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Today’s Taxpayer News!
NTU’s Nan Swift joins the Heartland Institute to talk about the impact of wireless communication taxes and the upcoming Wireless Tax Fairness Act, which would impose a five-year moratorium on new taxes on cell phones and similar products.
Join NTUF tomorrow (July 31) in celebrating Milton Friedman’s birthday! The Foundation is hosting both in-person and online events to celebrate Friedman’s contributions to economic freedom.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Senator Tackles Key Element of Tax Reform – Business Expensing
Perhaps the greatest policy challenge confronting this Congress remains how, exactly, to fulfill leading lawmakers’ promises to systemically reform the income tax law. Even after receiving months of input (informed by years of experience) from industry representatives, legislators, advocacy groups like NTU, and everyday taxpaying citizens, Members of the House’s and Senate’s tax-writing committees still have considerable work to do in crafting a tax reform package for floor consideration. No one said it would be easy.
As these efforts continue, having the right kind of legislative raw material will be vital to building a tax structure that will stand up to political and economic vicissitudes. Last week Senator Jeff Flake (R-AZ) made a helpful contribution toward one element of this vital construction project – the tax treatment of business expenses – by introducing the Small Business Investment Promotion Act (S. 1342). The bill is cosponsored by Sens. Jim Inhofe (R-OK) and Tom Udall (D-NM).
Aside from considerations such as the rate and ease of filing returns, business owners must – to a greater degree than the majority of individual tax filers – consider how expenses will affect their tax bills. Start-up companies may have large initial outlays for their infrastructure, while more mature firms may need to retool to keep up with more modern competitors. Either way, the ability to write off major investments up-front could make the difference in a business’ future growth, or even its survival.
How would a streamlined, less burdensome tax system recognize this imperative? Under one of the best alternatives, the Fair Tax (H.R. 25/S. 122), expensing for federal tax purposes would be irrelevant. Businesses would no longer be afflicted with income and payroll tax headaches from Washington, and would instead collect a consumption tax if they engaged in retail trade. Otherwise, in a flat or multi-rate profit tax environment, the law should allow 100 percent expensing in the year it occurs, the relief should be available to all businesses, and the provision should be as permanent as statutes permit (i.e., not put on a specific expiration schedule). Senator Flake’s bill makes good strides toward these ends:
There are of course many meritorious options for addressing the issue of business taxes in general and expensing in particular. For example, Senators Susan Collins (R-ME) and Robert Casey (D-PA) have authored bipartisan legislation (S. 1085) to make the present expensing policy permanent, plus extend for one year the Tax Code’s allowance for bonus depreciation as well as the 15-year straight-line depreciation for certain improvements. These would be positive changes too.
As NTU noted upon introduction of Senator Flake’s bill:
NTU strongly supports tax-policy proposals that permanently expand, simplify, and accelerate expensing for all businesses. Senator Flake's legislation makes admirable progress in applying these principles to small businesses and would, properly timed, be consistent with the framework for tax reform under development in the Ways and Means and Finance Committees. Congress should act to provide business owners with greater certainty and consistency in the tax laws so they can better focus their time and energy on growing the economy.
Here’s hoping Congress can take the preceding sentence to heart and can reach agreement on a reform package that moves our tax system in the right direction.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Today’s Taxpayer News!
Forbes continued its 11-part exploration of Dodd-Frank with this piece on the failures of Fannie Mae and Freddie Mac.
Business Insider recently updated this eye-opening collection of charts and tables related to government spending, taxation, and the federal debt.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Interested in the ideas and legacy of renowned economist Milton Friedman? Looking to discuss the latest tax reform proposals with some of DC's foremost policy experts?
Join National Taxpayers Union Foundation and the Tax Foundation on Wednesday, July 31 at the Laughing Man Tavern in downtown Washington, D.C. for this year's Milton Friedman Legacy Day. From 6-9 PM we'll be celebrating the life and work of the renowned economist with complementary drinks and a discussion of the latest in the world of tax reform. For more information on the location and to RSVP, check out the event page on Facebook.
For those outside of the metro-DC area, you can participate in the events by joining us online for a special contest. Just visit our Friedman Legacy Day website, vote for your preferred tax system reform, and you will be entered to win a $50 iTunes gift card!
