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The Fiscal Cliff Hangover Part I: The Senate

Post author:David Williams
Post published:January 1, 2013
Post category:Congress David Williams House Senate Spending Taxes Taxpayers Protection Alliance

Many people are accustomed to waking up on January 1 with a headache. This year taxpayers woke up to not only the usual headache from a night of excess, but also a headache from the excesses of Congress and the President. In the early morning hours of today (January 1, 2013) the Senate passed a bill to soften the blow of going over the fiscal cliff. In reality, the bill may do more harm than good. The bill extends the 2001 and 2003 Bush tax cuts for individuals making less than $400,000 and families making less than $450,000. In addition, the payroll tax cute will expire meaning that payroll taxes will increase from 4.2 percent to 6.2 percent, a real tax increase on the Middle Class. The real kick in the wallet is a two-month delay in the automatic spending cuts (sequestration). As reported by Breitbart.com, “According to the Congressional Budget Office, the last-minute fiscal cliff deal reached by congressional leaders and President Barack Obama cuts only $15 billion in spending while increasing tax revenues by $620 billion—a 41:1 ratio of tax increases to spending cuts.” UPDATE (3:00 pm): The Congressional Budget Office has pegged the spending cuts at $25 billion. Click here here for a full list of provisions as reported by Politico. With a $1 trillion deficit and a debt that has eclipsed $16 trillion, the lack of spending cuts is shameful. Even if all the revenue is used for deficit reduction (which it likely won’t be), the total impact to the $1.1 trillion deficit will be $64.5 billion (if no more spending cuts are approved and the sequestration is avoided).

Fiscal Cliff Frustration Isn’t Just About the Money

Post author:David Williams
Post published:December 27, 2012
Post category:Congress David Williams Spending Taxes Taxpayers Protection Alliance

With the fiscal cliff deadline looming, there is no escaping the monetary implications, including massive tax increases and over-due spending cuts. The fiscal cliff is also a symptom of a tremendous breakdown in political leadership in Washington, D.C. Americans are frustrated, and rightfully so, with not only the fiscal consequences of our current condition but also that Congress and the President have seemingly waited until the very last minute to do their jobs. Unlike Super storm Sandy and the snow/ice storms that swept across the country recently, the Fiscal Cliff is man made and Congress and the President willingly put the country in this predicament. Some amount of dysfunction has always been present in our nation’s capital, but the last two years has seen an unprecedented amount of finger pointing and 11th hour legislating that seems to always leave taxpayers as the losers.

Fiscal Cliff: Capital Gains Tax

Post author:David Williams
Post published:December 20, 2012
Post category:Congress David Williams Taxes Taxpayers Protection Alliance

The United States of America has long been viewed as a place that if you work hard and save anything is possible. These possibilities included achieving the American Dream of being able to purchase a home, send children to college and eventually retire. That dream may become a nightmare in 2013 as the capital gains tax rate is slated to increase from 15 percent to more than 20 percent for middle-income Americans. The capital gains tax is the tax that is paid on the sale of equities, real estate and other assets. While it is understood that the tax code is used to create incentives for certain behavior, the type of behavior that a low tax rate on capital gains is precisely the type of behavior we want and need to grow our economy and not one we want to disincentive through higher taxes. As economist Daniel Mitchell pointed out in Townhall.com, “Principles of good tax policy and fundamental tax reform is that there should be no double taxation of income that is saved and invested. Such a policy promotes current consumption at the expense of future consumption, which is simply an econo-geek way of saying that it penalizes capital formation.

