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Operation Choke Point: Consumer Protection or Troubling Government Overreach?
The recent House Financial Services Committee hearing regarding the Department of Justice’s “Operation Choke Point” made the shady overreaches of government look even more commonplace. The ominously named DOJ program has been billed as an attempt to slow fraudulent businesses from taking advantage of consumers.
This goal was repeated by many of the Democrats attending the hearing, who attempted to shed mostly a positive light on the DOJ’s motives. However, testimony from the witnesses assembled suggested something to the contrary. The witness panel was comprised of the DOJ’s Assistant Attorney General Stuart Delery, the Federal Reserve’s Scott Alvarez, the FDIC’s Richard Osterman, and the Comptroller of Currency’s Daniel Stipano. The witnesses stated repeatedly that the program only existed to target businesses acting unlawfully, and that banks facilitating legal enterprises had nothing to fear.
It certainly appears that things are not quite that simple. Representative Patrick McHenry (R-NC) led the hearing, and called attention to a list that the DOJ sent around to banks designating “high risk businesses” that were likely to incur subpoenas and investigations. The problem with the list, however, is that it doesn’t just cover specific businesses—it lists whole industries. The types of industries listed are varied, including strictly illegal operations like Ponzi and credit card schemes right next to entirely legal enterprises like tobacco sales.
Rep. McHenry tore into this list, calling it a “government hit list” and a tool for the Obama administration to intimidate banks into not interacting with legal businesses it dislikes. This allegation was reinforced throughout the hearing. Besides very recently informing banks that they were not being asked to stop working with lawful, “high risk” businesses, the witnesses failed to demonstrate that they had done anything to discourage the kind of intimidation the DOJ is being accused of using.
The most fiery and cutting remarks came from Representative Sean Duffy (R-WI), who asked Delery to state if the DOJ has actually pressed charges directly against the supposedly fraudulent businesses in question, or obtained a single guilty adjudication. Although Delery could name a few banks that had been fined, he could not answer Rep. Duffy with any fraudulent businesses that had been tried and found guilty. Rep. Duffy pointed out the danger of an overzealous government: “We have a federal government that’s out of control, and we have bureaucrats who think they can get a swift idea and impose the heavy hand of government on legitimate businesses that have no adjudication of fraud.”
The fact that the Department of Justice was at such a loss in its defense of Operation Choke Point is extremely concerning. The program is easy to exploit, and even worse, people across the country are employed by the industries the DOJ has deemed “high risk,” and these citizens have faced a withdrawal of financial services by their bank after regulators came knocking. Representative Andy Barr (R-KY) shared the story of a family land lender to the coal industry having their loan no longer facilitated by their bank. Representatives Ann Wagner (R-MO) and Stephen Fincher (R-TN) also attested to job losses in their states due to Choke Point’s crackdown on low-interest, short-term pay day loans.
The defenses offered for Operation Choke Point were weak at best, citing a few cases of levying fines against banks, but no guilty verdicts were described. Though a consumer protection in theory, practice shows that the program is little more than a means of politicized persecution of any business the Executive branch views unfavorably. While its drawbacks are being felt across entire industries, Choke Point’s benefits remain to be seen. If officials from the Federal Reserve and the Department of Justice can’t formulate rejections of the criticisms provided and demonstrate real consumer benefits, it’s doubtful that this discriminatory and damaging program has any real use.
You can read more about NTU’s take on the unfolding Operation Choke Point scandal here.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Today's Taxpayer News!
The House voted to cut more than $1 billion from the IRS’s Tax Enforcement budget. The spending cuts will likely result in fewer audits for American taxpayers. The bill heads to the Senate floor for consideration.
Keeping busy, the House also passed a bill to make it easier for banks to conduct business with marijuana shops and medical dispensaries. Rep. Earl Perlmutter (D- CO) is skeptical of the bill and believes crime rates will rise. Read here for more!0 Comments | Post a Comment | Sign up for NTU Action Alerts
Today's Taxpayer News!
The House of Representatives approved a bill to temporarily fund the Highway Trust Fund. The bill passed by a 367-55 margin and has the approval of the White House. Read here for more!0 Comments | Post a Comment | Sign up for NTU Action Alerts
Today, NTU and NTUF summer interns had a special meeting with Congressman Justin Amash who represents the Third District of Michigan for the House of Representatives. On the steps of the Capitol building, the interns were able to learn through a Q & A session the importance of transparency, bipartisanship, and using technology to your advantage. Social media, he said, is a great tool to show more people the effects of legislation and how such an attitude helps continue to build trust with his constituents. Rep. Amash emphasized the need to work in a bipartisan fashion on issues while learning to find common ground helps to avoid “political thumb wars.”
