 | The Need for Tax Reform: Simplicity, Savings, and Security |
 The U.S. tax system is time-consuming, expensive, and intrusive, and as the ongoing IRS scandal investigations have shown, its administration is subject to abuse and mismanagement of taxpayers' sensitive information. This week, National Taxpayers Union Foundation (NTUF) released a new analysis of the dire and growing risks present in the current tax system – and the ways in which the most prominent reform options could address those risks.
NTUF’s study offers an in-depth breakdown of the problems with the Tax Code, including the burden it places on our economy and the struggles the IRS has faced with security, as identity fraud-related crimes remain severe despite increases in enforcement staff and funding.  The analysis also breaks down the latest tax reform proposal from House Ways and Means Committee Chairman Dave Camp (R-MI), along with the Fair Tax and Flat Tax plans, clearly showing how all these reforms might mend our broken system.
“Three big challenges have beset our tax system: complexity, cost, and centralization,” said study author and NTUF Policy Analyst Michael Tasselmyer. “As these problems wreak havoc on taxpayers and as a result hurt our economy, the need for a thorough analysis of the alternatives has never been more urgent.” The highlights from NTUF’s new Policy Paper, “The Need for Tax Reform: Simplicity, Savings, and Security”: - The Code itself is now over 3.9 million words, and is accompanied by federal regulations that tally 10.48 million words, or 14,000 pages.
- The burden of tax compliance cost the economy $224 billion in 2013.
- The IRS reported nearly 642,000 cases of identity theft in 2012 – nearly 400,000 more than the prior year!
- It takes one division of the IRS nearly a year to resolve an identity theft case (312 days).
Tasselmyer concluded, “The current tax system appears to be falling short of fulfilling its most basic duty to protect Americans’ financial lives, burdening them with compliance and security issues that go beyond simply the revenue collected – our analysis finds that failure is only compounding as the status quo remains.” | Most Expensive Bill of the Week |
The Bill: H.R. 5288, the National Care Corps Act of 2014 Cost Per Year: $350 million ($1.8 billion over five years)  Earlier this month, President Obama marked the 20th anniversary of the AmeriCorps program during a ceremony at the White House. The program was created in 1994 by then-President Bill Clinton to provide government-funded volunteers to fill community service roles at nonprofit organizations, schools, and other community groups across the country. In exchange for their service, AmeriCorps members are offered federal stipends to cover various living expenses, including housing and food costs, as well as a package of benefits that includes health insurance, child care support, and tuition assistance. The program has enrolled over 900,000 members to date.
This type of “volunteer” community service policy is attractive to lawmakers looking to address the nation’s current unemployment issues, which disproportionately affect younger and less skilled or inexperienced workers searching for jobs. Efforts like AmeriCorps offer immediate job placements and give participants a chance to gain experience; however, they come at a high cost to taxpayers. The agency that oversees AmeriCorps, the Corporation for National and Community Service, had a budget of $734 million in 2013. NTUF featured legislation designed to significantly expand the program in a previous edition of The Taxpayer’s Tab. Washington, D.C. Delegate Eleanor Holmes Norton’s (D) Promoting National Service and Reducing Unemployment Act was introduced to expand the AmeriCorps program by over 400,000 members at a cost of $7.9 billion over five years. Another proposal for a new volunteer corps was recently introduced in Congress, this time to offer assistance to elderly and disabled Americans. H.R. 5288, introduced by Congresswoman Michelle Lujan Grisham (D-NM), would establish within the Department of Health and Human Services (HHS) a National Care Corps in order to provide caretaking services in areas where such support is needed. The National Care Corps Act mandates that all Corps members must undergo 20 hours of pre-service training, and prohibits them from providing medical care or conducting administrative work. Instead, enrollees would offer one-to-one support in home-based settings that foster “the achievement and maintenance of the highest level of independent living for each individual in need.” Much like AmeriCorps members, National Care Corps participants would be eligible for certain benefits including health insurance, post-service educational aid, and “living, travel, and leave” assistance. In order to qualify, Corps members would be required to pledge 24 months of service and pass a criminal background check. Similar legislation was introduced in the upper chamber by Senator Robert Casey (D-PA) in the form of S. 2842. According to a press release from his office, Senator Casey’s legislation would create a national “Caregiver Corps”, also overseen by HHS, that would “foster the creation of community-based programs that can help ‘fill the gap’ in assisting older adults and individuals with disabilities, and in providing added support for informal caregivers.” The text of H.R. 5288 authorizes $350 million per year to fund and administer the National Care Corps.   The Bottom Line: H.R. 5417 would exempt foods sold during school fundraisers (typically sugary treats) from nutritional requirements that otherwise apply. |
 | Least Expensive Bill of the Week |
The Bill: H.R. 3382/S. 1410, the Smarter Sentencing Act of 2014 Savings Per Year: $75 million ($376 million over five years)  For various reasons, such as lasting fiscal difficulties of the Great Recession or the already costly task of housing and paying for increasing prison populations, a majority of state governments are changing their drug laws. The Pew Research Center found that some states are “lowering penalties for possession ... , shortening mandatory minimums or curbing their applicability, removing automatic sentence enhancements, and establishing or extending the jurisdiction of drug courts” while others are disregarding federal law by decriminalizing the possession or sale of marijuana.
