IRS Evades Regulatory Accountability Through Self-Imposed Exemption From Oversight

Share on Facebook
Tweet this Story
Pin this Image

Posted by Tom Hebert on Wednesday, February 21st, 2018, 3:17 PM PERMALINK

The Internal Revenue Service actively avoids scrutiny of its activities by exempting its rulemaking from Congressional and administrative oversight and procedures. Based on an agency interpretation of federal law, the IRS has decided that it is allowed to publish regulations without an analysis of the economic impact of such rules.

As noted in a recent study by the Cause of Action Institute, the IRS has avoided scrutiny through creative interpretation of oversight laws. Federal agencies are typically required to follow a set of rules to ensure that their rulemaking wisely utilizes taxpayer resources. These oversight devices attempt to minimize bureaucratic abuse by requiring agencies to disclose the economic impact of their regulations to Congress and the American people.

The IRS first started claiming that its regulations have no economic impact in response to the 1980 Regulatory Flexibility Act (RFA), which was designed to mitigate the compliance costs of federal regulations on small businesses. The RFA states that if a proposed regulation could have a large economic impact on small businesses, the agency must consider alternatives that would leave small businesses unharmed.

The RFA also contains a Congressional amendment specifically designed to cover IRS regulations, but the IRS has shirked its duty to comply with the RFA since Congress passed the law. The IRS has broadened its self-exemption from economic impacts to all impacts, including record-keeping and other reporting burdens. That means that IRS regulations can impact small businesses while completely evading oversight from Congress or the White House.

In the Internal Revenue Manual, a document the IRS uses to guide its compliance with oversight mechanisms, the agency bizarrely claims that its rules have no economic impact. This reading allows the IRS to avoid sharing information with Congress, the executive branch, and the American people. The IRS has never offered an adequate justification for this self-exemption.

The IRS rule exemption affects the American people in two ways. First, it allows the IRS to avoid sharing information between federal agencies, Congress, and the White House. Second, it allows the IRS to avoid disclosing the economic impact of its policies to the public.

This exemption dates back to an agreement between the Office of Management and Budget (OMB) and the IRS from 1983, wherein the OMB exempted the IRS from review. Until recently, the memorandum documenting this agreement was secret. A 1993 executive order (E.O. 12866) from President Clinton maintained the IRS’s exemption from OMB review.

A recent study from the Government Accountability Office (GAO) confirmed that this agreement has not been revisited in over 25 years. The GAO reports that the Obama administration did not alter the terms of the deal between the IRS and the OMB when reaffirming Clinton’s executive order in 2011. There is no evidence that the current administration has revisited the secret deal.                                      

Senators Johnson and Lankford have recently sent letters to the White House Office of Information and Regulatory Affairs asking the office to investigate the IRS’s self-exemption. 

If every agency conducted itself like the IRS, it would effectively nullify the Administrative Procedure Act’s notice and comment requirements for new regulations. No government agency should be above the law. It is past time for the White House to demand that all IRS regulations be checked with the Office of Information and Regulatory Affairs. The career bureaucrats in the IRS simply cannot be trusted to protect small businesses from onerous regulations.

Photo Credit: Tim Evanson

Norquist to Congress: No Gas Tax Increase

Posted by Alexander Hendrie on Wednesday, February 21st, 2018, 1:00 PM PERMALINK

ATR President Grover Norquist today sent a letter to Congress in opposition to an increase in the fedeal gas tax. The letter was addressed to House Speaker Paul Ryan (R-Wis.), Senate Majority Leader Mitch McConnell (R-Ky.), House Ways and Means Chairman Kevin Brady (R-Texas), and Senate Finance Chairman Orrin Hatch (R-Utah).

[The full letter can be found here]

As Norquist noted, a gas tax increase will directly undermine the gains made from tax reform and could contribute to wiping out 60 percent of the individual tax cuts:               

“A gas tax increase of $0.25 per gallon would increase taxes on consumers by $37 billion next year. If combined with an anticipated $0.20 per gallon increase from rising gasoline prices, consumers will pay $71 billion more for gasoline next year, wiping out 60 percent of the $120 billion in tax cuts contained in the Tax Cuts and Jobs Act.”

