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Published: Wed, 13 Dec 2017 00:00:00 -0500

Last Build Date: Wed, 13 Dec 2017 23:17:18 -0500


Grover Norquist: GOP Tax Bill Is Good Enough For Now (He's Planning to 'Whine Later')

Wed, 13 Dec 2017 16:11:00 -0500

Tax reform bills have been approved by both the Republican-controlled House and Senate. Most observers believe the different versions will be reconciled into legislation representing the most thoroughgoing and consequential changes to the U.S. tax code since the late 1980s. To get a sense of the good, the bad, and the ugly of tax reform (there's plenty of each) Reason's Nick Gillespie sat down with Grover Norquist, the longtime head of Americans for Tax Reform and arguably the most influential activist over the past 30 years when it comes arguing for lower taxes. Edited by Mark McDaniel. Introduction and graphics by Meredith Bragg. Cameras by McDaniel and Bragg. Music by Krakatoa, licensed under Creative Commons, CC BY-NC-SA 3.0 US. Subscribe at YouTube. Like us on Facebook. Follow us on Twitter. Subscribe to our podcast at iTunes. This is a rush transcript. Check all quotes against the audio for accuracy. Nick Gillespie: When the Senate passed its version of tax reform you wrote, "This is big, a bigger deal than Obamacare. Big job creation, big middle class tax cuts, big changes in an outdated tax code." What do you like about tax reform as it's shaping up generally? What are the large contours? Grover Norquist: There are things that happen immediately and then there's secondary effects. We eliminate the tax deductibility of state and local taxes. It's a pay for. Rates go down, broaden the base. Gillespie: That's in both the House and the Senate. Norquist: It's in the House and the Senate, they're the same. $10,000, you can deduct up to $10,000 of property tax at that state and local level but not income taxes. You go, okay, that's lower rates, broaden the base, who cares? What you just did was dramatically remove an incentive for higher taxes at state and local level. This reform packages is going to result in 1,000 tax increases that didn't happen at the state and local level and a 1,000 tax cuts that do. As California with a 13.3% top income tax rate, it's going to have to take that down. Gillespie: California's also a net donor to the federal government so is this going to kill the golden goose if California's a high tax state when people are wealthy there? They kick a lot of money into the federal government, shouldn't they be getting tax relief from the federal government? Norquist: No. Gillespie: Okay. Norquist: Because it is California senators and congressmen and New York senators and congressmen, New Jersey senators and congressmen and Connecticut senators and congressmen who vote for the very high tax rates at the federal level which is why those states are donor states. They also have politicians at the state and local level who have high taxes as well. They damage the country when they raise our personal income taxes for everyone in the country. But they also damage the whole country when their state politicians have high state taxes that are subsidized by being tax deductible at the federal level. Gillespie: What are the other tax expenditures or tax breaks that get lost here? That you're good about? The Senate version doesn't do anything with the mortgage interest deduction so it allows homeowners and the people who take the mortgage interest deduction overwhelmingly wealthy, they can deduct up to a million dollars or interest on loans up to a million dollars for two houses. The House version caps that at 500,000 for one. Which is better? And why shouldn't it be zero for this? Norquist: We should take it to zero. Some of these things are how far can you get. Any three senators could kill the whole project. There are limits to how far you can go. Any 25 congressmen can kill the whole project. When you begin to push around the edges and we called it pretty close in both cases. We had two votes to spare in the Senate and maybe 10, 15 votes to spare in the House and now we're going to do this again. Given the rules we were living under, the Senate rule, the Bird Law, and the fact that we had narrow majorities. This is a very good piece of legislation but there's a caveat. It's not what you and I would write i[...]

