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Walgreens to Stay in the U.S.; President Obama Considering Executive Action to Stop “Inversions” – Late Edition, August 6
Posted By: Jihun Han - 08/06/14

Today's Taxpayers News!

The ongoing melodrama over corporate “inversions” may have pushed Walgreens to keep its headquarters here in the U.S. The Chicago based company was considering moving its headquarters to Switzerland. USA Today has the latest!

Staying on the subject, The Obama Administration is considering using executive action to prevent American companies moving overseas to pay less in U.S. taxes. Read here for more!

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Federal Budget Outlook: Worse Than You Think
Posted By: Dan Barrett - 08/05/14

What are the long-term implications of government spending, and how should policymakers reign in the current trend of unsustainable federal expenditures? Those questions were the focus of a recent event hosted by the Cato Institute, entitled Federal Budget Outlook: It’s Worse Than You Think, featuring Senator Ron Johnson (R-WI) and Cato’s Director of Tax Policy Studies Chris Edwards.

In FY 2013, the federal budget deficit was a staggering $680 billion, and expenditures topped $3.9 trillion. That pattern is projected to continue going forward, with some estimates showing current spending at 20.4 percent of GDP (projected to rise to 31.8 percent by 2040).

Edwards considered five categories of federal spending:

  • compensating federal workers – $407 billion
  • paying interest on the federal debt – $414 billion
  • purchasing goods and services – $571 billion
  • state and local aid – $510 billion
  • subsidy and benefit programs (transfers) – $1.98 trillion

Despite recent deficit decreases, spending on subsidy and benefit programs are growing at an annual rate of 6.7 percent. This spending increase results from the proliferation of entitlement programs including: Social Security, Medicare, SNAP (food stamps), unemployment benefits, agricultural subsidies, refundable tax credits, and so forth. Below is a visual graphic demonstrating the aforementioned categories.

Edwards noted, “the U.S. Constitution does not create an open-ended role for the federal government to transfer wealth or aid to the states. Yet today those two activities account for about two-thirds of federal spending.”

Senator Johnson’s main argument was that reporting by the Congressional Budget Office (CBO) is fundamentally flawed, allowing an administration to mask the severity of fiscal crises. CBO typically sticks to a ten-year budget window, but Johnson contended that some fiscal scenarios warrant a thirty year window, especially as demographic changes like the aging of the baby boomer generation impact the long-term stability of Social Security, Medicare, and other federal entitlement programs. The Senator said that ultimately, these programs amount to “inter-generational theft.” A sense of urgency has not yet set in among lawmakers because CBO does not adequately report the long-term effects of current fiscal policy.

The speakers suggested that America can move towards budgetary solvency if it eliminates wasteful spending (those that cost more than the benefits they yield) and respects the 10th Amendment. They also suggested that policymakers should work towards reducing regulatory and bureaucratic inefficiencies that cost taxpayers time and money, and open the door to cronyism and abuse.

At the current spending rate, the deficit will soon be many, many trillions. Senator Johnson finished the talk by imploring, “Please, God, don’t tell Washington what comes after trillions.”

Thanks to Paul Bartow for drafting this post.

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U.S. Senate Passes VA Reform Bill; Federal Employees Caught Watching Adult Videos During Work Hours– Late Edition, August 4
Posted By: Jihun Han - 08/04/14

Today's Taxpayer News! 

The U.S. Senate passed a VA reform bill that will cost about $17 billion. Some Senators were dissatisfied that it was rushed through President Obama is expected to sign the bill.

Federal employees have been caught breaking the rules and watching all sorts of things during working hours of “boredom”. NTU’s Pete Sepp sees this unnecessary free time as taxpayer money being wasted. Fox News has the latest!

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Congress, You Ain’t Got To Go Home… - Speaking of Taxpayers, August 1
Posted By: Douglas Kellogg - 08/04/14

... But you got to get the heck up out of here. What's Congress bumbling on budgetary matters before they finally head home for August? Lois Lerner is back in the news with some not-nice words for taxpayers. Afghan reconstruction costs more than rebuilding Europe. More interns invade the podcast. Milton Friedman Day is over, your chance to win 50 bucks is not. Plus, the Outrage of the Week!

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US Not Making Friends Through FATCA
Posted By: Samantha Jordan - 08/01/14

Rarely is there a policy or legislation that doesn’t have a cute acronym to help legislators sell it to the public. The Foreign Account Tax Compliance Act is no different. FATCA is the stunted acronym for “fat cat,” a term used frequently by President Obama, when referencing the so-called rich eluding taxes. However, FATCA isn’t just about targeting cartoonish tax-eluding billionaires - it is already causing trouble for many making well-below seven figures.

According to the IRS if you are a US individual holding just over $50,000 in foreign financial assets on the last day of the tax year, you too will be under the scrutiny of FATCA. But it isn’t just US citizens who are facing the consequences.

The vague wording in FATCA is extending its reach beyond US “citizens” to US “persons.” According an article in The Economist, foreign banks and other financial institutions must choose between turning over information on clients who are “US persons” or handing 30 percent of all payments of US source income as well as gross proceeds from the sale of securities that they receive from America to the IRS. “US persons” not only includes citizens but also current and former green card holders and non-Americans with various personal and economic ties to the United States, such as marriage. Of those non-American citizens impacted, it appears that Canadians will be the most directly affected.