Disaster Aid Bill Could Be a Disaster for All Taxpayers

Post author:David Williams
Post published:December 18, 2012
Post category:Amtrak David Williams Taxpayers Protection Alliance

While the impending doom of the fiscal cliff looms larger and larger and most of the country’s attention is focused on the fiscal cliff, Congress is preparing a disaster relief bill for the storm that hit the Northeast in October. As the Senate considers the emergency spending bill to cover Super Storm Sandy’s costs, it should make sure the components of this legislation don’t wreak as much havoc on taxpayers’ pocketbooks as Sandy did on their shore lines and communities. Unfortunately from the looks of the legislation in its proposed form, taxpayers appear to be getting the short end of the stick. A New York Post headline says it all: "Obama Sandy aid bill filled with holiday goodies unrelated to storm damage." Setting aside the argument over how much the federal government should – if at all – be involved in disaster relief efforts, it is reasonable to highlight potential spending line items that are included in the bill. Congress should be determined to limit the spending in this bill to only the most important, legitimate needs. What constitutes “important, legitimate needs,” is a worthwhile discussion. A good way to start it is by looking at what components of the $60.4 billion package are not of dire necessity. Congress should do its best to mitigate some of the worst examples of pork in a piece of legislation intended to help families, as opposed to creating even more bills for them to pay.

TPA Signs Letter Urging More Whistleblower Protection

Post author:David Williams
Post published:December 17, 2012
Post category:David Williams Defense

The Taxpayers Protection Alliance joined with 30 other groups across the political spectrum to urge conferees to retain Section 844 of the Senate-passed National Defense Authorization Act which would apply the stimulus and general corporate whistleblower standards to some $1.9 trillion of annual federal spending for government contracts, grants and Medicare. Whistleblowers have always been the first line of defense against waste, fraud, and abuse. The existing patchwork of laws contains gaping accountability loopholes, protecting only some contractors and federal-fund recipient employees who blow the whistle, and only under very limited circumstances. Specifically, Section 844 would prohibit reprisals for disclosures to appropriate federal entities related to the implementation or use of federal funds regarding gross mismanagement, gross waste, substantial and specific danger to public health and safety, abuse of authority, or a violation of a law, rule, or regulation. It would protect the most common disclosures made by employees seeking to fix a problem—those made to a supervisor or internal compliance program.

The Fiscal Cliff: The Death Tax

Post author:David Williams
Post published:December 13, 2012
Post category:David Williams Death Tax Taxes Taxpayers Protection Alliance

As part of the Taxpayer Protection Alliance’s closer examination of potential tax increases if Congress and the President don’t avert the fiscal cliff, today’s tax focus is the change in the rate and exemption level of the estate tax. First, let’s get some semantics out of the way. The estate tax should be called by its proper name, the Death Tax. Jim Martin, Chairman of the 60+ Association popularized the term “Death Tax,” because, quite frankly, that is the best way to describe the tax (be sure to check out the great work that the 60+ Association is doing to eliminate the death tax). Currently the death tax is set at a 35 percent tax rate and applies to estates valued at $5 million or more. Like other tax rates, the existing tax structure could go by the wayside if Congress’ inaction forces the country over the fiscal cliff. If we do go over the cliff, estates will face a 55 percent tax rate. Many more of them will face this tax because any estate valued at $1 million and above will be forced to fork over more than half of their hard-earned money, compared to the current exemption of estates valued up to $5 million or more. It is also important to remember that the money taken from through the estate tax is money that has already been taxed throughout the lifetime of the deceased individual.

Stop the Internet Tax

Post author:David Williams
Post published:December 11, 2012
Post category:Congress David Williams Internet Taxes Taxpayers Protection Alliance

Even though shopping online for Cyber Monday’s (the Monday after Black Friday) deep discounts is popular, people have become accustomed to purchasing all sorts of goodies online throughout the year. On-line sales have become an integral part of the country’s day-to-day commerce as people have less time to visit malls or “brick and mortar” stores. Now, Congress wants to impose an additional fiscal burden on those consumers purchasing goods online with the Marketplace Fairness Act (MFA). Once you get past the misleading name of the bill, it is clear that the legislation is far from fair as the bill seeks to impose even more taxes on top of the ones online shoppers are already paying. As the Huffington Post described, the bill was created “in order to provide states with the ability to collect a sales tax on online purchases made by state residents.” Major problems plague this legislation. Senator Jim DeMint (R-SC) summed up a few of its shortcomings succinctly in a blog on his website, “These problems include that: MFA is taxation without representation; MFA is a NEW tax; MFA will RAISE taxes; MFA isn’t fair; MFA won’t simplify state sales taxes, it will increase tax complexity; and MFA could lead to double-taxation.”

