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"When the wheels of Air Force are up, the meter is on, and I'm talking about a heap of taxpayer dollars." – Rep Howard Coble
This morning, Congressman Howard Coble (R-NC) highlighted the travel time and costs of President Obama that were at the heart of NTUF's recent paper Up in the Air: A Study of Presidential Travel and its Uncertain Costs by Policy Analyst Michael Tasselmyer. Rep Coble tied the $179,000 per flight hour of Air Force One to changing the costliness of government in light of the mounting debt and billion-dollar federal deficit. He said "I simply ask the President and his wife to exercise more prudence and discipline regarding their aircraft activities. ... The plague of the soaring debt continues to bother us, and I respectfully request that President Obama and his wife direct more attention at our soaring debt and deficit and less time on Air Force One."
Watch the entire floor statement here (skip to 1:13):
For more information on NTUF's Presidential Travel Study:1 Comments | Post a Comment | Sign up for NTU Action Alerts
Today’s Taxpayer News!
The Network of Enlightened Women offered this view on high tax rates, and the disproportionately negative effect high income taxes have on American women.
AFR Talk’s Nothing but the Truth radio show featured NTU’s Pete Sepp on Obamacare and its negative effect on employment.
NTU has also signed onto a letter urging the FCC to adopt reforms to the E-Rate program, which offers communications funding for schools and libraries.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Corporate Welfare Here to Stay with Reconfirmation of Ex-Im President
The Senate voted 82-17 today for Fred Hochberg to be reconfirmed as president of the U.S. Export-Import (Ex-Im) Bank for a second term. Sadly, the threat of the so-called “nuclear option” has hijacked normal order in the Senate, clearing the path for a handful of Administration nominees not based on their merits following a rigorous debate, but under the cloud of political horse trading.
Proponents of Ex-Im, a government agency that provides taxpayer backed loans to private companies under the auspices of spurring trade, have clamored for Hochberg’s swift confirmation ahead of a July 20 deadline that would leave the bank’s board without a quorum and unable to continue distributing funds. However, as NTU Vice President Pete Sepp explained here, reconfirming Hochberg is a vote for more crony capitalism and business as usual at Ex-Im:
But as we have argued before, even from a pure policy perspective it would be a mistake for the full Senate to green-light Hochberg’s reconfirmation the way the Senate Banking Committee already has. For one, important warnings about Ex-Im’s risk management have been coming in a steady stream from Ex-Im’s Inspector General, the Government Accountability Office, and other entities. And that could mean trouble down the road for taxpayers.
Washington doesn’t have a good track record when it comes to playing with other peoples’ money and based on today’s vote it doesn’t look like that will change any time soon as loans continue to flow for Boeing, Caterpillar, and doomed green-energy schemes.
NTU has long called for an end to the Ex-Im Bank, an unnecessary entity that even candidate Obama in 2008 called “little more than a fund for corporate welfare.” The reconfirmation of Hochberg means that free-market advocates need to double-down on efforts to dismantle the bank ahead of the 2014 charter renewal battle or risk being on the hook for billions more.
Taxpayers should rush to support Congressman Amash and Senator Lee’s “Export-Import Bank Termination Act,” a bill that would phase out the bank over three years, allowing plenty of time for the prudent resolution of any outstanding obligations. You can read NTU’s full endorsement of the legislation here.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Poor Charlie Brown. Lucy’s snatched the football away again - except this time, the football is Obamacare’s “deficit savings” and the American taxpayer is the one knocked flat on the ground.
Obamacare was sold on the premise that it would reduce the deficit. The Congressional Budget Office reported reductions of $130 billion in the first decade after passage, and $1.2 trillion in the second. President Obama even went so far as to say that the legislation was “the most significant effort to reduce the deficit since the Balanced Budget Act in the 1990s.”
Since the passage of the act, however, we’ve seen development after development completely disintegrate what many already viewed as misleading claims of budget relief.
As Reason.com noted, the bill was written to hide the costs beneath inflated “savings,” and higher insurance premiums and poor actuarial work would take their toll as well. The Heritage Foundation also tore the claims to pieces, pointing out that legislators ignored the expensive “doc fix,” and set the terms of several taxes and subsidies to falsely boost the idea of deficit reduction.
Now, after three years, the story of the “debt reducing” parts of the Affordable Care Act likely has the initial skeptics echoing Jurassic Park’s Ian Malcolm in saying, “Boy do I hate being right all the time.”
