Report: Hillary’s State Department Spent $79,000 On Obama Books
$79,000 of taxpayer money was used to buy copies of Barack Obama's books during Hillary Clinton’s tenure in the State Department.
Hillary Clinton's State Department used millions of taxpayer dollars for frivolous expenses and odd, non-State Department essential items such as $630,000 to increase Facebook "likes" on State Department pages and $450,000 to send three comedians to India on a tour called "Make Chai Not War."
These findings were published today in a 21 page in-depth report by the Republican National Committee that is based on findings from the State Department's Office of Inspector General (OIG). The OIG issued two Management Alerts relating to the State Department's oversight of contracts and grants during Secretary Clinton's tenure.
The OIG reported over $600 million de-facto waste in their reports. The RNC did a random sample analysis of State Department's line item expenditures and they identified over $9 million in expenses that were seen as extremely frivolous and excessive.
Why did the State Department, under Hillary Clinton's lead, spent so much taxpayer money on ridiculous items that are obviously not necessary? One can only guess for reasons why the State Department would need to spent $79,000 on books written by Barrack Obama. At an average of $15 per book that’s more than 5,000 (five thousand!) books. The State Department library must be overflowing.
Or why the Clinton State Department decided that it was good use of taxpayer’s money to spent $5,400,000 on a no-bid contract for crystal stemware. Perhaps to drink the 32 bottles of wine from for which they paid $4,837.
Donald Trump mentioned during the third debate that under Clinton’s tenure $6 billion went missing since 2008. This was most likely based on a memo from the OIG in 2014 where they found that:
“Specifically, over the past 6 years, OIG has identified Department of State (Department) contracts with a total value of more than $6 billion in which contract files were incomplete or could not be located at all.”
Funnily enough Hillary said these claims were debunked (they are not). This new report by the RNC ads more proof to the mountain hill of evidence that the State Department wasted millions of taxpayer dollars under Hillary Clinton’s tenure.
Imagine what kind of shopping she would do as president.
More from Americans for Tax Reform
Texas Considers Tax Hike on a Tourism Industry Trounced by Pandemic
For years, the Lone Star state has been a shining light for other states, showing that low taxes mean big growth.
One of nine states with no income tax, Texas has led the nation in population growth over the past decade, and become the world’s ninth-largest economy.
So it comes as a surprise that some Texas legislators are advancing a tax hike this session, including the chairman of the House Ways and Means committee.
It only gets more confounding when you consider the state, along with local governments, will get around $17 billion from the Biden bailout.
There was some overblown fear of a budget gap, but that gap is turning out to be far smaller than expected, and the state has federal cash lying around which further renders budget gap talk pointless.
It gets even worse when you consider the tax in question is a tax on tourism. House Bill 2889 would hammer travel agents with a new tax on service fees.
This picks on a hospitality industry that has been absolutely crushed by the pandemic. Job loss in hospitality in Texas has been worse than any other industry, employment was down 23% from February 2020 to January 2021 (Private Enterprise Research Center at Texas A&M).
Not to mention, hiking taxes on booking travel would have a negative downstream effect on restaurants, trucking, retail shopping, and more.
Texas legislators should be on high alert, especially Senate Republicans, as the House threatens to moves this tax hike next week.
The good news, over 40 state legislators have signed the Taxpayer Protection Pledge committing to their constituents they will oppose all tax hikes.
The bad news, some of these pledge-signers are flirting with breaking their commitment – just to support an unjustifiable tax hike that picks on the industries most hurt by the pandemic.
Texas taxpayers should get on the phone and make sure their legislators are not falling for the tourism tax hike trap.
Photo Credit: Patrick Gensel
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FDA & Marvel’s "Mind Control Menace" is Comically Ludicrous, but Seriously Dangerous
This year, the U.S. Food and Drug Administration (FDA) has procured the assistance of Marvel Comics, the creators of countless famous characters including Captain America, Spider Man, and the Hulk, to spread fear-mongering propaganda about e-cigarettes to the masses.
This promotion is a part of FDA’s “The Real Cost” initiative, a costly government program that was recently renewed with a $900 million budget to be spent over the next five years.
With Marvel’s help, the FDA has introduced Mind Control Menace, a storyline that follows two teenagers, Javier and Amy, as they seek to rid their town of an unknown plague. The plague, which appears in the form of green vapor, specifically targets high school students, turning them into zombies, effectuated with terrifyingly empty, pale-green eyes.
This "menace”, clearly representative of e-cigarettes, possesses nearly all of Amy and Javier’s peers until the motivated teens invent a device that allows them to see into the future. Amy and Javier show their zombified classmates what their futures will look like should they continue to succumb to the mind-controlling menace.
