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EconomyThe Cost of Fighting Currency Manipulation In its analysis of multiple Senate races as well as the 2012 Presidential campaign, NTUF has noted several candidates making reference to currency manipulation in some countries - particularly China - and the need to "crack down" on our trading partners' monetary practices. The position has found its way into the agendas of:
Currency Manipulation The alleged issue is that some countries artificially lower the value of their currency. This increases the cost of U.S. exports to those countries, and decreases the cost for the U.S. to import those countries' goods. Policymakers have proposed various regulations in response, hoping to make U.S. exports more competitive on the international market. The topic can be a confusing one to examine from a taxpayer's perspective not only because of the complexity of international trade, but also because these types of policies can significantly affect revenues in addition to outlays. However, there are some regulatory and administrative costs associated with these policies that we can examine. Let's take a look at how the campaign proposals might translate into actual dollar figures. What Has Been Proposed The basis that NTUF used for its analysis of the above candidates' "currency crackdown" proposals was Senate Bill 1607, the Currency Exchange Rate Oversight Reform Act of 2007, which lawmakers introduced in the 110th Congress. That bill would have directed the Treasury to:
The bill as introduced would apply to the currencies of countries with whom the United States has "major" trade relationships. Clearly, China would be included amongst those countries: in 2011, the U.S. Department of Commerce reported $103.9 billion in exports to China, and imports of $399.3 billion. What It Could Cost The CBO's report on S. 1607 estimated that the bill would cost about $4 million per year to implement; over the course of 5 years, that would amount to $20 million. Part of the cost would be a result of the extra workload imposed on the Treasury: tracking exchange rates and identifying whether or not certain countries may be manipulating them. Additionally, the legislation would require the formation of an entirely new federal agency, the Advisory Committee on International Exchange Rate Policy. The Committee would advise the Treasury on how to penalize countries found to be manipulating the value of their currencies. These penalties would depend on Congressional approval and would be proposed after consulting with the WTO and IMF. Be sure to take a look at NTUF's candidate studies for more on how this issue fits in to the rest of the candidates' proposed spending agendas. NTUF does not endorse any candidate or position mentioned. 0 Comments | Post a Comment | Sign up for NTU Action Alerts
The Late Edition: August 30, 2012 Today’s Taxpayer News!
NTU’s executive vice president Pete Sepp and Michael D. Ostrolenk, director of the Liberty Coalition were featured in a North County Times op-ed imploring Rep. Darrell Issa (R-CA) to support stronger protections for whistleblowers who come forward to report waste and abuse in government. A recent editorial from the Washington Examiner demonstrates the economic edge which, on average, Republican Governors enjoy over their Democratic counterparts nationwide. Economists Donald J. Boudreaux and Andrew Morriss of the Mercatus Center at George Mason University explain in a commentary piece how government regulations contribute to higher gas prices in different regions of the nation, and offer a solution of less regulation and more competition.
Oil and Gas Companies: Key Contributors to US Economic Engine NTUs’s vice president Pete Sepp recently had an editorial piece published in US News illustrating the significant contributions of oil and gas companies to the US economy. Sepp demonstrates the importance of reducing the tangle of costly regulatory and tax burdens these (and other) industries face in order for our economy as a whole to continue reaping the rewards of their crucial job-creating activity.