We look forward to seeing you there (or online)!0 Comments | Post a Comment | Sign up for NTU Action Alerts
Subscribe to NTU's podcast "Speaking of Taxpayers" via iTunes!
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Pete & Doug discuss the President's remarks this week, Art Laffer's unconvincing study on the Internet sales tax, and NTUF's Dan Barrett discusses our Milton Friedman celebration online contest and event! Plus, the Outrage of the Week!
Billionaire Team Owners Go Stadium Shopping with the Taxpayers’ Credit Card
After declaring bankruptcy last week, Detroit officials announced that the city’s financial problems will not affect their plan to construct a $650-million hockey stadium for the Red Wings, with taxpayers bearing nearly half of the cost. Detroit is, however, only one egregious example among many American cities where sports team owners get public money to finance new stadiums.
During the last month, the Atlanta Falcons, the St. Paul Saints, and D.C. United have also reached public funding agreements for new arenas.
City officials and team owners have typically argued that taxpayer-funded stadiums create jobs and generate additional income, thus spurring economic growth in their area. For instance, on July 25, D.C. Mayor Vincent Gray declared that a new $300-million soccer stadium will favor economic development by creating America’s most vibrant sports-and-retail district.
However, most economic studies contradict such allegations.
New sports stadiums do not increase overall consumer spending, but merely redirect it from other entertainment venues, while also placing heavier burdens on taxpayer shoulders. Research conducted by economist Dennis Coates shows that each citizen loses an average of $10 when a new arena is built, because tax increases destroy more economic activity than stadiums can create.
Another problem with taxpayer-funded stadiums is that their cost has soared over time as compared to privately-built stadiums. A previous NTUF study found that when public contributions represent over 50 percent of total construction costs, stadiums will be $65 million more expensive on average.
Price tags have become increasingly problematic because team owners want modern, fancier stadiums, without concerns over cost containment. They get to have their cake and eat it too when taxpayers pay for significant chunks of development.
It’s not like there are not cheaper options. The St. Louis Rams, for example, rejected a $200-million stadium upgrade plan and requested a more elaborate, publicly-funded $700-million upgrade. Wrangling for a new football stadium in San Diego, the Chargers have said they can put up $100 million for the project but of course are seeking a nearly $1 billion complex.
Other teams, such as the Detroit Red Wings, are asking for increasingly complex, taxpayer-funded entertainment districts.
What is more, stadiums are sometimes demolished or abandoned before they have been completely paid for, leading taxpayers to finance arenas that no longer exist. This is the case with the Atlanta Falcons, who want to have a new stadium completed by 2017, even though their current arena will not be paid off until 2018.
Public financing of stadiums can also lead to further tax increases, because officials often fail to estimate future costs and revenues. For example, the Red Wings stadium will be financed through Detroit’s property tax, which is notoriously volatile.
In another case, St. Paul officials have added almost $9 million to the initial cost estimate of the Saints stadium, after tests showed that the soil on the construction site was contaminated.
Despite the common view that big sports projects are supported by the voters, a recent survey has shown that taxpayers would agree to pay only one fifth of the typical stadium subsidy.
Sports are wonderful, but for fiscally reckless governments in the midst of a difficult economy, it is hard to find justification for the extravagant trends in stadiums.0 Comments | Post a Comment | Sign up for NTU Action Alerts
As NTUF continues to research new legislation for the BillTally project, this week's edition of the Taxpayer's Tab highlights some of the notable bills we've scored lately.
Featured in this week's "Wildcard" section is a proposal from Congresswoman Doris Matsui (D-CA) that would establish a new grant program to fund tree planting projects. H.R. 1807, the TREES Act, is designed to combat high energy useage by strategically planting trees to provide more shade in residential areas. It authorizes "such sums as may be necessary" to do so, but no estimate is available regarding how high that cost might be.
Also in the latest issue:
Also, NTUF is teaming up with the Tax Foundation to host an event honoring the life and work of renowned economist Milton Friedman. For more information on how you can participate in the Friedman Legacy Day festivities, follow the link here.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Today’s Taxpayer News!
The Digital Goods and Tax Services Fairness Act would set “decent, prudent guidelines” for taxes on digital items. Click here to see what NTU’s Pete Sepp has to say on the issue.
