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RSC and House GOP Alternative Budgets for FY 2015
Posted By: Michael Tasselmyer - 04/10/14

In the newest edition of The Taxpayers Tab, National Taxpayers Union Foundation (NTUF) compared some of the alternative budget proposals put forth by several Congressional caucuses, including the Republican Study Commission (RSC), the House Republicans, the House Democrats, the Congressional Progressive Caucus (CPC), and the Congressional Black Caucus (CBC). We compared the top-line budget numbers from each proposal relative to the Congressional Budget Office's baseline projections for 2014 to give taxpayers an idea of how each of these budget alternatives differ.

This first of two posts will focus on each of the GOP alternatives.

FY 2015 Republican Budget Proposals
(in billions of dollars)
 
Defense
$514
$521
$521
Other Discretionary
$524
$429
$492
Mandatory
$2,116
$2,1572
$2,2103
OCO1
$92
$85
$85
Total
$3,246
$3,192
$3,308
Change from FY2014
N/A
-$54
+$62
Notes:
Totals may not add due to rounding.
Figures are in budget authority, except where noted.
BillTally does not track changes in debt interest servicing and so they are not included in these figures.
1Overseas Contingency Operations (OCO) funding is not subject to budget caps.
2NTUF assumes that the Back to Basics budget reported mandatory spending in outlays. NTUF therefore must compare their outlay figures with the budget authority figures of the other entities. This may not reflect the caucus's budgetary intent.
3The Path to Prosperity budget reported mandatory spending in outlays. NTUF therefore must compare their outlay figures with the budget authority figures of the other entities. This may not reflect the caucus's budgetary intent.

Some notable points:

  • Both the RSC and Ryan budgets eventually balance, but the RSC's does so within four years, compared to the ten year goal in the Ryan proposal.
  • Both GOP budgets maintain Overseas Contingency Operations (OCO) funding at $85 billion, and propose $521 billion in discretionary defense budget authority.
  • The RSC plan proposes deeper cuts to non-defense discretionary programs than does the Ryan plan, but a simplification of the current tax code is a stated priority for each group.

While the two GOP budgets are similar in that their ultimate goals are balanced books, the RSC plan would try to achieve that within a much shorter timeframe. In both cases, emphasis is placed on cutting discretionary spending rather than any wholesale or fundamental reforms of mandatory entitlement programs.

For more, check out NTUF's full analysis in The Taxpayer's Tab.

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Latest Taxpayers Tab: Budget Alternatives
Posted By: Michael Tasselmyer - 04/09/14

Taxpayer's Tab Update

As tax day approaches, lawmakers in various Congressional caucuses have been unveiling their own alternatives to the President's Fiscal Year 2015 budget proposal. In this week's edition of The Taxpayer's Tab, NTUF looked at proposals from the Republican Study Commission (RSC), House Republicans, House Democrats, the Congressional Progressive Caucus (CPC), and the Congressional Black Caucus (CBC) -- in addition to President Obama's own budget -- to see what their policy priorities could mean for taxpayers.

  • RSC: The RSC budget attempts to balance the federal budget within four years by offering lower spending caps than the ones currently on the books, as well as freezing discretionary spending at $950 billion in every year that the budget does not balance. The RSC budget also calls for a simpler tax code and cuts to non-defense discretionary programs.
  • House Republicans: The Path to Prosperity put forth by Rep. Paul Ryan (R-WI) and the GOP House Budget Committee would also balance the budget, but within ten years instead of four. It would defund President Obama's signature Affordable Care Act and attempt structural reform of several mandatory entitlement programs.
  • House Democrats: The Democrats' alternative represents a renewed focus on economic stimulus, offering additional funding for infrastructure & education projects as well as expanded unemployment benefits. The new spending would be offset by additional taxes.
  • CPC: The CPC's Better Off Budget increases discretionary spending in order to achieve its goal of creating 8.8 million jobs by 2017. The budget would discontinue Overseas Contingency Operations (OCO) funding, and expand long-term unemployment benefits, education grants, and public works projects.
  • CBC: The CBC budget emphasizes social welfare programs and anti-poverty initiatives with $3.4 trillion in budget authority for FY 2015. It would also discontinue OCO funding, and provides significant investment in community development and job training programs.

For more on these alternative budget proposals and how they compare to each other and the President's proposals, check out the online edition of The Taxpayer's Tab.

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New Report on State and Local Tax Burdens
Posted By: Lee Schalk - 04/04/14

The good folks at the Tax Foundation have released another eye-opening report with their Annual State-Local Tax Burden Rankings, which “estimates the combined state and local tax burden shouldered by the residents of each state.”

