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Indiana Can Challenge Obamacare Tax Credit Rule; Canadians Suing Over FATCA Law
Posted By: Jihun Han - 08/13/14

Today's Taxpayer News! 

A U.S. district judge ruled that Indiana can challenge an Obamacare tax credit rule. Indiana claims that enrolling for Obamacare through the federal exchange and gets tax credits is illegal. Read here for more!

Canadians are suing over the Foreign Account Tax Compliance Act (FATCA) for many reasons, including that it contradicts the constitutional principle “that Canada will not forfeit its sovereignty to a foreign state.”

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Dispatches from the Internet Sales Tax Road Show
Posted By: Melodie Bowler - 08/12/14

The Marketplace Fairness Act (MFA) “is the single biggest threat to taxpayers that is capable of passing this Congress,” stated NTU President Pete Sepp in a recent “Speaking of Taxpayers” podcast. The MFA would allow state governments to collect sales taxes from every online retailer that sells to consumers in their states, regardless of the state in which the retailer is located. The burden of this legislation would fall on businesses, having to file tax returns for every jurisdiction to which they send products. For more details on the MFA, check out NTU’s Internet Sales Tax Myths and Facts.

In order to inform voters about the consequences of this legislation passing, NTU has joined with the R Street Institute to tour the country on the Internet Sales Tax Road Show.

Below, Andrew Moylan of R Street and Pete talk to an audience in Columbus, Ohio about opposition to the MFA. Ohio voters overwhelmingly reject the idea of other state governments taxing Ohio’s online retailers, 56 percent to 31.

pete andrew 1

Ohio business owners were greatly concerned about the difficulties of complying with the MFA. An independent study found the cost to businesses of collecting taxes annually for nearly 10,000 existing jurisdictions can range from $57,500 to $260,000. The initial setup, integration, and implementation of the necessary software can cost an additional $80,000 to $290,000.

After the presentation, Pete discussed the hazards of passing the MFA with a local Columbus reporter from WBNS. Many state governments believe the MFA would provide a legal means to pad their coffers by allowing them to collect sales taxes on the online purchases of their constituents. However, with 46 states grabbing at online merchants’ revenues, many small businesses could end up closing shop, unable to afford the cost of compliance.

Look out for NTU and R Street in your state! For additional information and to keep up with the Road Show, head to ntu.org/internet_sales_tax or DontTaxTheInter.net for more in the effort to stop MFA.

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National Employee Freedom Week Helps Educate Union Members on their Rights
Posted By: Samantha Jordan - 08/11/14

82.87 percent of Americans say union workers should be able to opt out without force or penalty. Many union members don’t know they already have that right. 

National Employee Freedom Week (NEFW) is working to change just that. NEFW is a nationwide campaign to let employees know they have the freedom to opt-out of their union. Through a coalition of 77 groups in 44 states, NEFW aims to “empower workers by informing them of their choices, sharing alternatives that may better serve their needs and provided them the resources needed to make the choice that’s best for them.”

Among these options, NEFW emphasizes that employees in “Right-To-Work States” have the option to leave their union entirely. The National Right to Work Legal Defense Foundation, Inc. explains nearly half of the US—24 states —protect employees from being required to join unions. Even those living in “Non-Right-To-Work States,” have options within their union. Employees in these states can either become an agency fee payer that only pays for the non-political parts of union membership or become a religious/conscientious objector who does not fund the union whatsoever.

Alternative professional organizations provide additional options such as insurance and opportunities for professional development at a fraction of the cost of a union membership. For example, organizations such as the Association of American Educators offer insurance benefits for just $16.50 a month and cover $2 million in liability insurance.

Of 454 union members surveyed, NEFW found 136 wanted to leave their union. By increasing awareness through their August 10—16, 2014 campaign, NEFW can help union members to understand their options and weigh the opportunity cost of paying thousands of dollars in dues or freeing themselves from the unions. 

