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Phone Scam Claims More Than $5 Million From Taxpayers; President Obama’s Corporate Donors Involved in “Inversion” Deals - Late Edition, August 14
Posted By: Jihun Han - 08/14/14

Today's Taxpayer News! 

Fake IRS callers have called people demanding thousands of dollars in alleged unpaid taxes. A reported $5 million have been stolen from taxpayers in this scam based on 1,100 people. Read the IRS response here!

President Obama will not return money to his corporate donors that have practiced “inversions” which the President dubbed the practice as “unpatriotic”; via Bloomberg!

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Indiana Can Challenge Obamacare Tax Credit Rule; Canadians Suing Over FATCA Law
Posted By: Jihun Han - 08/13/14

Today's Taxpayer News! 

A U.S. district judge ruled that Indiana can challenge an Obamacare tax credit rule. Indiana claims that enrolling for Obamacare through the federal exchange and gets tax credits is illegal. Read here for more!

Canadians are suing over the Foreign Account Tax Compliance Act (FATCA) for many reasons, including that it contradicts the constitutional principle “that Canada will not forfeit its sovereignty to a foreign state.”

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Profiles in Liberty: Good Luck Summer Interns!
Posted By: Dan Barrett - 08/13/14

The Profiles in Liberty series has shown you some of the faces behind the work that makes up NTUF’s Taxpayers Tab newsletter, the Government Bytes blog, and the comprehensive BillTally project. Our interns agree that their experience working for NTUF this summer has been both informative and rewarding.

For many of our interns, this has been their first internship in the public policy field. NTUF is happy to have been able to introduce them to the intricacies of government spending through their research this summer and to prepare them to make informed decisions in their future jobs.

Our communications interns have had the opportunity to study taxpayer issues from all across the country as they write for Government Bytes and assist our communications staff. Sam Jordan has particularly enjoyed writing for the blog because it has kept her abreast of the latest current events and allowed her to expose government waste and federal inefficiencies. NTUF’s other communications intern, Jihun Han, who wants to pursue a career in broadcast journalism, has had the opportunity to edit several of NTUF’s podcasts over the course of the summer.  This, along with his research into news stories, has helped prepare him for an effective future in the media.

Creative Content Intern JR Ridley came to NTUF with some web and graphic design experience, and he hoped to develop his skills further. JR describes his work as “not so much an internship as a learning opportunity. No day is ever the same, whether I’m designing website graphics, meeting Congressmen researching bills, or having roundtable lunch discussions. It has been a diverse, unique, and ultimately fulfilling summer for me.”

NTUF’s research interns were very excited to be able to see some of the fruits of their labor from this summer. NTUF’s BillTally report was released in the middle of their internship, so they were able to see their research being published on the website.  Aside from seeing their work used in a meaningful way, our interns were working for a noble cause this summer. Kelly Hastings said it well: “I am motivated by the cause of protecting taxpayers from exploitation and promoting transparency in our government.”

The interns would like to thank NTU and NTUF staff for investing in us this summer. We feel that we have greatly benefited from our work experience and our discussions with you.  Thanks to you, the reader, for taking an interest in us and looking through our interviews. We greatly appreciate your contributions to NTUF’s cause.

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

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Disability Insurance: The Alarming Underbelly of the Social Security Crisis
Posted By: Melodie Bowler - 08/13/14

On Monday, July 28th, the Social Security Administration released its annual trustees report, officially titled “The 2014 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds.”

Old-Age and Survivors Insurance (OASI) is commonly known as Social Security and is received by retirees or their immediate family after death. Disability insurance (DI) is also under the purview of Social Security but is received when someone is unable to work due to physical or mental disability.

In response to the release, the Committee for a Responsible Federal Budget held a panel discussion the following day, titled “Decoding the 2014 Social Security Trustees Report.”

Starting the discussion were Congressmen Tom Cole (R-OK) and John Delaney (D-MD).

At the end of May, they introduced H.R. 4786, the Social Security Commission Act of 2014. H.R. 4786 would create a 13-person Commission on Long Term Social Security Solvency. The commission would be chaired by a presidential appointee; the House and Senate each would choose six members, including two non-elected experts. For the commission to report its recommendations, it would need approval of at least nine participants, ensuring a bipartisan consensus. The Congressmen were enthusiastic about the prospect of creating this commission, but since its introduction, the bill has not moved. Everyone in the discussion agreed that progress will not continue until after the November elections.