Not surprisingly, New York placed first, with taxpayers shelling out 12.6 percent of their income to pay for state and local taxes, while Wyoming replaced Alaska at number 50 with a burden of 6.9 percent.

Other key findings, according to the Tax Foundation:

  • During the 2011 fiscal year, state-local tax burdens as a share of state incomes decreased on average. This trend was largely driven by the growth of income in all states.
  • In 2011, the residents of New York, New Jersey, and Connecticut had the highest state-local tax burdens as a share of income in the nation. In these states, residents have forgone over 11.9 percent of income due to state and local taxes.
  • Residents of Wyoming paid the lowest percentage of income in 2011 at just 6.9 percent. They replaced Alaska, which had previously been the least-taxed for multiple decades, as the lowest-burdened state in the nation. After Wyoming and Alaska, the next lowest-taxed states were South Dakota, Texas, and Louisiana.
  • State-local tax burdens are very close to one another and slight changes in taxes or income can translate to seemingly dramatic shifts in rank. For example, the twenty mid-ranked states, ranging from Oregon (16th) to Georgia (35th), only differ in burden by just over one percentage point.
  • On average, taxpayers pay more to their own state and local governments (73 percent of total burden). Taxes paid within states of residence decreased on average in 2011, while taxes paid to other states increased, leading to a slight decrease in total burden. Some states deviated from these national trends, however.

The report serves as an excellent reminder for taxpayers to continue the push for tax reform and decreased spending at state and local levels of government. For more from the Tax Foundation or to read the entire report, click here.

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Taxpayers Claim Big Win in Fight Against IRS Free Speech Silencing Rule
Posted By: Nan Swift - 04/04/14

NTU members deserve a pat on the back for their hard work in the on-going fight against IRS-overreach. For months, NTU and other grassroots organizations (categorized under section 501(c)(4) of the Tax Code) have been engaged in an uphill battle against an oppressive new IRS rule proposal that would significantly restrict our ability to educate citizens and hold elected officials accountable. Thanks to your help however, this silencing of free speech has been thwarted...for now.

After concerned citizens filed an overwhelming number of comments with the IRS to oppose the rule – thousands of which came from NTU members – IRS Commissioner Koskinen announced yesterday that the rule will not be finalized this year. So, it’s clear that taxpayers have won the first round.

According to Koskinen:

During the comment period, which ended in February, we received more than 150,000 comments. That’s a record for an IRS rulemaking comment period. In fact, if you take all the comments on all Treasury and IRS draft proposals over the last seven years and double that number, you come close to the number of comments we are now beginning to review and analyze.

It’s going to take us a while to sort through all those comments, hold a public hearing, possibly repropose a draft regulation and get more public comments. This means that it is unlikely we will be able to complete this process before the end of the year.

As you can see from Koskinen’s comments, this fight is far from over. Largely developed behind closed doors, the new ruling would have constituted a profound infringement of the First Amendment rights of NTU and each of our members. It would have made it difficult – if not impossible – for NTU to hold elected officials accountable for their actions and ensure that the voice of the taxpayer is heard in the nation’s capitol.  It should come then as no surprise that imposing this rule was a major priority for the Obama Administration to finalize ahead of 2014 Congressional elections. (Click here for more background information).

 It’s important that we use the time we have to keep up the pressure on our legislators to oppose this terrible rule!

Here’s how you can help:

  1. Take Action and urge your Senators to support S. 2011, the “Stop Targeting of Political Beliefs by the IRS Act of 2014” – this would impose a statutorial one-year delay of the proposed rule.
  2. Give generously to ensure we have the tools and resources we need to stop the IRS’s bullying of grassroots organizations.

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Yet Another Scandal at the Consumer Financial Protection Bureau
Posted By: Brandon Arnold - 04/03/14

The Consumer Financial Protection Bureau (CFPB) was created just a few years ago and it’s already experienced more than its fair share of stumbles. The latest kerfuffle: revelations that a self-professed socialist now sits on one of the agency’s advisory boards.

Ron Ehrenreich has been appointed to the CFPB’s Credit Union Advisory Council. Flash back to 26 years ago, and he was running to be Vice President of the United States on the Socialist Party’s ticket. How times change … or have they? In any case, it’s unclear what kind of impact Ehrenreich will have in this role, but his appointment certainly underscores the need for additional oversight and accountability at CFPB. This lack of Congressional supervision is something that NTU has been concerned about for years and was a major source of contention when President Obama appointed Richard Cordray to head the agency. At that time, Republicans in the Senate blocked the appointment for months as they raised serious concerns about the inability of Congress to conduct sufficient oversight, as well as concerns about the sweeping new powers the CFPB would wield. Obama eventually used a constitutionally questionable “recess appointment” to put Cordray in office and he was later confirmed after Senate Majority Leader Harry Reid changed the rules to prevent his colleagues from using the filibuster.