Obama's Bailouts for All a Recipe for Disaster In light of the revelation that General Motors (GM) is again teetering on the edge of bankruptcy, President Obama’s declaration that he wants to replicate the auto bailout in “every industry” should send profitable manufacturers everywhere running for cover. Only about one week ago, the President was stumping with this at a campaign stop in CO: OBAMA: I said, I believe in American workers, I believe in this American industry, and now the American auto industry has come roaring back and GM’s number one again. Now I want to do the same thing with manufacturing jobs, not just in the auto industry, but in every industry. Yesterday, Forbes.com suggested that GM is on track to lose billions of dollars as the stock has lost almost 50% of its value over the past two years at the same time market share has also continued to decline, leaving the company in a perilous situation – and taxpayers holding the bag: Right now, the federal government owns 500,000,000 shares of GM, or about 26% of the company. It would need to get about $53.00/share for these to break even on the bailout, but the stock closed at only $20.21/share on Tuesday. This left the government holding $10.1 billion worth of stock, and sitting on an unrealized loss of $16.4 billion. 1 Comments | Post a Comment | Sign up for NTU Action Alerts
The Amazing Illegal Tax Discovery from Today's Commerce Hearing Today's Senate Commerce hearing on the awful Marketplace Fairness Act, a bill the likes of which we've been crusading against for more than a decade now, was a comedy of errors that would have been funnier if it weren't so sad. Despite a stacked panel of six supporters testifying against just one opponent, the proceedings proved that there are huge problems for taxpayers inherent in legislation to allow states force enormously burdensome sales tax collection requirements on remote retailers WITHOUT any physical presence there. In addition, the hearing led to a stunning discovery that one panelist's business may well be collecting sales taxes incorrectly and illegally. So much for "easy" and "accurate" tax collection. Steven Bercu, CEO and co-owner of BookPeople book store in Austin, Texas, told the committee that he felt so strongly about collecting sales taxes that his business did so even for sales into states where he has no physical presence. He has no legal obligation to do so, but he likened it to a kind of civic obligation to support infrastructure and services in other states (nevermind the fact that shipping companies that help deliver his items already do plenty of that through income and gas tax burdens of their own). The revelation of illegal tax collection came when Steve DelBianco, Executive Director of NetChoice, gave his testimony. In it, he presented a screenshot of a purchase he made on BookPeople's website this morning which showed that he was charged what was purportedly Virginia state sales tax of 8.25%. There's only one problem: Virginia's sales tax is 5%. Mr. Bercu quickly proclaimed that a mistake had likely been made and that he'd look into it with the provider of the service that calculates sales tax collection for his business. It turns out that 8.25% is actually the prevailing sales tax rate in Austin, Texas, where BookPeople is physically located. In all likelihood, this is the source of the mix-up. While it was somewhat amusing to uncover this mistake, it also suggests that the tax was illegally charged to DelBianco. If BookPeople collected and remitted on behalf of Virginia, they illegally overcharged him because no business can collect more than the legal sales tax rate. If they collected and remitted to Texas, they illegally charged DelBianco on a transaction which was not subject to sales tax. Under current law DelBianco has no sales or use tax obligation whatsoever in Texas and if BookPeople charged him one, that was just as illegal as a grocery store charging someone sales tax on something in a state where food is exempt from it. Let me state that I don't believe that Mr. Bercu and BookPeople are intentionally defrauding customers or governments. This is almost certainly an honest mistake made in the process of a good-faith effort, but it shows just how difficult accurate sales tax collection and remittance can be. His business was supposed to be the poster child for how easy collection is. After all, it's so easy that he does it even though he isn't legally required to! But even the best of intentions can't iron out mistakes resulting from the confusion of 9,600 taxing jurisdictions with different rules across the country. It also suggests that perhaps the reason Mr. Bercu and BookPeople were so convinced of the ease of collecting is that his business was simply charging everyone Austin's sales tax. Current law would need to change in order to accommodate that, but that sort of an origin-based taxation system is dramatically simpler and easier to comply with than what the Marketplace Fairness Act would impose. In the end, the hearing was mostly a jumble of minimally-useful talking points from supporters and some brief but passionate questioning from the likes of Senators Jim DeMint (R-SC) and Kelly Ayotte (R-NH). The bottom line for taxpayers is still this: the Marketplace Fairness Act undermines basic taxpayer protections by eliminating the physical presence standard, imposes huge compliance and interstate commerce burdens, and does little or nothing to promote tax reform and revenue neutrality. 0 Comments | Post a Comment | Sign up for NTU Action Alerts