These were valuable lessons learned and it gave the NTU and NTUF interns a good introduction into the real workings of the Legislative Branch and elective politics. Thanks to Congressman Justin Amash for allowing us to meet with him!
A special thank you goes to Hayley Alexander for making this meeting possible.
In NTU Foundation's recently released BillTally report on the First Session of the 113th Congress, researchers found that Rep. Amash proposed an $83.2 billion net annual spending cut agenda. This means that if all of the bills that he sponsored and cosponsored in 2013 were enacted, federal spending would decrease by $83.2 billion for each of the next five fiscal years. Check out Congressman Amash's line-by-line BillTally report!
Interested in doing research, communications, development, or government affairs work at NTU and Foundation? Check out the details and help us keep a tab on Congress!
Thanks to Ian Johnson for drafting this post.0 Comments | Post a Comment | Sign up for NTU Action Alerts
The National Taxpayers Union (NTU) has two interns this summer working in their Government Affairs department. Government Affairs interns are tasked with finding the latest news articles about state and federal tax issues. Their dedication ensures that Nan Swift, NTU’s Federal Government Affairs Manager; Lee Schalk, NTU’s State Government Affairs Manager; and Brandon Arnold, NTU’s Vice President of Government Affairs, have the best information to fight for taxpayers around the country.
Melodie (Mel) Bowler is one of these two Government Affairs Interns. Mel went to the University of North Carolina at Chapel Hill, and graduated with degrees in Public Policy and Philosophy. She is interested in state tax policy, and recently interned in the State Affairs department at Americans for Tax Reform. Her internship with NTU marks her second internship in the tax field.
What have you enjoyed about working at NTU so far?
MB: I love writing blog posts. It’s a great opportunity for my opinions to be published on the web by a respectable organization like NTU. I also enjoy going to meetings in Washington, D.C. The Capitol Hill meetings are interesting, but the state tax and policy meetings are my favorites, since progress can be made more quickly at the local level.
What is a standard day like for you?
MB: I come in and get started on the daily state tax news update. I read local new about state taxes, budgets, pension reform, and anything that has to do with spending taxpayers’ money. I then send a list of all the relevant news articles to Lee Schalk and Brandon Arnold. After that, I blog for Government Bytes, and I often attend meetings in the city. I’ve written three blog posts so far, one about a record-setting budget in California, another about the monetary gift from the state of New Jersey to a basketball team, and one about the minimum wage hikes in Seattle. I have several more in the works.
Why did you choose to work at NTU?
MB: I have a really specific focus on state-level taxation. My previous studies hadn’t focused on social issues, so I wanted to avoid larger non-profits that cover many topics. Since I had already interned at Americans for Tax Reform, and since NTU one of the places that I really wanted to work at, it seemed like the logical next step.
What are you hoping to learn this summer at NTU?
MB: I am hoping to improve my writing skills and become a more effective communicator. Each time I write a new blog post, NTU staff will read through it and give me advice. Their edits have been invaluable so far in helping me to better my writing.
How did you become interested in politics?
MB: I first became aware of politics when I was ten years old and President George W. Bush was running for office for the first time. I remember asking my father what the difference between a Republican and a Democrat was. He very simply explained that, generally, Republicans want smaller government and Democrats tend to want to grow the government. After that discussion, I knew I was going to work in politics or design clothes and accessories. Around fourteen, I realized that my life would be better spent in politics.
What advice do you have for future interns?
MB: Don’t be too concerned if you haven’t interned in Washington, D.C. yet. The first time I interned here I wasn’t 21 yet, and being 21 is a prerequisite for so many of the networking events in D.C. Also, I’ve found it more useful to network this summer (as opposed to during my last internship), because I’m actively looking for a job now. The contacts I am making now have more value because I can actively use them to find a job. So, don’t worry if you haven’t had a chance to intern in Washington, D.C. yet, but when you come and you’re looking for a job, take advantage of the connections you make.
Next in the Profiles in Liberty series will be an interview with NTUF intern Catherine Fitzhugh. Be sure to read our post about NTUF research intern Alex Eblen.
