasting a whopping $1.5 billion on this redundant “government owned network” over its 30-year life. NTIA should certainly not encourage these failures to be replicated.

We appreciate your work to help close the digital divide and agree that access to reliable internet is a priority, however we should not use this need to serve as a cover for unnecessary

government expansion. Please feel free to reach out to any of the undersigned organizations or individuals should you have questions or comments. 


Grover G. Norquist
Americans for Tax Reform
Jennifer Huddleston*
Director of Technology & Innovation Policy
American Action Forum
Phil Kerpen
American Commitment
Krisztina Pusok, Ph. D.
American Consumer Institute
Center for Citizen Research
Brent Wm. Gardner
Chief Government Affairs Officer
Americans for Prosperity
Jeffrey Mazzella
Center for Individual Freedom
Andrew F. Quinlan
Center for Freedom and Prosperity
Jessica Melugin
Director Center for Technology and Innovation
Competitive Enterprise Institute
Matthew Kandrach
Consumer Action for a Strong Economy
Yaël Ossowski
Deputy Director
Consumer Choice Center
Roslyn Layton, PhD
China Tech Threat
Ashley Baker
Director of Public Policy
The Committee for Justice
Tom Schatz
Council for Citizens Against Government Waste
Katie McAuliffe
Executive Director
Digital Liberty
Annette Thompson Meeks
Freedom Foundation of Minnesota
Adam Brandon
George Landrith
Frontiers of Freedom
Garrett Bess
Vice President
Heritage Action for America
Carrie Lukas
Independent Women's Forum
Heather Higgins
Independent Women's Voice
Tom Giovanetti
Institute for Policy Innovation
Ted Bolema
Executive Director
Institute for the Study of Economic Growth
Seton Motley
Less Government
Zach Graves
Head of Policy
Lincoln Network
Matthew Gagnon
Chief Executive Officer
Maine Policy Institute
Matthew Nicaud
Tech Policy Specialist
Mississippi Center for Public Policy
Brandon Arnold
Executive Vice President
National Taxpayers Union
Tom Hebert
Executive Director
Open Competition Center
Ellen Weaver
President & CEO
Palmetto Promise Institute
Eric Peterson
Pelican Center for Technology and Innovation
Lorenzo Montanari
Executive Director
Property Rights Alliance
Jeffrey Westling
Resident Fellow, Technology & Innovation Policy
R Street Institute
James L. Martin
60 Plus Association
Saulius “Saul” Anuzis
60 Plus Association
David Williams
Taxpayers Protection Alliance

Dann Mead Smith
Washington Policy enter

Mark Harmsworth
Small Business Director
Washington Policy Center

* individual signer; organization listed for identification purposes only


Photo Credit: Denny Müller

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ATR Partners on International Tax Burden Index, USA Ranks Second-Best

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Posted by Rowan Saydlowski on Friday, July 23rd, 2021, 3:45 PM PERMALINK

Americans for Tax Reform Foundation partnered with the Paris-based free-market think tank Institut Économique Molinari for the publication of the first edition of "The Tax Burden of Global Workers: A Comparative Index," published by James Rogers and Nicolas Marques of the Institut Économique Molinari.

In the index, South Africa and the United States had the lowest tax burdens, while European Union member states took the bottom 25 spots in the 34-country ranking. The 34 countries studied represent 58.2% of the global economy. The annual study calculates a "tax liberation day" for each country, indicating how many days' worth of work compensation is extracted from workers by their governments each year. The amount of taxes extracted were calculated as a combination of income taxes and social security contributions by both the employee and employer for an average worker in each country.

The governments of three countries (Austria, France, and Belgium) were found to extract more money than the worker himself or herself receives; for example, in Austria, the government receives $1.35 for every $1.00 that the average worker receives in take-home pay, for a total real tax rate of 54.76%. Meanwhile, in the United States, the government only receives $0.41 for every $1.00 that the average worker takes home, for a total real tax rate of 27.11%.

According to the index, Austria and France share the latest tax liberation day (July 19th), while South Africa has the earliest day (March 7th). American workers can celebrate their tax liberation day on April 9th this year.