Getting Closer to Wireless Tax Fairness The Wireless Tax Fairness Act, a bill that NTU has strongly supported for years, might be a step closer to becoming law if its sponsor Senator Ron Wyden (D-OR) has his way. He intends to introduce it as an amendment to S. 2884, a bill the Senate may consider next week. Wyden's legislation would protect taxpayers by freezing state and local charges on wireless phone service for five years and preventing them from imposing multiple and discriminatory taxes and fees. This common sense legislation is one of few bills that enjoys wide bipartisan support both in and out of Congress. According to a MyWireless.org survey, 80% of respondents support the goals of the bill and Republicans and Democrats alike have aided its movement on Capitol Hill. Late last year, the House actually passed its version (sponsored by Arizona Republican Trent Franks and California Democrat Zoe Lofgren) unanimously on a voice vote. Wyden's amendment gives us hope that the Senate will pick up on that sentiment and pass the bill promptly. As it stands today, wireless tax rates across the country are mind-numbingly insane. Legislators constantly proclaim the importance of wireless access because it supports economic opportunity and growth, but the taxes they levy on it tell a very different story indeed. Five states charge more than 20% in taxes, 23 states charge combined rates of higher than 15%, and in only ONE state in the nation (Nevada) will you face a lower charge on wireless services than for ordinary sales. Simply put, most states are levying "sin tax"-like charges on a technology they claim to love and support. It's not the federal government's job to fix the details of each state's insane tax system, but it is their job to prevent states from enacting dumb tax policies that harm interstate commerce. There are few markets that are more interstate in nature than wireless service, so it's perfectly appropriate and necessary for the federal government to exercise its power to eliminate the worst abuses. We'll still have a lot of work to do to fix state tax codes after passing the Wireless Tax Fairness Act, but this is an extremely important first step and it's up to us to make sure Congress takes it soon. Stay tuned to these pages next week for more information about how the bill will proceed and what you can to to help. In the meantime, we'll be gearing up our grassroots army to push Congress to pass this bill immediately. 1 Comments | Post a Comment | Sign up for NTU Action Alerts
The Internet Tax Threat That Won't Go Away The so-called “Marketplace Fairness Act," a bill to impose onerous tax collection requirements on remote retailers, is back again for another bite at taxpayers' wallets. We've alerted you to this threat timeand time again, and now proponents and their big-money backers are trying to sneak it through once more. Introduced as an amendment to S. 2237 (a small business tax bill) by Senators Mike Enzi (R-WY), Dick Durbin (D-IL), and Lamar Alexander (R-TN), the measure would add to the burden governments heap upon items purchased online while undermining vital taxpayer safeguards. The Marketplace Fairness Act would…
It is particularly odious and contradictory to attempt hanging this proposal on a bill purporting to assist small businesses. S. 2237 is problematic for taxpayers in its own right, but is made all the worse with an Amendment that fails on so many counts. As a practical matter, the paltry “small seller exemption” contained in the language means that numerous firms will become ensnared in a web of higher tax-compliance overhead costs. Businesses that could be contributing to a more robust economic recovery will instead squander resources extricating themselves from this trap, or worse, resign themselves to oblivion. As a philosophical matter, the amendment treats the Internet and e-commerce as a sinister, alien force for small business, when the opposite is true. Where would brick-and-mortar retailers be, for example, without the convenience of online inventory control, or other “B2B” transactions that make management so much more efficient today? What losses would retailers suffer without the new markets for goods and services for which the Internet has provided the portal? How many millions of everyday citizens, who have created thriving online “mom and pop” proprietorships, would be denied the opportunities to provide for their families? To be clear: No Senator who claims to support taxpayers and small businesses should vote for this amendment. There are fairer, less burdensome ways to address any real “level playing field” issues in this area of commerce.