Once the Congressmen left, the panelists began their examination of the report’s findings.

The combined Old-Age and Survivors Insurance and Federal Disability Insurance (OASDI) trust funds will be depleted in 2033. This prediction has not changed from last year’s report. Once depleted, 77 percent of total Social Security benefits will still be disbursed as revenue is continually deposited into the funds from payroll taxes.

Viewed separately, the OASI trust fund will run dry in 2034. The DI trust fund will empty in 2016 and will continue to pay just 81 percent of benefits. With disability insurance running very low very soon, the discussion steered toward solutions.

Unlike much of the federal government, the OASDI trust funds cannot borrow from outside sources to replace depleted revenue. One suggested solution is to borrow instead from the OASI fund to replenish the DI fund. This would be a short-term fix, and the almost insolvent DI fund would not be able to repay the loan to the OASI fund.

Another similar solution is to reallocate revenue from OASI to DI. Rather than a simple transfer from one fund into the other, politicians could change the portion of the social security payroll tax that benefits the two funds. Right now, the social security tax is 6.2 percent of income, with 5.3 percent funding OASI and the remaining 0.9 percent going to DI. Raising DI’s portion of the tax and lowering OASI’s portion would extend the solvency of the DI trust fund, but it would shorten the solvency timeline for the OASI trust fund.

Most of the panelists insisted that a truly long-term solution would include tax increases, benefit cuts, or both, which they did not describe in detail.

Many politicians and organizations have recognized the crisis facing Disability Insurance, but few have presented comprehensive plans to solve the problem. Last August, the Cato Institute published a policy analysis titled “The Rising Cost of Social Security Disability Insurance” to address exactly this issue.

Rather than raising taxes or putting the OASI trust fund in jeopardy, Cato recommends cutting costs drastically to save the DI trust fund. The analysis examines several ways to lower costs; the two paramount changes would be reducing benefits and enforcing stricter eligibility requirements. Regular reexamination of recipients would also result in significant savings. In the early 1980s when the Social Security Administration decided to reexamine DI beneficiaries, they found that 40 percent did not qualify to receive benefits. Cato recommends other small changes, but with these three together, Congress should be able to save Social Security Disability Insurance for those who really need help.

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Canadians Sue Over FATCA
Posted By: Samantha Jordan - 08/13/14

In a recent blog, The National Taxpayers Union Foundation speculated over potential snags in the United State’s close friendship with Canada over the overreach of the Foreign Account Tax Compliance Act. It appears after just one month since it’s enactment, US-Canadian ties are already being strained.

Since implementation on July 1, 2014, FATCA has cost Canada’s five biggest banks a combined $750 million in Canadian dollars ($687 million in US dollars) just in initial compliance expenses. American-Canadian dual citizens are already fed up. 

The Wall Street Journal explains US expatriates are taking legal action against the Canadian government for its role implementing FATCA. The lawsuit challenges that the Canada-US intergovernmental agreement violates provisions in the 1982 Canadian Charter of Rights and Freedoms which guarantees “life, liberty, and security of person; security against unreasonable search and seizure; and equal protection of law without discrimination.”

Additionally, the plaintiffs suggest that FATCA “goes against the principle ‘that Canada will not forfeit its sovereignty to a foreign state.” By forcing Canadian banks to share account information with the IRS via Canadian tax authorities, many would argue FATCA goes against the Canadian principle “that Canada will not forfeit its sovereignty to a foreign state.”

Given that a record, 1,577 US taxpayers gave up their passports or green cards in the first half of 2014, the US needs to ask if FATCA is worth risking our closest ally.

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Senate Finance Committee Examines Impact of CHIP Tobacco Tax Hikes
Posted By: Michael Liguori - 08/13/14

 Recently, the Senate Finance Committee convened to discuss an important but often controversial topic: tobacco taxes.

Committee chairman Senator Ron Wyden opened the hearing by accusing the tobacco industry of tax evasion, citing  more than $2 billion in tax revenue that supposedly should have been raised since the Child Health Insurance Program Reauthorization Act (CHIPRA) was passed in 2009.

You might recall these measures as going against President Obama’s promise not to raise taxes on anyone making less than $250,000 per year.