The study notes that this year the overall average "real tax rate" throughout Europe decreased as a result of small policy changes and pandemic relief measures, though different European countries saw differing effects. 2021's tax liberation days arrive earlier in 10 European countries, later in 8, and on the same day in 10 as compared to last year, according to the authors.

"We are excited to partner with the Institut Économique Molinari to analyze tax burdens from major countries around the world," said Grover Norquist, President of Americans for Tax Reform. "While the United States fortunately performed well in this ranking, U.S. officials must remain wary to not fall into the burdensome taxation trap implemented by many of their European allies. Lower tax rates allow workers to keep more of their own hard-earned money and provide an environment for innovation to thrive. We need to stop the $2.9 trillion USD tax increase proposed by the Biden-Harris Administration, otherwise we will end up with the same level of taxation burden as European Union workers."

"Expanding our research to include all continents reveals a sharp contrast between the European Union and the rest of the world when it comes to taxing the salaries of workers," said James Rogers, co-author of the study and Research Fellow at Institut Économique Molinari. "Workers outside of the EU, with the exceptions of tiny Malta and Cyprus, get to keep significantly more of their earnings. American workers celebrate their 'tax liberation day' earlier than any of their European counterparts and enjoy the third-highest take-home pay around the world––while the cost of hiring them, thanks to the relatively labor-friendly tax rates, is cheaper than in 10 European countries."

"Through 12 years of study, the correlation between payroll taxes and the unemployment rate is clear in many European Union countries," added Rogers. "Looking at the global picture, this is generally the case, with low-tax countries such as Australia, Ireland, the U.S. and the U.K. experiencing lower unemployment than the EU average."

The full study can be found here:

States Get a Win in Lawsuit Over Blue State Bailout’s “No Tax Cut” Mandate

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Posted by Matt Haynie on Friday, July 23rd, 2021, 2:20 PM PERMALINK

Infamously, the American Rescue Plan (ARP) included language that barred states from “directly or indirectly” reducing tax burdens with the federal money they received. This vague, over-broad restriction left it unclear whether any state tax cut that occurred after the bailout could be challenged by the federal government.  

This spurred lawsuits from coalitions of states over the ‘no tax cut’ mandate. On July 2nd, a federal judge sided with Ohio in a lawsuit over restrictions in the American Rescue Plan – a big victory for taxpayers.  

Ohio and Arizona have spearheaded separate legal challenges, joined by other states to the language in the blue-state bailout package. This comes at a time when Americans need tax relief as the country returns to work after the pandemic.  

The Ohio lawsuit asserts that the federal government overstepped its bounds by issuing the “tax mandate” in the ARP.  The judge agreed, ruling that the prohibition of tax cuts with relief funds “falls short of the clarity required by Supreme Court precedent”. Further, the Judge ruled that the tax mandate meets the requirements for injunctive relief, meaning the law will, at least temporarily, no longer apply.  This comes as a win to Ohio taxpayers, and signals that other states may find success in their efforts to cut taxes with ARP funds.   

Arizona has also filed suit against the ARP’s tax mandate. After receiving over $4.9 billion dollars from the ARP, Arizona cut the state’s income tax by $1.9 billion dollars, putting much needed cash back in the hands of hardworking Arizonans. In the currently pending case, Arizona is arguing that the Federal Government offers a coercive amount of money in the ARP and is attempting to commandeer the state’s policy making process through the tax mandate.   

The court victory for Ohio taxpayers is a positive signal for Arizona’s lawsuit to protect their taxpayers. The tax mandate is a display government overreach, as the ARP attempts to interfere in the constitutionally prescribed domain of the states. This ruling is vital for protecting the states from the federal government trying to micromanage their budgets.   

Photo Credit: Flickr - Ohio Attorney General

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IRS Unit Has More Cars than Agents and Fails to Ensure Cars Are Used for Official Business

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Posted by Michael Mirsky on Friday, July 23rd, 2021, 12:15 PM PERMALINK

If a regular American taxpayer failed to show proper documentation for vehicle use related to their tax return, they would be in civil and criminal trouble with the IRS. But a new Inspector General report shows that the IRS would not pass the same audit it subjects Americans to.