Prostitution Ad Ban Creeps Forward, Threatening Social Media and Sex Workers

Tue, 12 Dec 2017 14:40:00 -0500

A measure making prostitution advertising a federal crime passed the House Judiciary Committee this morning. "This legislation is about more than just," said bill sponsor Rep. Ann Wagner (R-Missouri), promising that the changes would "wreak havoc" on "hundreds of websites." House Judiciary Committee Chairman Bob Goodlatte (R-Virginia) crowed that the bill "empowers prosecutors with new tools" to hold human traffickers accountable. But Goodlatte is lying—nothing in the bill addresses penalties for actual human traffickers. Instead, it would allow the government to treat websites and social apps as if they are human traffickers if bad actors should communicate through their digital platforms and tools. (For more about how this would work, see my post from yesterday.) The bill would also make posting or hosting prostitution ads a federal crime. If H.R. 1865 becomes law, the FBI would be able to prosecute Facebook, Twitter, Snapchat, Instagram, Craigslist, and myriad other sites where sex workers advertise and/or communicate with clients—even if the sexual exchange is only alluded to and never completed.* Goodlatte said that in crafting the legislation, he "consulted with local prosecutors, and also with the Department of Justice." Notably, he does not mention consulting with any sex workers, tech companies, sex-trafficking victims, or any groups that work directly with sex-trafficking victims. If he did, he might learn that digital advertising has revolutionized the sex trade, making it much more possible for women to work without the aid of abusive or controlling pimps; to screen clients before seeing them; and to generally take more control over their bodies, businesses, and personal safety. Meanwhile, it's also been hugely useful to law enforcement and families for finding victims of exploitation (something that would be all but impossible if street-based sex work were the only option or if traffickers start turning to the dark web.) But in the delusional minds of folks like Goodlatte and Wagner, everyone engaged in sex work will simply stop if there are no web-ad platforms and all the sex traffickers will simply let their victims go. (Drugs went away when we made those illegal, too, right?) So their goal is to eradicate any web platforms where sex buyers might communicate with sex sellers. After all, catching actual evildoers is too hard. "Advertisements rarely, if ever, will say the person advertised is a 'victim of sex trafficking,'" Goodlatte lamented. Easier for authorities to stop distinguishing between forced or underage prostitution and sex that free adults consent to have. More profitable, too. Wringing assets from petty pimps hasn't proven too valuable for the feds so far, but sites like Backpage and Facebook are much bigger fish. And Congress is always ready to approve a bigger net. During Tuesday's meeting, Rep. Jerry Nadler (D-New York) was the only committee member who expressed reservations about the bill, saying he was concerned that it had not been fully vetted, did not have support from surivors of sex trafficking or other relevant stakeholders, did not provide "appropriate protection for civil liberties," and could be redundant in light of a similar bill. Nadler asked that the committee refrain from voting the bill forward until more work could be done, but his colleagues did not agree. * This post previously stated that intent was not required for prosecution, which is incorrect. The original version of this bill, authored by Wagner, stated that nothing in the measure should "be construed to require the Federal Government in a prosecution, or a plaintiff in a civil action, to prove any intent on the part of the information content provider." But the version agreed to yesterday, authored by Goodlatte, says people or entities are only guilty if they use or operate a digital platform "with the intent to promote or facilitate the prostitution" (emphasis mine). The new language is certainly an improvement, but not necessarily that reassuring. Prosecutors and pol[...]

Posting or Hosting Sex Ads Could Mean 25 Years in Federal Prison Under New Republican Proposal