Ironically, the teens use of science to “save the day” is reminiscent of how e-cigarettes were invented. While many anti-vaping advocates like to claim that vaping was invented by big tobacco, this could not be further from the truth.
The first vapor device was invented in America in 1963, but it wasn’t until 2001, in Beijing, China, that the world’s first e-cigarette was created. Hon Lik, a Chinese pharmacist and heavy cigarette smoker, had recently lost his father to lung cancer and was determined to quit the deadly habit himself.
Lik invented a vaporization system that combined non-toxic aerosol with nicotine concentrate, creating a device that mimics the habitual nature of cigarette smoking while removing the thousands of chemicals and tar that cause cancer and other severe illnesses.
Hon Lik used science to “save the day” and while Marvel’s Mind Control Menace is pure fiction, Lik’s invention is very much real and has helped countless smokers quit cigarette use, not just saving the day, but saving their lives.
As the story continues, Amy and Javier lead their classmates in defeating the plague by simply yelling “No” at the “menace” of vaping. This “Just Say No” style of messaging is evocative of D.A.R.E. (Drug Abuse Resistance Education) programs, popularized in the 1980’s as a means of combatting drug use among youths.
The “Just Say No” strategy has been universally accepted as a failure, with data indicating that the D.A.R.E. program did little to nothing to combat substance abuse among teens. A 2009 mathematical review of 20 different scientific studies further reinforced the scope of this failure, revealing that teens who enrolled in the D.A.R.E. program were just as likely to engage in drug use as those who received no drug-abuse intervention.
If drug addiction and substance abuse could truly be overcome by simply saying “No” then drug addiction would not be a problem in the United States. Yet 21 million Americans have at least one addiction and only 10% of those with an addiction receive treatment.
This troubling statistic is largely due to the stigma that surrounds drug addiction. Even as scientists have long reached the consensus that addiction is a complex brain disorder with intricate behavioral components, many in the public still view addiction as a consequence of moral weakness and flawed character.
Messaging like Mind Control Menace further reinforces this stigma by telling America’s youth that nicotine addiction is something that can simply be overcome by standing tall and valiant, puffing out your chest, and courageously saying “No” to addiction. It is then easily inferred that anyone who falls victim to addiction is clearly not brave enough, or smart enough, to stand up to addiction. This obvious and dangerous instance of victim-blaming will only make the issue of addiction worse.
Mind Control Menace also fails to consider a key aspect of any comic book and movie; the villain is half the intrigue. While superheroes are household names in America, so are their archrivals. Marvel’s anti-vaping propaganda will only further the curiosity that youth have regarding vaping.
What FDA & Marvel forgot, or chose to ignore, is that the 2019 National Youth Tobacco Survey found curiosity to be the most common reason school-age kids cited for trying e-cigarettes. The more curious kids are about vaping, the more likely they are to try it. Promoting messaging that will undoubtedly increase curiosity around vaping is both foolish and dangerous and is entirely the wrong approach for keeping youth away from e-cigarettes.
Rather, FDA could consider another approach, one that would keep e-cigarettes out of the hands of children while being truthful with them about the harms and benefits that e-cigarettes have. E-cigarettes are tools that help smokers quit, not a “menace” that controls your mind. They are proven to be 95% less harmful than combustible cigarettes and are more than twice as effective at helping smokers quit than traditional nicotine replacement therapies like nicotine patches or gum. E-cigarettes should be promoted as a safer alternative to cigarettes and a way of helping those who can’t quit cigarettes, not as an alien fog that turns teenagers into zombies.
It is difficult to discern which aspect of Mind Control Menace is most nonsensical. Could it be the massive $900 million price tag? Could it be the foolish “Just Say No” messaging that stigmatized addiction? Or could it be the notion that this fear-mongering misinformation will keep any teenager, even just one single teen, from trying e-cigarettes? There truly isn’t a right answer.
E-cigarettes don’t require some lifesaving scientific invention that will help people quit using them; they are that lifesaving scientific invention. It’s time we start treating them as such.
Photo Credit: Marvel
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ATR Releases Letter Supporting Senator Roy Blunt's EBITDA Bill
ATR President Grover Norquist today released a letter in support of Senator Roy Blunt's bill to prevent a tax hike exceeding $100 billion on American businesses deducting interest expenses. This legislation is cosponsored by Senators Rob Portman, James Lankford, and Jim Inhofe. If allowed to go into effect, this tax hike would harm businesses hit hard by the pandemic and would make the United States' deduction standard uncompetitive relative to foreign competitors.