The IRS Criminal Investigation (IRS-CI) division fails to perform basic due diligence to ensure its vehicles are being used properly. And many agents are assigned individual vehicles even though they do not need one and are not qualified for one, according to a recent report by the Treasury Inspector General for Tax Administration (TIGTA).

The inspector general found "questionable and missing information reported by special agents for commutes and commuting miles."

How would the IRS react if you were under audit and gave them "questionable or missing information"?

The division also has more vehicles than it does agents, costing taxpayers millions in unnecessary expenses. These findings are alarming given that President Biden has proposed a massive expansion in the size and power of the IRS.

Key excerpts from the report are as follows:

Excerpt #1: 

"questionable reporting of commutes and commuting mileage brings into question CI’s maintenance of sufficiently detailed, accurate information and data to support day-to-day oversight of the fleet as well as its compliance with requirements under the Home-to-Work authorization."

Excerpt #2:

"Our analysis of the number of pool vehicles compared to CI’s utilization criteria found there were excess pool vehicles in the CI fleet inventory."

Excerpt #3:

"Our review of fleet usage information provided by CI found that its data were often inaccurate or incomplete."

Excerpt #4:

"Our analysis of CIMIS usage data from April 2017 through January 2020 found questionable data reported for individually assigned vehicle use. Specifically, we identified three special agents who reported between 95,000 and 242,000 total mission miles in a 12-month period. The mileage reported is significantly greater than the 7,200 mile utilization criteria used by the IRS’s Facilities Management and Securities Services Division."

Excerpt #5:

"We also identified questionable and missing information reported by special agents for commutes and commuting miles. Specifically, 125 special agents reported zero commutes or commuting miles in a 12-month period. The information reported by these 125 special agents would indicate that they did not drive their assigned fleet vehicle to or from their place of  employment during this period. As such, the information reported by these special agents does not support his or her need to have an individually assigned vehicle based on criteria and requirements associated with Home-to-Work authority, which is discussed further in this report."

Excerpt #6: 

"the Home-to-Work data provided included missing and questionable information."

Excerpt #7:

"Our review found that the information provided by CI fleet management during this review was inadequate to support proper fleet management."

Excerpt #8: 

"Based on the evidence and documentation provided by CI, there were 342 special agents who did not report any commutes during the three-year period shown above in Figure 4. If these agents’ individually assigned vehicles were transitioned into pool vehicles at a two-to-one ratio, CI could potentially have realized cost savings of more than $871,682."

Excerpt #9: 

"Our review of inventory reports and Home-to-Work reports provided by CI fleet management found that CI is unnecessarily retaining and paying for an excessive number of fleet vehicles."

Excerpt #10: 

"eliminating questionable positions from Home-to-Work authority could have provided cost savings of over $1,714,943 over the three 12-month time frames included in our analysis. Appropriate analysis, controls, and measurable use associated with vehicle utilization, including realistic estimates on new hires and employee attrition and evaluating the necessity for Home-to-Work authority for special agent positions that do not qualify, are needed to ensure that CI reduces excess vehicle inventory and reduces unnecessary costs when possible."

CI’s fleet manager is responsible for providing timely information reports on the status and utilization of the CI fleet to the U.S. Department of the Treasury Fleet Manager under the Assistant Secretary for Management. 

As of January 1, 2020, the CI fleet program included 2,221 vehicles compared to just 2,030 agents. Of these vehicles, 1,698 vehicles were assigned individually to special agents and 523 vehicles were assigned as “pool cars”, or vehicles assigned to one or more IRS offices. All CI special agents with field investigative responsibilities and a select number with protective service responsibilities are authorized for Home-to-Work transportation. The annual cost of CI’s vehicle fleet inventory is shown below.

Federal agencies are required to maintain logs and other records to establish the official purpose of their Home-to-Work programs. Special agents are required to log all daily use of the vehicle outside the normally scheduled tour of duty. Despite these mandates, the TIGTA report found the IRS agents routinely ignored protocol. 

The IRS does not meet the standards it demands of taxpayers.

"If a small business owner gets audited, the IRS demands to see a detailed 'contemporaneous log' of their business miles, organized just so. But IRS agents themselves have no problem using taxpayer-funded company cars with a far more lax standard," said tax expert Ryan Ellis, certified as an IRS Enrolled Agent and president of the Center for a Free Economy.