Thanks to Catherine Fitzhugh for developing the Profiles in Liberty series and interviewing our interns.0 Comments | Post a Comment | Sign up for NTU Action Alerts
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Pete Sepp's back from the second week of NTU & R Street's Internet Sales Tax 'Road Show' which is touring 20 states to announce poll results that have, so far, shown the Marketplace Fairness Act's brand of Internet Sales Tax is extremely unpopular. NTUF Director of Research Demian Brady sits down to review the big findings from the latest BIllTally study. Plus the Outrage of the Week!0 Comments | Post a Comment | Sign up for NTU Action Alerts
In early June, the Environmental Protection Agency (EPA) released 645 pages of new regulations of carbon emissions for fossil-fuel-fired power plants in every state. The overall goal is to reduce total emissions from these plants by 30 percent in 2030, compared to measurements of emissions in 2005. Unfortunately, these regulations could have a devastating effect on taxpayers and state economies.
The EPA determined a different reduction goal for each state based on its ability for further reductions, since total emissions have already decreased since 2005. For some states, such as California, which currently has stricter emissions targets than the EPA, the transition will be easier. For states that rely heavily on coal for energy and jobs, particularly Kentucky and West Virginia, compliance with the reductions may prove extremely difficult.
The percentage reduction goals for each state vary from 10.6 percent in North Dakota to 71.6 percent in Washington. These numbers are deceiving, however. Washington has only one coal-powered plant left and gets the majority of its energy from hydroelectric power. The state legislature has decided to close that one plant in 2025, which will sufficiently reduce emissions to meet their target. Kentucky sits on the opposite end of the spectrum, with a goal to reduce emissions by 18.3 percent. While this might seem like an easily attainable goal, the state receives over 90 percent of its power from coal plants meaning it will be hard pressed to comply. Kentucky state officials, and many of their counterparts in states south of the Great Lakes, could be forced to close plants, which would immediately result in serious economic disruptions.
In response to the EPA’s unprecedented regulatory overreach and unattainable mandates, several cases were filed against the agency and combined to be heard at once by the Supreme Court. The main case was led by the Utility Air Regulatory Group, but other challengers included the U.S. Chamber of Commerce and several states. Unfortunately, the 5-4 ruling upheld the agency’s ability to force power plants to adhere to its regulations. There was one small win for proponents of free markets buried in the decision, which negated the EPA’s rule forcing power plants to request permission before expanding their operations. With the new targets now supported by the courts, states must submit their plans for reduction by June 2016, but if states refuse or their plans are deemed inadequate, the EPA will create plans for them.
Opponents of the regulations have spoken up at the state and federal level from both sides of the aisle. Kentucky Senator and Minority Leader Mitch McConnell, a Republican, pinned blamed on President Obama, stating, "It's clear that the president is trying to impose this national energy tax via executive order because he knows the representatives of the people would never vote for it." Democratic Governor Earl Ray Tomblin of West Virginia worries, "If these rules are put into place, our manufacturers may be forced to look overseas for more reasonable energy costs, taking good paying jobs with them and leaving hardworking West Virginians without jobs to support their families.”
Senator McConnell, among others, rightly calls the new regulations a national energy tax, since the likely result is higher costs for individuals and businesses as cheaper sources of energy are forced out of the not-so-free market. When energy prices rise, so will the costs of goods and services. Equally alarming is the possibility of state-level carbon taxes, which the EPA implicitly allows in the new regulations. While legislators may see a carbon tax as an easy way to comply with the rules and pad state coffers, such a tax might result in the phenomenon called “carbon leakage.” Because states have different reduction goals, their carbon taxes would be different as well. Coal plants and industries which rely heavily on energy consumption will relocate to states with lower taxes, ultimately exporting power and goods back to the states with higher taxes. In this scenario, some states may be marginal winners and others will most definitely be losers.
Despite the ruling by the Supreme Court, some congressmen have yet to concede this battle. The House Appropriations Committee, chaired by Republican Rep. Hal Rogers of Kentucky, approved legislation on Tuesday that would curb the EPA’s funding and ability to enforce the emissions regulations. Attached to an appropriations bill for the Department of the Interior, the riders would specifically cut EPA funding by 9 percent and reduce the staff to 15,000, its smallest since 1989. The bill would also bar the EPA from using its funding to implement the new regulations. While it is unlikely to pass, especially in the Democrat-controlled Senate, Rep. Rogers emphasized the importance of his committee’s action, stating, “The Congress must exercise its prerogative to prevent this kind of bureaucratic overreach that would be crippling for the U.S. economy.”