All members of Congress should support and co-sponsor this legislation.
You can read the full letter here or below:
April 15th, 2021
Dear Senator:
I write in support of legislation introduced by Senators Roy Blunt (R-Mo), Rob Portman (R-Ohio), James Lankford (R-Okla.) and Jim Inhofe (R-Okla.) to prevent a tax hike on American businesses deducting interest expenses. If lawmakers fail to act, this deduction will narrow at the end of the year.
Currently, businesses can deduct net interest expenses (i.e. debt) up to 30 percent of earnings before interest, tax, depreciation, and amortization (EBITDA) under IRC section 163(j). However, effective 2022, this deduction is narrowed to 30 percent of earnings before interest and tax (EBIT).
Removing depreciation and amortization from the calculation of the deduction will reduce the value of the tax deduction, resulting in a tax hike for many capital-intensive taxpayers including manufacturing businesses.
Allowing the EBIT standard to go into effect could result in a tax increase exceeding $100 billion over the next decade. As noted by the Joint Committee on Taxation report analyzing the Tax Cuts and Jobs Act (which first instituted the interest limitation), the EBITDA standard raises $90 billion in revenue in the first five years, while the EBIT standard raises $163.2 billion. Approximating this difference over the ten-year window would imply that failing to pass Sen. Blunt’s bill would result in a tax hike of at least $140 billion over the next decade.
In addition, the EBIT standard could disproportionately harm businesses that have been hit hard by the Coronavirus pandemic. A 2020 study by Ernst and Young notes that the 163(j) limitation tends to increase taxes on businesses during economic downturns because they are more likely to report lower income and higher interest expense. Given we are still recovering from an economic downturn due to the Coronavirus pandemic, making the EBITDA standard permanent is more important than ever.
Finally, an EBITDA standard is globally competitive whereas an EBIT standard would harm American businesses relative to foreign competitors. According to the Tax Foundation’s International Competitiveness Index, many foreign countries including the United Kingdom, France, Germany, Korea, and Mexico utilize an EBITDA standard for their interest deduction limitations. Maintaining this EBITDA standard will therefore help American manufacturers and other businesses compete with foreign businesses.
I urge you to support Sen. Blunt’s legislation to make the EBITDA standard permanent for calculating interest deductions. This legislation will prevent a tax hike exceeding $100 billion from going into effect, will ensure American businesses have a tax code on par with foreign competitors, and will help businesses with cashflow coming out of the pandemic.
Onward,
Grover G. Norquist
President, Americans for Tax Reform
Photo Credit: Gage Skidmore
List of Tax Hikes Supported by Virginia Candidate for Lieutenant Governor Glenn Davis
In the heavily contested race for the Republican nomination for Lieutenant Governor this year in Virginia, voters should beware: Delegate Glenn Davis has a history of voting to raise taxes and grow government.
Here are just a few of the billions of dollars in tax hikes he has supported during his time as a Delegate to the General Assembly and City Council-member:
Sales Tax Hikes
Six Percent Sales Tax Increase Statewide (HB 2313, 2013);
Twenty Percent Sales Tax Increase in Northern Virginia and Hampton Roads (HB 2313, 2013);
Gas Tax Hikes
Statewide Gas Tax Increase (HB 2313, 2013);
Targeted Hampton Roads Gas Tax Increase (HB 2313, 2013);
Targeted Central Virginia Gas Tax Increase (HB1541, 2020)
Real Estate Tax Hikes
Northern Virginia Real Estate Recording Tax Increase (HB 2313, 2013);
Virginia Beach Real Estate Tax Increase (Virginia Beach's 2013 City Budget);
Hampton Roads Grantors Tax Increase (HB1726, 2020)
Hotel Tax Hikes
Two Percent Hotel Occupancy Tax Increase (HB 2313, 2013);
Car Tax Hikes
Car Titling Tax Increase from 3 to 4.14 Percent (HB 2313, 2013);
Personal Property Tax Increase on Cars from $3.70 to $3.80 per $100 of Value (James Spore, Resource Management Plan, 2010);
New Internet Taxes
New Tax on Internet Purchases (HB 1501, 2017);
Davis filed legislation in 2017 to tax internet sales, a move that could have raised taxes by more than $250 million a year (Fiscal Impact Statement, Department of Taxation).
But wait, there's more. Delegate Glenn Davis supported Obamacare expansion in Virginia. When his colleagues were rejecting the misguided expansion of Medicaid for able-bodied adults, Davis was penning op-eds and spending his time arguing, "We take the money, or it goes someplace else."