Incomplete or inaccurate data do not support an efficient fleet program

TIGTA’s analysis of Criminal Investigation Management Information System (CIMIS) usage data between April 2017 and January 2020 found questionable data reported for individually assigned vehicles. The investigation uncovered three special agents who reported between 95,000 and 242,000 total mission miles in a 12-month period. This number greatly exceeds the 7,200 mile utilization criteria used by the IRS’s Facilities Management and Securities Services Division. Furthermore, the number of mission miles reported by these three agents were well above the average mission miles reported by other CI special agents.

The report also found that 125 special agents reported zero commutes or commuting miles in a 12-month period. The information reported by these 125 special agents would indicate that they did not drive their assigned fleet vehicle to or from their place of employment during this period. As such, the information reported by these special agents does not support their need to have an individually assigned vehicle based on criteria and requirements associated with Home-to-Work authority.

IRS fails to ensure accuracy of reported mileage

IRS procedures indicate that the manual input of mileage and usage information for these vehicles is to be completed monthly by administrative support staff. The guidance explicitly states that responsibility for the accuracy of the database rests with each CI employee. 

The procedures clearly identify which CI employee is responsible to ensure the accuracy of the database, with special agents entering data into their diaries, and administrative support staff transcribing the information from the diaries into the CIMIS. This leads to CIMIS administrators not correcting errors when they are identified. 

CI fleet management indicated that supervisory special agents are not required to physically verify the ending mileage on Government-operated vehicles on a month‐to‐month basis, allowing issues to go unnoticed, such as excessive mileage reported by special agents.

CI fleet management often provided incomplete data

TIGTA requested copies of the vehicle use data that CI fleet management is required to maintain to ensure effective management and oversight of its fleet. Some information, such as vehicle inventory reports, internal Home-to-Work analyses, and monthly expense reports, was provided to the investigators, while other important information was not always complete or up to retention standards. 

The report found that the Home-to-Work data provided included missing and questionable information. In addition, several older mileage reports were not available. 

The investigators also found that Fleet management does not track consolidated data on the number of special agents whose authorizations were suspended, why they were suspended, or the number of reinstatements that had been processed. 

Problematic guidance led to inaccurate reporting practices

Through their investigation, TIGTA found that special agents were not provided clear guidance to accurately input commuting miles. The guidance instructed CI agents to record commuting data without specifying whether the commute was within their tour of duty. 

Because this information lacks important details, there is a risk that the account includes an insufficient record of vehicle use outside of the normally scheduled tour of duty hours as required. 

CI cannot justify its fleet program size

TIGTA’s review of CI fleet management inventory reports and Home-to-Work reports found that the unit is unnecessarily retaining and paying for an excessive number of fleet vehicles. CI’s vehicle utilization criteria allow for one vehicle per special agent in the field and one pool vehicle for each supervisory special agent’s staff. However, a review of mission miles reported by special agents found that the mission miles reported by hundreds of these special agents would not have met the minimum requirements.

A breakdown of mission miles for individually assigned vehicles can be found below. 

CI’s fleet inventory has an unnecessary number of pool vehicles

The report found that 58, 140, and 10 vehicles were added to pool inventory due to attrition in FYs 2017, 2018, and 2019, respectively. Despite the push for this increase in the size of the fleet, none of these vehicles were accessed during these time frames, effectively increasing the number of vehicles in CI’s pool fleet. A cost savings of $1,016,606 could have been realized over three years.

Due to poor management, the taxpayer-funded vehicle fleet is too large.

Not all positions in CI require an individually assigned vehicle

Back in 2011 CI reduced the number of individually assigned vehicles in certain positions. The division also reduced the positions qualifying for Home-to-Work authority. This led to 64 special agents and approximately 127 special agent positions being identified as no longer requiring Home-to-Work authorization. 

Despite their conclusion that these positions were unnecessary for individual vehicle assignment, CI bulletins indicate that these positions were added back into the Home-to-Work request in February 2014, which was subsequently approved by the Department of the Treasury.

