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The 1986 Tax Reform Act is 27 Years Old Today
Posted By: Douglas Kellogg - 10/22/13

On this date 27 years ago President Reagan signed the Tax Reform Act into law, saying, “After almost three years of commitment and hard work, one headline in the Washington Post told the whole story, “The Impossible Became the Inevitable.”

After nearly three decades, tax reform buzz has returned to Capitol Hill, and once again a bloated tax code that suppresses growth poses a seemingly impossible adversary. President Reagan credited the American people for ‘never giving up’, and being a key factor in making such initially daunting reform possible – that ‘X’ factor will have to be present today for a tax reform push to succeed.

National Taxpayers Union’s annual study of tax complexity helps paint a stark picture of the tax code’s massive growth since that landmark bill signing in 1986, and the need for another tax reform effort today…

In 1985 the 1040 form’s instructions were 52 pages long, in 2012 they were 214 pages long. Not surprisingly, the use of paid preparers has shot up by more than ten percentage points along side that growth in complexity. Tax complexity cost the U.S. economy $240 billion dollars last year.

With an economy starving for growth, if the American taxpayer makes their voice heard, perhaps the impossible will become the inevitable once again.


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The Late Edition: October 21, 2013
Posted By: Curtis Kalin - 10/21/13

Today’s Taxpayer News!

Contracting catastrophe: The Washington Times reports that the Department of Energy’s Inspector general found that of DOE’s $1 billion pay out to contractors, nearly 10 percent of the money went “to pay for food, drinks and entertainment” for the contractors themselves.

Double booking: The Department of Homeland Security spent over $30 million on two programs to track and record immigration and border information. However, a GAO report says the two programs do basically the same thing and use the same technology. The department downplayed the report, rejecting the GAO’s claim that the programs were duplicate waste. More details on FedScoop.

Shady navigators: Former employees of the now infamous community organizing group ACORN have been hired by the government to act as “navigators” for the new healthcare law (Obamacare). A new group, made up of primarily former ACORN staff, received almost half a million dollars for their work. Read more at

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Let’s Make a Debt Deal - Speaking of Taxpayers, Oct. 18th
Posted By: Douglas Kellogg - 10/19/13

Subscribe to NTU's podcast "Speaking of Taxpayers" via iTunes!

NTU Vice President Brandon Arnold joins the podcast once again to discuss what happened in Congress this week with the deal that raised the debt ceiling and ended the government shutdown.

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Obamacare website’s terrible, horrible, no good, very bad week
Posted By: Curtis Kalin - 10/18/13

Quite possibly the most prominent news story obscured by the government ‘shutdown’ was the awful technological week for the new healthcare exchanges.  The consequences of the early crashes, bugs, and errors that marred the first week of enrollment have grown into a full fledged tsunami of malfunction in week two.

First came the revelation that out of the 9.5 million visitors to, just 36,000 were able to successfully navigate the sites difficulties and fully enroll. A success rate of less than one percent. This prompted Health and Human Services (HHS) to take down parts of the site for repairs.

The cause of these errors raised another series of unflattering answers. The website forces an individual to sign up and provide all sorts of information before allowing them to view their coverage options and prices. The website creators knew this would slow down operations on the site but insisted on it being done. “An HHS spokeswoman said the agency wanted to ensure that users were aware of their eligibility for subsidies that could help pay for coverage, before they started seeing the prices of policies.” Either HHS was attempting to hide the cost of coverage plans, or perhaps trying to push subsidies as quickly as possible.

Even more worrisome is a USA Today article citing tech experts that advocate for the site’s “total overhaul” because, “The federal health care exchange was built using 10-year-old technology that may require constant fixes and updates for the next six months and the eventual overhaul of the entire system. ”On top of the old technology, the site was reportedly not tested until a week prior to launch.

That begs the question of why industry experts were not brought in to aid HHS. The answer is the administration’s fear that “those companies could be subpoenaed by Hill Republicans”.  A stark politically motivated move that would hurt the end users of the exchanges, who one might imagine are the point of Obamacare. Plus, the only IT firm that worked on the site has deep connections to the failed Canadian healthcare site in Ontario. All of this while the financial tab for the site has tripled.  No wonder the site’s designer has wiped all reference of it from the company website.

This massive comedy of errors that has unfolded over the last two weeks was months in the making, and raises real concerns as to the viability of the government’s effort to direct the healthcare insurance market.