Delegate Glenn Davis is not a mainstream conservative. He's out of touch with the real needs of taxpayers.
Unlike Winsome Sears and Tim Hugo, also contenders for Lieutenant Governor, Davis refuses to sign the Taxpayer Protection Pledge, a written commitment to you, Virginia voters, to oppose even more tax increases. Can taxpayers trust Davis as Lieutenant Governor? On May 8th, they'll have the chance to decide.
Grover Norquist on the Importance of a Competitive Corporate Tax Rate
ATR President Grover Norquist joined Jacqueline Alemany on Washington Post Live to discuss President Biden’s proposed tax increases and his more than $4 trillion infrastructure plan.
During this conversation, Norquist discussed the success of lowering the corporate income tax rate in the Tax Cuts and Jobs Act, which led to the lowest unemployment rate in 50 years, immense economic growth, and a substantial rise in the median income.
Norquist explains how lowering the corporate income tax rate helped lower the unemployment rate to historic levels:
"When the Republicans cut taxes, we took the highest corporate rate in the world, 35 percent, all the rest of the world had lowered their corporate rates below 35 percent and they were getting stronger economic growth as a result. We were still at 35 percent, 10 points higher than communist China. What happened when the Republicans cut individual rates, rates on small business, rates on corporations?
We went to the lowest unemployment in 50 years, 3.5 percent; this is 2019. We went to the lowest poverty rate in 50 years. Everything that the liberals said they want to do with big spending programs was actually achieved. The bottom quarter earners got larger raises than the top quarter earners in the economy."
Norquist explains how the Tax Cuts and Jobs Act spurred economic growth and raised wages:
"So, for everything from equity to jobs to creation, compare it to the rest of the world. The U.S. growth in 2018 was 2.9 percent; that was twice Germany's, which was 1.5 percent; more than twice Britain's.
We were not only out-competing--in one year, one year alone, 2019, the median income, which is the median income, family income, half people make less, half the people make more. Bill Gates making a billion dollars doesn't move the median. The median income, in that one year alone, increased 6.8 percent, or $4,440; $4,000 raise for the median income. That means tens of millions of Americans saw their income increase by those amounts. That compares to, oh, during the Obama years, in eight years, Obama increased it 5 percent. In one year, the lower rates in 2019 increased the median income 6.8 percent, or over $4,000. By the way, almost exactly what the Republican economists in the White House predicted would happen if you cut taxes and more capital, more investment per worker flooded in."
Norquist explains how Biden's tax hikes will harm Americans' 401(k) accounts:
"But think about the owners of capital, if you have a 401(k), your 401(k) will be worth less because it's a higher corporate rate, and 53 percent of American households have a 401(k); 53 percent of Americans do not make more than $400,000 a year. Biden is going right for the middle class, right for the upper middle-class and that 400,000 is a dead letter and never amount to anything, and certainly doesn't mean anything now."
Click below to watch:
Iowans Will Get Stuck with Higher Utility Bills Due to Biden Corporate Tax Rate Hike
If Biden and the Democrats enact a corporate income tax rate increase, they will have to explain why they just increased your utility bills
If President Biden and congressional Democrats hike the corporate income tax rate, Iowa households and businesses will get stuck with higher utility bills. Democrats plan to impose a corporate income tax rate increase to 28%, even higher than communist China's 25%.
Customers bear the cost of corporate income taxes imposed on utility companies. Corporate income tax cuts drive utility rates down, corporate income tax hikes drive utility rates up.
Electric, gas, and water companies must get their billing rates approved by the respective state utility commissions. When the 2017 Tax Cuts and Jobs Act cut the corporate income tax rate from 35% to 21%, utility companies worked with officials to pass along the tax savings to customers, including at least four Iowa utilities.
Working with the Iowa Utilities Board, Iowa American Water Co., MidAmerican Energy Company, Black Hills Energy and Alliant Energy passed along tax savings to customers.
Alliant Energy: As noted in this April 13, 2018 DEI excerpt:
Alliant Energy announced this week that it will pass savings from lower federal taxes on to its customers in Iowa.
Annual savings, including tax-related savings from Alliant Energy’s transmission providers, are expected to be approximately $75 million, the company said.
“These tax savings are great for our Iowa customers and the new, lower corporate tax rate will benefit our families, businesses and communities today and in the future,” Doug Kopp, president of Alliant Energy’s Iowa energy company, said. “In the last six years, we’ve delivered about $500 million in other separate tax-related savings to customers, reducing energy costs.”