Rather than increasing taxes on consumers, lawmakers should more wisely use existing revenues to pay for roads and bridges, which are frequently diverted to unrelated projects:

“A recent report by the Government Accountability Office (GAO) found that more than 50 percent of the HTF spending went to non-road-related projects, while 15 percent of federal gas tax revenue is diverted to the Mass Transit Account…”

The full letter is available below and can be found here.

Dear Speaker Ryan, Leader McConnell, Chairman Brady, and Chairman Hatch:

I write in opposition to increasing the federal gas tax. An increase in the gas tax will disproportionately harm low and middle-income families and will only encourage further wasteful spending.

Republicans have just passed tax reform that gave middle class tax relief to American families across the country. The legislation reduced the federal tax burden for a family of four earning $73,000 by nearly 60 percent, resulting in a $2,058 reduction in taxes. Similarly, a single parent with one child earning $41,000 per year will see tax reduction of 73 percent, resulting in a $1,304 tax cut.

Raising the gas tax will directly undermine these gains and would predominantly falls on middle and low-income American families. According to Strategas Research, a gas tax increase of $0.25 per gallon would increase taxes on consumers by $37 billion next year.

If combined with an anticipated $0.20 per gallon increase from rising gasoline prices, consumers will pay $71 billion more for gasoline next year, wiping out 60 percent of the $120 billion in tax cuts contained in the Tax Cuts and Jobs Act.

Instead of increasing taxes on consumers, Congress should prioritize cutting wasteful spending. While supporters of a gas tax increase argue that it is needed to pay for roads and bridges, the Highway Trust Fund, which is financed by the gas tax, is frequently pillaged for projects unrelated to its purpose.

A recent report by the Government Accountability Office (GAO) found that more than 50 percent of the HTF spending went to non-road-related projects, while 15 percent of federal gas tax revenue is diverted to the Mass Transit Account, which supports local bus and light rail services, while an additional $850 million is spent on recreational trails and beautifying streets. HTF funds have even been used on squirrel sanctuaries and to finance driving simulators.

Lawmakers can find further savings through suspending the Davis-Bacon Act, which needlessly increases the cost of infrastructure projects. The Davis Bacon Act requires contractors working on government projects to be paid “prevailing wage.” However, the Department of Labor uses a highly flawed methodology which sets prevailing wages 22 percent above market rates. In 2011 alone, Davis-Bacon added $11 billion to the deficit. 

Rather than asking taxpayers to foot the bill for more wasteful spending, Congress should prioritize meaningful reforms to the HTF to end the cycle of wasteful spending on projects unrelated to rebuilding America’s roads and bridges.

A vote to increase the gas tax will only perpetuate further wasteful spending and will undermine middle class tax relief gained from passing tax reform last year. Rather than increasing taxes on consumers to fund infrastructure, I urge you to prioritize spending reforms that ensure existing revenues are wisely spent.


Grover G. Norquist
President, Americans for Tax Reform

Cc: All Members of the U.S. House of Representatives and U.S. Senate

Photo Credit:

ATR Urges Virginia Lawmakers to Reject Hospital Bed Tax and ObamaCare Expansion

Share on Facebook
Tweet this Story
Pin this Image

Posted by Paul Blair on Tuesday, February 20th, 2018, 3:53 PM PERMALINK

Today, in a letter to Virginia lawmakers, ATR President Grover Norquist urged the House of Delegates and state Senate to reject a proposal which would both raise the health care/hospital "bed tax" and expand Medicaid for able-bodied adults in the Commonwealth. This significant expansion of ObamaCare in Virginia would expand the pool of individuals who qualify for taxpayer-funded health care by more than 300,000 for those who make up to 138 percent of the federal poverty level. 

It should be noted that the House-passed plan does institute a work requirement, a change causing headaches at groups like Families USA who prefer expansion without any accountability

In the letter to lawmakers, Grover explains:

"Medicaid expansion has cost states two and a half times as much as promised, according to a report released this month by the Foundation for Government Accountability. Expansion per-person costs have exceeded original estimates by 76 percent. Total Medicaid expansion cost overruns have cost taxpayers 157 percent more than expected. These overruns will saddle Virginia taxpayers billions of dollars more than expected.

