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Considerations in Criticizing or Praising the Recovery
Posted By: Dan Barrett - 07/09/13

The Wall Street Journal created this great comparison of the different recessions and resulting recoveries we've been through as an economy. By no means is this a complete picture but indicators like Household Net Worth and Business Investments always need to be considered when addressing government intervention in the economy.

Click on the image to see a larger version.

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Sen. Ted Cruz Condemns Marketplace “Fairness” Act
Posted By: Nan Swift - 05/06/13

In a scathing op-ed at yesterday, Senator Ted Cruz (R-TX) launched a bold attack on S. 743, the Marketplace Fairness Act (MFA). The Senate is preparing to vote on final passage of the destructive tax legislation later today, and taxpayers can only hope that more Senators will take notice of the many serious reasons to oppose the bill that Cruz lays out:

The misleadingly titled Marketplace Fairness Act is a job-killing tax hike, plain and simple. It is, in effect, a national Internet sales tax, which would hammer the little guy and benefit giant corporations.

Senators who vote for it are voting to impose audits, compliance costs, lost wages, and inefficiency on small businesses in every state. And they are potentially crippling an engine of new job creation at a time of economic struggle. This bill will not create jobs; it will not create new opportunities; and it will not create the economic growth our country needs and our people deserve.

The Senator goes on to explain that “Big business supports this bill because it will drive smaller competitors off the Internet and out of business.” When our economic growth is still in jeopardy and newly minted college graduates are facing a dismal jobs market, to support legislation that spells death by a thousand cuts via costly burdens for small businesses is legislative malpractice.

Sen. Cruz also points out what should be a fundamental concern to Senators:

Last but not least, this bill doesn’t pass constitutional muster. The MFA overturns the fundamental idea that states’ taxing authority ends at their borders. The Supreme Court has said that an out-of-state business could subject itself to a state's taxing power if due-process concerns are satisfied, namely that the business purposefully targets its activities in that state. But because pure Internet sales by their nature don't target any one state, this legislation presents a serious constitutional problem.

It is definitely worth your time to read the whole thing. But the anti-MFA fun doesn’t stop there, Sen. Cruz kept up the attack by posting this awesome video with a short, to the point, explanation of exactly what is at stake if the dreaded MFA passes.

You can help support Sen. Cruz’s fight against MFA by calling your Senators TODAY. It will only take two minutes (one for each Senator) and your call could make a big difference in this important fight. Go here to find our toll-free taxpayer hotline and more information on how you can join the fight.

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Sandy Relief Act for Fisheries: $193 Million Cost
Posted By: Dan Barrett - 05/03/13

While NTUF highlights at least four newly-scored bills in our weekly newsletter, The Taxpayer's Tab, we have a lot of legislation that don't necessarily fall into the "Least Expensive" or "Most Friended" categories. So, as a supplement, here's another bill introduced in the 113th Congress that taxpayers may find interesting. Just as the bills that appear in the Tab, this is a preliminary score and may be updated with new information.

The Bill: H.R. 1445, the Sandy Disaster Fisheries Relief Act

Annualized Cost: $96.5 million ($193 million over two years)

After Hurricane Sandy, much of the East Coast is still recovering from the effects of wind, rain, and flood damage. For fishermen, the National Oceanic Atmospheric Administration (NOAA) found that the storm wreaked havoc on the fishing industry. New Jersey's fishery infrastructure suffered between $78 and $121 billion in uninsured losses. To attempt to help quicken the recovery, Congress passed a large relief package in January that included $5 million for these fisheries. Then, Congressman Frank Pallone (D-NJ) introduced a bill that would add additional emergency funds to assist fishing on the East Coast. He said that "[n]ow, it is our turn to support our fishermen by making a commitment of fisheries disaster assistance that really takes into account the amount of damage they suffered."

The Sandy Disaster Fisheries Relief Act would authorize NOAA to spend up to $193 million between 2013 and 2014. Funding would be limited to operations, research, and maintenance of fishing-related facilities and channels still recovering from Sandy. Since the spending would be deemed as an emergency measure, spending limitations related to any budgetary caps or sequestration would not apply, and therefore be wholly counted as new spending. There are no offsets included in the proposal.

