BTN Feeds from Allies

With the unemployment rate at 9.5%, it’s safe to say that the economic “stimulus” has failed to create any jobs. In spite of this fact, the President has been on a speaking tour lauding his own economic policies. At a speech last week at the groundbreaking of a new battery manufacturing plant, Obama said, “Now, this is the ninth advanced battery plant to begin construction because of our economic plan.” What the President fails to realize is that the company which owns the site, Compact Power Inc, is a Korean owned business that has prospered and invested in the U.S. despite the President’s policies, not because of them.

As ATR has noted before, Obama and the Democrats have an awful track record when it comes to promoting free trade. From the “Buy America” provision in the stimulus, to the tariff on Chinese tire imports, they have continually made the marketplace inhospitable for foreign businesses.

Promoting free trade would reduce unemployment by providing incentives for rich foreign companies to bring their business over here. As Wall Street Journal notes, “For decades, multinational companies headquartered outside the U.S. have been creating high-paying American jobs…over 5.5 million Americans—4.6% of all private-sector workers—are employed at such companies here.”
Free trade would simultaneously attract new foreign direct investment and lower costs for consumers, resulting in a net wealth increase for mostly everyone.

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Americans for Tax Reform (ATR) urges you to oppose H.R. 3534, the Consolidated Land, Energy, and Aquatic Resources Act of 2010 (CLEAR Act), as it further taxes America’s oil and gas producers, removes the liability cap for offshore operators, implements onerous, arbitrary regulations, and creates over $30 billion in mandatory spending for the Land and Water Conservation Fund and the Historic Preservation Fund.

Oil and Natural Gas Tax

While legislation reacting to the oil spill off the Gulf of Mexico is entirely appropriate, the CLEAR Act is an unconcealed attempt to punish oil and gas producers. Imposing a tax of $2 per barrel of oil and 20 cents per million BTU of natural gas, the CLEAR Act will raise energy prices for American families, impel layoffs, and threaten America’s production of oil and natural gas—resources which power our economy. The CLEAR Act elicits memories from 1993 when the White House urged Members to vote for a BTU tax only to have President Clinton distance himself from his proposal.

Removal of the Liability Cap

Further undermining America’s energy security, the CLEAR Act’s removal of a liability cap will drastically increase insurance premiums on Gulf oil and gas production, threatening the very existence of deepwater operations. Insurance premiums would rise so fast that small and medium refiners would be priced out of nearly all Gulf production. This proposal is a clear sop to trial lawyers as it allows them to sue companies for exaggerated amounts.

Regulatory Burden

Reforms are certainly needed to ensure that a spill of this magnitude never happens again, but new regulations must be targeted and precise. Unfortunately, the CLEAR Act’s regulations are not as investigators are yet to determine the exact cause of the oil spill. Instead of simply issuing more regulations, Congress should wait until the spill has been studied and enact thorough, preventative regulations.

Unnecessary Spending

Additionally, the $30 billion of mandatory spending for the Land and Water Conservation Fund and the Historic Preservation Fund is indicative of Congress’ spending problem. With government expenditures reaching a record 23 percent of GDP every year over the next decade, Congress should look to cut spending, not compound our mushrooming deficit.

For these and other reasons, ATR will be keyvoting against H.R 3534 (CLEAR Act) in our annual Congressional scorecard. 

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White House spokesman Robert Gibbs seems to have forgotten that his boss has already broken his central campaign promise – a “firm pledge” that “no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.”

Responding to a question during his daily press briefing today, Gibbs said, “The President believes raising taxes on the middle class during this economic time would not make a lot of economic sense.” 

But President Obama has already broken his “firm pledge” at least eight times:

1.  Federal Tobacco Tax Hike:  On Feb. 4, 2009, just sixteen days into his presidency, Obama signed into law a 156 percent increase in the federal excise tax on tobacco– a hike of 62 cents per pack.  The median income of smokers is just over $36,000. 

When the tax took effect on April 1, 2009, White House spokesman Reid Cherlin tried to pull a fast one on Associated Press reporter Calvin Woodward.  Cherlin falsely claimed Obama’s tax pledge applied only to “income or payroll taxes”.  Cherlin said: "The president's position throughout the campaign was that he would not raise income or payroll taxes on families making less than $250,000, and that's a promise he has kept."  Woodward rightly wasn’t buying it (PROMISES, PROMISES:  Obama Tax Pledge Up In Smoke).

Tax Increases on families making less than $250,000 didn’t stop with tobacco.  Obama’s signature on the healthcare reform bill made possible the following tax increases – none of which exempt families making less than $250,000:

2.  The Tax on Indoor Tanning Services took effect July 1, 2010:  This provision of Obamacare imposes a new 10 percent excise tax on Americans using indoor tanning salons.  The tax was tucked into the bill behind closed doors at the last minute, replacing the previous “Bo-Tax” – a proposed tax on plastic surgery.  The 30 million Americans who visit tanning facilities are getting a lesson in the petty, nanny-state nature of Obamacare – every time they walk through the door.  Not to mention the business owners and employees who are threatened by the tax. 

3.  The “Medicine Cabinet Tax” takes effect Jan. 1, 2011: Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).

4. The HSA Withdrawal Tax Hike takes effect Jan. 1, 2011: This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent. 

5. The“Special Needs Kids Tax” takes effect Jan. 1, 2013:  This provision of Obamacare imposes a cap on flexible spending accounts (FSAs) of $2500 (Currently, there is no federal government limit).  There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children.  There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education.  Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year.  Under tax rules, FSA dollars can be used to pay for this type of special needs education. 