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What Did Failed ACA Exchanges Cost Taxpayers?
Posted By: Michael Tasselmyer - 08/10/14

Taxpayer's Tab Update

Technical difficulties during the rollout of Healthcare.gov, the online insurance plan exchange authorized by the Affordable Care Act (ACA) and administered by the federal government, received plenty of scrutiny both in the media and on Capitol Hill. However, four states' independently-run exchanges -- in Maryland, Oregon, Massachusetts, and Nevada -- were also plagued by glitches and security concerns; so many, in fact, that all four have decided to either scrap their sites and start over, or opt into the federally-administered system. According to new information from the House Energy and Commerce Committee, taxpayers fronted $746 million worth of grants to get those failed exchanges up and running.

In this week's edition of The Taxpayer's Tab, NTUF featured legislation introduced by Congressman Tom Reed (R-NY) and Senator John Barrasso (R-WY) that would require those states to return the money to the federal government. The State Exchange Accountability Act would result in about $75 million per year being returned to the Treasury.

Also featured in this week's Tab:

  • Most Expensive: Senator Richard Blumenthal (D-CT) introduced the Stop Subsidizing Childhood Obesity Act. S. 2342 builds on legislation originally sponsored by former Representative Dennis Kucinich and would repeal current tax breaks offered to promotional activity within the food industry. Any revenue gained from doing so would be redirected to the U.S. Department of Agriculture's Fresh Fruits and Vegetables Program to provide students with more nutritional school lunches. The bill would cost $500 million in the first year.
  • Wildcard: Congressmen Dave Cicilline (D-RI) and Scott Rigell (R-VA) introduced H.R. 5095, which would require Members of the House of Representatives to undergo ethics training similar to that which is required of current House staffers and all Senate Members and staff. It likely wouldn't require any additional funding.
  • Friedman Legacy Day Poll: NTUF asked our members which method of tax reform they'd like to see in Washington, and we have the results of the poll in this week's Tab.

Check out the latest edition online.

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Profiles in Liberty: Looking to the Future
Posted By: Dan Barrett - 08/08/14

With all their tax, communications, and research training, what will our NTU and NTUF interns be doing this fall? We asked them, and here’s what they said!

Government Affairs Interns:

  • Melodie Bowler will be staying in the area and searching for a job in policy research.
  • Michael Liguori is transferring to the University of North Carolina, Chapel Hill, where he will continue to work towards an International Relations degree and minors in Economics and Arabic.

Foundation Communications Interns:

  • Jihun Han is returning to Syracuse University to complete his junior year. He is looking forward to continuing his program in radio broadcasting.
  • Sam Jordan will be returning to George Mason University in the fall. She plans to use her improved communication skills on the University’s competitive speech team.

Foundation Research Interns:

  • Steve Adams will be headed back to Hampden-Sydney College to complete his senior year.  He was elected to represent his classmates as a student senator, and will be working to complete his thesis on capital punishment.
  • Paul Bartow has just started a job at the American Enterprise Institute as an American History Research Assistant. He is excited to apply the research and communication skills he honed at NTUF in his new position.
  • Alex Eblen has a fall internship with Representative Blaine Luetkemeyer from Missouri.
  • Catherine Fitzhugh will be returning to Grove City College to complete her senior semester. While there, she will continue her role as a Student Research Fellow at the Center for Vision and Values at Grove City College.
  • Kelly Hastings will be moving back to Tennessee and conducting an extensive job search. She completed her degree in Economics this past spring.
  • Ian Johnson will be spending some time with his family and then returning to Brigham Young University in January.
  • Gordon Miller hopes to advance free-market principles by obtaining a job at an educational organization or a think tank in the Washington, D.C. area.
  • JR Ridley will be headed back to Vanderbilt University where he will continue his work with the Medical School IT Department.
  • Daniel Simmons will return to Texas with his family. He is the owner of a power washing company, and will be completing the capstone class of his MBA program.

The Profiles in Liberty series will have one more instalment this summer. Stay tuned to Government Bytes to see what our interns have to say about their internship experience this summer.

Thanks to Catherine Fitzhugh for developing the Profiles in Liberty series and interviewing our interns.

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Rep. Jeb Hensarling on Ex-Im Bank - Speaking of Taxpayers, August 8
Posted By: Douglas Kellogg - 08/08/14

Subscribe to NTU's podcast via iTunes!