CHIPRA provides health insurance for roughly 8 million uninsured children, and it has intended to fund this health insurance by ramping up excise taxes on tobacco products.

While taxes normally just burden and slow markets, the post-CHIPRA taxes are uneven; some products such as cigarettes, light cigars, and “roll-your-own” (RYO) tobacco are taxed at dramatically higher rates than pipe tobacco and large cigars.

Much of the alleged tax evasion Senator Wyden referred to is found in companies changing how they sell tobacco to take advantage of different tax rates. For example, the sale of pipe tobacco was ten times higher very soon after CHIPRA’s passage, and companies began adding grams of tobacco to light cigars in order to make them qualify as heavy cigars.

One of the underlying questions of the hearing was whether these actions qualify as “tax evasion” or “tax avoidance” as Senator Hatch put it. Arbitrary changes in taxation may just incentivize private firms in an unintended manner?

This question became more and more relevant as Senator Wyden pressed John Manfreda, Administrator of the Alcohol and Tobacco Tax and Trade Bureau (TTB), to explain why the TTB hadn’t enforced some of these cases of mislabeling, to which Manfreda responded that it simply isn’t the TTB’s jurisdiction to govern how private companies make their products.

Senator Wyden mentioned several times that tobacco companies were supposedly burdening American taxpayers, which is an odd accusation considering Congress started this process in the first place with ill-advised levy hikes.

Like other so-called “sin taxes,” high taxes on tobacco products hurt low-income Americans the most. But high cigarette taxes have also created a booming black market for smuggling..

Scott Drenkard of the Tax Foundation spoke of the “effective prohibition” on cigarettes in the most tax-heavy states; a situation that leads to smuggling and counterfeiting tobacco products.

Currently 57% of cigarettes in New York City, where a pack of smokes costs $14,are smuggled from different states, and one smuggler was found to be using the proceeds to fund the terrorist group Hezbollah. In addition the international trade of untested, unregulated counterfeit cigarettes is growing, with black markets like China’s producing 400 billion possibly dangerous cigarettes each year. 

As the hearing neared its conclusion, and the mass of information surrounding this issue became clearer, proposals were offered up.

Senators Wyden and Hatch pressured the TTB to begin enforcing taxes on these firms alleged to be guilty of evasion, while Dr. David Gootnick of the Government Accountability Office suggested making all taxes of all tobacco products equal. A third answer to the problem seems obvious, yet it was only really mentioned by the Tax Foundation’s Scott Drenkard: Why not follow historical principle and ease government restrictions on tobacco products? Why not simply lower taxes across the board? Tax parity would be the first step so that all products are equal in the eyes of the law.

When the market is restricted, dangerous black markets develop, and unpredictable negative externalities emerge. With the health effects of tobacco products well-known to the general public and warning labels on every pack of cigarettes, American consumers should be allowed to make their own decisions and buy these products free of excessive and confused taxes.

Politicians dealing with these challenges would also do well to learn of the unintended consequences of constantly relying on an “easy target” like cigarette taxes.

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Dispatches from the Internet Sales Tax Road Show
Posted By: Melodie Bowler - 08/12/14

The Marketplace Fairness Act (MFA) “is the single biggest threat to taxpayers that is capable of passing this Congress,” stated NTU President Pete Sepp in a recent “Speaking of Taxpayers” podcast. The MFA would allow state governments to collect sales taxes from every online retailer that sells to consumers in their states, regardless of the state in which the retailer is located. The burden of this legislation would fall on businesses, having to file tax returns for every jurisdiction to which they send products. For more details on the MFA, check out NTU’s Internet Sales Tax Myths and Facts.

In order to inform voters about the consequences of this legislation passing, NTU has joined with the R Street Institute to tour the country on the Internet Sales Tax Road Show.

Below, Andrew Moylan of R Street and Pete talk to an audience in Columbus, Ohio about opposition to the MFA. Ohio voters overwhelmingly reject the idea of other state governments taxing Ohio’s online retailers, 56 percent to 31.

pete andrew 1

Ohio business owners were greatly concerned about the difficulties of complying with the MFA. An independent study found the cost to businesses of collecting taxes annually for nearly 10,000 existing jurisdictions can range from $57,500 to $260,000. The initial setup, integration, and implementation of the necessary software can cost an additional $80,000 to $290,000.