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What a Cory Booker Budget Might Look Like
Posted By: Dan Barrett - 10/18/13

New Jersey Capitol and State OutlineNewark Mayor Cory Booker won Wednesday’s special election for the open New Jersey Senate seat, but taxpayers may not be aware of the policies that he plans to bring to the higher chamber. Fortunately, NTU Foundation released studies on the spending that Mayor Booker and his opponent, former Bogota Mayor Steve Lonegan, proposed before the election to inform those in the Garden State exactly what the candidates said and how their words could translate into changes in the federal budget. We highlighted the candidates’ agendas by posting their full line-by-line reports, creating easy-to-read infographics, and offering taxpayers additional information to understand what programs the two candidates would add or drop from the government’s ledger. Now, let’s take a look at exactly what New Jerseyans have voted for and how the rest of the country might be affected by this special election.

We used direct quotes from Booker and his campaign literature and matched it with budget proposals, existing legislation (as scored by the BillTally system), and other estimates by third parties, like the Congressional Budget Office (CBO) and the Government Accountability Office. Any proposal that could not be clearly identified or quantified was listed as an unknown cost. Our intention is to show how detailed the platforms were and where the candidates needed to give the public more information.

Booker’s Overall Platform: NTUF found that, overall, he would increase spending by $33 billion each year. The total is the net effect of 23 measures that were able to be identified (20 spending increase items and three decreases). An additional 35 policies that Booker said or wrote about had unknown costs or savings.

His Policy Focus: Booker’s key points of emphasis were on improving America’s education and criminal justice systems. For education, the study identified seven policies that would change how the Department of Education facilitates higher education. Many aimed to increase student aid in the form of more and larger Pell Grants and ensuring that subsidized Stafford Loans would remain available at low interest rates. Just taking new spending for colleges and universities, NTUF found that two of the proposals would increase spending by $654 million and could not determine the costs associated with the other five. The seven measures are strictly spending dedicated to higher education; other proposals like doubling research grants in the America COMPETES Act would likely increase spending for colleges as well.

Booker’s other goal was to improve the criminal justice system. This category had a wide range of policies but making overall improvements to how courts interact with criminals and inmates make up the largest number of proposals (five). Approximately $136 million in additional funding would be allocated to the Department of Justice for the three items that NTUF was able to quantify. One would increase spending by giving more funds to local entities for community drug courts and two would decrease spending: eliminating the crack and powder cocaine disparity, and decreasing the number of criminals in prisons. We could not put price tags on two other measures: eliminating mandatory minimum sentencing and ending the use of private prisons.

The Senator-Elect’s Spending Focus: Even with the multitude of proposals mentioned above, one platform point that Booker made in a campaign policy paper made up over 60 percent of his total annual spending total: passing comprehensive immigration reform. As already passed in the Senate, Booker pledged to pressure the House to also pass the bill, which would overhaul the current system and increase border security and infrastructure. Using a CBO estimate of the Act as passed, NTUF credited Booker with a $20.2 billion spending increase. Another policy that was touched on in the above section is doubling federal research spending related to the America COMPETES Act. We used spending figures from a 2013 Congressional Research Service report and mapped out how much spending would increase each year to reach a total $58 billion by FY 2021. It was determined that such a measure would mean an average $4.9 billion rise in funding for each of the next five years, and additional increases thereafter.

His Savings Plans: Booker’s three savings proposals include the two mentioned in his criminal justice system reforms and repealing spending associated with oil and gas exploration. His stance against providing benefits to oil and gas companies is one that has appeared in numerous campaigns at both the Senatorial and Presidential levels, but almost all of the budgetary points occur on the revenue side in the form of tax credits. The one program that does include outlay costs is the Ultra-deepwater Oil and Gas Research and Development Program. The President’s FY 2014 Budget request proposes to phase this program out, which would save $50 million over three years. Booker has supported this proposal as well.

What All of This Doesn’t Include: The 35 proposals that NTUF was unable to score in Booker’s platform cover a wide range of government programs and activities. For example, he proposed to support climate change legislation without offering details about what kind of action he would like to see (presumably a carbon tax or a cap-and-trade system). Another example is his entire health care plan, in which he seeks to increase prenatal, preventative, and outreach services. Some points include grants while other statements only go so far as to say he wants to see improvements in a certain care area.

What taxpayers should take away from NTUF’s study is that Booker, as well as Lonegan, did not offer enough information to Americans during their campaigns. As a result, we truly do not know what a budget would look like in the eyes of Cory Booker. Some of his points would decrease spending but it is unclear how much of those savings would offset his proposals when considered with how much his unknown items could cost.

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Illinois Court Strikes Down Internet Sales Tax Bill
Posted By: Nan Swift - 10/18/13

It’s not often that one hears good news for taxpayers coming from Illinois. Today is an exception, when the state’s Supreme Court ruled 6 to 1 that the 2011 Main Street Fairness Act was unconstitutional.  The opinion is available here.

For anyone unfamiliar with the story unfolding in Illinois, our friends at the Illinois Public Policy Institute summed up the legislation this way:

In 2011, Illinois Gov. Pat Quinn signed the Main Street Fairness Act that required out-of-state online retailers such as to collect and remit sales taxes on purchases destined for Illinois if the online retailer had arrangements with Illinois-based marketing affiliates. These are typically coupon or deal websites, whose operators earn commissions for driving shopping traffic to an online retailer.