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• As of 2006, the tax burden of the top 1 percent of taxpayers exceeds the tax burden of the bottom 95 percent combined. Moreover, according to the National Taxpayers Union, households in the top 5% by income have been paying about 60% of the federal income tax bill for years.

• Income taxes as a portion of a person’s total tax liability is 7.9 times larger for the top 20 percent of taxpayers as opposed to the bottom 20 percent, while payroll taxes as a portion of a person’s total tax liability remains relatively constant across the entire population.

• Many low-income individuals who owe no taxes because of the standard exemption, the personal exemption, the child credit, and the earned income credit end up making a profit off of filling out a return through “refundable” credits, of which the earned income credit is the most common. Moreover, one can collect these “refunds” whether or not one owes any taxes, which disincentivizes upward mobility.

• As the New York Times reports, “the Top 5 percent in income earners — those households earning $210,000 or more — account for about one-third of consumer outlays, including spending on goods and services, interest payments on consumer debt and cash gifts, according to an analysis of Federal Reserve data by Moody’s Analytics. That means the purchasing decisions of the rich have an outsize effect on economic data.”

• In 2009, approximately 47 percent of U.S. households paid no federal income taxes. While 2009 had fewer households owing taxes than other years due to some allegedly temporary tax breaks and a lagging economy, the Tax Foundation reports that close to 40 percent of households owe no federal income taxes in an average year. According to the IRS, 67 percent of Single Head of Household returns in 2005 had no tax liability whatsoever.

• The proportion of American tax returns that incur no tax liability increased by 59 percent between 1989 and 2007, the latest year for which full analysis is available.

Because so much of the tax burden ends up coming down on the top end, those individuals and small businesses with the most ability to create jobs and spur investment end up devoting much of their capital and effort to sheltering themselves from taxes. Only by recognizing that the top end of the tax scale comprises the engines of economic growth can the U.S begin to incentivize hiring, investment, and upward mobility instead of punishing success.

Since Obama’s pledge-breaking tanning tax has gone into effect (with more taxes to come) American for Tax Reform has been offering protection for families that make less than $250,000 with the Obama Tax Hike Exemption Card, a tangible reminder that Obama has broken his promise to the American people.

ATR encourages people to try out the card on their local merchants and take a video of their reactions. Townhall.com editor Katie Pavlich did just that with humorous results. Watch the video below to see if she could convince anyone to give her a tax break on behalf of the President.

We encourage you to follow Kate’s example and film the Obama Tax Hike Exemption Card in action. Send us the footage and we will post the best videos on the site.

On June 30, 2010, Grover G. Norquist testified before the National Commission on Fiscal Responsibility and Reform as the President of Americans for Tax Reform. He outlined both the reasons why the present debt crisis comes from an overspending problem, not from deficits, why tax rates should not be raised, and several ways to cut spending and foster growth.

Below is his testimony with links to ATR’s proposed solutions:

[PDF of Testimony]

Why the Problem Is Not Deficits—It Is Spending

Reasons Not to Raise Taxes

Growth: The Only Way to Raise Tax Revenues Over Time

Ideas to Reduce Spending

1. Resurrect the “Byrd Committee.”
2. Give the public five days to read bills before a floor vote. 
3. Put every federal transaction and contract online in real time.
4. Term limit appropriators. 
5. Sitting Congressmen and Senators should not be able to name buildings or other monuments to themselves, and none should be named for them while they are still living.
6. Block grant education funding and welfare to the states.
7. Freeze the salary and benefit levels of federal employees.
8. Require all eligible federal employees to compete for their job with a private sector bidder.
9. Only hire one new federal employee for every two that retire from government employment.
10. Repeal the Davis-Bacon Act.
11. Reform farm subsidies along the lines of the 1996 “Freedom to Farm” Act.
12. Leave defense cuts on the table.
13. Stop using “emergency” spending loopholes to get around budget rules.
14. Freeze discretionary spending at 2007 levels.

Ideas to Increase Federal Revenues by Increasing Economic Growth

1. Increase legal immigration.
2. Enact worldwide free trade. 
3. Replace tax “depreciation” with full business expensing. 
4. Cut marginal tax rates. 
5. Make all expiring tax cuts permanent.
6. Move from worldwide to territorial taxation of overseas income.
7. Congress should stay home.
8. Don’t import Europe’s labor laws.
9. Inventory and sell all non-essential government assets.
10. The Federal Communications Commission (FCC) should halt its misnamed “Net Neutrality” proceeding

A recent poll conducted on behalf of the American Petroleum Institute shows that American voters are fed up with Democrats and their excessive tax hikes.  More specifically, the numbers show that voters are concerned with heavy taxes levied on the oil and gas industry.

According to polling professionals Harris Interactive, 64 percent of respondents were opposed to any tax increase in the oil and gas industry.  More specifically, 46 percent were strongly opposed.  This is more than double the amount of respondents who supported tax increases at 27 percent.

The data shows that voters are well informed over the issues surrounding American energy. For instance, Congress is trying to overtax the same industry that paid $100 billion in federal income taxes in 2008 and employs more than 9.2 million Americans.

In this economic climate, a tax hike for any industry would be disastrous.  Raising the cost of energy production, Democrats would be forcing companies to lay off workers.  Our government should be cutting taxes to encourage investment and jumpstart the economy-not hand out pink slips.