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Latest Taxpayer's Tab: Taxpayer-Funded Stock Options?
Posted By: Michael Tasselmyer - 06/22/14

Taxpayer's Tab Update

An employee stock ownership plan (ESOP) is a type of benefit program that gives workers the chance to own stock in the companies they work for. The idea is that employee ownership better aligns shareholders' interests with workers' incentives -- since an ESOP rewards both groups for better stock performance. Senator Bernie Sanders (I-VT) wants more companies to offer these benefits, and recently introduced legislation, known as the United States Employee Ownership Bank Act, that would offer public funding to help more businesses start their own ESOP programs. The bill authorizes $500 million in new financing to create a fund within the Treasury that would do just that.

NTUF analyzed the bill's background and what it could mean for taxpayers in the latest edition of The Taxpayer's Tab. This week's edition also features:

  • Most Expensive: Senator John Rockefeller (D-WV) introduced legislation that would fund research and development of carbon capture and storage technology. The Carbon Capture and Sequestration Deployment Act of 2014 offers $20 billion in guaranteed loans, and could cost taxpayers $984 million over the next five years.
  • Most Friended: The Veterans Affairs scandal has renewed debate over how vets access the medical care they're promised, and Congressman Jeff Miller (R-FL) has introduced legislation that would allow them to more easily seek treatment at non-VA medical centers. The Veteran Access to Care Act of 2014 gained 158 cosponsors, and according to Congressional Budget Office estimates would cost at least $620 million over the next three years. 
  • Intern Spotlight: Foundation Associates Sam Jordan and Gordon Miller are featured in the latest installments of "Profiles in Liberty," which will spotlight the work our interns are doing this summer.

For more details on these bills and what else NTUF's been up to, check out The Tab online.

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Profiles in Liberty: Daniel Simmons
Posted By: Dan Barrett - 06/21/14

NTUF takes a holistic approach to help educate the next generation of policy experts.  We give our interns the chance to improve upon their policy and communication skills, but we also want them to hone their critical thinking skills so they can analyze their own political beliefs.They are encouraged to sit in onhearings on Capitol Hill, attend seminars about how to make the best use of their time in Washington, D.C., and NTUF hosts lunch discussions where we consider some of today’spressing political issues and the differing perspectives in public policy.

NTUF Research Intern Daniel Simmons

One intern who especially enjoys our lunch discussions is Daniel Simmons.  Daniel lives in Houston, Texas with his wife and three kids. He went to the University of Houston, where he worked towards a BA in Communications.  After graduating, he founded Pressure Washing America.  Daniel is quite proud of how his business has grown over the past five years.  Last year, he returned to the University of Houston in Victoria, where he is seeking his MBA.  This summer, Daniel moved his family to Washington, D.C. so that, while he is working, his kids can have a hands-on history lesson as they explore the city.

What has been your favorite part of living in the DC area?

DS: Sight-seeing.  I have been to the Capitol Building, seen the Tomb of the Unknown Soldier at Arlington National Cemetery, visited Mount Vernon, and toured the Smithsonian National Air and Space Museum. 

Who are your heroes?

DS: I really admire my dad.  He raised three kids on his own.  I also admire Milton Friedman.  Not only do I agree with his work as an economist, he made difficult-to-understand economic principles palatable and accessible to many people.

How did you become interested in politics?

DS: I enjoy listening to Michael Berry, a radio show host based in Houston, TX, and this spiraled into an ever-growing interest in politics.

What have you learned while working at NTUF that has been most interesting to you?

DS: I find the sheer volume of bills that are introduced into Congress to be very interesting.  Before coming to NTUF and working on the BillTally project, I had no concept of the number of bills which are introduced, and I didn’t understand how little a percentage of these bills will actually become law.

What obstacles to success do you feel that you have worked to overcome while at NTUF?

DS:  When I first arrived at NTUF, I was daunted by the length of the U.S. Code; trying to find and understand the section of the Code that each bill is trying to amend was difficult.  But, with experience, this has become easier.

Why did you choose to work at NTUF?

DS: I am very interested in the out-of-control spending of the federal government, and I feel that, by working at NTUF, I will gain insight into how our government uses our money and why expenditures keep increasing year after year. 