In Virginia, Medicaid accounted for more than 60 percent of General Fund spending growth over the last decade. Across the country, Medicaid expansion has caused Medicaid spending as a percent of budgets to go from one in four dollars to one in three. Expansion will either result in future tax hikes or cuts to other priorities, including transportation and education." 

The proposal also games the federal Medicaid system by raising the health-care provider tax, referred to as the "bed tax." This gimmick takes advantage of new revenue on health care providers, counts it as state spending, and qualifies it for a spending match from the federal government. This needless cash grab drives up the cost of health care and assumes that the federal government will never reduce the cap on health-care provider taxes which qualify for a federal match. Grover notes:

"Hoping that the federal government will maintain its promise to fund 90 percent of expansion costs in perpetuity is an assumption made by those with a fundamental misunderstanding of reality about Washington, D.C. and its debt obligations. If Virginia expands Medicaid, there is no turning back. The state will eventually be on the hook for billions. 

The letter concludes: 

"Last October, House Speaker Kirk Cox said, “It’s a simple proposition: if you cannot afford your mortgage payment, you don’t build a new addition to your house… It would be financially irresponsible to ask taxpayers to fund the massive expansion contemplated under the Affordable Care Act.” I agree. It was reckless then and is reckless today. 

ATR urges the legislature to reject Medicaid expansion and a new bed tax. Lawmakers should pass work requirements and focus on reforms that drive down costs instead of trying to game the federal Medicaid system." 

Click here for a copy of the letter. 

Photo Credit: Flickr: Mayberry Health and Home

More from Americans for Tax Reform

Fannie & Freddie Bailout Request Highlights Need for Housing Finance Reform

Share on Facebook
Tweet this Story
Pin this Image

Posted by Matthew J. Adams on Monday, February 19th, 2018, 4:59 PM PERMALINK

Last week, Fannie Mae and Freddie Mac issued requests to the U.S. Treasury asking for billions of dollars in cash infusions. The requests come after Q4 2017 reports show net losses totaling billions for the two housing institutions, forcing them to draw on their line of credit with the Treasury. The request is roughly $3.7 billion for Fannie Mae, and $312 million for Freddie Mac.

While Fannie and Freddie blame their requests on passage of the GOP’s tax reform, others criticize their contrived multi-billion dollar payments to trust funds while lacking sufficient capital to continue paying. In reality, the requests were spurred from their capital reserves declining toward $0 over the past year, paired with write-downs of their deferred tax assets, prompting the ask for a withdrawal from the Treasury’s coffers. The request has been long-expected from economists and market observers, but it nevertheless indicates the urgency for housing reform.

The two institutions are America’s largest mortgage companies, standing behind $5 trillion in mortgage debt. Spurred by the Great Depression and the following housing market collapse, consumers quickly defaulted on mortgages and lenders themselves lacked, hoarded, or simply stopped loaning capital. Congress quickly moved to alleviate the problem, and created Fannie Mae in 1938 as part of President Roosevelt’s New Deal. Formed as a government sponsored enterprise or GSE, it created a national fund for mortgage lending, with loans backed by an implicit government guarantee. In the late 60s and early 70s it was converted to a publicly traded company, and Freddie Mac was founded shortly after to compete with Fannie. However, both bought and continue to buy mortgages, sell securities, and retain the coveted government guarantee.

For years, the GSEs bought mortgages, packaged them together, and sold them off as securities to Wall Street. However, many were full of underperforming subprime mortgages, which borrowers later defaulted on as they couldn’t repay the loans. In 2008, with the collapse of the Lehman Brothers, federal regulators soon took both Fannie and Freddie under government conservatorship, bailing them out with taxpayer funds of roughly $187 billion.

With the financial crisis still fresh in 2011, Americans for Tax reform submitted testimony to the House Financial Services Committee recommending measures to encourage Congress to reform the housing market towards a more transparent, responsible, and taxpayer friendly environment.