Mon, 11 Dec 2017 15:55:00 -0500

Looking forward to a future when federal agents monitor Tinder? We won't be far off if some folks in Congress get their way. Under a proposal from Rep. Bob Goodlatte (R–Va.), anyone posting or hosting digital content that leads to an act of prostitution could face serious federal prison time as well as civil penalties. This is obviously bad news for sex workers, but it would also leave digital platforms—including dating apps, social media, and classifieds sites such as Craigslist—open to serious legal liability for the things users post. In effect, it would give government agents more incentive and authority to monitor sex-related apps, ads, forums, and sites of all sorts. And it would give digital platforms a huge incentive to track and regulate user speech more closely. Goodlatte's measure was offered as an amendment to another House bill, this one from the Missouri Republican Ann Wagner. The House Judiciary Committee will consider both bills on Tuesday. Wagner's legislation (H.R. 1865) would open digital platforms to criminal and civil liability not just for future sex crimes that result from user posts or interactions but also for past harms brokered by the platforms in some way. So platforms that followed previous federal rules (which encouraged less content moderation in order to avoid liability) would now be especially vulnerable to charges and lawsuits. The bill currently has 171 co-sponsors, including ample numbers of both Republicans and Democrats. Specifically, Wagner's bill would amend Section 230 of the federal Communications Decency Act, which says that websites and other online platforms should not be treated as the creators of user-posted content. What this means in effect is that these third-party platforms can't be sued or prosecuted for users' and commenters' illegal speech (or illegal actions resulting from speech)—with some major exceptions. Digital platforms do not get a pass for content they actually create "in whole or part," for instance. As it stands, states cannot generally prosecute web services and citizens cannot sue them when user-generated content conflicts with state criminal law. Rep. Wagner's bill—like the similar and more-hyped "Stop Enabling Sex Traffickers Act" (SESTA) in the Senate—would end this state and civil immunity for digital platforms in cases of "sex trafficking" or "sexual exploitation of children." But while that may sound like a small concession, it actually opens up a huge range of activity for liability. At the federal level, the above offenses encompass everything from the truly horrific and unconscionable (like sex trafficking by force) to things like sexting between teenagers. And at the state level, definitions can be even more varied and blurry. Wagner's bill doesn't just stop at carving out a new Section 230 exception. It also creates a new crime, "benefitting from participation in a venture engaged in sex trafficking," and makes it easy to hold all sorts of web platforms and publishers in violation. Any "provider of an interactive computer service" who hosts user-posted information "with reckless disregard that the information in furtherance of [sex trafficking] or an attempt to commit such an offense" could face a fine and up to 20 years in prison, the bill states. And nothing "shall be construed to require the Federal Government in a prosecution, or a plaintiff in a civil action, to prove any intent on the part of the information content provider." So in cases like, say, Hope Zeferjohn, the teen girl convicted of sex trafficking for talking to a younger teen on Facebook about prostitution, Facebook could be facing a federal charge for participating in a sex trafficking venture. Goodlatte's proposal, meanwhile, would work by amending the Mann Act, a century-old prohibition on transporting someone across state lines for prostitution. The new section would declare that "whoever uses or operates a facility or means of interstate or foreign commerce or attempts to do so with the intent[...]