The most blatant attempt to cover “Obamacare’s” new spending was the CLASS Act. It offered, for what seemed like a reasonable premium, average long-term insurance benefits of at least $50 per day. Originally, the Congressional Budget Office (CBO) estimated that CLASS could cut the deficit by $70 million. Unfortunately, the program itself was unworkable from the get-go.
The CBO couldn’t even effectively measure the program, because no benefits were scheduled for distribution until at least five years after initial enrollment. CBO scores only cover the ten-year span after a law is enacted - so for the first half of the study, the “cost” of the program was effectively zero. Naturally, this bit of budget wonk-ery quickly caught up to the administrators of the program. As NTU noted, “an ‘insurance death spiral’ was inevitable – high premiums and a short vesting period would discourage all but the sickest Americans from signing up...this would drive premiums even higher, further discouraging the young, healthy people needed to keep costs manageable.”
The Department of Health and Human Services “realized” this before long as well, and CLASS was abandoned in October 2011 having done its main job of reducing the Affordable Care Acts CBO score.
The Employer Mandate is the most recent piece of “Obamacare’s” deficit reduction bundle to bite the dust. One of the most crucial financial supports of the Affordable Care Act, the mandate requires every employer with more than 50 employees to provide health insurance or pay a hefty penalty. A non-insurance providing company will owe $2,000 for each employee ineligible for low-income exchanges, and $3,000 for each employee eligible for the exchanges. The penalties are intended to fund the exchanges themselves, and tax credits for insurance purchase. However, the Obama administration recently delayed the mandate, extending the deadline for employer insurance coverage to 2015.
This is a budget-buster in more than one way: not only will the administration lose out on $10 billion in potential penalties in the upcoming year, but the infamous individual mandate was not tied to the employer one. This is creating an incentive for companies to dump employee insurance ahead of schedule, avoiding both the cost of health insurance and the first year’s fees. However, those unlucky employees will still be bound by the individual mandate, and many will likely be forced onto government exchanges. If Congress doesn’t act to delay the individual mandate as well, the costs could spiral much higher, both for the consumer and for Obamacare.
Finally, inefficient insurance exchanges threaten to chew up any “savings” created by other programs, and then some. Originally, wage and income data from the IRS was supposed to be used to determine eligibility for exchange subsidies. The problem is, the information needed didn’t (and still doesn’t) exist in a “real time” database. Such a collection of information would be costly and time-consuming to create, not to mention the requirements of keeping such a database secure.
Eventually, the administration admitted defeat, and announced that they would be offering subsidies based on self-reporting: basically, “the honor system.” Given the government can only impose penalties for fraud on your tax refund, the honor system is a particularly expensive way to conduct business. If you don’t collect a refund, no penalties will be imposed.
“Obamacare’s” supporters used “deficit reduction” as a major plank in arguing for passage of the law. As many critics predicted, though, in actual practice they’re limited by structural deficiency and an inability to respond efficiently to market forces. Now, the budget-busting reality of his health care reform boondoggle should be clear to all, but sometimes it seems only those paying the bills truly notice.9 Comments | Post a Comment | Sign up for NTU Action Alerts
On Mining Investment, the United States is Dead Last
While environmental protection is an important concern in the development of our nation’s natural resources, excessive regulations have suppressed expansion of our critical minerals industry and sent jobs overseas. In a study of the 25 leading mining countries, the United States has tied with Papua New Guinea for last place in terms of delays involved in obtaining a mining permit:
Permitting delays are the most significant risk to mining projects in the United States. A few mining friendly states (Nevada, Utah, Kentucky, West Virginia, and Arizona) are an exception to this rule but are negatively impacted by federal rules that they are bound to enforce resulting in a 7- to 10-year waiting period before mine development can begin.
This red tape essentially offers energy business on a platter to other countries, namely China. Many of these elements which America is forced to import could be provided through domestic mining if redundant regulations didn’t discourage development. The Natural Resources Committee in the house began looking into this issue in 2011 when it referred to a U.S. Geological Survey which reported that:
The U.S. is 100% dependent on foreign sources for rare earth elements (REE), 97% of which are provided by China... the USGS released a report revealing 13 million metric tons of REEs exist within known deposits in 14 U.S. states.