What has been the most interesting bill which you have researched?

DS: I researched a bill that would repeal a section of the Affordable Care Act.  This bill was interesting because it gave me more insight into one of the many facets of the Affordable Care Act, namely that insurance companies could be bailed out with tax dollars.  It also surprisedme that Congress would have to pass a bill in order to determine whether or not taxpayers would support these possible bailouts. 

Do you have any advice for future interns?

DS: Learn as much as you can during your time at your organization.  While it may not seem like it, your time there will go fast, and the people you are working for have a vast amount of knowledge.  Take advantage of this, and try and learn as much as possible from them.  Also, in D.C., there are so many informative political events. If you are able, attend several of these.  Having an internship is a great opportunity, so don’t let it go to waste!

Stay tuned for an interview with Steve Adams coming out in a few days.  Be sure to check out the previous interview with Research Intern Gordon Miller.

Interested in learning about the other interns working for the Foundation this summer? Want to help the NTUF interns? Check out this post.

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

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Florida’s 19th Special House Election: A Budgetary Guide
Posted By: Dan Barrett - 06/20/14

In what some are calling a quiet election, there’s still a lot to be said. Though the challenges of taking drug tests have largely been replaced with who can help create the most jobs in the next five months, before the next election for the same office, Florida residents are asking the same questions of candidates as they did in Florida’s other recent special House election: What will you do in Washington, D.C.? Especially in the wake of their last Congressman, Trey Radel, who resigned after being arrested for possession of cocaine.

In just a couple of short months, three front runners have emerged to battle for the 19th District’s seat: businessman Curt Clawson (R), businesswoman and former political activist April Freeman (D), and former health worker Ray Netherwood (L). Each candidate offers different general solutions to America’s fiscal ills but details have yet to come out about how each would actually change the federal budget. However, by using a methodology similar to National Taxpayers Union Foundation’s (NTUF) BillTally project, taxpayers can see where the candidates stand on at least some of the spending issues. For this brief study, we took direct quotes and campaign materials of candidates and matched them with budget and legislative data to see exactly what the differences and similarities are.

Similar to the New Jersey Special Senate and Florida’s 13th Special House elections, details were few and far between. Even with the campaigns releasing economic plans and platform summaries, we’re still left asking what will they do if elected as the House of Representative’s newest member?

Check out the entire line-by-line analysis of all three candidates. As with NTUF’s other BillTally and campaign studies, only changes in current spending are recorded (similar to the Congressional Budget Office). The reports do not include changes in revenues or costs outside the federal government. Below are summaries of each candidates’ proposals.

Curt Clawson (R) has proposed two (out of 12) quantifiable policies that NTUF was able to score. Combined, they would decrease annual spending by $395.8 billion. The largest budget-influencing item that he supports would cap federal expenditures at 19 percent of GDP, which would be implemented using the “Penny Plan,” which would cut spending by one percent each year as long as the budget is not balanced.

  • Block Grant Education Funds to States: Unknown
  • Continue Federal Flood Insurance Rates: Unknown
  • Create a Budget Cutting Committee: Unknown
  • Freeze Federal Employment: Unknown
  • Limit Federal Spending: $331.9 billion (savings)
  • Require Congressional Approval for Major Regulations: Unknown
  • Block Grant Medicaid Funds to States: Unknown
  • Eliminate Government Health Care Bureaucrats: Unknown
  • Protect Health Insurance Access for those with Pre-Existing Conditions: Unknown
  • Provide for Health Care Plans and Accounts: Unknown
  • Repeal the Patient Protection and Affordable Care Act: $63.9 billion
  • Restore Medicaid Advantage Funding: Unknown

April Freeman (D) has two (out of 12) policy items that NTUF could fiscally score. Together, they would increase spending by $20.203 billion each year for the next five years. Her largest quantifiable proposal would overhaul the immigration system.