Tax Bill Mixes Very Encouraging Developments With Very Disappointing Ones

Mon, 04 Dec 2017 15:20:00 -0500

What to make of the Tax Cuts and Jobs Act, the legislation passed by the Senate at 1:36 a.m. Saturday, by a 51 to 49 vote, with only Republicans in favor? Any final assessment has to await a conference with the House of Representatives that will attempt to bridge differences between the Senate bill and the one already passed by the House. For now, though, the legislation is a mixture of really encouraging developments and really disappointing ones. Encouraging is the reduction of the corporate tax rate to 20 percent from 35 percent. Politicians from both parties have long acknowledged that the U.S. corporate rate is so high that it hurts American competitiveness. President Obama in 2012 proposed reducing the rate to 28 percent, and eventually talked about a 25 percent rate for some manufacturers. A 20 percent rate, or even 22 percent, would be an improvement. It would still leave America's corporate tax rate higher than places like Ireland, where the rate is 12.5 percent. But it'd be a big step in the right direction, toward solving what even Obama acknowledged was a problem. The Senate waits until 2019 to deliver the 20 percent corporate rate, while the House bill puts it into effect in 2018. Also encouraging is the prospect—somewhat shocking, isn't it?—of politicians actually following through on a campaign promise. The potency of tax cuts as a political issue has been eroded over time by politicians who pledge them but fail to deliver. The Republicans haven't managed to achieve their long-promised repeal of ObamaCare. Successfully getting a tax cut passed into law after being elected in part to bring one about is almost enough to warm a voter's heart, or to restore a person's faith in government's ability to act on the signals sent by elections. It's an antidote to cynicism. Unfortunately, by that same standard, aside from the rate cuts, the content of the bill itself and the process behind it so far are pretty disappointing. The middle of the night, weekend, party-line vote is the sort of thing that Republicans complain about, with some merit, when Democrats control Congress. A full text of the 479-page bill was provided to senators only hours before the voting began, and it was full of hand-written cross-outs and marginal emendations. The Senate bill doesn't meaningfully simplify the tax code. A lot of Americans will need not just a journalist or a politician but an accountant or a tax lawyer to explain to them how it will affect them. There's an element of the whole thing that reminds me of the home renovation horror story about the guy who starts out replacing a doormat and winds up having to redo the entire kitchen—what project managers call "scope creep." The Republicans set out to lower the corporate tax rate. Once they did that, then rates for businesses organized in other ways looked low, so they had to lower those, too. And once that was done, budget rules meant they had to "recover" the "lost revenue" somehow, with a variety of minor adjustments, even tax increases. Together, those add up to lots of work for lobbyists and accountants. They can be revisited in coming years as a way to milk campaign contributions out of the interested parties. Particularly dangerous is the practice of a political party using the tax code to reward its backers and punish its enemies. Republicans, who now control the White House and both parties of Congress, may find it humorous or convenient to raise revenue by increasing taxes on a handful of well endowed universities with overwhelmingly liberal faculties, and on the mostly Democratic-leaning cities and states with high state and local income taxes. But there will come a time when the tables are turned, and Democrats will then be tempted to alter the tax code in a way that punishes Republicans. The GOP would be on higher ground if it stood on principle for a tax code that treats everyone the same. Avoiding this sort of petty political vindictiveness is one of many reasons why a lot of peop[...]

Today at SCOTUS: Does the Federal Ban on Sports Gambling Violate the 10th Amendment?

Mon, 04 Dec 2017 07:45:00 -0500

(image) The Professional and Amateur Sports Protection Act of 1992 made it illegal for "a governmental entity to sponsor, operate, advertise, promote, license, or authorize by law or compact" sports betting. In oral arguments today in the case of Christie v. National Collegiate Athletic Association, the U.S. Supreme Court will consider whether that federal law runs afoul of the 10th Amendment and its underlying principles of constitutional federalism.

On one side of Christie v. N.C.A.A. stands the state of New Jersey, whose voters amended the state constitution in 2012 in order to legalize sports gambling. Garden State lawmakers responded by partially lifting the existing state ban on the practice at casinos and racetracks.

On the other side of the case stands the National Collegiate Athletic Association, the National Basketball Association, the National Football League, the National Hockey League, and the Office of the Commissioner of Baseball, all of which seek to prevent the state's legalization efforts.

The sports leagues argue that New Jersey is illegally flaunting the Professional and Amateur Sports Protection Act and should be stopped. New Jersey argues that that federal law is overreaching and unconstitutional.

The outcome of the case is likely to turn on the Supreme Court's application of two precedents from the 1990s. In New York v. United States (1992), the Court held that "while Congress has substantial powers to govern the Nation directly, including in areas of intimate concern to the States, the Constitution has never been understood to confer upon Congress the ability to require the States to govern according to Congress' instructions."

Five years later, in Printz v. United States (1997), the Court continued in this vein. "The Federal Government may neither issue directives requiring the States to address particular problems, nor command the States' officers, or those of their political subdivisions, to administer or enforce a federal regulatory program." In short, "federal commandeering of state governments" goes against the Constitution.

The legal question at the heart of Christie v. N.C.A.A. is whether the Professional and Amateur Sports Protection Act, or PASPA, violates the anti-commandeering doctrine set forth in New York and Printz.

New Jersey argues that PASPA does violate the doctrine and should therefore be declared unconstitutional. "Under our Constitution," the state argues, "if Congress wishes for sports wagering to be illegal, it must make the activity unlawful itself. It cannot compel States to do so."