In February 2013, Congressman Mark Amodei (R-NV), along with 57 cosponsors, proposed H.R. 761, the National Strategic and Critical Minerals Production Act of 2013, in order to address this issue.
Although many of these minerals are necessary for the president’s green energy goals, Obama still refuses to allow efficient development of domestic minerals and asks legislators to strongly oppose H.R. 761 in the name of environmental protection.
A similar scenario is playing out on the Outer Continental Shelf and across many federal lands where onerous regulations and permitting processes keep our natural resources tied up in red tape. Whether those resources are essential minerals or equally essential energy, the solution is still the same, as NTU’s Executive Vice President Pete Sepp explained:
Instead of picking winners and losers in the industry, we believe officials should pursue a policy that applies low, simple taxes … avoids government subsidies, and eases regulations that stand in the way of developing new resources.
With employment numbers still stubbornly low, Washington should be easing the path for economic development and job growth, not throwing up roadblocks for job creators. Let’s hope the House moves H.R. 761 forward quickly to help get vital investments out of permitting purgatory.0 Comments | Post a Comment | Sign up for NTU Action Alerts
North Carolina Tax Reform Saga Continues: Compromise Tax Plan Unveiled
Today was a historic day for the Tar Heel State. After months of debate, Governor Pat McCrory, Senate President Pro Tempore Phil Berger, and House Speaker Thom Tillis announced their compromise tax reform package. Under their plan, the current 3-tiered personal income tax system (rates of 7.75, 7, and 6 percent) would be replaced by a flat rate of 5.8 percent in 2014 and 5.75 percent in 2015. The corporate income tax would fall from 6.9 to 6 percent in 2014 and then to 5 percent in 2015. If revenue goals are met, that rate would drop to 4 percent in 2016 and then to 3 percent in 2017. Additionally, the death tax would be eliminated and the gas tax would be capped at 37.5 cents.
While not quite as impressive as previous plans introduced in the North Carolina Senate, the Tax Simplification and Reduction Act would undoubtedly be the nation’s largest state-level taxpayer victory of 2013 – a $500 million cut over two years and a $2 billion cut over five years if revenue goals are met.
As I’ve stated in recent letters to state leaders, North Carolinians need pro-growth tax reform now more than ever. The state’s top individual income tax rate is higher than that of any state in the South, and a move to a flat rate of 5.75 percent would provide taxpayers much-needed relief while improving the state’s economy and creating jobs. The corporate income tax cuts would also send a clear message that North Carolina is open for business. In fact, the State would jump from 44th to 17th in the Tax Foundation’s Business Tax Climate Index.
By implementing the boldest state tax reform plan of 2013, North Carolinians would be given some much-deserved financial relief, which is especially important in light of rising federal tax rates and soaring health care costs.
Stay tuned to NTU.org for the latest on tax reform in North Carolina.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Today's Taxpayer News!
NTU has signed on to a letter in conjunction with a collection of other conservative groups, advocating for a reduction in the size of the D.C. district court, to bring it in line with the court’s workload.
House Republicans may have succeeded in separating food stamps from agricultural policy with the passage of the most recent farm bill, but there’s still work to be done. The current bill offers “more in spending than the President asked for,” according to NTU’s Pete Sepp.
In light of the current Congressional debate over student loans, check out this YouTube video on the rising cost of college, produced by LearnLiberty.org.0 Comments | Post a Comment | Sign up for NTU Action Alerts
(AUDIO) Speaking of Taxpayers: State Silver Linings, Obama Travel Costs
Subscribe to NTU's podcast "Speaking of Taxpayers" via iTunes!
NTU State Affairs Manager Lee Schalk updates listeners on some positive action in the states, including tax reform in North Carolina; Farm Bill follies in the House; How much is Air Force One costing you? And the Outrage of the Week!0 Comments | Post a Comment | Sign up for NTU Action Alerts
Move to Russia Nets Kovalchuk Around $3.6 Million Thanks to Income Tax Savings
After New Jersey Devils hockey star Ilya Kovalchuk announced he was ”retiring” from the NHL last Thursday and it became clear that he would be instead signing for the Russian league team SKA St. Petersburg, speculation arose about what the motive for such a change might be. One possible reason might be economics: next year, Kovalchuk is likely to snag an additional $3.618 to $3.63 million thanks to a new contract and savings on federal and state income taxes.