Typical residential electric customers will see an annual savings of approximately $50 to $60. Typical residential natural gas customers will see annual savings of approximately $30
Iowa American Water Co.: As noted in this Jan. 29, 2018 Des Moines Register article excerpt:
And Iowa-American Water Co., which provides service in eastern Iowa, would provide $1.5 million and $1.8 million to customers.
MidAmerican Energy Company: As noted in this April 5, 2018, Quad-City Times excerpt:
"A big part of the tax reform is the corporate income tax rate changing from 35 to 21 percent," said MidAmerican spokeswoman Tina Hoffman. "That is what the $42 million represents, with 100 percent going back to the customers."
The company expects to distribute $33 million on electrical bills and $8.8 million on natural gas bills. The total also includes annual savings for commercial and industrial consumers: $75 in electricity, $25 in natural gas for commercial customers and $8,000 in electricity, $175 in natural gas costs for industrial customers, she said.
In addition, Hoffman said MidAmerican expects to save another $40 million to $50 million in 2018 from other tax-related benefits including new provisions related to how companies account for excess accumulated deferred taxes and depreciation. The utility plans to create an account to capture these benefits and use them to reduce the size or need for a future rate case in Iowa.
Black Hills Energy: As noted in this April 27, 2018 Iowa Utilities Board statement:
The Iowa Utilities Board issued multiple orders this week approving an estimated $78.7 million in savings for utility customers based on the IUB’s investigation and review of the tax refund proposals filed with the IUB by MidAmerican Energy, Alliant Energy-Interstate Power and Light, and Black Hills Energy regarding the 2017 federal tax reform law.
The IUB opened an investigation into the impact of the federal Tax Cut and Jobs Act of 2017 on Iowa’s rate-regulated utilities in January 2018, Docket No. INU-2018-0001. The utilities’ tax refund proposals detailing how customers would benefit are a result of this investigation. The new tax law reduced the federal corporate income tax rate from 35 percent to 21 percent.
The following tax refund proposal tariffs were approved by the IUB, subject to complaint or investigation:
Black Hills Energy will return an estimated $2.2 million to its natural gas customers in Docket No. TF-2018-0037.
Conversely, a vote for a corporate income tax rate hike is a vote for higher utility bills as households recover from the pandemic.
Many small businesses operate on tight margins and can't afford higher heating, cooling, gas, and refrigeration costs. President Biden should withdraw his tax increases.
International Reference Pricing Would Harm American Patients, Workers, and the Healthcare System
President Joe Biden is expected to release a “human infrastructure” plan in the coming weeks that spends as much as $2 trillion. This proposal will likely include new tax increases and foreign price controls on American medicines that will harm patients, manufacturers, and the American healthcare system.
House Democrat lawmakers want to include H.R. 3, “the Lower Drug Costs Now Act,” legislation they pushed last Congress that would impose international reference pricing. This policy will set U.S. prices based off the prices in six countries - Australia, Canada, the United Kingdom, France, Germany, and Japan. These price controls are enforced by a 95 percent excise tax on medicines.
If included into the Biden infrastructure plan, international reference pricing would lead to healthcare shortages, threaten American jobs, and crush medical innovation.
Foreign countries have significant healthcare shortages. These countries utilize socialist price controls on their healthcare systems. Because there is no way to compete on price, supply is reduced, which means reduced access to care for citizens in these countries.
For instance, Canadian patients wait an average of 19.8 weeks from referral to treatment. By comparison, 77 percent of Americans are treated within four weeks of referral, while just 6 percent wait more than two months.
At any one time. one million Canadians are waiting for treatment according to some estimates.
In the UK, there was a shortage of 10,000 doctors and 43,000 nurses in 2019, with 9 in 10 managers in the National Health Service saying that too few doctors and nurses presented a danger to patients. At any one time, 4.5 million patients were waiting to see a doctor or receive care.
France has been forced to make significant spending cuts to its “free” socialist healthcare system and there have been significant shortages of basic supplies. Australia has also experienced problems with shortages of medicines, and healthcare professionals.
Adopting foreign price controls will create the same problems that foreign healthcare systems suffer from. It will lead to less medical innovation leading to fewer cures and healthcare shortages for American patients.
According to research by the Galen Institute, 290 new medical substances were launched worldwide between 2011 and 2018. The U.S. had access to 90 percent of these cures, a rate far greater than comparable foreign countries. By comparison, the United Kingdom had access to 60 percent of medicines, Japan had 50 percent, and Canada had just 44 percent.
Price controls utilized by Europe delayed new drugs coming to market by an average of 14 months.