  • Ensure Wage Equality: $3 million
  • Support Domestic Industries: Unknown
  • Support Teachers: Unknown
  • Ban Hydraulic Fracturing: Unknown
  • Expand Alternative Energy Sources: Unknown
  • Fully Fund Water Infrastructure Improvements: Unknown
  • Fight Human Trafficking: Unknown
  • Pass Immigration Reform: $20.2 billion
  • Protect Citizens’ Privacy: Unknown
  • Secure the Border: Unknown
  • Normalize Relations with Cuba: Unknown
  • Ensure Veterans’ Benefits: Unknown

Ray Netherwood (L) had one proposal that NTUF could identify. It would be to replace the current income-based tax system with a national sales tax, known as the Fair Tax. The measure would cut an average $19 billion in federal outlays for each of the next five years.

Normally, there would be some overlap between the candidates’ platforms. In the other Florida Special Election, the front runners supported increasing current spending by $180 million per year to delay a scheduled rate increase for the National Flood Insurance Program. That was not the case in this House race, although the three candidates were not asked similar questions when interviewed by the same source.

What does this mean for taxpayers and residents of the 19th District? It’s time for the campaigns to give Americans more details. While candidates are asking Floridians for their vote, taxpayers are asking for the roadmap of each candidate’s path to reach a better and expanding economy. As highlighted above and in the full report, the absence of budgetary facts and figures opens the possibility that all of the candidates could have much larger or smaller spending aspirations in mind. Clawson, Freeman, or Netherwood need only clarify their intentions with dollar figures to help complete this report and help educate Americans on important and pressing issues that we’re all facing.

Note: National Taxpayers Union Foundation is a 501(c)3 nonprofit organization. Our research efforts are intended only to educate Americans on how their tax dollars are being or will be spent by those in office, seeking office, or in appointed positions. For more information on NTUF go here.

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Permanent Internet Tax Freedom Act Moves Ahead
Posted By: Michael Liguori - 06/20/14

Wednesday, the House Judiciary Committee passed the Permanent Internet Tax Freedom Act (PITFA), and there is plenty of reason for the American taxpayer to get excited. Congress has previously held a temporary moratorium on Internet access taxes. This bill sets that moratorium in stone, ensuring that burdensome state and local taxes don’t create a fiscal hurdle for engaging in the one of the fastest-growing, most productive parts of our economy and culture. Taxes on a resource like the Internet are not only a tax on free speech and communication, but a tax on an educational and economic resource that all Americans can access.

NTU Vice President of Government Affairs, Brandon Arnold recently wrote a letter to Congress in support of this admirable piece of legislation:

Any nation seeking to remain technologically and economically competitive should not punish the very citizens who are reaching out into the digital realm, especially by levying charges that are unlikely to have anything to do with bettering Internet service. Taxpayers need long-term protection from state and local authorities seeking to add taxes to the various routes consumers use to access the Internet, and this bill would provide such safeguards.

NTU urges lawmakers to bring PITFA to the House floor for a full vote immediately, as removing the uncertainty of Internet taxation would create a boon for both consumers and investors. However, it is important that other unrelated tax bills aren’t tacked on. One particularly concerning piece of legislation that has been lurking in the shadows is the Marketplace Fairness Act. This bill  would allow states governments to collect sales taxes from out-of-state businesses. This would increase costs for businesses, prices for consumers, and allow states to discriminate between one online business and another. In a commentary piece, NTU’s Nan Swift debunks some of the worst myths about this harmful piece of legislation.

National Taxpayers Union supports laws that encourage free enterprise and minimize unnecessary government burdens. PITFA is an excellent step toward this ideal, and we hope that legislators vote “yes” and a clean bill and avoid potential pitfalls, like the disastrous Marketplace Fairness Act.

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Senators Seeking Tax Hike for Highway Trust Fund; NJ Senate Dems Want Tax Hike on Rich but Christie Says No - Late Edition, June 19
Posted By: Jihun Han - 06/19/14

Today's Taxpayer News!

Sens. Bob Corker (R- Tennessee) and Chris Murphy (D- Connecticut) are proposing a hike in the federal gas tax to fund the highway trust fund (fund runs out this summer). To help offset the tax hike, the Senators want Congress to pass the expired tax extenders. Business Insider has the latest!

Senate Democrats in New Jersey are proposing tax hikes for the wealthy in order to balance the budget. However, Governor Chris Christie has reiterated that he will not raise taxes. Reuters  has more! 