The sports leagues take the opposite view. "Congress' power to regulate gambling on a nationwide basis," the leagues maintain, "is as settled as its power to prohibit states from undertaking or authorizing conduct that conflicts with federal policy, and nothing in [New Jersey's] arguments calls either commonly exercised power into question."

Which side will prevail in this dispute, federalism or federal power? We'll get our first indications during today's oral arguments.

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Tax Reform Is on Track to Add $1 Trillion to the National Debt, Even After Accounting for Economic Growth

Thu, 30 Nov 2017 18:03:00 -0500

It's not yet a fait accompli, but Thursday was a good day for supporters of the GOP tax proposal. The bill, however, still doesn't come close to paying for itself. Sen. John McCain (R-Ariz.), considered a crucial swing vote on the measure, said he will support the bill. House leaders are reportedly preparing for a vote on Monday to go to a conference committee to iron out differences between their version of the tax bill (passed earlier this month) and the Senate bill. All that comes less than 24 hours after the first vote on the Senate tax bill—a motion to proceed to debate, a procedural step that's been anything but simple on other major GOP initiatives this year—including a drama-free "aye" from all 52 Republican senators. The only thing that slowed the tax bill's momentum was a new analysis from the Joint Committee on Taxation (a number-crunching cousin of the better-known Congressional Budget Office) showing, once again, that the GOP proposal will add about $1 trillion to the federal debt. This, even after accounting for increased economic growth from cutting corporate income taxes. Here's how the JCT spelled it out: All of those minuses show the one glaring flaw in the plan. Republicans mostly seem willing to ignore the defect, claiming increased economic growth will cancel out an estimated $1.4 trillion blow the plan will deal to the federal budget. The JCT report shows clearly that is not going to happen. Increased economic growth cancels out about $400 billion, leaving a $1 trillion shortfall. That's roughly in line with other estimates. When forecasted economic growth is factored in, the Republican proposal will cost about $500 billion, according to The Tax Foundation, a nonpartisan think tank. A separate analysis by the Wharton School at the University of Pennsylvania says the cost, including projected growth, will exceed $1.3 trillion. Here's a neat summary of various estimates, compiled by the Committee for a Responsible Federal Budget, which opposes the current tax plan because of how it will add to the debt. Projections are tricky things, with lots of moving parts. No one knows for sure what dynamic effects the tax changes will have on the economy, or what outside factors could drive growth—or trigger a recession—in the coming years. There are, however, no estimates, even from Republican sources, showing that tax bill cuts would fully pay for themselves. Instead, Republicans have responded to the estimates much the way Sen. John Cornyn (R-Texas) did today after the JCT analysis was released. .@JohnCornyn tells me re: JCT score "I think it's clearly wrong." Says growth projections are too conservative — Seung Min Kim (@seungminkim) November 30, 2017 In other words, close your eyes and wish really hard for the Economic Growth Fairy to make everything okay. It's a vision that you're tempted to believe in because it means you get all the benefits with none of the costs—which, in this case, are the tough political decisions about cutting spending—but it's not one that tracks with the real world or the economic and political history of the last 30-plus years. This isn't new. It's the same thinking that drove the passage of the Reagan tax cuts, properly understood as "tax deferrals," since the debt has to be paid back someday, as National Review's Kevin Williamson wrote in a memorable 2010 piece. The same thinking that drove the passage of the Bush tax cuts. Correcting this view, as Williamson wrote at the time, requires equating "spending" and "taxes" so that every dollar spent today means a dollar in taxes must be raised, either today or tomorrow. Unfortunately, that's not where we are right now. When the Bush tax cuts passed in 2001, the nation's debt-to-GDP ratio was 31 percent. Today, it's 77 percent. And Congress is about to add another $1 trillion to future Americans' tab.[...]

Are Dry Stream Beds Navigable Waters of the United States?