To avoid triggering the sales tax, out-of-state online retailers simply dropped their Illinois marketing affiliates, driving thousands of Internet startup entrepreneurs, many in Chicagoland, either out of business or out of state, some never to return again.

… Quinn’s online sales tax stopped this emerging sector in its tracks. The small, up-and-coming Internet entrepreneurs got hammered by their own Illinois government. Overnight, the state became less competitive in e-commerce, the future of business, communications and entertainment.

Be sure to read the whole thing here.

The immediate drop in online commerce and entrepreneurship is just one of the many negative consequences NTU and our allies fear should the federal Marketplace “Fairness” Act or other internet sales tax schemes move forward. If states are truly the laboratories of democracy, it’s safe to say that this is one experiment other states shouldn’t try.

Today’s opinion illustrates just how far from “fair” the internet sales tax gambit really is. Proponents of the legislation at the state and federal levels repeatedly argue that the government needs to “level the playing field” between brick-and-mortar and online retailers. But as the Court explains, such laws have the effect of creating even more, unconstitutional disparities, in this case, between online and traditional offline advertisers.

The Tax Foundation explains further:

… the law is broad enough that it could be read to sweep all paid-per-click advertising activity. So if you pay for advertising by the view, you have no obligation, but if you pay for advertising by the sale (performance marketing), you do.

Most of the legal challenges to these laws have focused on whether the state power exceeds constitutional limits under the Commerce Clause, but the Illinois Supreme Court focused on this disparity between Internet advertisers and traditional advertisers. Ultimately, the court concluded that because the law requires Internet-based performance marketers to collect tax, but does not require that of traditional performance marketers, it is a discriminatory tax on Internet-based commerce in violation of the federal Internet Tax Freedom Act…

NTU has long pointed out that bills like S.743 or H.R. 684 would be better titled the Marketplace Un-Fairness Act. Burdening online retailers, many of them small businesses, with even more regulations and compliance hurdles than brick-and-mortar stores isn’t leveling the playing field – it’s using the government to drive your competitors out of business.

Luckily, as the Illinois Supreme Court upheld today, these kinds of discriminatory shenanigans are unconstitutional. Let’s hope that legislators in Washington are paying attention.

Click here to learn more about this issue.

Click here to tell your Representative and Senators to oppose unconstitutional internet sales tax schemes.


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986 Billion Shades of Grey: Debt Deal Dodges Big Decisions
Posted By: Brandon Arnold - 10/17/13

On the evening of October 16th, Congress sent H.R. 2775 to President Obama, who promptly signed it into law. The legislation temporarily restores funding for certain parts of the federal government and suspends the debt limit. Though many members of the political and economic community greeting this development with relief, passage of H.R. 2775 isn’t cause for a celebration – it contains mixture of both good and bad policies. More than anything, the bill buys Congress a few additional months to work on the most critical fiscal issue facing the nation: the long-term debt crisis.

When it comes to the federal debt, fiscal conservatives should be disappointed by the bill’s failure to meaningfully address the problem. Tackling the issue isn’t easy, as it requires reforms to popular programs like Social Security, Medicare, and Medicaid, but doing so is imperative for the nation’s fiscal well-being.  The agreement provides barely a glimmer of hope for entitlement reform by requiring House and Senate negotiations on a budget. Taxpayers should demand much more from Congress.  Between now and February 7, when the debt ceiling will need to be readdressed, lawmakers should pursue spending reductions in an amount that is at least commensurate with the debt ceiling hike.

On the positive side, the bill preserves the sequester – although it could have been better in this regard. It funds the federal government at a rate of $986 billion, which is higher than the sequestration spending cap of $967 billion. Congress should have simply reduced funding to the statutory requirement, but instead chose to rely on the sequestration mechanism to bring spending in-line with the law. This is acceptable – as long as Congress keeps the sequester in place.  To make sure they do, taxpayers must be extremely vigilant, as many big-spenders in Washington are already working to undo it. In fact, Senate Majority Leader Harry Reid (D-NV) reportedly rejected a proposal that would have given the executive branch more flexibility in adjusting to the cuts precisely because he feared doing so would make it more difficult to trash the sequester. Keeping the sequester spending caps in place will be one of the biggest policy battles over the next several months. You can help NTU’s efforts to “Keep the Caps” by clicking here.

