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The Myth of the 12.6 Percent Effective Corporate Tax Rate
A May 2013 report by the Government Accountability Office (GAO) claimed that U.S. corporations paid an effective tax rate of just 12.6 percent - a startling revelation considering the U.S. now has the highest statutory corporate tax rate in the world at 35 percent. As a wary taxpayer might expect however, there is more to the story…
The GAO study was used by many to bolster the notion that tax loopholes and offshore “tricks” allowed American businesses to duck a great deal of their tax burden. The party for those seizing on this opportunity was short-lived, however, as a more complete analysis performed by international tax expert Andrew B. Lyon (with Pricewaterhouse Coopers ) showed real and significant problems with GAO’s analysis.
Lyon’s study, published in the academic journal Tax Notes last month, exposed glaring omissions that skewed GAO’s baseline finding. Most evident was GAO’s use of just the year 2010 in their analysis. In making their judgment, they selected a narrow window of time that that just happened to coincide with loss write-offs resulting from several years of the Great Recession. Lyon took a more comprehensive approach, breaking down the corporate rate from 2004-2010. His finding was that long-term, “The effective tax rate based on worldwide current tax payments for all U.S. corporations exceeded 35 percent for the 2004-2010 period.”
What’s more, Lyon’s more comprehensive methodology found that even during the limited period GAO examined, effective corporate income tax rates well exceeded the 12.6 percent reported by GAO, largely because the agency failed to account for taxes paid to foreign governments on certain income dividends received by American companies.
An effective tax rate of 35 percent ranks highest among industrialized nations and has America lagging behind in terms of tax competitiveness. With unemployment in particular remaining a challenge for the U.S., it is important for policymakers to clearly understand the damage a punitive corporate income tax rate causes our economy. Taxpayers should not be fooled into a false choice using false facts. How the GAO could issue such a flawed study is another question…
Andrew Lyon’s very in-depth study is highly recommended for those looking to dive deeper into this discussion, read it HERE.
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Five Quirky Taxes to Watch Out for on Tuesday's Ballot
It’s almost Election Day and voters in several states and many more localities will head to the polls to decide the fate of numerous fiscal ballot measures. Some of these proposals stand out more than others. Below we’ve listed the top five strange (and what many would consider punitive) tax issues on the ballot in 2013 that our research has identified:
Also of note for local taxpayers: In California 87 school districts will vote on 45 local bond/tax measures totaling $22 billion. This far exceeds what any other state in America has on the ballot. Additionally, Arizona voters will be deciding on 11 local ballot measures that would implement $209 million for education bonds and $311 million in non-education related bonds (public safety, parks, roads, etc.)
There are many more state and local measures of note. Other entries – strange or not – from sharp-eyed taxpayers across the country are welcome!0 Comments | Post a Comment | Sign up for NTU Action Alerts
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Yesterday, NTUF released a special BillTally report examining the first six months of the first session in the 113th Congress. The report comes as lawmakers begin to debate several long-term budget issues, not the least of which is the fact that under the terms of the compromise that ended the recent government shutdown, federal funding will again run dry by early February unless Congress takes further action.
The 113th Congress has, at least to this point, shown a reluctance to address U.S. budgetary dilemmas by cutting spending. Through the first six months of 2013, Congress has introduced 554 bills to increase spending, as opposed to just 114 that would reduce outlays –- a nearly five to one ratio. For context, that ratio in the previous Congress was 3.9 and 4.6 to one in the House and Senate, respectively. Across both Chambers, the 113th Congress has introduced a net spending agenda of $1.28 trillion: about $1.74 trillion in increases and $453 billion in savings.
Perhaps more concerning for taxpayers who are wary of mounting debt and deficits is that if previous legislative trends are any indication, it's unlikely that Congress will introduce savings proposals any more quickly over the rest of the session.
In the 112th Congress, NTUF identified 221 House savings proposals over the course of the two year term. 52 percent of that total had been introduced by the end of the first 6 months, and over 74 percent were considered by the end of the first year. In other words, only about a quarter of any major savings proposals were introduced over the entire final year of that Congressional session.
The 112th Senate followed a similar trend: by the end of the first six months of the two year term, about 56 percent of all savings bills had been introduced. Just over 81 percent of the Senate’s savings legislation had been submitted by the end of the first year.
Through July of this year, the current Congress introduced 81 savings bills in the House and 33 in the Senate. The House had already submitted 72 percent of its savings bills by the end of March, and the Senate had reached 70 percent of its total in that same time.
Although it's impossible to predict how the current Congress might act going forward, history shows that legislative proposals to cut spending tend to be considered earlier rather than later. If that holds true for the 113th Congress, the window for significant savings legislation to be considered may be closing as the year comes to an end.0 Comments | Post a Comment | Sign up for NTU Action Alerts
This week, NTU released its 2013 Ballot Guide: The Taxpayer’s Perspective. Our findings might surprise you.