House Financial Services Committee Chairman Jeb Hensarling (R-TX) joins the show to explain what's going on with Ex-Im on the Hill - and why it's so important we put an end to the "Bank of Boeing." Plus, Pete & Doug talk "inversions", FATCA, and good news on the BBA front... And, as always, the Outrage of the Week!

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Ken Blackwell on Milton Friedman
Posted By: Dan Barrett - 08/07/14

Last week, Ken Blackwell, member of the board of directors for the National Taxpayers Union and director of the Coalition for Mortgage Security, wrote an article for Forbes praising Milton Friedman for his contribution to the understanding of free markets and advancement of individual rights in honor of the late economist’s 102nd birthday. In addition to outlining Friedman’s ideas regarding the role of government in civil society, Blackwell commends him for accurately predicting the growth of government and anti-market sentiments that has occurred in recent years.

Friedman believed that government responsibility should be limited to military defense, the enforcement of contracts between individuals, and the protection of citizens from crimes against themselves or their property. He further argued that government intervention in the economy ultimately leads to, “inefficiency, lack of motivation, and loss of freedom.” In his 1994 reintroduction to Friedrich Hayek’s The Road to Serfdom, Friedman suggested that “the battle for freedom” is one that “must be won over and over again.” Blackwell’s analysis of Friedman’s introduction to Hayek’s pivotal work sheds light on the dangers Americans face today as our government continues to expand, assault for-profit institutions, intervene in the healthcare market, and disregard private property rights.    

Thanks to Kelly Hastings for writing this post.

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Obama Administration Opaque On Releasing Obamacare Info; Growing Number of U.S. Citizenship Renunciations Spurred by Taxes? – Late Edition, August 7
Posted By: Jihun Han - 08/07/14

The Obama Administration has stopped releasing Obamacare sign-up information since the month of May. They are reportedly nervous about releasing premium rates before the midterm elections. Daily Caller has the latest!

The Treasury Department released its quarterly list of Americans renouncing their citizenship. 2013 was a record high for U.S. expatriates and the trend still seems to be going up. According to Forbes, one of the reasons is because of the complex tax code and the requirement to file taxes even if you don’t work in the U.S.

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Corporate Inversions Continue
Posted By: Melodie Bowler - 08/07/14

This is a follow-up to the earlier blog post, Corporate Inversion: Fleeing from the Terrifying Tax Code.

The fervor for inversion is not slowing down, especially now that Congress is in recess until September. With two bills left behind, H.R. 4679 in the House and S. 2360 in the Senate, Congress could address the issue during their short September session or in the subsequent lame duck session. While President Barack Obama and Treasury Secretary Jacob Lew condemn businesses as “unpatriotic” for trying to relocate, few policymakers attempt or even suggest specific comprehensive reforms to the tax code, despite admissions that the rate is the real problem. Instead, both bills retroactively change the IRS requirements for inversion to trap businesses in the U.S.

The high corporate tax rate reduces competitiveness for U.S. companies, causing many to analyze the costs and benefits of moving their headquarters abroad. Under the current law, some not-yet-incorporated, fledgling businesses will also decide that the U.S. is not an ideal country in which to open shop. The U.S. corporate income tax rate sits at 35 percent, considerably higher than the European Union average rate of 21.34 percent or the OECD average of 24.11 percent. Operating with at least a 10 percentage point tax advantage leaves foreign competitors with significantly more income for future investments, higher wages, or lower prices, with which U.S. companies struggle to compete.

With their additional expendable revenue, foreign corporations are increasingly viewing U.S. companies as valuable investments. They can buy U.S. competitors to take advantage of American resources and infrastructure, yet maintain their headquarters abroad. As a recent Wall Street Journal article reported, foreign businesses use their additional cash after paying taxes to outbid their U.S. counterparts trying to buy U.S.-based businesses. The article specifically cites a situation in which Emerson, a manufacturing and technology company based in St. Louis, attempted to acquire American Power Conversion (APC) in Rhode Island. Despite an offer of over $5 billion, France-based Schneider Electric outbid Emerson by about $1 billion, turning once-American APC into a French company.