All told, eliminating questionable positions from Home-to-Work authority could have provided cost savings of over $1,714,943 over the three 12-month time frames included in the analysis. The breakdown of those potential savings is shown in the table below. 

This latest audit of the IRS is more evidence of an agency-wide problem with basic competence and due diligence resulting in wasted taxpayer funds and poor execution of core duties.

The FTC’s Integrity Crumbles Under Chair Khan’s “Leadership”

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Posted by Joseph Murgida on Thursday, July 22nd, 2021, 4:28 PM PERMALINK

In the first month of Lina Khan’s surprise tenure as chair of the FTC, she has extended false olive branches of transparency while working overtime to smash bipartisan limits on the agency’s enforcement authority. If gone unrestrained, Khan’s aggressive pursuit of radical partisan goals will harm the intellectual integrity of the FTC.

Khan’s decision to hold open FTC meetings may seem like a positive development, but the actual transparency is illusory at best. Even though the public has the opportunity to submit comments before the meetings, the comments are only considered after the commission already voted. Khan ignores the public’s concerns in her quest to fundamentally reshape the FTC. 

The only actual effect of the public meetings, as Commissioner Christine Wilson pointed out during Wednesday’s meeting, is forcing the commissioners to “avoid both staff participation and a dialogue among the commissioners.” Instead, she recognized that the commissioners “are left to deliver monologues with no interaction making these events more akin to theater than the reasoned decision-making that should characterize the FTC.” FTC commissioners are losing oral briefings, robust conversations or detailed memoranda describing the consequences of the proposals in the meetings. Wilson justifiably fears that these losses are crippling the FTC’s ability to fully understand the analytical impacts of the changes. 

Commissioner Noah Phillips also highlighted the procedural concerns of Khan’s leadership. He pointed out that, for the second time this month, Khan has given “the minimum notice required by law” for the meeting’s agenda, without adequately opening up the items for public comment. On top of all that, Khan is using a partisan, temporary 3-2 majority to undo bipartisan previous FTC enforcement standards. Although this majority will disappear once current FTC Commissioner Rohit Chopra transitions to his new role as the Director of the Consumer Financial Protection Bureau, for the indefinite future it looks like Khan will jam through as many changes as possible. Continued erosion of long-held enforcement principles will cause businesses to pull their punches when competing with rivals, robbing us of the robust competition that delivers the best prices and best choices for American consumers. 

Khan’s reckless pursuit of “reforming” the FTC likely is guided by her belief that the agency needs “bold leadership willing to use the full breadth of its expansive authority.”  The “bold” approach that she has theorized about for over five years turns out to be a cold disregard for bipartisan limits on government power. Khan’s blind pursuit of her radical agenda is willingly ignoring the commissioners outside of the temporary Democrat majority, the perspectives of other scholars, and the will of the public. In this pursuit, the FTC’s integrity is crumbling before our very eyes.

Photo Credit: New America

Massachusetts Sports Betting Proposals Look to Fleece, Not Foster, the Emerging Industry

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Posted by Doug Kellogg on Thursday, July 22nd, 2021, 3:38 PM PERMALINK

Massachusetts going into sports betting with high tax rates is like the Patriots playing without Tom Brady. They’ll be in the game, but performing worse.

High tax rates are a big threat with Senate Bill 269, which includes rates of 20% for in-person bets and 25% for mobile bets. These rates would be among the highest in the nation, behind only Pennsylvania’s absurd 36% effective tax rate. The 25% tax rate on mobile would beat out Tennessee’s 20% rate. These are extremely high tax rates that will make it tough for sports books to succeed, and grow.

Low tax rates are best, they make the legal market more competitive with other states, make it easier for sports books to make ends meet, and help the industry grow and create jobs. Low taxes also make legal betting more attractive to bettors, so they are not betting in the black market.  

For comparison, 6.75% is the lowest rate among U.S. states. While Massachusetts’ neighbors are awful on taxes, Connecticut’s 13.75% rate would be notably lower than the proposed rates.

It is not just taxes that cause concern, both Senate and House have proposed significant recurring licensing costs (on top of the initial, one-time fee), from a $200,000 annualized cost, to $1 million. Pennsylvania hits operators with a whopping $10 million initial licensing fee, but even the Keystone State’s recurring fee amounts to a much lower $50,000 annualized.