Unfortunately, it’s been 10 years since the initial bailout, and still, the housing market has yet to see any real reform. 

After learning that the GSEs were in need of cash last week, Financial Services Chairman Jeb Hensarling issued a press release lambasting the request:

 “After footing the bill for the costliest bailout in history, taxpayers are sick and tired of getting ripped off by Fannie and Freddie and then scolded by GSE apologists when they complain.  Americans deserve better.  That’s why Congress can and should enact comprehensive housing finance reform this year to create a sustainable housing system.

If the necessity for reform wasn’t clear enough, a stress test done by the Federal Housing Finance Agency this past summer found that if another economic downturn occurred, the two GSEs could require another bailout close to $100 billion dollars just to stay solvent.

With a Republican in the White House and GOP majorities in both chambers, the time for reform is now. Chairman Hensarling, Treasury Secretary Mnuchin, and Federal Housing Finance Agency Director Mel Watt have have all expressed support for housing finance reform, indicating that the efforts will hopefully have the momentum to materialize in the coming months. 

Photo Credit: Daniel Lobo

ATR Supports Wisconsin Legislators’ Efforts to License Dental Therapists

Share on Facebook
Tweet this Story
Pin this Image

Posted by Tyler Tate on Friday, February 16th, 2018, 9:56 AM PERMALINK

Wisconsin legislators recently introduced innovative legislation to create a mid-level dental practitioner position in an effort to reduce healthcare costs and increase access to dental care. If passed, Senate Bill 784 and companion Assembly Bill 945 would allow the state dental board to license educated and qualified mid-level dental practitioners as dental therapists.

Similar to dental hygienists, dental therapists would work under the supervision of dentists to provide an expanded number of services to dental patients, including filling cavities and other basic procedures. The position mirrors the nurse practitioner system in hospitals, where mid-level providers work within a broader health team to provide quality service at a lower cost to consumers.

This pro-consumer legislation may be the solution to reducing costs and increasing access to dental care in Wisconsin, especially for rural and underserved populations. Nationwide, 63 million Americans live in areas designated by the Department of Health and Human Services as dental shortage areas.

By allowing dental therapists to handle basic procedures, dentists would have greater flexibility to focus on more complex procedures and treat more patients, similar to how dental hygienists enable dentists to efficiently use their time to serve patients. This greater efficiency holds the key to reducing dental costs and increasing access to care, all without cost to taxpayers or increasing government regulations.  

The change would especially benefit lower income households and Medicaid recipients. Currently, only one in three dentists accepts Medicaid recipients. By decreasing the costs of providing dental services, this legislation enables more dentists to offer services to Medicaid recipients.

Dental therapists can already practice in Alaska, Minnesota, Maine, and Vermont, which have all authorized the licensing of these mid-level practitioners.

Furthermore, the policy has strong bipartisan support on the national level. According to a poll commissioned by the Americans for Tax Reform Foundation and conducted by Wilson Perkins Allen Opinion Research, 79% of Americans support the creation of a mid-level practitioner position. The support is evenly spread among Americans of all parties, with 77% of Republicans, 80% of Democrats, and 80% of Independents in favor. 58% of all respondents strongly support the creation of this position, indicating support is intense and broad.

ATR strongly urges the Wisconsin legislature to expand the scope of practice for dental hygienists through the creation of a new mid-level dental provider. ATR's letter to the legislature can be found here.

Photo Credit: Wikimedia Commons

Stop the Gas Tax Hike!

Share on Facebook
Tweet this Story
Pin this Image

Posted by Adam Radman on Friday, February 16th, 2018, 9:13 AM PERMALINK

It seems politicians in Washington can't help themselves. While Americans are just starting to feel tax relief from President Trump's tax cuts, some in Congress are already floating the idea of a federal gas tax hike. 

The federal gas tax is one of the most regressive taxes in existence. It disproportionally affects lower-income people, who see a more substantial portion of their paychecks go towards energy. 

A recent study by Strategas Research found that "60% of the individual tax cut savings in 2018 would be wiped out by rising gasoline prices and a $.25 per gallon gasoline tax increase."