Thu, 30 Nov 2017 08:30:00 -0500

The House Subcommittee on the Environment held a hearing yesterday on what its chairman called "one of the biggest federal overreaches in modern history." The Waters of the United States rule, passed by administrative fiat in June 2015, gave the federal government jurisdiction over nearly every river, lake, creek, estuary, pond, swamp, prairie pothole, irrigation ditch, and intermittent rivulet in the U.S. It's a regulation that can force a rancher to spend $40,000 trying to get permission to grade a road through a dry wash that carries water only during occasional summer rainstorms—and then give up rather than pour more resources into the fight. After the Environmental Protection Agency (EPA) issued the rule, 33 states and more than 70 private sector organizations immediately challenged it in the courts for being too broad. In October 2015, the U.S. Court of Appeals for the Sixth Circuit issued a nationwide stay on implementing the regulation. The purpose of the subcommittee meeting was to hear testimony on the current status of federal water regulations, their impact at the state level and to examine options for improving them going forward. Chairman Andy Biggs (R-Ariz.) said Wednesday, "Not only did the rule's flimsy definitions and underlying science mean that the agency had the ability to regulate private land, but it also placed significant financial burdens on some of our country's hardest workers." In her opening statement, subcommittee ranking member Suzanne Bonamici (D-Ore.) noted that the 1972 Clean Water Act was adopted because many states had failed to meet their responsibilties to keep their rivers, streams, lakes, and estauries clean, allowing them to become "dirty and polluted"; some waters, she noted, had even "caught on fire." She cited a January 2015 EPA study, Connectivity of Streams and Wetlands to Downstream Waters: "The scientific literature unequivocally demonstrates that streams, individually or cumulatively, exert a strong influence on the integrity of downstream waters. All tributary streams, including perennial, intermittent, and ephemeral streams, are physically, chemically, and biologically connected to downstream rivers via channels and associated alluvial deposits where water and other materials are concentrated, mixed, transformed, and transported." In other words, we all (intermittently) live downstream. The Clean Water Act instructs the EPA to "prepare or develop comprehensive programs for preventing, reducing, or eliminating the pollution of the navigable waters." Central to the fight over federal jurisdiction is the definition of just what "navigable waters" are. Under the rules promulgated under the Obama administration, the EPA thinks it's pretty much any water at all. Most people would interpret the phrase more narrowly. In February, President Donald Trump issued an executive order instructing the EPA to "consider interpreting the term 'navigable waters' a manner consistent with the opinion of Justice Antonin Scalia in Rapanos v. United States." Scalia's opinion noted that before the Clean Water Act passed, the courts had "interpreted the phrase 'navigable waters of the United States' in the Act's predecessor statutes to refer to interstate waters that are 'navigable in fact' or readily susceptible of being rendered so." He then argued that "on its only plausible interpretation, the phrase 'the waters of the United States' includes only those relatively permanent, standing or continuously flowing bodies of water 'forming geographic features' that are described in ordinary parlance as 'streams[,]...oceans, rivers, [and] lakes.'" Just how far the feds reached under prior administrations was illustrated in testimony by James Childton Jr.—the Arizona rancher who wanted to grade that road. His environmental consultant warned him that this might require an Army Corps of Engineers permit, and eventually he abandoned t[...]