Note: The sponsor's office confirmed that the text of the bill contained a drafting error that authorized "$193,000,000,000" instead of "$193,000,000" as detailed in a press release. Under BillTally rules, NTUF scores the intention of legislation and so will record the potential spending as a $193 million new two-year cost.

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Made It in America, Government Gives You Millions
Posted By: Dan Barrett - 03/29/13

Throughout the last two years of budget negotiations, debt ceiling fights, and the supposedly economy destroying sequestration, legislators have pointed to government grants as an easy way to cut down on spending. Yet indiscriminate across-the-board cuts in one form or another have occurred without eliminating what many Americans feel are real cases of government waste. Here’s just one government grant that we could do without: the Department of Commerce’s Make it in America Challenge.

From a 2012 summary, $40 million of federal tax dollars will be made available to levels of state and local governments as well as nonprofit organizations in the form of up to 15 projects, each at $4 million maximum allotments. Grants will be used to “encourage insourcing, either through on-shoring of productive activity by U.S. firms, fostering increased foreign direct investment, or incentivizing U.S. companies to keep their businesses and jobs here at home, as well as train local workers to meet the needs of those businesses.” Funds will be provided through the existing budgets of:

  • Economic Development Administration (Department of Commerce);
  • National Institute of Standards and Technology Extension Partnership (Department of Commerce);
  • Employment and Training Administration (Department of Labor);
  • Rural Community Advancement Program (Department of Agriculture); and
  • Rural Business Opportunity Grant Program (Department of Agriculture)

The Make it in America Challenge would also accept additional appropriations from Congress, which would likely require new spending. However, as the program is set up, budget outlays would not increase.

Many problems can come out of having the government pay for businesses to re-shore or pay to prevent those firms from leaving the country. Living in Ohio for years, I saw this first hand. Companies were given tax or other deals to stay in the Buckeye State but when the terms expired, the companies responded to incentives and expected an equal or better deal to remain in the state. When the state could’t or refused to comply, the company left for a better business environment (sometimes for better deals, more consistent or lower tax rates, or more competitive labor markets). In other words, the act of giving individual businesses (at times, picking winners & losers) results in unintended consequences that left the state worse off.

Now, potentially expand Ohio’s example to the entire nation. Some companies could not afford to leave for better fiscal pastures (think your local hair stylist or car mechanic) but with e-commerce expanding fast, many corporations would leave or threaten to leave without a government handout. This is not an example of businesses, or even capitalism, being evil. It’s a situation where people seek scarce resources and jump on opportunities. We all do the same thing picking store brand canned goods because of the lower price or use a coupon to get $10 off an oil change.

What would be better is to allow companies to move about freely (domestically or internationally) to encourage greater tax competition and competitiveness across all boarders. That starts with having a freer marketplace. By allowing firms to succeed and fail because of their own choices and workers to have earned success by taking less out of their paychecks, the economy will grow and erase the need for government handouts. Plus, saving $40 million is no small feat.

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The Cost of Fighting Currency Manipulation
Posted By: Michael Tasselmyer - 11/02/12

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:

  • identify currencies that were "fundamentally misaligned" with equilibrium exchange rates; and
  • change international monetary policy accordingly to penalize them should they not address the problem. The penalties would be coordinated with the World Trade Organization and the International Monetary Fund.

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.

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The Late Edition: August 30, 2012
Posted By:  - 08/30/12

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.


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Oil and Gas Companies: Key Contributors to US Economic Engine
Posted By:  - 08/20/12

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.

Contributions of oil and gas industries to US economy

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Obama's Bailouts for All a Recipe for Disaster
Posted By: Nan Swift - 08/17/12

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, 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.

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The Amazing Illegal Tax Discovery from Today's Commerce Hearing
Posted By: Andrew Moylan - 08/01/12

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.

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Getting Closer to Wireless Tax Fairness
Posted By: Andrew Moylan - 07/13/12

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 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.

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