Without true tax code reforms, Congress will continue to see erosion of its tax base. Congress’s misguided attempts to stop inversions could actually expedite the erosion by preventing new companies from incorporating in the U.S. President Obama has threatened unilateral action to stop inversions, but only comprehensive tax reform will rectify the problem that Congress has created with the complicated tax code.

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What Tax System Taxpayers Want
Posted By: Dan Barrett - 08/06/14

In honor of the economist Milton Friedman’s birthday, NTU Foundation once again opened up the polls to taxpayers across the country to see which fundamental tax system change they support. As many Americans know, Friedman was a supporter of tax reform in favor of broadening the base and increasing bureaucratic efficiency. This poll has become a tradition for Americans as NTU and Foundation continue to research the different revenue collecting proposals in Congress and state capitols. Taxpayers were given several different options to choose from:

  • FairTax: A consumption-based national sales tax on all new goods and services. It would repeal the 16th Amendment and eliminate all income-based taxes, including refundable tax credits that are counted as increases in federal spending. The Internal Revenue Service would also be phased out over a four-year period. A monthly “prebate” would be sent to every household to cover taxes on necessities up to the federal poverty level. While the measure is said to be revenue-neutral, NTUF found that it would decrease budgetary outlays by $96.9 billion over five years if enacted in FY 2014.
  • Flat Tax: A modification of the current income-based system where progressive income brackets would be replaced with a single 17 percent rate for everyone above the poverty line. The measure would repeal all income tax credits (including refundable credits) and would likely lead to reductions in costs associated with IRS enforcement and staff. If S. 173 was signed into law in FY 2014, the federal government would cut spending by $85.8 billion in the first year.
  • Keep the Current System: A hybrid-progressive income-based system with thousands of credits and deductions. In the modern seven-bracket system, the more that one earns, the more they must pay to the IRS. Many measures have been proposed, including Congressman Dave Camp’s (R-MI) idea to consolidate the number of brackets and reduce the number of credits. New spending would occur if the reform was introduced and then signed into law by simplifying the Tax Code (and decreasing costs for the IRS) and dedicating new funds to infrastructure projects. NTUF determined that Rep. Camp’s plan could increase spending by $126.5 billion over eight years but that does not include lower IRS costs and possible savings from consolidating refundable tax credits.
  • National Transaction Tax: A defined percentage tax on every financial transaction or transfer involving currency, stocks, or bonds. Congressman Chaka Fattah (D-PA) proposed, specifically, a one-percent transaction tax in the 112th Congress as well as a repeal of the income-based tax system. Individuals making under $100,000 and households making under $250,000 each year would receive a one-percent credit to help offset the tax. Though H.R. 1125 did not call for an increase or decrease in the federal budget, it is likely that monitoring the millions of transactions would require new funds and personnel; exactly how much is unknown.
  • Value-Added Tax: A flat rate imposed on goods and services each time they change hands within a supply chain until sale. Currently in operation in Europe, a VAT is a fee on the value added to a product as it makes its way through the levels of production. The tax is ultimately passed onto the consumer in a similar end-result like a sales tax. Though a VAT has been discussed in the past, few legislators have put forth a version that would replace the current system. Back in the 102nd Congress, Congressman Robert Wise (D-WV)* proposed to have the Department of the Treasury study the VAT. Similar to the Transaction Tax, a VAT would likely require more federal funds to keep track of the millions of transactions of goods and services throughout the supply chain.

What did taxpayers vote for this year? Over 170 people voted in our poll with half voicing their support for the FairTax. The Flat Tax came in second at 39 percent. Demand for a National Transaction Tax, Keeping the Current System, and a VAT fell into the single digits, similar to last year.

Thanks for everyone who voted in our poll this year! We will be doing more of these as Congress continues to propose alternatives and marginal changes to our current tax system.

Have a thought or question on the FairTax or any of the other options? Leave a comment below and our NTUF experts will get back to you!

* Email me if you want to see Rep. Wise's BillTally report from the 102nd Congress. NTUF has back to the 107th Congress online.

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