The next CFPB public relations disaster occurred soon after Cordray’s Senate confirmation, when we discovered that many of its employees were extremely well-paid:

Hundreds of CFPB officials are paid more than Supreme Court Justices, senior White House officials, members of Congress, and all 50 state governors, according to a Washington Examiner analysis of salary data for the board's 1,204 workers.

As my colleague, Pete Sepp, noted in the same Washington Examiner story, “how can it be justified on grounds to hire expertly qualified people when many of the salaries far exceed the experts at places like the Federal Reserve and the Securities & Exchange Commission?”

This week, the CFPB was hit with two significant issues.  First, as previously mentioned, we learned of an avowed socialist serving on a CFPB advisory board. And just yesterday, the CFPB was accused of discrimination against women and minorities.

Taxpayers must be left wondering what is next for this troubled agency that is supposed to be protecting consumers from harm.

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Fight for LNG Exports Reveals Ex-Im Bank Hypocrisy
Posted By: Nan Swift - 04/03/14

Next week the House Energy and Commerce Committee will consider a bill, H.R. 6, to open up new markets for natural gas exports. Currently, natural gas exports (in the form of liquefied natural gas or LNG) are restricted to the handful of countries with which the U.S. has a free trade agreement. In order to export LNG to other countries, applicants must first pass a public interest review and the process is marked by extensive delays.

The government-imposed export restrictions are hampering the growth of the domestic natural gas industry, even as new technology makes more and more resources available.  When domestic consumption of natural gas is flat and natural gas prices and consumption are high abroad, it makes perfect economic sense to take our abundant supply to the global demand. Our neighbors in British Columbia are doing so and expect to see 4 percent economic growth over the next few years.  Increased LNG exports would not only bolster the profitability of domestic natural gas production, but also bring with it new jobs and economic development – two things our struggling economy desperately needs.

Writing in at TheHill.com today, Raymond Keating, chief economist of the Small Business and Entrepreneurship Council explained:

According to the Center for Liquefied Natural Gas, each new terminal created to ship LNG overseas could generate more than $10 billion in investment for the U.S. economy, including wages and purchase orders for equipment. A single project will likely generate more than $10 million per year in new tax revenue at the federal, state and local levels. For good measure, it’s estimated that very $1 billion of LNG produced creates about 5,000 construction and manufacturing jobs.

So, while it’s still frustrating that government is still standing in the way of an industry’s success, what’s even more surprising is how U.S. taxpayer-backed dollars are being used to prop up the LNG industries of other nations even as our own producers are stymied by our government.

When it came to light that recent Administration-imposed sanctions towards Russia had put the kibosh on an Export-Import Bank (Ex-Im Bank) financing deal for the Russian OAO Novatek Yamal LNG project,   I wondered – how many other LNG export projects do we support in other countries? A quick search turned up quite a few.

Robust competition and free trade dictate that competitors to U.S. natural gas will and should develop their own energy resources. But the federal government shouldn’t be propping up direct competitors for U.S. products using cheap, taxpayer-backed credit. Not when our own producers are not allowed to compete on that playing field. This is doubly true when the recipients of Ex-Im Bank largess are giant corporations more than capable of securing their own private capital.

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April Fool’s Day Still Real Anniversary of Highest Corporate Tax Rate
Posted By: Brandon Arnold - 04/01/14

Happy April Fools’ Day! Today marks the 2nd anniversary of the United States having the highest corporate tax rate in the industrialized world – a foolish policy situation that continues to plague our economy.

Last year, I analyzed this dubious occasion in an op-ed for the Washington Times. Sadly, virtually nothing has changed since then. The rate remains far too high. And even after all loopholes, credits and deductions are accounted for, our average effective rate is among the world’s highest. This has put American businesses at a huge competitive disadvantage when compared to international rivals.

A few weeks ago, House Ways & Means Chairman Dave Camp (R-MI) introduced a tax reform draft that would significantly alter the existing Tax Code. While NTU has several concerns about the plan, it represents a promising step toward fundamental tax reform. One of its most encouraging pro-growth provisions would flatten the corporate rate structure and move to a single rate of 25 percent – significantly lower than the current 35 percent rate. Such a change would create 391,000 full time jobs, according to the Tax Foundation.

Let’s hope that Camp’s proposal builds momentum for the passage of a new Tax Code that is simpler, fairer, and less burdensome than the current one. Otherwise, we’ll be “celebrating” on April Fools’ Day again next year.