There is no need for a gas tax hike. The problem is gas tax revenue is siphoned off to pay for projects unrelated to roads and bridges.

Use the form below to tell President Trump and Congress: No Gas Tax Hike!


Photo Credit: Adobe Stock Photo

More from Americans for Tax Reform

Taxes Become Topic of Discussion in South Carolina Gubernatorial Race

Share on Facebook
Tweet this Story
Pin this Image

Posted by Americans for Tax Reform on Thursday, February 15th, 2018, 4:48 PM PERMALINK

South Carolina Gov. Henry McMaster (R) recently came under attack from Catherine Templeton, McMaster’s opponent who is challenging the incumbent governor in the upcoming June primary to be the GOP’s gubernatorial candidate this November.

Templeton – who has served as Director of the Department of Health and Environmental Control and is also former Director of the Department of Labor, Licensing and Regulation – claimed at a recent Republican luncheon that Gov. McMaster signed into law “"the largest tax increase in modern history.”

Templeton’s claim here is false, and has been correctly ruled as inaccurate in fact checks conducted by both the Charleston Post & Courier and the Columbia, SC-based The State newspaper. As the Post & Courier fact check points out, the pension bill signed by McMaster that Templeton claims was a tax hike is a piece of legislation that, in fact, “did not include any new taxes.” Rather, that bill increased employer and employee contributions to the state pension system.

Templeton’s attack on Gov. McMaster here false and misleading. As it would happen, not only has he not raised taxes, but Gov. McMaster is one of 12 governors nationwide to have signed the Taxpayer Protection Pledge, a written commitment to voters to oppose and veto any and all efforts to raise taxes. Gov. McMaster kept his commitment to South Carolina voters by vetoing a regressive gas tax increase last year that was ultimately enacted when the legislature overrode his veto. Nikki Haley was a Taxpayer Protection Pledge signer during her time as governor. Catherine Templeton has also signed the Taxpayer Protection Pledge in her bid for office.

“After being hit with 20 federal Obamacare tax increases over the last eight years and a state gas tax hike last year, the last thing Palmetto State taxpayers need is to be hit with further tax hikes at the state level,” Grover Norquist, president of Americans for Tax Reform, said. “As such, I applaud both Gov. Henry McMaster and Catherine Templeton for signing the Taxpayer Protection Pledge and in doing so, making the principled commitment to defend South Carolina voters from any and all efforts to raises their taxes.”

Photo Credit: Jimmy Emmerson

SpaceX Celebrates Successful Falcon Heavy Launch

Share on Facebook
Tweet this Story
Pin this Image

Posted by Krista Chavez on Thursday, February 15th, 2018, 10:07 AM PERMALINK

Last week, SpaceX successfully launched its Falcon Heavy booster for the first time from the Kennedy Space Center in Florida. This achievement puts American industry at the forefront of space exploration, proving that where government stalls, the private sector takes over the job of innovation. And they do it at lower costs, with David Bowie blasting in the background.

At 229.6 feet tall, the Falcon Heavy rocket is quickly becoming the most powerful. It has the liftoff thrust of 5 million pounds and capability for more than 140,000 pounds. Competing with this rocket is NASA’s new Space Launch System (SLS), which is being designed to take humans in interplanetary missions. According to CNN, the agency will design new rockets for each new mission. The SLS costs $2.6 billion annually to develop and build the ground launch systems at the Kennedy Space Center. The three year delay of the SLS will add another $7.8 billion to its already costly development. ArsTechnica notes, "That $7.8 billion equates to 86 launches of the reusable Falcon Heavy or 52 of the expendable version."  

In 1969, NASA’s Saturn V rocket brought humans to the moon, and took us back to space throughout the '70s. While the Saturn V was a breakthrough in human engineering, innovation is on the horizon to take us into the 21st Century of space exploration. SpaceX CEO Elon Musk is now taking that dream of humanity in space to new heights, at lower costs. When the Saturn V was being produced, it cost $1,160,000,000 (adjusted for 2016 inflation) to launch from the Kennedy Center pads. In comparison, the Falcon Heavy costs $90,000,000 to launch, cutting prices 7.8%.