In order to keep this conversation alive on Capitol Hill, taxpayers should quickly contact their elected officials, expressing their concerns. In our sputtering economy, the last thing Americans need is a stack of costly regulations from unelected EPA officials. Stay tuned to NTU.org for more as this story unfolds.0 Comments | Post a Comment | Sign up for NTU Action Alerts
A recent poll conducted by The Heritage Foundation found that in 2013 alone, a record 3,000 Americans living overseas voluntarily gave up their citizenship or green cards. The percentage increase of expats from 2012 was an overwhelming 221 percent, an increase never seen before in the United States. There has been much speculation as to what caused the concerning increase but the most discussed cause is the passage of the Foreign Account Tax Compliance Act (FATCA).
Passed in 2010, the act took effect on July 1st of this year and it nominally aims to crack down on the use of offshore banks and fight against tax evasion. By forcing foreign banks and other financial institutions to exchange data, the act is incentivizing many Americans to abandon their US citizenship to avoid FATCA’s complexity and overreach.
The previously mentioned Heritage survey revealed that 70 percent of Americans working and living abroad have considered giving up their U.S. citizenship because of FATCA.
Among those who have recently relinquished their US citizenship are some surprising and extremely well known faces.
Perhaps the most famous of the expats is singer Tina Turner. The US embassy in Bern Switzerland confirmed that the famous American singer signed a “Statement of Voluntary Relinquishment of U.S. Citizenship” in October 2013. Ms. Turner has been living in Switzerland since 1995 with her husband Erwin Bach, a German record executive. A Forbes article notes, “While it doubtless wasn’t tax motivated, our tax system doesn’t exactly help.” And “Concerning taxes, it is worth noting that Swiss rates are high.”
What makes FATCA so burdensome is how it inserts the U.S. Government into the financial matters of people who have as little as $10,000 in an account. Combine that with America’s already nonsensical “double taxation” system where citizens living abroad can owe domestic income taxes (even if they did not spend a day in the U.S.), and you have a big reason to cut bait, and almost no reason to retain citizenship any longer.
Social media pioneer, Eduardo Saverin received slightly more criticism from the media for his relinquishment of his US citizenship. The Washington Post explains that the Facebook co-founder renounced his U.S. citizenship to become a resident of Singapore. His spokesman countered, “We are unequivocal in our position that taxes were not a factor in his decision.” However, unlike Ms. Turner’s new home in Switzerland, Singapore’s taxes will favor Mr. Saverin.
Socialite, songwriter and former high-profile Democratic Party fund-raiser, Denise Rich also handed in her U.S. passport. Reuters explained in 2012 Rich renounced her citizenship in for an Austrian Citizenship “and, with it, much of her US tax bill.” But FATCA isn’t just causing the rich and famous to relocate their allegiance to tax-friendlier countries, the act is also having a rather large impact on over 7 million Americans who are living overseas.0 Comments | Post a Comment | Sign up for NTU Action Alerts
On Thursday, July 29, National Taxpayers Union Foundation is joining with the Tax Foundation and the Washington D.C. chapter of Liberty on the Rocks to toast the legacy of economist Milton Friedman.
If you’re in the D.C. area, join us at the Laughing Man Tavern for happy hour, where we’ll be playing Friedman-themed games, collecting school supplies for Perry Street Preparatory School, and enjoying complementary drinks to celebrate the famous economist’s life and work.
Can’t join us in person? We’ll also be hosting a special online version of the game attendees will be playing in D.C., Cards Against Liberty. More details will be coming soon about how you can get involved!0 Comments | Post a Comment | Sign up for NTU Action Alerts
New BillTally Report: Congress's Trillion Dollar Agenda
Today, National Taxpayers Union Foundation (NTUF) released our latest BillTally report, which analyzed the legislation introduced during the first session of the 113th Congress. NTUF researchers found that legislators introduced 680 spending increase proposals and 119 savings measures; had all of these bills been enacted, federal spending would have increased by nearly $1.1 trillion on net.
BillTally is a comprehensive accounting project that tracks the budgetary costs or savings associated with every bill introduced in Congress. By cross-indexing each Senator's and Representative's sponsorship records with our database of cost estimates, NTUF is able to compile each Member’s net spending agenda, which reflects the total fiscal impact of the bills they supported. The data offers taxpayers a unique look at how their elected officials would change federal spending if they had the "keys to the budget."
The first session of the 113th Congress marked a move towards more moderate fiscal proposals, as lawmakers from both sides of the aisle proposed, on average, lower spending hikes and fewer budget cuts.
While the enthusiasm for major spending increases or budget cuts seems to have (at least temporarily) waned, the 113th Congress continues to propose new legislation that could impact taxpayers in many ways.
Read the latest BillTally report here, and find out what sort of budgetary changes your Senators and Representatives have proposed in Congress.0 Comments | Post a Comment | Sign up for NTU Action Alerts