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Falling Behind on Corporate Income Tax is No Laughing Matter
Posted By: Pete Sepp - 04/01/14

There’s an old saying that goes, “Fool me once, shame on you, fool me twice, shame on me.” But when it comes to our tax system, the shame is a one-way street leading to our nation’s capital. Today is the second anniversary of the U.S.’s dubious distinction of having the highest combined corporate tax rate (39.1 percent) in the industrialized world. And guess who bears the burden of this cruel joke? Workers, investors, and taxpayers… everyone.

On April 1, 2012, Japan finally implemented a reform plan that lowered its corporate tax rates and simplified its tax base. “Finally” is an apt choice of words, since most developed countries had been taking such steps for years.  Since 1985, for example, the simple average corporate tax rate for OECD nations has fallen from a high of close to 50 percent down to roughly 25 percent.

When was the last time the U.S. took bold steps to slash its corporate tax rate? Hint: You needed a Walkman to listen to music, a paper map to find directions, and a landline to make phone calls. The year was 1986. Today, nearly three decades later, advances in technology allow us to listen to music, navigate, and communicate all on one device. Our tax code, on the other hand, has made no such advances.

If this seems ironic for the model of capitalism, that’s because it is. There is no good reason for the U.S. to voluntarily place itself at such a competitive disadvantage. Our 39.1 percent corporate tax rate is a disincentive to domestic investment and job creation.  And while some high-taxers dismiss this benchmark because it fails to account for the “effective” burden after deductions and credits, this too is a misnomer. Even by that measurement, the U.S. is still a serious laggard.

Even as we fall behind, other countries are making moves to attract American businesses with more desirable tax rates – not just Japan, but other competitors such as Canada and the United Kingdom. Still, the burden of paying taxes is not the only problem afflicting our businesses – it’s the burden of complying with taxes. As NTU’s most recent “Taxing Trend” analysis of systemic complexity reported from a PwC analysis, the U.S. ranked an underwhelming 63rd out of 185 countries surveyed for the time to fill out all the necessary business tax forms associated with a medium-sized manufacturer (“1” being the easiest to deal with).

Fortunately, some Members of Congress are starting to get serious about overhauling our nation’s personal and business tax systems. The House Ways and Means Committee’s recent tax reform discussion draft may need work in several areas, but it has helped to advance a much-needed dialogue.

The House Majority’s 10-Year Budget Resolution, introduced today, goes even further. While it does not endorse a specific plan, it calls for a wide-ranging debate over comprehensive tax reform that could include not only the Chairman’s draft but other worthy proposals to replace the code with a flat tax or consumption tax.

A day like this is a good one to remind Washington it’s time to stop fooling around with tax reform and get to work. Our lawmakers need to take action now before another three decades – and many more of our competitors – pass us by.

(Picture source: Mercatus Center, Veronique de Rugy, http://mercatus.org/publication/corporate-income-tax-rates-oecd)

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Presidential Travel Study, Another BBA Resolution Passes! - Speaking of Taxpayers, March 28
Posted By: Douglas Kellogg - 03/31/14

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National Taxpayers Union Foundation's study of Presidential travel has spread far and wide, Policy Analyst Michael Tasselmyer has the low down. Plus, NTU State Affairs Manager Lee Schalk talks alcohol policy in Pennsylvania & Ohio Governor John Kasich's budget proposal! And, as always, the Outrage of the Week!

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Latest Taxpayer's Tab: Trimming the DoD Budget
Posted By: Michael Tasselmyer - 03/30/14

Tab Insert

Thanks to the support and feedback of our readers as well as the hard work of our creative content team, The Taxpayer's Tab got a visual overhaul recently, and we have new research to introduce along with the new look.

This week's Tab features a proposal from Congressman Ken Calvert (R-CA) to reduce the Department of Defense's civilian workforce of 770,000 by 15 percent. In doing so, H.R. 4257 would save about $16.5 billion per year, or $82.5 billion over the next half decade.

Also featured this week:

  • Most Expensive: Congressman Jared Huffman (D-CA) introduced H.R. 4239, which would provide $475 million in emergency funding for drought relief in California and other western states, and make it easier for affected areas to receive federal assistance compared to current law.
  • Wildcard: Washington, D.C. Delegate Eleanor Holmes Norton's (D) H.R. 4243 would ease restrictions on commercial filmmakers shooting video or photographs in and around the Capitol building.
  • Presidential Travel Update: NTUF recently updated our ongoing study of Presidential travel, and we have a roundup of some of the media attention it generated.

Be sure to check out the full Tab online for more information on these bills and our research.

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