TPA Joins Coalition Warning Congress about Bloated Farm Bill

Post author:David Williams
Post published:December 10, 2012
Post category:Agriculture Congress Congressional Budget Office David Williams Farm Bill Taxpayers Protection Alliance

The big story of the last month, and the remainder of the year, is the fiscal cliff; the combination of tax increases and spending cuts that are due to go into effect on January 1, 2013. In fine Washington tradition, members of Congress are trying to tack on other pieces of legislation to the fiscal cliff legislation. One of those pieces may by the Farm Bill. The Taxpayers Protection Alliance has joined with ten other taxpayers and free market groups warning Congress of including the bloated and expensive Farm Bill to the fiscal cliff legislation. Rushing through a Farm Bill is bad policy and bad for taxpayers because the full House hasn’t even considered a Farm Bill and amendments will not be allowed. And, if history is any indication, the current price tag of $958-$970 billion could be a woefully low estimate.

Corporate Tax Rate Also Needs to be Addressed as part of Fiscal Cliff

Post author:David Williams
Post published:December 7, 2012
Post category:Congress Corporate Tax David Williams Taxes Taxpayers Protection Alliance

Earlier this week, the Taxpayers Protection Alliance highlighted the devastating effect of the increase in dividend taxes (read here) if the country goes over the Fiscal Cliff. Today, as a bonus tax blog, TPA wants to reiterate the importance of including corporate tax rate reform in discussions surrounding the Fiscal Cliff. On April 1, 2012, the United States had the dubious distinction of becoming the country with the highest corporate tax rate. As Congress talks about tax reform as part of the Fiscal Cliff discussions, lowering the corporate tax rate should be at the top of the list. According to an April 4, 2012 op-ed in Reuters by Elaine Kamarck and James P. Pinkerton, “The U.S. in the dubious position of being number one in anti-competitiveness with a current combined rate of 39.2 percent. . . . combined corporate tax rate, and federal rate at 35 percent, leaves us in a weaker position relative to other leading economies.” In February, Treasury Secretary Timothy Geithner proposed a plan to reduce the corporate tax rate to 28 percent and House Republicans have proposed a rate of 25 percent. Unfortunately, policy makers in Washington are not the only ones paying attention as Kamarck and Pinkerton point out our competitors are also taking notice, “Over the last 20 years, America’s competitors have lowered their top corporate rates to levels as low as 12.5 percent and 8.5 percent in the cases of Ireland and Switzerland, while the U.S. has not.” Now, a new letter from the Chief Executive Officers of 17 of the largest U.S. companies, members of the RATE Coalition , sent a letter to lawmakers looking for a “reduction of the corporate tax rate as part of any wide-ranging corporate tax reform.” Read the full letter here.

Round and Round Taxpayers Go

Post author:David Williams
Post published:December 6, 2012
Post category:David Williams Earmarks Taxpayers Protection Alliance

While other museums may cost Americans more, no pork project takes taxpayers for a ride quite like the Herschell Carrousel Factory Museum. In 1915, carousel maker Allan Herschell created the Allan Herschell Company, based just outside of Buffalo in North Tonawanda, N.Y., the carousel capital of the time. Between 1916 and the late 1950s, the Herschell Carrousel Factory produced about 3,000 carved wooden carousels before moving to another location and eventually being bought out. The vacant North Tonawanda factory was restored and opened as the Herschell Carrousel Factory Museum in 1983. The merry-go-round museum draws a paltry 15,000 visitors per year, and with admission fees topping out at $5 for adults, the museum's administrators are always on the lookout for more money. Instead of improving private fundraising efforts, or simply closing the flagging facility, museum managers went on the dole, badgering local, state and federal government agencies for taxpayer-funded handouts. The plan has worked. Since 2005, government giveaways to the Herschell Carrousel Factory Museum have cost federal, state and local taxpayers a combined $410,431.