Take Ruth Anne Freeborn for example. After the passage of FATCA in 2010, Oklahoma born US citizen Freeborn had to choose “between country and family.”  Freeborn has been living in Canada for over 30 years with her Canadian husband who receives an income of $51,000 a year as an electronics technician and is the sole income earner in the family. Despite her family’s modest income, Freeborn was fearful enough of FATCA’s overreach to renounce her US citizenship.  Freeborn explained, “My decision was either to protect my Canadian spouse and child from this overreach or I could relinquish my US citizenship.”

It is unlikely Freeborn’s Canadian family will be alone in their decision. Many banks are giving their American associated customers the boot to avoid entanglement with FATCA. It may not be hard for Americans to choose their family’s financial wellbeing over their US citizenship.  According to FATCA Newsany Canadian holding a dual US-Canadian citizenship is a US person and will be impacted by the FATCA provisions. Individuals who have spent a large amount of time in the US are also considered US persons. Others include estates, trusts, US corporations and partnerships.” Even some Canadian “snowbirds” who travel to America for a small portion of the winter will be subject to FATCA. 

This is just a small snapshot of the rifts FATCA could be creating across the world – either causing discomfort for anyone interacting with Americans, or making any U.S. “person” persona non grata abroad. If these experiences become more widespread, it seems more than just “fat cats” are getting a shave.

More on FATCA: Increase in Expats: FATCA a Factor in Stunning 70 Percent of Citizenship Renunciations

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The Rising Tide of Red Tape
Posted By: Michael Tasselmyer - 07/31/14

Just a few weeks ago Washington, D.C. required tour guides to pay $200, pass an exam, and obtain licensure before giving tours around our nation's capital. However, this regulatory measure was recently overturned in favor of DC-area small-business owners, Bill Main and Tonia Edwards. The owners of the tour guide company, "Segs In The City," originally sued in 2010 to have the licensing system abolished on the basis of free speech. The recent decision is a major victory for Main and Edwards, but offers a glimpse into the much larger issue of economically challenging regulation.

Federal and state governments are constantly producing more "red-tape," and its creation often goes unnoticed until the regulation has taken a stranglehold on individuals and small-businesses. Unlike taxes, which usually have a direct and immediately visible effect, regulation often creeps into our daily lives without receiving the same scrutiny that taxation receives. This is a serious problem since regulatory laws have massive costs, measured in both time and money.

Cass Sunstein, former head of the White House Office of Information and Regulatory Affairs, was quoted in 2011 as saying there is no "tsunami" of regulation to worry about. Three years later, there may not be a tsunami but there is no doubt a rising tide. According to research by the Competitive Enterprise Institute (CEI), it costs Americans $1.863 trillion to comply with federal regulations in 2013, making U.S. regulatory costs higher than the GDPs of countries like Canada and Australia.

Since 1994, the U.S. has issued an average of more than 3,500 regulations a year, or about nine per day. Also, in 2013 the Federal Register contained 79,311 pages, the fourth highest total ever. The Register's two largest volumes were in 2010 and 2011, including the 81 major rules -- those that have a $100 billion impact or greater -- that the President has issued annually since he took office. This all adds up to make regulation cost $14,974 per household, or 23% of the average household income of $65,596.

CEI's report also includes an "Unconstitutionality Index." This is a ratio of regulations by federal agencies compared to the legislation passed by Congress and signed into law. In 2013, the ratio was 51-1, which means that there were 72 new laws and 3,659 new regulatory rules, or a new regulation every 2½ hours. Six federal agencies, including the Departments of Commerce, Treasury, Interior, Health and Human Services, and Transportation and the Environmental Protection Agency, account for 49.3 percent of these regulations. Many of the regulations these agencies create hit small-businesses the hardest. Firms with 20 or fewer employees pay an average of $10,585 per employee in regulatory costs, while firms with 500 or more pay an average of $7,755 per employee.

At a time when state and local economies are in dire need of job growth, and government budgets are strained for every single dollar, cutting "red tape" is a cheap, politically savvy way of raising much needed funds. This is an especially prudent choice for local governments, since complex federal laws like Dodd-Frank and the Affordable Care Act impose significant costs for consumers and employers throughout the country. With this in mind, taxpayers should pay close attention to regulations proposed at every level of government, which can have far-reaching economic impacts.

Special thanks to NTUF Research Associate Alex Eblen for authoring this post.

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New Lois Lerner Emails Reveal Bias Against Conservatives; House Rep. Introduces National Soda Tax Bill– Late Edition, July 31
Posted By: Jihun Han - 07/31/14

Today's Taxpayers News! 

The House Ways and Means Committee released November 2012 emails belonging to Lois Lerner. Lerner used derogatory terms to describe Republicans and Conservatives in the emails. Fox News has the latest! 

Rep. Rosa DeLauro of Conn. introduced a national soda tax bill aimed at taxing sugary beverages. Similar measures at local levels will be brought up in November for the people to vote. Read here for more!