It's unclear as of now how the Senate will proceed on this amendment or the underlying small business tax bill, but rest assured that we'll be hammering away to make sure that well-financed lobbyists don't fleece taxpayers and businesses with this awful bill. 0 Comments | Post a Comment | Sign up for NTU Action Alerts
Opposition to Food/Farm Welfare Bill Grows NTU has been hard at work opposing the massively wasteful, nearly-$1 trillion food and farm welfare legislation that Washington knows as "the Farm Bill." In some of the best news we've had on the issue in weeks, The Hill reported today that House Speaker John Boehner (R-OH) is leery of the pork-filled legislation and could hold the key to protecting taxpayers from it. We've been watching the markup debate over 100 amendments unfold with shock and horror, as positive measures to reduce government intervention in the dairy and sugar markets failed at the hands of special-interest minded Members of the Agriculture Committee. But if Boehner comes out forcefully in opposition to the bill, taxpayers could be spared from its awful provisions in favor of a one-year extension which would allow a presumably more fiscally responsible 2013 Congress to take it up. Boehner is no stranger to Farm Bill opposition. He opposed the travesties that were the last two versions and has always expressed his distaste for the incredible amounts of wasteful spending that get packed into them. Despite the different makeup of this Congress, the bill they came up with is sadly no different. It eliminates direct payments made for certain commodity crops, but then plows virtually all of the savings into new subsidy programs to effectively guarantee revenue for farmers. The end result, when combined with an exploding food stamp program that has doubled in size since 2008, is a bill that costs upwards of $900 billion and does almost nothing to truly begin to wean farmers off of their sweet, sweet taxpayer money. The bill is complicated, but the issue is simple. Farm income exceeded $100 billion last year. Average farm household income has consistently grown faster than the average American household, particularly post-1995 (when the "We swear, this is the Farm Bill to end all Farm Bills!" charade began in earnest). Fewer than one in 200 farms fail per year. Crop prices are at or near record highs. Meanwhile, our fiscal challenges have never been larger with a rapidly-increasing $15.8 trillion national debt. As a result, we have a more fiscally conservative House of Representatives than we've had in years. One could scarcely dream up a better time to truly reform farm programs. Thankfully, it appears that Speaker Boehner realizes that this bill doesn't even come close to doing that. We should encourage him to do the right thing and shelve this monstrosity for good. 0 Comments | Post a Comment | Sign up for NTU Action Alerts
Failing at 100 Mbps Louisiana readers: I have some shocking news for you. You might want to sit down for this. A taxpayer-subsidized project is rapidly turning into a dismal failure. Who'da thunk it? An audit of a taxpayer-subsidized municipal broadband provider called LUS Fiber in Lafayette, Louisiana has revealed that the company lost $45,000 per day during the last fiscal year! The Lafayette Consolidated Government suffers from $150 million in debt and must make an upcoming principal payment next year of $3.2 million. That has led to calls to cut budgets across the board by 5%, meaning fewer police and less maintenance of things that really are basic infrastructure like roads. In sum, LUS Fiber is losing boatloads of money and exacerbating an already-difficult budget situation in the area. There is a silver lining though! According to LUS's own numbers, the project might break even by the time 2014 or 2015 roll around. Or maybe not...you know, whatever. It's just taxpayer money, which I'm pretty sure just falls from the magic money tree in the sky when we shake it at no cost to anyone. This is, unfortunately, just another bullet point to add to the huge list of municipal broadband failures across the country, many of which we covered in a study we released last month called Municipal Broadband: Wired to Waste (PDF). In the study, we detailed the growing trend of local governments piling hundreds of millions of dollars in debt and other costs on the backs of taxpayers in order to build entire retail television and internet service providers. It's just too bad that we hadn't written the study yet when Lafayette officials decided to approve this boondoggle. 0 Comments | Post a Comment | Sign up for NTU Action Alerts