As we all know, there’s no Presidential race this November, nor is there a regular round of Congressional elections. However, voters in Colorado, Maine, New Jersey, New York, Texas, and Washington will decide on statewide ballot measures that will impact the nation’s fiscal policy. Additionally, many taxpayers will find local ballot measures when they head to the polls on November 5. Here are the highlights from our latest guide:
State and local measures can have major implications not just for the citizens deciding them but for taxpayers nationwide. Whether it’s the massive Colorado Amendment 66 tax hike, significant debt increases in Maine, or an attempt to bolster the initiative and referendum process in Washington, voters in many parts of the country will encounter some eye-opening that could impact their wallets for years to come.
Stayed tuned to NTU.org for our post-election ballot measures analysis.0 Comments | Post a Comment | Sign up for NTU Action Alerts
BillTally Report: Congress Still Proposing New Spending
As we approach the final weeks of the first session in the 113th Congress, taxpayers have already been faced with a number of major legislative shakeups in Washington, D.C. From automatic sequestration cuts to the rollout of several major provisions of the Affordable Care Act – and a multi-week government shutdown, to boot – there’s been a lot for citizens to consider as they reflect on how their Representatives and Senators have used their tax dollars.
Fortunately, National Taxpayers Union Foundation (NTUF) has been keeping tabs on Congressional budget proposals through its BillTally project – the only comprehensive database that tracks every major spending and saving bill introduced on Capitol Hill. In a new Policy Paper, NTUF Director of Research Demian Brady has crunched the BillTally numbers from the first six months of the current session of Congress to offer taxpayers perspective and insight into how the proposals we’ve seen so far measure up to those in previous years.
Among the major findings:
Brady also analyzed lawmakers’ proposals by policy category, and found that health care and job creation/”stimulus” measures carried the highest costs to taxpayers. Among the least expensive proposals – those that would reduce federal spending the most – were across-the-board spending cuts, Affordable Care Act repeals, and tax code reforms that would reduce or eliminate many refundable credits.
Overall, although the 113th Congress has introduced its share of spending cuts, Brady’s analysis shows that at least over the first six months, it is doing so at a slower pace than the 112th. That finding comes at a time when many Americans are still concerned over mounting deficits and no sure sign that a long-term budget deal will be worked out in the coming months.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Today’s Spooky Taxpayer News!
More website waste: A new report from CBS News reveals that 15 of the state-based exchange websites for Obamacare are facing errors and cost overruns that total more than $1 billion. Also alarming are reports that contractors were paid to do duplicate jobs among the states.
Backlogged parks: In the wake of the National Parks Service’s questionable actions during the ‘shutdown’, the agency is now drawing fire for failing to use their allotted taxpayer funds to solve the backlog of maintenance issues at parks. Almost $2 billion of money allocated to fix toilets, clean monuments, and fixing outdated utilities were instead used to send rangers to a wine tasting and a Michigan car show. Read more at B98.5 FM.
Green tech mess: The scope of financial and environmental damage from a taxpayer funded solar company is now being realized. After receiving a loan guarantee from the federal government, Abound Solar went bankrupt in 2012, leaving taxpayers to pick up a $40-60 million tab. What’s worse, the company left toxic chemicals at the site and the cleanup will cost another $3.7 million. Moe details from the Heartland Institute.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Beat Back the Wicked Witches of Spending: Donate to NTU Foundation
From commemorating Milton Friedman’s work to giving taxpayers the best and latest research, NTUF has done a lot this year. With the support of taxpayers like you we don’t plan to stop! Now more than ever, NTUF’s timely research and the BillTally project -- the ONLY comprehensive tracking system that looks at what federal legislators want to spend -- is needed to hold back the fiscal phantoms and debt demons.
How can we help save America from the spending specters? By educating citizens on the often complex issues and proposals that make their way through the halls of Congress. NTUF has taxpayers’ backs, arming Americans with knowledge, analysis, and real-time estimates to stay ahead of the most frightening tax and spending legislation being crafted on Capitol Hill.
NTUF’s work doesn’t stop there. Like Van Helsing, we stay vigilant through the dark of night to keep tabs not only on elected officials but candidates seeking reelection or higher office. Just recently, we examined the budgets proposed by New Jersey Senate contenders Cory Booker and Steve Lonegan.
With your $100, $50, or even $25, the best is yet to come. We will continue to provide insights and analysis the hard numbers behind politicians’ soft talk, but we need your help! NTUF doesn’t take public dollars. We depend on the help of Americans like you to bring our timely and important research to taxpayers across the country.
THANK YOU for your past support. We look forward to working together for a better future.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Top Five Head-Scratching Quotes by Secretary Sebelius
Today, Health and Human Services Secretary Kathleen Sebelius testified before the House Energy and Commerce Committee on the disastrous implementation of Obamacare. Here are five direct quotes from the Secretary that have left us puzzled to say the least.
#5: “Contractors had never suggested a delay.”