After the presentation, Pete discussed the hazards of passing the MFA with a local Columbus reporter from WBNS. Many state governments believe the MFA would provide a legal means to pad their coffers by allowing them to collect sales taxes on the online purchases of their constituents. However, with 46 states grabbing at online merchants’ revenues, many small businesses could end up closing shop, unable to afford the cost of compliance.

Look out for NTU and R Street in your state! For additional information and to keep up with the Road Show, head to or for more in the effort to stop MFA.

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National Employee Freedom Week Helps Educate Union Members on their Rights
Posted By: Samantha Jordan - 08/11/14

82.87 percent of Americans say union workers should be able to opt out without force or penalty. Many union members don’t know they already have that right. 

National Employee Freedom Week (NEFW) is working to change just that. NEFW is a nationwide campaign to let employees know they have the freedom to opt-out of their union. Through a coalition of 77 groups in 44 states, NEFW aims to “empower workers by informing them of their choices, sharing alternatives that may better serve their needs and provided them the resources needed to make the choice that’s best for them.”

Among these options, NEFW emphasizes that employees in “Right-To-Work States” have the option to leave their union entirely. The National Right to Work Legal Defense Foundation, Inc. explains nearly half of the US—24 states —protect employees from being required to join unions. Even those living in “Non-Right-To-Work States,” have options within their union. Employees in these states can either become an agency fee payer that only pays for the non-political parts of union membership or become a religious/conscientious objector who does not fund the union whatsoever.

Alternative professional organizations provide additional options such as insurance and opportunities for professional development at a fraction of the cost of a union membership. For example, organizations such as the Association of American Educators offer insurance benefits for just $16.50 a month and cover $2 million in liability insurance.

Of 454 union members surveyed, NEFW found 136 wanted to leave their union. By increasing awareness through their August 10—16, 2014 campaign, NEFW can help union members to understand their options and weigh the opportunity cost of paying thousands of dollars in dues or freeing themselves from the unions. 

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What Did Failed ACA Exchanges Cost Taxpayers?
Posted By: Michael Tasselmyer - 08/10/14

Taxpayer's Tab Update

Technical difficulties during the rollout of, the online insurance plan exchange authorized by the Affordable Care Act (ACA) and administered by the federal government, received plenty of scrutiny both in the media and on Capitol Hill. However, four states' independently-run exchanges -- in Maryland, Oregon, Massachusetts, and Nevada -- were also plagued by glitches and security concerns; so many, in fact, that all four have decided to either scrap their sites and start over, or opt into the federally-administered system. According to new information from the House Energy and Commerce Committee, taxpayers fronted $746 million worth of grants to get those failed exchanges up and running.

In this week's edition of The Taxpayer's Tab, NTUF featured legislation introduced by Congressman Tom Reed (R-NY) and Senator John Barrasso (R-WY) that would require those states to return the money to the federal government. The State Exchange Accountability Act would result in about $75 million per year being returned to the Treasury.

Also featured in this week's Tab:

  • Most Expensive: Senator Richard Blumenthal (D-CT) introduced the Stop Subsidizing Childhood Obesity Act. S. 2342 builds on legislation originally sponsored by former Representative Dennis Kucinich and would repeal current tax breaks offered to promotional activity within the food industry. Any revenue gained from doing so would be redirected to the U.S. Department of Agriculture's Fresh Fruits and Vegetables Program to provide students with more nutritional school lunches. The bill would cost $500 million in the first year.
  • Wildcard: Congressmen Dave Cicilline (D-RI) and Scott Rigell (R-VA) introduced H.R. 5095, which would require Members of the House of Representatives to undergo ethics training similar to that which is required of current House staffers and all Senate Members and staff. It likely wouldn't require any additional funding.
  • Friedman Legacy Day Poll: NTUF asked our members which method of tax reform they'd like to see in Washington, and we have the results of the poll in this week's Tab.

Check out the latest edition online.

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Rep. Jeb Hensarling on Ex-Im Bank - Speaking of Taxpayers, August 8
Posted By: Douglas Kellogg - 08/08/14

Subscribe to NTU's podcast via iTunes!

House Financial Services Committee Chairman Jeb Hensarling (R-TX) joins the show to explain what's going on with Ex-Im on the Hill - and why it's so important we put an end to the "Bank of Boeing." Plus, Pete & Doug talk "inversions", FATCA, and good news on the BBA front... And, as always, the Outrage of the Week!

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