Maybe Not Libertarian, But There Are Some Things to Like in This Tax Reform

Wed, 29 Nov 2017 06:45:00 -0500

The Senate and House produced tax reform bills in the last few weeks, similar in important ways, but different enough that they could be lethal to the tax reform efforts. The House passed its version and we are waiting on the Senate to either pass or reject their own version. Before breaking down these proposals, it is worth remembering that our current system is horribly complicated, making compliance costs exorbitant. It is incredibly unfair, extending privileges to some at the expense of others. There is no equality before the taxman. Genuine tax reform would expand and simplify the tax base by getting rid of the thousands of loopholes to special interest groups. It would lower the top marginal rates and end the double taxation on saving and investment. It should restore some horizontal equity (two people making the same income paying the same taxes). It would also make as many provisions permanent—and predictable—as possible. Good tax reform would require the federal government to make adjustments in spending, the way states and the District of Columbia operate, so the amount of tax collected more or less covers spending for a given year. The Simpler Tax Code The House version goes after a large number of tax exemptions, breaks, credits and deductions that make our code so complicated and unfair. It takes some significant steps to reduce the mortgage interest deduction. It also gets rid of most—with the exception of a $10,000 deduction—of the state and local tax deduction (SALT). Pretty impressive moves considering ending tax deductions is usually where tax reform goes to die. The House plan doubles the standard deduction, meaning dramatically fewer taxpayers will itemize their taxes. The Senate plan also doubles the standard deduction. (an estimated 90 percent of filers making under $200K would now claim the standard deduction). It gets rid of SALT entirely, but is more timid on the mortgage interest deductions. Moreover, it preserves many of the tax breaks with which the House dispenses. And rather than making the tax changes permanent, it includes a sunset date of 2025 reverting the standard deduction, the estate tax, the child tax credit, SALT, the pass-through deduction, and individual tax rates to 2017 levels. Middle Class Tax Cuts President Trump's intention to give a real tax break to the middle class is counter-productive considering the middle class barely shoulders any of the income tax as it is. The top 10 percent of income earners—households making $133K, not $1 million as most assume—currently pay more than 70 percent of all income tax revenue. The middle quintile pays, on average, 2.6 percent of the federal income tax. And yet, in both the House and Senate plans the middle class receives the largest tax relief by reducing their marginal tax rates, increasing the child tax credit and doubling the standard deduction. The result is fewer taxpayers would be paying income tax at all, problematic from a small government perspective. It also means a more progressive income tax code than it already is. The House plan also effectively jacks up the top marginal rate for some high earners by using a 39.6 percent bubble rate on the first $90K earned by single taxpayers making $1 million and married taxpayers making $1.2 million and a 12 percent rate like everyone else. This is a perfect example of Republicans caving in to political pressure and implementing bad policies. Not that it will stop Democrats from calling it a tax cut for the rich. Lack of Spending Cuts Senate and House tax writers have been trying to pour two pounds of sugar into a one-pound bag to comply with reconciliation rules. Budget rules require that tax reform not cost more than $1.5 trillion over ten years and be deficit neutral outside of that time window. Because the $1.5 trillion tax reform is scored on a static basis and assuming that many [...]

How Congress Keeps Its Sexual Harassment Hush Money Secret

Tue, 21 Nov 2017 12:18:00 -0500

BuzzFeed reported Tuesday night that the office of Rep. John Conyers (D-Mich.) paid $27,000 to settle a previously undisclosed sexual harassment complaint against the lawmaker. The story is notable not just for the allegations against a powerful member of Congress, but for shedding light on the highly opaque process through which the House of Representatives handles such settlements—and keeps them concealed. Amid the cascade of sexual harassment allegations ignited by The New York Times' exposé of Harvey Weinstein, Rep. Jackie Speier (D-Calif.) told MSNBC earlier this month that the House had paid out millions of dollars over the last decade to settle sexual harassment claims. Under public pressure, the Office of Compliance, which acts as the House's rough simulacrum of a human resources department, released documents showing it had paid out $17 million since 1997 to settle a variety of workplace claims, including sexual harassment. The details of those settlements, including their nature, are confidential. Claimants are required to sign a nondisclosure agreement to begin the lengthy mediation process. Last week Speier introduced legislation that would prohibit Congress from requiring nondisclosure agreements in such situations and would require regular reporting of settlements. "In 1995, Congress created the Office of Congressional Compliance to protect itself from being exposed, and it has been remarkably successful," Speier said in a statement. "Twenty years later, 260 settlements and more than $15 million have permanently silenced victims of all types of workplace discrimination. Zero tolerance is meaningless unless it is backed up with enforcement and accountability." "It's clear that our country is at an inflection point with respect to the behavior of powerful men across our society," says Alex Howard, deputy director of the Sunlight Foundation, a group that works for government transparency. "Congress itself is neither excluded nor sacrosanct from that reckoning, but continued secrecy will hinder public understanding of how our representatives conduct themselves in office. Ethical standards that include training, oversight, and public disclosure of all past settlements online as open data are in the public interest, and we hope that Congress does so." It's important to understand just how secretive the current House process for settling harassment claims is. In most regular cases, lawsuit settlement by the federal government go through the Treasury Department's Judgement Fund, which has an online, searchable database of payouts, filterable by agency and date. For example, the Department of Veterans Affairs has settled nearly 8,000 lawsuits between 2007 and 2016, according to records from the Judgement Fund database—most of them, unsurprisingly, for medical malpractice. It is the federal agency with the second highest number of settlement payouts, behind the Social Security Administration, which has about 13,000. But the House harassment payments described by Speier don't appear in that database. Nor do they appear in the disbursement disclosures the House is regularly required to file. Because of the provisions of the ironically named Congressional Accountability Act, settlement payment come from a special Treasury fund that the Office of Compliance draws from as necessary. The offices responsible for the payouts, and the reasons for the settlements, are kept strictly confidential. In Conyers' case, his office didn't even go through that process, according to the documents obtained by BuzzFeed: [O]ne of Conyers' former employees was offered a settlement, in exchange for her silence, that would be paid out of Conyers' taxpayer-funded office budget. His office would "rehire" the woman as a "temporary employee" despite her being directed not to come into the office or do any actual work, accord[...]