Though official federal policy has remained unchanged, the Department of Justice made modifications to reduce nonviolent prison sentences in 2013, which has led to a decrease the federal prison population. It is the first time the overall number of incarcerated individuals has shrunk in decades. It is up for debate as to what factors or policies are directly contributing to these arguably positive results, but Americans seem to agree with less harsh sentencing laws.  In all of these cases, each state and level of government likely has different reasoning in deciding to change the law. Many of the areas with the harshest drug laws and sentences, such as New York and Arkansas, found that their state prisons, which house many more offenders than federal facilities, could not sustain the historically high numbers of nonviolent offenders. States like Texas have switched from prosecutions to drug courts and alternative means to fight widespread addiction and abuse. As state governments are typically better able to react to local problems, they can also craft legislation more in line with the opinions of residents. Pew found that the majority of Americans now favor treatment for illegal drug use, as opposed to calling for prosecutions (a reversal of views held in the 1990s).
To reform the criminal justice system, the Administration and Congress are considering a number of drug-related sentencing changes. The Justice Department, under the direction of President Obama, has changed the criteria for clemency so that currently serving nonviolent offenders can apply to have their sentences commuted. About 2,000 prisoners would be eligible to go free under the new system. In Congress, Congressman Raul Labrador (R-ID) and Senator Dick Durbin (D-IL) introduced the Smarter Sentencing Act. If enacted, the bill would reduce federal mandatory minimum sentences for offenders possessing, manufacturing, or importing small amounts of heroin and cocaine. Because new sentences would be shorter and serving inmates would be eligible to commute some of their prison terms, the Congressional Budget Office (CBO) predicts that the government would save $515 million between FY 2015 and 2019 as prison budgets shrink. Fewer inmates would also lead to smaller corrections staff and fewer new facilities needs in the long-term, but would not yield budgetary savings in the first five years. H.R. 3382 and S. 1410 would also increase the allowable sentences below statutory mandatory minimum sentences to include those with two convictions. This provision, known as expanding the “safety valve” would reduce costs by $12 million over five years. Approximately $152 million in new costs over five years would result from enacting the Smarter Sentencing Act. By accelerating the release of prisoners, more individuals would be eligible for federal benefits such as Medicare, Medicaid, and Social Security, requiring $149 million in new outlays. An additional $3 million would be spent on reports and updating guidelines for law enforcement officials. Beyond the five-year window of the BillTally project, CBO estimates that the bill would cut spending by a net $3.1 billion over ten years, starting in FY 2015. The Bottom Line: The Smarter Sentencing Act would decrease the number of nonviolent offenders in prison by modifying minimum sentencing laws. H.R. 3382 and S. 1410 would, on net, cut $376 million in federal spending over five years. |
| The Wildcard |
The Bill: H.R. 5417, the Bringing Awareness and Knowledge to Exempt Schools Against Legislative Encroachment (BAKE SALE) Act of 2014 Cost Per Year: “No Cost” – Regulation  As students head back to school each fall to start a new academic year, parents and neighbors have come to expect plenty of school-sponsored fundraisers, which offer everything from cookies to popcorn to chocolate bars to raise money for students’ activities. This year, however, federal law could change the sort of foods you can buy from local schools.
Over the summer, the U.S. Department of Agriculture began enforcing provisions of the Healthy Hunger-Free Kids Act (passed in 2010 with the support of First Lady Michelle Obama’s “Let’s Move!” initiative), which restricts sales of certain foods on school grounds depending on their nutritional content. The law was intended to improve the dietary quality of foods sold to kids who rely on programs like the School Breakfast program, the National School Lunch Program, the Afterschool Snack Program, and the Afterschool Meal Program by setting minimum requirements for calorie, fat, and sodium content. It offers states flexibility to enforce standards above those laid out in the law, and gives them authority to fine schools that did not adhere to those standards. States are also allowed to offer exemptions to the standards for certain types of events on a limited number of occasions per year, and the guidelines do not apply to events held after school hours (including sporting events). Those exemptions aren’t enough in the eyes of some school administrators, especially since the law can be more difficult to interpret in the case of homemade items. Brownies and cupcakes found at bake sales do not typically come with any verified nutritional labeling, and if sold during the day, can warrant a fine from the state for violating the guidelines. Some schools have decided to avoid any debate entirely by doing away with food-centric fundraisers, like Girl Scout Cookie sales, during the day. The law’s restrictions have also caused backlash from some politicians in Washington, D.C., including Congressman Ted Poe (R-TX), who introduced the BAKE SALE Act in response. H.R. 5417 would prohibit the nutritional requirements in the Healthy Hunger-Free Kids Act from applying to any fundraiser held at any time on school grounds. “Bake sales are as American as apple pie. For years, students and parents have used the bake sale as a way to raise funds for school trips, athletic competitions, new uniforms and other activities,” said Congressman Poe in a press release. “Not only is this rule an example of gross government overreach, it is also denying public schools thousands of dollars for extra-curricular activities.” Because the BAKE SALE Act amends regulatory rules, NTUF estimates that it will not affect federal outlays. The Bottom Line: The Presidential Library Donation Reform Act would require private foundations to disclose donors who contribute over $200 to a President’s library while he is still in office. It would cost about $1 million per year. |
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