Secretary Sebelius seems to suggest that the Administration was blindsided by the numerous problems of HealthCare.gov. A story in the Washington Post suggests otherwise. According to the article, a group of about 10 insurers were convened to test out the website before its release and “about a month before the exchange opened, this testing group urged agency officials not to launch it nationwide because it was still riddled with problems, according to an insurance IT executive who was close to the rollout.” It appears that the Administration was at least partially aware of the serious technical issues associated with the website.
#4: “The assessment we have made is that it will take the end of November for an optimally performing website.”
No one can predict the future, but given its track record and the analysis of various IT experts, the Secretary’s claim is hard to believe. An article in the New York Times noted, “Some specialists working on the project said the online system required such extensive repairs that it might not operate smoothly until after the Dec. 15 deadline for people to sign up for coverage starting in January, although that view is not universally shared.” The article also states that, “One specialist said that as many as five million lines of software code may need to be rewritten before the Web site runs properly.”
A blog post by Clay Johnson, President Obama’s former innovation advisor, suggests the issues with the website run much deeper: “Healthcare.gov got this way not because of incompetence or sloppiness of an individual vendor, but because of a deeply engrained and malignant cancer that’s eating away at the federal government’s ability to provide effective online services. It’s a cancer that’s shut out the best and brightest minds from working on these problems, diminished competition for federal work, and landed us here — where you have half-billion dollar websites that don’t work.”
#3: “The website has never crashed. It is functional but at a very slow speed and very low reliability.”
Perhaps she is using a nonconventional or extremely technical definition of “crashed,” but there have been numerous reports of the website crashing or being completely unavailable to users since its October 1st launch. In fact, on its very first day, the website crashed according to an article by Josh Archambault at Forbes.com. Embarrassingly enough for Secretary Sebelius, HealthCare.gov appeared to be down during the hearing, as illustrated by a CNN split-screen.
#2: “I am not eligible for the exchange, because I have coverage in an employer plan.”
This was perhaps the most bizarre statement by Secretary Sebelius during the hearing. According to Healthcare.gov, this appears to be completely false. A page on the website titled, “What if I have job-based insurance?” specifically states, “If you'd like to explore Marketplace coverage options you can.” As long as an individual lives in the United States, is a citizen or legal resident, and is not presently incarcerated, he or she is permitted to utilize the Obamacare exchanges. As far as I know, Secretary Sebelius meets all of those requirements.
#1: “Yes, he is.”
Some context is needed here. This was a response to Congresswoman Marsha Blackburn, who during the hearing asked, “the president kept saying if you like your health care plan, you can keep it, so is he keeping his promise?” So Secretary Sebelius is standing by the President’s frequently cited claim that people could keep their health insurance. She does so despite numerous stories and reports of millions of Americans losing their insurance as a result of the law – not to mention the recent analysis of Washington Post’s “Fact Checker,” who judged Obama’s claim false and issued it a whopping “Four Pinocchios.”0 Comments | Post a Comment | Sign up for NTU Action Alerts
Back in April, NTUF devoted coverage in the Taxpayer's Tab to H.R. 1686, a bill by Rep. Jim Moran (D-VA) that would impose a five-cent tax on every disposable paper or plastic bag that grocers and other retailers issue to customers. The proposal -- known as the Trash Reduction Act of 2013 -- was introduced to coincide with Earth Day, and was designed to incentivize shoppers to switch to reusable bags instead of single-use varieties that wind up in landfills across the country.
The legislation would generate plenty of revenue: in a press release, Rep. Moran's office cited figures from 2009 that showed Americans use over 102 billion plastic bags per year. However, that money would be directed towards new environmental spending to the tune of $4.08 billion.
The bag tax proposal isn't new. In fact, Moran based his legislation on an existing law in Washington, D.C., a city not far removed from his own Congressional district that encompasses parts of Northern Virginia.
Now, the bag tax has made its way overseas to the United Kingdom, and while many consumers may already be weary of new taxes and regulations, emerging research shows that this new initiative could actually make some Brits physically ill.
The Telegraph reports on a study from Aberdeen University in Scotland that warns the tax could result in more outbreaks of sickness from E. Coli and other food-borne bacteria, due largely to the high risk of contamination in reusable bags. "We have to be careful about being too strict in forcing people to re-use bags. ... There are some bags you should only use once, so I would be very unhappy at having a 5p charge on bags that are being used for food," said Professor Hugh Pennington.
Bacteriologist Kofi Aidoo echoed Pennington's concerns: "If people are going to have to pay for bags and re-use them my concern is we're creating a high risk of food poisoning. At the very least people have to be given advice to clean these bags every time they use them."
The UK study seems to be supported by research from UPenn, in which scientists observed a 25 percent increase in hospital admissions for bacterial infections (including E. Coli) after San Francisco banned plastic bags from certain stores.
The findings suggest an unintended, potentially hazardous consequence of environmental regulations that public officials will undoubtedly have to address should they decide to move forward with new or existing bag tax laws.0 Comments | Post a Comment | Sign up for NTU Action Alerts