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Senate Passes Own Highway Trust Fund Bill; Forbes Challenges Obama’s Stance on “Tax Inversions”; Washington Times Editorial Examines BillTally Stats for Caucuses – Late Edition, July 30
Posted By: Jihun Han - 07/30/14

Today's Taxpayer News! 

With just days left before August recess, the Senate passed its own version of the Highway Trust Fund Bill with a couple of key House provisions cut out. Speaker John Boehner has insisted that the House will not pass the Senate version of the bill. Politico has the latest!

President Obama called companies practicing “tax inversions” as unpatriotic. Forbes released an op-ed that challenges the President’s claims.

The Washington Times has an editorial making good use of NTUF’s BillTally findings on the 113th Congress – what did they take from the report on caucus agendas?

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Celebrating Friedman Legacy Day
Posted By: Michael Tasselmyer - 07/29/14

Milton Friedman, one of the most influential economists of the 20th century, would have celebrated his 102nd birthday on Thursday. To honor his countless contributions to economics and public policy, NTUF is joining with the Tax Foundation and Liberty on the Rocks, D.C. to host an event in downtown Washington this evening, and you're invited!

If you can join us in person, we'll be meeting for happy hour at the Laughing Man Tavern, just blocks from the White House. You can mingle with policy experts and grassroots citizens alike to discuss Friedman's economic philosophy and the impact it still has on policy debates today. We'll also be playing Friedman-themed games, enjoying some celebratory drinks, and even hearing from those who studied alongside Friedman and knew him personally. Be sure to bring your spare pens, markers, and folders, too- there will be donation bins for school supplies in order to benefit Perry Street Prep School, a D.C. charter school that operates with the independence that Friedman advocated for throughout his life.

Not in the D.C. area? No problem. You can also participate with us online through our interactive #milton102 website, where we're asking folks from all over the country to vote for the tax reform proposal they'd most like to see become reality. Friedman had his own thoughts on the matter, but we want to hear from you -- would you prefer a flat tax? FairTax? Let us know, and you'll be entered to win a $50 Visa gift card!

We hope to see you tonight or get your input online. Happy birthday, Milton Friedman!

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Milton Friedman's Legacy
Posted By: Michael Tasselmyer - 07/28/14

As a Nobel laureate, winner of the Presidential Medal of Freedom, and founder of the Chicago school of economic theory, few would argue that Milton Friedman's economic philosophy hasn't been widely influential. However, his modern fame and recognition make it possible to forget that in the beginning of his career, he faced great opposition to his work and few would have predicted it would earn him the respect it has today.

A 2006 memoriam in The Economist offered some perspective:

"In the wake of the Great Depression and the second world war, with the Keynesian revolution still young, championing the free market was deeply unfashionable, even (or especially) among economists. Mr Friedman and kindred spirits -- such as Friedrich von Hayek, author of 'The Road to Serfdom' -- were seen as cranks. Surely the horrors of the Depression had shown that markets were not to be trusted? The state, it was plain, should be master of the market; and, equipped with John Maynard Keynes's 'General Theory', governments should spend and borrow to keep the economy topped up and unemployment at bay. That economists and policymakers think differently now is to a great degree Mr Friedman's achievement."

Friedman was a tireless advocate for smaller government, and took a staunch position when it came to tax reform: "I am in favor of reducing taxes under any circumstances, for any excuse, for any reason whatsoever." One of Friedman's major contentions with the U.S. tax system that he frequently lamented was its complexity. The tax system, he said, was an "unholy mess" that was so dominated by special interests and lobbying groups that he went so far as to claim reform was "impossible." Despite his pessimism regarding tax reform, he saw some of his ideas translated into reality after the Code was revised in 1986.

Had Friedman had his way, though, he likely would have supported one of two alternative tax systems.

  • He was known as a supporter of the "negative income tax," which would offer a stipend to those earning incomes below a certain threshold. He argued that doing so offered the poverty-reducing benefits of programs like food stamps and rent subsidies, but without the bureaucratic inefficiencies that usually accompany them. In other words, as the New York Times put it, "[i]f the main problem of the poor is that they have too little money, he reasoned, the simplest and cheapest solution is to give them some more."
  • Friedman also supported a flat tax system in his well-known 1962 work "Capitalism and Freedom." He told the Wall Street Journal in 1996 that "[a]ll things considered, the personal income tax structure that seems to me best is a flat-rate tax on income above an exemption."

July 31 would have been Milton Friedman's 102nd birthday. In celebration of his life and work, NTUF is hosting a happy hour event with Liberty on the Rocks D.C. and the Tax Foundation in downtown Washington, D.C. tomorrow evening (Tuesday, July 29). The event will feature discussion of Friedman's influence and a school supplies drive benefitting Perry Street Preparatory School, a local charter school whose independent status represents the education reforms Friedman spent so much time and energy advocating for.

If you can't make it in person, we're also hosting an online poll asking participants which tax reform proposal they'd like to see enacted. Friedman proposed a flat tax, but would you prefer a FairTax or Value Added Tax? Let us know, and you'll be entered to win a $50 Visa gift card!

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