The Institute for Humane Studies’ Professor Antony Davies explains in this video why higher tax rates won’t actually balance the budget.0 Comments | Post a Comment | Sign up for NTU Action Alerts
With summer recess under way for the majority of state legislatures, taxpayers can claim an important victory: less than half of states have opted into the outlandish Medicaid expansion scheme. Many legislators already recognize that Medicaid is already embroiled with fraud, waste, and abuse. Understanding that expanding the system augments the flaws, they want reforms before tying their state to a sinking ship. But we shouldn’t celebrate for too long—the fight for smaller government rages on as a handful of states have emerged as battlegrounds and others are attempting to craft their own versions of Medicaid expansion.
Tax-and-spenders are trying to paint Medicaid as an ideal program which gives everyone “free” healthcare. A writer at MSNBC portrayed expansion almost as a mandatory policy, stating that “It’s been exactly one year since the Supreme Court ruled that the Affordable Care Act was the law of the land, but Republicans continue to reject it.” This statement fails to acknowledge that the Supreme Court gave states, on that exact same day, the right to opt out of expanding the program. Even beyond this misguided assessment, a growing number of Republican governors have thrown their support behind expansion. Jan Brewer (AZ), Chris Christie (NJ), Rick Scott (FL), Rick Snyder (MI), John Kasich (OH), Susana Martinez (NM), Terry Branstad (IA), Brian Sandoval (NV), and Jack Dalrymple (ND) all have turned their backs on fiscal responsibility.
The good news is that out of the fifty states and Washington D.C., only twenty-four (less than half!) have agreed to take part in Medicaid expansion, and twenty-one are not moving forward at this time. Some states, such as Arkansas, Indiana, Iowa, and Tennessee are also pursuing alternative state versions. At the end of the day, there are still a handful of battleground states that could go either way. Because one vote, purposeful or mistaken, can impede the creeping expansion of this immense policy, grassroots communication to state officials has been and will continue to be essential to keep lawmakers from supporting the expansion.
The following details the current status of battleground states where debate continues:
Recent events lend credence to the hesitancy of states to fully commit to Medicaid. The administration’s delay of the employer mandate, announced over a Treasury blog post, may shift the balance in the conservatives’ favor. President Obama has framed the delay as an allowance for states to have more time to comply with the mandate; however, it can easily be seen as an acknowledgement of the intricate difficulties involved in widespread enrollment in the entire ACA program, including Medicaid. Michael Cannon at the Cato Institute explains that the “purpose of the employer mandate was to reduce the economic and political upheaval that the rest of ObamaCare will unleash.” Medicaid will be much more burdened without that stabilizing factor for at least the first year of implementation. If an employer mandate is too complex for businesses to carry out, then why think that Medicaid expansion is manageable? Why spare businesses and not individuals? Avik Roy also pointed out that:
Effectively, states no longer need to expand Medicaid, because this newly Medicaid-eligible population can now sign up for the exchanges, at no cost to the state, and know that their incomes won’t be verified by the IRS…The feds will also allow people to gain means-tested subsidized coverage on the exchanges without having to…test their means.
Despite grassroots opposition to the program, some lawmakers and governors continue to be tempted by the promise of “free” federal dollars to expand Medicaid. But that money isn’t free. The Kaiser Family Foundation acknowledges that federal Medicaid spending would increase by 26 percent, or $952 billion, as a result of expansion. State lawmakers should bear in mind that everything that government funds is actually footed by their constituents’ hard-earned tax dollars. Additionally, by rejecting the expansion, state legislators have an opportunity to slow Washington’s reckless borrowing binge.
States’ actions over the next year may determine the future of Medicaid expansion and the Affordable Care Act as a whole. Some legislators propose temporarily trying it out and withdrawing if necessary. This fallacious argument is possibly the most disappointing; as Ronald Reagan cautioned, “governments' programs, once launched, never disappear.” With this in mind, taxpayers should continue to encourage legislators and governors to keep up the good, responsible fight. Otherwise, Medicaid expansion—and an onslaught of tax hikes to pay for it—could be here to stay.0 Comments | Post a Comment | Sign up for NTU Action Alerts
(VIDEO) Why the Digital Goods & Services Tax Fairness Act is Needed
Check out NTU's Pete Sepp as he explains the importance of improving our approach to digital properties, including the importance of the recently introduced Digital Goods and Services Tax Fairness Act.0 Comments | Post a Comment | Sign up for NTU Action Alerts