Oftentimes when Congress considers “must-pass” pieces of legislation, Washington lobbyists frantically try to tack on unrelated bills or amendments that benefit their clients. Thankfully, H.R. 2775 did not contain any major extraneous provisions, like the Internet sales tax or an extension of the Farm Bill. However, it did include a number of smaller, unnecessary add-ons.  For example, the bill featured a $2.9 billion authorization for a dam project in Kentucky. Also included was a $174,000 payout to the widow of the late Sen. Frank Lautenberg. While it is customary to provide a year’s salary to the families of deceased lawmakers, in light of the Lautenberg family’s vast wealth, other benefits available to survivors, and the urgent nature of this bill, Congress could have foregone this extra payment.

On the issue of revenues, taxpayers may have dodged a bullet on H.R. 2775. It contained no new taxes or, as they are sometimes called, revenue-raising “loophole closures”. Once again, taxpayers must be vigilant on this issue. As Congress looks to reduce debt, many left-leaning politicians will attempt to hike taxes despite the fact that the Congressional Budget Office expects that revenues will soon exceed their 40-year averages. Please stay tuned as NTU will be engaged on this important issue and will need informed citizens like you to help us fight against tax hikes.

Overall, H.R. 2775 was a mixed bag of policies – good, bad, and ugly. Now that passage has occurred, it’s time for Congress to really get to work.  Tell your elected officials to pass meaningful reforms to entitlement programs and Keep the Caps by protecting the sequester.

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The Late Edition: October 17, 2013
Posted By: Curtis Kalin - 10/17/13

Today’s Post-‘Shutdown’ Taxpayer News!

The ‘less than 1 percent’: A study published in The Hill today shows that the dysfunctional Obamacare website has only enrolled 36,000 people out of over 9 million visitors during the first two weeks. Web traffic to the site is also plummeted 88 percent.

Duplicate lines: In an effort to provide high speed internet access to Colorado schools, the federal government authorized the laying of 32 miles of fiber optic cable lines right next to two commercial lines already feeding schools in Colorado. The cost of this duplication is around one million dollars. Read more at FedScoop.

High speed scheme: The latest filing on California’s $9 billion bullet train reveals the project remains financially unrealistic. A Superior Court judge had previously charged the High Speed Rail Authority with failing to meet spending limits set out in the 2008 bond measure approving the system. More details at the Riverside Press Enterprise.

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Booker's & Lonegan's Proposals in NJ Senate Race
Posted By: Dan Barrett - 10/16/13

On Monday, NTU Foundation released a line-by-line study of what Newark Mayor Cory Booker and former Bogota Mayor Steve Lonegan would support if elected as Senator of New Jersey. We found that, of the policies we were able to quantify and score, Mayor Booker would increase spending by $33 billion and former Mayor Lonegan would decrease the federal budget by $68 billion. However, that's not the whole story. Both candidates had large holes in their agendas by either offering proposals that were too vague to be matched with current legislation or CBO cost estimates or they failed to even address an issue category (both said nothing regarding changing veterans programs).

What you should take away from this study: While it appears that Booker would grow the federal government and Lonegan would shrink it, both needed to offer taxpayers more information and details on exactly what they would do. This is something that plagues many campaigns and races, be it Senate races in 2010 or the 2012 GOP primaries. Both candidates touted themselves as the best choice for New Jersey and for improving the lives of Americans but neither laid out how they would accomplish such goals.

What you should espeically pay attention to: The largest proposal of each candidate. Booker would seek to pass comprehensive immigration reform legislation that has already worked its way through the Senate. The bill would increase spending by $20.2 billion each year and, similar to previously introduced measures, would increase border security spending and remake the immigration process. Lonegan has pledged to repeal the Affordable Care Act, which NTUF found would result in a $63.9 billion spending decrease each year.

Check out the breakdown of each policy categories below and the infographics of both Booker and Lonegan.

Break Down of Proposed Spending by the Two New Jersey Senatorial Frontrunners
(in millions of dollars and annualized)
Proposal Category
Economy, Transportation, and Infrastructure
Education, Science, and Research
Energy, Agriculture, and the Environment
Government Reform
Health Care
Homeland Security and Law Enforcement
National Defense and International Relations
Source: NTUF BillTally System
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The Late Edition: October 16, 2013
Posted By: Curtis Kalin - 10/16/13

Government ‘Shutdown’: Day 16

Toll hunt: The Texas Department of Transportation is releasing the names of almost 28,000 violators of the state’s highway tolls. The move comes as the state attempts to gain back nearly $27 million in lost revenue.  Read more at KWTX.

Insurance overpay: Fluctuations have been found in the insurance plans for Memphis city and county government employees. Memphis city council chair Edmund Ford, Jr. reported that due to the area’s multiple insurers, the cost of employee insurance is $58 million. If all government employees were on a single plan, the cost would be significantly less. More at WMCTV.

Quadruple contracts: The Government Accountability Office recently reported the Department of Health and Human Services had four “potentially duplicative investments” in enterprise security systems costing taxpayers over $256 million.  The department has said they will look into the matter. Read more at FedScoop.

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