Reference pricing will threaten the development of new medicines. As it stands, developing new medicines is a time consuming and expensive process, as noted by the Congressional Budget Office. It takes up to $2 billion and ten years to develop new medicines and only 12 percent of drugs that enter clinical trials ultimately make it onto the market. Manufacturers make this steep investment knowing they will be able to recoup the extensive costs involved.
Costs for developing new medicines includes laboratory research and clinical trials of drugs as well as expenditures on medicines that that do not make it past these stages. The clinical development and approval times alone average 90.3 months for a pharmaceutical drug and 97.3 months for a biologic.
Because of the steep investments required, research and development spending averaged 25 percent of net pharmaceutical revenues in 2018 and 2019, totaling roughly $80 billion each year.
Not only does this investment make the U.S. a world leader in medical innovation, but it also ensures we have high paying manufacturing jobs. Nationwide, the pharmaceutical industry directly or indirectly accounts for over four million jobs across the U.S and in every state, according to research by TEconomy Partners, LLC. This includes 800,000 direct jobs, 1.4 million indirect jobs, and 1.8 million induced jobs, which include retail and service jobs that are supported by spending from pharmaceutical workers and suppliers.
The average annual wage of a pharmaceutical employee in 2017 was $126,587, which is more than double the average private sector wage of $60,000. President Biden has repeatedly promised to create millions of new high paying manufacturing jobs in America. He must ensure that his policies do not cause the loss of existing jobs.
Adopting foreign price controls through an international reference pricing plan would harm American patients, workers, and the healthcare system. This policy has no place in Biden’s infrastructure bill and should be rejected by lawmakers.
Photo Credit: Darko Stojanovic
Poland’s Digital Advertising Tax is a Mistake
Poland is moving in the wrong direction on taxes. In February the government decided -- against longstanding principles of international taxation -- to impose new taxes on digital advertising. This new levy, from 5% to 10% on digital ads, will affect the private digital media market in favor of the state-run pro-government media. This is a clear anti-market policy that will affect foreign direct investment and increase bias public spending.
In Poland, substantially raising tax revenue from private digital media businesses will enable the government to spend more on state media. For example:
- Television, radio, and cinema companies whose annual advertising revenue is between PLN 1,000,000 ($262,692 USD) and PLN 50,000,000 ($13,134,585 USD) will pay a 7.5% tax. Companies with higher advertising revenue will pay 10%.
- Newspapers reporting advertising revenue between PLN 15,000,000 ($3,940,375 USD) and PLN 30,000,000 ($7,880,751 USD) will pay a 2% tax, while newspapers earning more will pay 6%.
- A 5% tax on Internet advertising will be placed on any company exceeding EUR 5,000,000 ($5,955,250 USD) of advertising revenue.
When plans to impose a new tax were announced, almost all private media went on strike, suspending publication of any content. Although the strike lasted only one day, it was the first time since 1989 that the media in Poland––often of different ideological orientations––united in this way and on such a large scale.
An American bad example: Maryland
In the United States, starting on March 14, Maryland was the first state to impose a digital advertising tax. Republican Governor Larry Hogan vetoed this bill in May 2020. The bill violates the Internet Tax Freedom Act, but the Maryland Senate, run by Democrats, ignored the Governor’s decision, as well as fierce opposition from many legal scholars and overrode the veto. This bill imposes a tax on digital advertising with a tax rate span from 2.5% to 10% which is applied to a company’s global annual gross revenue from digital advertising services in Maryland. The cost of the digital advertising service tax will ultimately be borne by Maryland-based employers and consumers in the form of higher prices and fewer options for advertising services, as companies that utilize online platforms will pass the added costs on to consumers. This will not come as a surprise, as companies like Amazon and Google had to adjust prices in response to similar measures in France, Spain, and other countries. This tax will be paid by people and not by the companies the government is targeting. The Maryland DST will not only affect the economy in the state but also undermine the powerful opposition of the USA's global position against digital service taxes.
A European bad example: Austria
But much closer to Poland, in Europe, is the Austrian digital advertisement tax. Despite the initial commitment to wait for and find a solution during the ongoing OECD negotiations, Austria implemented a digital advertisement tax of 5% on digital advertising on revenue, effective on January 1st, 2020. This levy is applied to all companies that reach or exceed an annual global revenue of 750 million Euro and annual revenue of 25 million Euro or more on digital advertising services. By nature of the design of the scope of the tax, only American tech companies are subject to it. It is the most advanced unilateral attempt by a European government to target U.S. digital corporations such as Google, Amazon, Facebook, and Apple. As consequence, the United States Trade Representative (USTR) launched an investigation into Austria's digital advertisement tax and concluded it was discriminatory against American companies.