While there certainly could be other more substantial reasons for the change, the move highlights the differences between the complex tax code of the United States and the flat tax in Russia.
In New Jersey, Kovalchuk would have faced top marginal income tax rates of 8.97 percent from the state, and 39.6 percent at the federal level for the upcoming season. By crossing the pond, “Kovy” will be subject to a revamped 13 percent Russian flat income tax.
Using multiple online tax calculators (from tax-bracket.org and yourmoneypage.com) to take into account basic deductions and three dependent children, his contracted salary of $11.3 million with the Devils for the 2013-2014 season would have caused him to owe about $4.9 million in taxes.
In stark contrast, the only income tax he would have to pay in Russia is the flat 13% PIT (Personal Income Tax). Kovalchuk’s new contract has been reported to range from $10-$15 million (and perhaps even as high as $20 million). Assuming the low end of this estimate, $10 million, he would owe $1.3 million in income taxes.
When compared to his tax liability in the United States, this is a savings of $3.6 million.
Furthermore, next year would have been a peak earning year for Kovalchuk in the U.S. If we compare the tax burden on his average NHL salary over the life of his contract, $6.7 million, we find a domestic burden of around $3 million versus just $867 thousand on that same amount the motherland.
While Russia has a much lower income tax, they also have a high Value Added Tax. Russia’s VAT (Value Added Tax) is 18% while the sales tax in New Jersey is 7.0%. Nonetheless, this does not mean that taking the VAT into consideration makes his overall tax burden relatively even in both countries.
Even if we assume that Kovalchuk spent all of his income on goods subject to sales tax (a very unrealistic, if not impossible scenario), Kovalchuk total overall tax burden would still be substantially lower in Russia than in the United States, 31% and 55.57% respectively.
Property taxes are a relative push with max 2.2 percent burden in Russia compared to Newark’s 2.98 percent. Our estimates also do not include the complexities surrounding the so called “jock tax” which allow states to tax visiting athletes for the time spent playing games within their borders. This tax system on entertainers makes an already gargantuan task of estimating a worker’s income tax burden nearly impossible for anyone outside an accounting firm.
This examination is helpful in demonstrating just how burdensome our nation’s tax system has become, but there are many more layers to this financial situation, including income from endorsements, and how Russian business passes on costs from a recently modified social welfare tax system (similar to Social Security and Medicaid). There can be no doubt however, that the tax incentives in this case favor departing what is supposed to be known as the land of opportunity.1 Comments | Post a Comment | Sign up for NTU Action Alerts
Congress is back from its Fourth of July recess and high on its “to-do” list are the annual appropriations bills, which are the legislative vehicles Congress uses to spend your money. Back in 2011, taxpayers scored a small, but important victory when the Budget Control Act (BCA) was enacted. This law established spending caps for ten years and created an enforcement mechanism known as the “sequester” to try to impose budget discipline on recalcitrant lawmakers. Unfortunately, the victory could be short-lived as big-spenders are fighting back trying to eviscerate the BCA.
At the center of the budget battle is Senate Appropriations Committee Chair Barbara Mikulski (D-MD), who along with other big-government proponents on the Committee, recently approved an appropriations blueprint that would allow for $1.06 trillion in discretionary spending. This figure is a whopping 9.4 percent increase over the $967 billion cap established by the BCA.
The House, meanwhile, has so far agreed to stick to the 2014 BCA cap, but this task will be much tougher because of Mikulski, who is actively recruiting Republicans to help her “find a solution to sequester.” To some, it seems, modest fiscal restraint is a serious national problem.
Congress should embrace the reasonable caps set forth by BCA, not reject them. While doing so would not come close to fixing our serious fiscal problems, it would show a modicum of discipline on the part of Congress. Then, it can focus attention on mandatory spending, which is the primary cause of our long term debt. Mandatory spending – mostly Social Security, Medicare and Medicaid – is projected to be approximately $2.21 trillion in 2014 and will increase rapidly in successive years unless reined in by Congress.
Reforming entitlement programs will be no easy task, but before Congress can run it must first demonstrate it knows how to walk. It should hold the line on the discretionary spending cap and then begin a serious conversation about the staggering impending debt associated with Social Security, Medicare and Medicaid. If it can’t even stick to the discretionary budget caps already established by law, taxpayers ought to be very, very worried about the long-term fiscal health of the nation.1 Comments | Post a Comment | Sign up for NTU Action Alerts