This means that the U.S. can launch 13 Falcon Heavy rockets for every Saturn V rocket launched.

Additionally, NASA tried to do a review of the SLS at the request of the Trump administration to determine whether astronauts would be able to fly on the rocket’s first mission. However, the report found that it would be too difficult, dangerous, and expensive for NASA to pull off in 2019.

Despite this, NASA announced in 2017 that its goal to launch the first SLS would be December 2019. However, this date could be moved due to possible risks, “While the review of the possible manufacturing and production schedule risks indicate a launch date of June 2020, the agency is managing to December 2019,” NASA administrator Robert Lightfoot noted in a statement.

“When you’re talking about the differences in budgets, it’s phenomenal how less expensive Falcon Heavy is compared to a government rocket like SLS,” owner of consulting firm Astralytical Laura Forczyk disclosed to The Verge in a report. Another competitor, the United Launch Alliance’s (ULA) Delta IV Heavy, was also beat on Tuesday by Falcon Heavy’s low cost and high payload. SpaceX’s product can carry at least twice as much as ULA’s at only one-third of the cost. The Falcon Heavy is advertised for $90 million per launch, but the Delta VI Heavy costs between $300 million and $500 million per flight. This cost reduction is significant and exciting for the purchasing power of space exploration.

All this competition makes a clear point—the private market is better at creating innovation to advance human flourishing than government. The market does it at significantly lower costs with exciting new features and entrepreneurial horizons.

Photo Credit: Kristian Golding, Flickr

More from Americans for Tax Reform

Dr. Barash Makes Written Commitment to Oppose Higher Taxes in CA-07 Race

Share on Facebook
Tweet this Story
Pin this Image

Posted by Chris Skinner on Thursday, February 15th, 2018, 9:32 AM PERMALINK

Americans for Tax Reform (ATR) congratulates congressional candidate Dr. Yona Barash for signing the Taxpayer Protection Pledge, which is a written commitment to the people of California to oppose higher taxes.

Dr. Barash was born in Romania during WWII and immigrated to Israel where he joined the Israeli Defense Force after high school.  Later, he graduated from the Hebrew University Medical School in Jerusalem. In 1975, Barash moved to the United States and has practiced surgery in the Sacramento area since 1989.

“The American people are tired of the tax-and-spend policies coming from Washington and they are looking for solutions that create jobs, cut government spending, and grow the economy. Signing the Pledge is the first step in that process,” said Grover Norquist, President of Americans for Tax Reform.

Candidates running for public office like to say they will not raise taxes, but often turn their backs on the taxpayer once elected. The Taxpayer Protection Pledge requires these candidates to put their rhetoric in writing. It is offered to every candidate for state and federal office and to all incumbents. Nearly 1,400 elected officials have signed the Pledge.

“We are ecstatic about Dr. Barash’s commitment to the taxpayers of California. I challenge all candidates for California’s 7th Congressional District to make the same commitment to taxpayers by signing the Taxpayer Protection Pledge today,” continued Norquist.

Photo Credit: Dr. Barash for Congress

More from Americans for Tax Reform

Norquist Statement In Opposition to Raising the Gas Tax

Posted by Alexander Hendrie on Wednesday, February 14th, 2018, 4:43 PM PERMALINK

ATR President Grover Norquist released the following statement in opposition to raising the federal gas tax:

“There is no need to raise the federal gas tax. The problem is not that the gas tax is too low. The problem is that gas tax revenue is siphoned off to pay for projects unrelated to roads and bridges.

“Supporters of raising the gas tax claim that roads and bridges are a priority and higher taxes are needed to pay for them. But by refusing to consider displacing existing spending, they are admitting that they view every other spending program—foreign aid, farm subsidies--as more important than fixing roads and bridges. Their insistence on raising the gas tax proves their only real goal is higher taxes on American families. Again.

“Democrats always promise they would only tax the top 1%.  Then they get elected and try to raise taxes on energy/gasoline and screw the middle class. (Clinton and Obama). President Trump will not be fooled into following the Democrat play book.”


Photo Credit:

More from Americans for Tax Reform