Fees are supposed to cover the cost to government to run a program, or service. If they are generating revenue, they amount to taxes. These flat costs also are more burdensome to smaller operators.

The hits don’t stop coming, as the Senate version does not allow for betting on college sports. This kind of blanket restriction would keep all betting on collegiate sports in the black market, or the state’s neighbors.

The House version looks better in comparison on tax rates. Its 12.5% rate on in-person betting revenue, 15% on online, are clearly preferable. Yet, tax rates around 15% and up have been shown to reduce betting activity, keeping bettors in the black market.

Further, the House version allows sports leagues to require betting operators use “official league data.” This is a giveaway to sports leagues that is not necessary for protecting gaming integrity. Nevada has operated for decades, and now New Jersey has operated for years without such mandates.

In National Basketball Ass’n v.Motorola,Inc. a court of appeals held that sports statistics are not copyrightable, and that compiling and distributing statistics was legal.

It makes sense, the number of touchdowns Tom Brady throws is a fact, it can’t be copyrighted. State lawmakers should not step on this legal precedent, especially when the market is working, and the leagues are cashing in on data agreements without government interference.

There are many companies that collect sports data, and sports betting operators can decide which they would like to use. There is no need for government to force one private company to use another’s services.  

If Massachusetts legislators want to foster a competitive market for sports betting and follow the lead of a northeastern state, they should copy New Jersey. The Garden State’s tax rate on in-person betting is 8.5%, and the state avoiding any significant regulatory pitfalls – like the completely unnecessary data mandate.

The State Senate saw a much better proposal put forward earlier in session.

These current proposals are too focused on maximizing paydays for government, and their pals, rather than doing what is best for consumers and an emerging industry. In the process, they could fail on all counts.  

Photo Credit: Wikimedia

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Massachusetts Legislators Vote to Keep Taxpayers in the Dark

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Posted by Dennis Hull on Thursday, July 22nd, 2021, 2:04 PM PERMALINK

As a state that ranks 47th out of 50 for political transparency, Massachusetts is already infamous for doing business behind closed doors. But despite growing calls from residents and activist groups for a more open process, legislators on Beacon Hill passed a rules package last week that will deceptively conceal voting records and burden the public with even more opaque procedures. 

One proposal in the package would have ensured that legislators and the public have at least 48 hours to read a bill before it’s brought up for a vote. Many Massachusetts bills often reach legislators’ desks just a few hours before the vote, giving them almost no time to file amendments. Ironically, the rules package itself was revealed less than 4 hours before the deadline to file amendments. But business will continue as usual on Beacon Hill after the amendment to require a 48-hour interim period failed miserably in a 39-119 vote. 

The legislature also scratched an amendment to reveal how most lawmakers vote on legislation in committee. Now, only committee members who vote “no” on a bill will be identified by name. The rest of the votes, including those who vote “yes” or abstain from voting, will be bundled into a single aggregate number, thus leaving those politicians free from public criticism. As a result, Massachusetts voters will have even less of an ability to hold their other representatives accountable for their support bills. 

Perhaps the most straightforward of the failed amendments was one aimed at reinstituting a 4-term limit for the Speaker of the House. Those who opposed term limits pathetically argued that they would “discriminate” against the Speaker (since no one else faces term limits) or that they’re undemocratic (since legislators would no longer be able to choose whomever they want for Speaker at any time). But the failure of the term limits amendment in a 35-125 vote reflects the powerful grip of the legislative leadership over the vast majority of its members. Establishment politicians, particularly Speaker Ron Mariano, opposed all of these amendments to rid the Massachusetts legislature of its secretive, top-down procedures. But, for low-ranking representatives, voting for transparency was simply not worth the cost of future retaliation from the people at the top.  

Thanks to the cowardice of freshman legislators who ran on transparency but voted with the establishment, not much will change in the Massachusetts legislature. Even with dozens of protestors on the capitol steps, an open process will once again take a backseat to the personal interests of lawmakers who want to minimize accountability and stay in power. 

Photo Credit: Nidavirani

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