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Income Tax Cuts in DC? Yes, They’re Real
Posted By: Lee Schalk - 06/19/14

Believe it or not, the District of Columbia is moving closer to passing a positive tax reform package that would slim the City’s fattened coffers by $67 million each year while cutting income taxes for the vast majority of DC residents. It would also lower the death tax. It’s not a perfect plan, but it’s far superior to what we’re accustomed to seeing in DC. The District’s government needs to be put on a diet, and this proposal would help.

By now, most DC residents have probably heard about the “fitness tax” scare that some local gyms have ginned up to squash support for the proposed reforms. This line of argument deserves closer scrutiny.  

Health clubs are currently excluded from the 5.75 percent DC sales tax, as are carpet and upholstery cleaning services, car washes, tanning studios, bottled water home delivery, bowling alleys, and billiard parlors. The sales tax would be expanded to each of these services. As the DC Fiscal Policy Institute explained, “The Council’s tax package doesn’t create a special tax on health clubs but instead includes them in the basic sales tax.”

Raising taxes on businesses and their customers – without lowering other taxes by a greater amount – would be a bad idea. That’s especially the case if a product or service is being targeted with high rates. Taxpayers and businesses should likewise beware of big-government tax collection schemes masquerading as “fairness” or “reform,” like the misguided Marketplace Fairness Act.

But that’s not quite what’s happening here. The net result of the tax package would be less for the DC Taxman overall. Sure, gym members might pay an extra four bucks a month to go to the gym, but on average, they would also save a cool $400 per year on their income tax tab. It’s a tradeoff similar to what we saw last year, when North Carolina enacted its historic, pro-growth tax reform plan, which featured income tax cuts made possible by expanding the sales tax base. Given the choice, I’d gladly pay a little more in sales taxes if it means the government took a smaller bite out of my paycheck, leaving me with more money in my pocket than I’d have under current tax laws. Nearly everyone I know living in the District feels the same. And in the end, a lower income tax bill leaves consumers with more to spend at local businesses anyway.

While the DC package wisely broadens the sales tax base and treats more goods and services equally, it moves in the wrong direction on vapor products. The plan would miscategorize e-cigarettes as “other tobacco products” (OTP), even though they contain no tobacco. It would then tax OTP products at the same rate as traditional analog cigarettes, which frustratingly means that vapor products, which are a safer alternative to smoking, will become much pricier. This could lead District “vapers” to stick with traditional cigarettes (which doesn’t bode well for public health).

While higher taxes on e-cigarettes would be disappointing if it remains in the final proposal, other elements in the overall package (the income tax cuts) would provide a nice boost for nearly all DC residents. Taxpayers in DC should carefully examine the claims about the gym tax  by heading over to the Tax Foundation’s blog, getting informed, and speaking up in favor of pro-growth reform done the right way.

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DC's Healthcare Exchange Suffers Same Afflictions as Obamacare
Posted By: Samantha Jordan - 06/19/14

For Skip Moskey, and many D.C. residents, signing up for health insurance through DC’s new insurance marketplace has been like “climbing the great wall of China.” But instead of climbing up an ancient wall, DC residents are climbing through miles of red tape.

The Washington Post explained on Wednesday that processing problems on the new marketplace are causing delays to coverage up to three months. With myriad insurers including CareFirst and Kaiser Permanente reporting they have received information with flawed data, or failed to receive applications at all, it appears the problem is occurring at the DC Healthlink.

The DC Healthlink is a government-sponsored marketplace providing mandatory insurance coverage, one of 14 which states have set up after the unsuccessful launch of the national exchange. Yet, it seems the smaller exchange is running into many of the same glitches and processing problems the national exchange encountered last year. 

Healthlink is not only costing DC residents time, but also money. The Washington Post reported that those seeking coverage through DC’s marketplace could pay more than twice as much a month than with a previous plan. 

This extreme case was true for Skip Moskey who discovered the new policy would cost him $667 a month compared to $330 a month he was paying with CareFirst BlueCross BlueShield. 

When the cost of time and money is substantially larger than the alternative, it is difficult to imagine many would volunteer to attain coverage under the Healthlink. But instead of paying $337 more for the new policy, taxpayers will be paying $1.8 trillion.