New taxes – new normal?
The imposition of a new tax on advertising is harmful. But at least in Poland’s case, there’s something more to this story. The Polish government has long moved away from a free-market economic model to a statist hybrid in which social spending, state-owned companies, and the national media are seen as parts of a single taxpayer-funded orchestra. And the demands of this orchestra are constantly increasing. The tax on advertising would already be the 35th tax raised, or imposed, by the current government. It is worth remembering that as far as new "big" taxes are concerned, in 2016 the so-called bank tax among other things, was introduced, bringing an additional 4 billion zlotys ( more than 1 million USD) a year to the budget. Those Poles, whose income exceeds one million zlotys (more than260,000.00 USD), pay the solidarity levy, enriching the government by another 1.2 billion zlotys (more than 315,000,000.00 USD). In turn, revenues from the sugar levy imposed this year on all drinks containing sugar, sweeteners, and caffeine, taurine, and guarana are expected to amount to around 3 billion zlotys in 2021 (more than 780,000,000.00 USD).
This year has also witnessed the introduction of the trade tax (i.e. tax on retail sales), which is expected to translate into an additional 1.5 billion zlotys (more than 390,000,000.00 USD) in the State coffers. The costs of new taxes are always passed on to the end customer. However, as far as manufacturers are concerned, they are not neutral either. Some new taxes are imposed on goods for which demand is highly elastic. Their producers raise prices, but at the same time are unable to maintain their former profitability. This translates into a reduction in the rate of investment in the economy, which is actually occurring in Poland, with the rate falling to 17.1 % in 2020 compared to 18.5 % in 2019. This is a rate 5 percent lower than the government's plan presented in 2016. (Strategy for Responsible Development).
Taxes are not the answer
The decline in private investment cannot be indefinitely replaced by the investments subsidized by state-owned companies and the creation of new such entities. Unfortunately, new taxes stifle investment not only because of a reduction in their expected profitability but also because of the complexity of the fiscal and regulatory system they cause. In fact, all taxes on products and services introduced in Poland are based on complex and not entirely clear (even for tax advisors) mechanisms of calculation and collection. Moreover, even the solutions meant to simplify tax settlements, in practice they work exactly in the opposite direction (Slim Vat, Estonian Cit, JPK). As a result, Poland occupies distant places in the rankings assessing the operation of the tax system. For example, in the International Tax Competitiveness Index, Poland is ranked 3rd from last among the OECD countries and penultimate in Europe (just behind Italy), and in the "Paying Taxes" category of the World Bank's "Doing Business" ranking, Poland is ranked as low as 77th - globally.
A complicated tax system means that companies have to spend more and more money on legal services and consulting, which consumes resources away from productive activity. The smaller the company, the less capital it can devote to dealing with regulatory complexity, which translates into fewer innovative ideas: they are simply nipped in the bud. Another effect of growing fiscalization and the associated bureaucratization is the room for tax optimization, or tax avoidance. The more regulations there are, the more space there is for various lobbying organizations to seek 'exemptions' from such taxes, with translates into stifling market competition.
Poland has enjoyed years of prosperity and in order to maintain the right policy course that contributed to the country’s success, the time of the pandemic should be a time devoted to reviewing the State’s economic policy, aimed at reducing fiscalism and reducing the regulatory burden.
*President of the Warsaw Enterprise Institute (Poland)
Photo Credit: Giuseppe Milo
Pipeline Worker Three Months After Biden Killed Keystone: “We’re hurting and we need jobs.”
"He's not helping us and I don't know of any unions that he's helped so far in other trades."
Fox Business Network's Carley Shimkus visited Bald Knob, Arkansas to interview workers affected by President Biden's harmful executive order to halt the KeystoneXL pipeline. Nearly three months after Biden's decision, workers and their families are hurting.
Here are some onsite quotes from the report:
"It's hard to make plans when you've got an administration that's trying to crush your future."
"I've looked for them green jobs and they are not there."
"I lost probably $60,000 - $80,000 not being able to go on that job. That's my livelihood. If I'm not working, I'm barely scraping by. I've got two kids to support, what am I supposed to do there?"
"My whole family is unemployed."
"The middle class is standing right here and looking at him [Biden] and telling him, 'we're hurting, and we need jobs.'"
"He's not helping us and I don't know of any unions that he's helped so far in other trades."