Spectrum Stumbling Blocks Last week, I participated in a panel discussion on "Why Tech Issues Matter" with folks from across the ideological spectrum. Despite our vastly different views on the proper size and scope of the federal government and its approach to regulating the tech space, there were a few items where we had almost unanimous agreement. One such issue was the need to free up more spectrum for use in building out America's telecommunications networks. There is widespread acknowledgment in the tech community that we could soon face a crippling capacity bottleneck absent swift action to reallocate spectrum to where it is most needed. In fact, the Obama Administration set a goal for federal agencies to identify an additional 500 MHz of existing spectrum that could be reallocated for use in building the capacity of mobile networks. But as Larry Downes writes at Bloomberg Law, those efforts haven't borne much fruit. Despite a lot of discussion and debate in recent years, there has been very little in the way of actual movement on this existential crisis. One aspect of that agonizingly slow progress has been (surprise!) government failure. The National Telecommunications and Information Administration produced a report on 100 MHz of spectrum currently held by federal agencies that could be better used for mobile broadband. But, as Larry detailed, "[The] 20 agencies involved in the study demanded 10 years and nearly $18 billion to vacate the spectrum—and insist on moving to frequencies that are already assigned to other public or private license holders." So, instead of getting their act together and moving quickly to solve at least 1/5th of the spectrum gap identified by the Obama Administration, this group of federal agencies is instead engaged in a damaging stand-off that threatens to cause even more delay and disruption. Another stumbling block on the road to more efficient use of spectrum is the "Hell No Caucus," a set of "public interest" groups that have loudly and repeatedly opposed many of the biggest recent spectrum plays. Though every member of the Hell No Caucus would tell you they support more efficient allocation of spectrum, their actions seem to belie their stated positions. They have lobbied Congress and the Federal Communications Commission vociferously to rig the results of voluntary incentive auctions by including rules that would exclude companies like AT&T or Verizon from bidding on spectrum, despite the fact that the demands of their customers make those companies most likely to pay hefty sums for greater capacity. But they haven't been content to limit their advocacy to spectrum legislation; they've also been extraordiarily active in lobbying the feds to wield their power to prevent so-called "secondary spectrum market" deals. The Daily Caller covered the phenomenon last week, calling groups like Public Knowledge and Free Press the "usual DC allies" of interests seeking the destruction of spectrum deals between private entities. First it was the proposed merger of AT&T and T-Mobile, a deal widely viewed as an attempt by AT&T to secure T-Mobile's valuable spectrum. Opponents of the deal claimed they were defending competition, but T-Mobile's parent company, Deutsche Telekom, has repeatedly stated that they're not interested in operating the company and as such it has been withering on the vine. The (unfortunately) successful effort to kill the merger, which NTU strongly supported, has left AT&T without the additional spectrum it sought and T-Mobile is now a "zombie carrier," in the words of one analyst, incapable of providing much in the way of vigorous competition. So, mission accomplished for the Hell No Caucus. Now the big food fight is over the new Verizon-SpectrumCo deal (SpectrumCo is a joint venture of Comcast, Time Warner, and Bright House). Verizon seeks to buy $3.6 billion worth of spectrum on which SpectrumCo is not building, but the Hell No Caucus has come out in full force to oppose the transaction, again citing nebulous concerns about "competition." They are vesting their hopes in a friendly FCC which, after squashing the AT&T-T-Mobile merger, has clearly shown a propensity for killing mutually-beneficial agreements between private companies. This is frustrating, to say the least. We're staring a very real crisis right in the eyes, one that threatens to bring the scintillating pace of innovation and improvement we've seen in mobile broadband over the last decade to a screeching halt within a few short years, and the response from some groups has been to delay and destroy many of the deals that would offer hope in avoiding that fate. Even more frustrating for me, as a lonely pro-taxpayer, limited government activist is how they pass that off as "public interest" lobbying when the public interest has suffered such damage from their work. 0 Comments | Post a Comment | Sign up for NTU Action Alerts
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