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Death Tax Repeal Coming?; Congress Reacts to IRS Lost Email Claims – Late Edition, June 18
Posted By: Jihun Han - 06/18/14

Today's Taxpayer News!

The U.S. House of Representatives is one step closer to repealing the death tax altogether. Forbes has the latest on it! At the same time reports are swirling that the Clintons are maneuvering to avoid the tax (which they support). 

The IRS' claims that it has lost numerous emails related to its controversial actions toward conservative groups have members of Congress reacting harshly: Read here.

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House GOP Leadership Vote: NTU Ratings Shed Light on Costly Differences
Posted By: Brandon Arnold - 06/18/14

Tomorrow, House Republicans will vote to elect a new Majority Leader and, in all likelihood, a new Majority Whip. Last week, National Taxpayers Union (NTU) posted the NTU Rates Congress scores of the various candidates for these two important leadership positions. Since that time, the Majority Leader race has winnowed down to two men - pitting current Majority Whip Kevin McCarthy (R-CA) against Rep. Raul Labrador (R-ID).

Here’s how they stack up on NTU’s scorecard:

Candidate

2012 Score

2012 Grade

2012 Rank

Lifetime Average Score*

McCarthy

72%

B-

144

79%

Labrador

90%

A

5

90%

*Lifetime average score is the arithmetic mean of each year’s score. Please note that grading criteria changes from year to year.

Many media outlets are reporting that McCarthy is a heavy favorite. If he does indeed win, it would open up the position of Majority Whip. Running for that post are Republican Study Committee Chairman Steve Scalise (R-LA), Rep. Pete Roskam (R-IL), who is currently the chief deputy whip, and Rep. Marlin Stutzman (R-IN). 

Here are their ratings on NTU’s scorecard:

Candidate

2012 Score

2012 Grade

2012 Rank

Lifetime Average Score*

Scalise

82%

B+

57

84%

Roskam

69%

C+

170

78%

Stutzman

86%

A

24

87%

*Lifetime average score is the arithmetic mean of each year’s score. Please note that grading criteria changes from year to year.

For more information on NTU’s rankings, please click here.

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In New Jersey, 76ers Come First, Taxpayers Second
Posted By: Melodie Bowler - 06/18/14

Various ideas are cropping up in the New Jersey legislature to close the looming $2.7 billion budget gap for fiscal year 2015, and Governor Christie has had to cut pension payments to pay for this year’s $800 million shortfall. Despite these fiscal woes, the state has approved an $82 million gift (paid in yearly $8.2 million installments) for the Philadelphia 76ers basketball team to build a training facility in Camden. While legislators debate raising income taxes on millionaires and an e-cigarette tax, Governor Chris Christie lauded the 76ers decision, which he believes will bring “additional revenue and other things and business for the city of Camden.” The New Jersey Economic Development Authority voted unanimously in favor of the grant, given their authority by the Economic Opportunity Act of 2013.

Local politicians believe the construction of the training facility will boost the economy in Camden, where unemployment continues to soar above national rates at 16 percent. For $82 million, the 76ers facility will bring only about 250 jobs to Camden, 200 of which are already filled by players and current members of their staff, according to reports. Still, Governor Christie and Camden’s own representatives believe that the facility will revitalize the area, bringing in new businesses to meet the demands of people visiting and working in the facility. Camden Mayor Dana L. Redd asserts, “The ancillary services that are going to be needed provide a great opportunity for small businesses, to reap rewards. There's going to be a spill-over effect."

Based on the area’s current attractions, however, a spill-over effect seems unlikely. The 76ers’ training facility will be built at the Camden waterfront, a long-time local attraction. At the waterfront currently sits the Adventure Aquarium and Susquehanna Bank Center, along with the Battleship New Jersey and the Camden Children’s Garden. Despite the jobs these brought to Camden when they were first built, the existing attractions have done little to improve economic growth in the area. The state currently predicts the deal will bring in $76.6 million in benefits over 35 years. In the end, New Jersey will give the Sixers an $8.2 million per year tax cut, only to see approximately $2.19 million per year in net benefits. Next time, before catering to a multi-million dollar franchise, perhaps Governor Christie should give his own heavily-taxed constituents a break.

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