Americans for Tax Reform is collecting personal testimonials of Americans hit by President Biden's energy restrictions. (If you would like to submit a short video, please send it to Mike Mirsky at mmirsky@atr.org). Please see the examples below:
Pipeline Worker: "I've got my whole life invested in this."
“This is our livelihood. We don’t consider it a temporary job. We consider it as our career.”
Democrats Threaten to Oppose Biden Spending Plan if SALT Deduction Cap is not Repealed
Several Democrats from high-tax states have threatened to vote against Biden’s infrastructure plan if it does not include a full repeal of the State and Local Tax (SALT) deduction cap. This repeal would disproportionately benefit wealthy Americans.
As reported by Politico, dozens of Democrats have made this threat. On Tuesday, a powerful group of House Democrats — all but two members of the New York delegation — sent a letter demanding that the repeal of the SALT deduction cap be a part of any tax-related bills Congress takes up. Notably, Rep. Alexandria Ocasio-Cortez was one of the New York Democrats who refused to sign onto this letter. She had also voted against repealing the SALT deduction cap in 2019.
Several New Jersey Democrats like Rep. Josh Gottheimer and Rep. Bill Pascrell have also called for the repeal's inclusion in President Biden’s next legislative package.
In a press release by Senators Chuck Schumer and Kirsten Gillibrand, Sen. Gillibrand said, “I am proud to join my colleagues to introduce legislation to repeal the cap on the State and Local Tax deduction, a cynical policy passed by Republicans as a way to repay wealthy donors and lobbyists with big corporate tax cuts,” said Senator Gillibrand. This statement is especially ironic considering that lifting the SALT cap would be much more favorable to the rich than the Tax Cuts and Jobs Act was—with almost three times as much of the benefit going to the top one percent.
All of this begs the question: what is more important to these Democrats? A multi-trillion infrastructure bill, which they claim the country desperately needs, or tax cuts for their rich constituents?
Many progressives have noted that the SALT deduction disproportionately benefits the wealthy. The New York Times described the SALT deduction as “The Tax Cut for the Rich That Democrats Love.” The Center for American Progress has stated that repeal of the SALT cap “should not be a top priority” as it would “overwhelmingly benefit the wealthy, not the middle class.”
The left-of-center Tax Policy Center found that the top 1 percent of households would receive 56 percent of the benefit of repealing the SALT cap, and the top 5 percent of households would receive over 80 percent of the benefit. The bottom 80 percent of households would receive just 4 percent.
Similarly, the Brookings Institution explained that almost all (96 percent) of the benefits of SALT cap repeal would go to the top quintile, 57 percent would benefit the top one percent (a cut of $33,100), and 25 percent would benefit the top 0.1 percent (for an average tax cut of nearly $145,000). Whether or not this is a tax cut for the wealthy is not up for debate—the evidence is clear.
Repealing the SALT cap would be a costly addition to Biden's spending plan. Fully repealing the SALT deduction cap would cost $80 billion per year, or $400 billion in total, as the cap sunsets in 2026 along with several other tax provisions. This $400 billion proposal would tie Medicaid expansion for the single largest category in Joe Biden’s infrastructure plan. Because Democrats are attempting to fund this bill through tax hikes, the repeal of the SALT deduction cap could result in Democrats raising taxes elsewhere, including taxes directly or indirectly on low- and middle-income Americans.
Democrats falsely claim that when the unlimited SALT Cap was repealed, Americans in blue states like New Jersey and New York saw a massive tax hike and were hit with double taxation, as they now pay federal taxes on income that was already subject to state and local taxes.
In reality, a majority of Americans do not claim the SALT deduction, or any deduction. Instead, they claim the standard deduction. In 2018, 133 million American taxpayers (or 87% of filers) claimed the standard deduction. These taxpayers deduct zero state and local taxes, so they have no protection against double taxation.
Democrats from high-tax states are desperate to repeal the SALT deduction cap because their constituents do not like the true burden of high taxes if they cannot deduct it. Quantitative evidence shows that the SALT deduction does make high-income Americans more tolerant of high state taxes.
The high costs of living in states like New York, New Jersey, and California has resulted in a mass exodus. In New York, 66.4 percent of total moves were outbound. Similarly, 60.6 percent of New Jersey’s total moves were outbound.
Because their state legislatures refuse to provide relief for their constituents, Democrats are attempting to curb the sting of high taxes from the U.S. Congress.
At the same time President Biden and others on the left are pushing for the wealthy to "pay their fair share" in higher taxes, Blue State Democrats are pushing for tax cuts for their own wealthy constituents.
Photo Credit: The Leadership Conference on Civil and Human Rights
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