The Good, the Bad, and the Unspeakably Ugly: A Reason Surveillance Reform Bill Primer

Tue, 21 Nov 2017 09:30:00 -0500

Before the year's end Congress needs to decide what it's going to do about Section 702 of the Foreign Intelligence Surveillance Act (FISA), which permits the federal government to engage in surveillance of foreign targets that are not on U.S. soil, secretly and without warrants. Section 702 amendments sunset at the end of the year if Congress does not act to renew it. These amendments were originally passed in 2008 and renewed in 2012. These surveillance authorities have become a source of controversy because it has become increasingly clear to the public that Section 702 has drawn in domestic communications from Americans when they were speaking with (or even just talking about) targets of foreign surveillance. There are "minimization" procedures to limit the ability of intelligence agencies from reading private communications from and by Americans without a warrant, but civil rights groups and surveillance experts have warned FBI and NSA intelligence agents bend the rules with "back door searches" and "reverse targeting" in order to keep tabs of Americans or people on American soil. Intelligence agencies have also engaged in searches "about" a subject of foreign surveillance, in addition to communications to or from the target, futher drawing in communications of Americans. The top concerns here are that the surveillance is done without warrants and overseen by the deliberately secret FISA court. The secrecy is to protect intelligence investigations and anti-terror and anti-espionage efforts. Since the intended targets are not supposed to be American citizens and not on American soil, the Fourth Amendment protections against unwarranted searches are not compromised. But when the feds access and use data from Americans, there are problems. Privacy-minded groups and some supportive lawmakers are looking to reform Section 702 to provide stronger protections for American citizens against unwarranted surveillance. The White House, however, has said they do not want any changes in Section 702, even though President Donald Trump has complained about people in his 2016 presidential campaign having their conversations collected through such surveillance. Below is a useful primer on the three Section 702 bills floating around in Congress, what each bill hopes to accomplish and a subjective assessment of its chances. It's entirely possible all three fail and a renewal with no changes is added to a must-pass, end-of-year omnibus bill. It's also possible Congress will fail to get a renewal approved and Section 702 sunsets. The Electronic Frontier Foundation, among other groups, would love to see Section 702 surveillance authorities go away entirely. But there is little evidence lawmakers are willing to take that political risk at a time of public concern over mass violence or terrorist attack within the U.S. borders. USA Liberty Act of 2017 (H.R. 3989) This is an intended "compromise" bill that has been offered up to rein in the use of unwarranted use of Americans' communications to fight domestic crimes while still allowing some access intended to assist the FBI and NSA in fighting terrorism and espionage from foreign actors. What does it actually do about surveillance? The USA Liberty Act requires federal investigators to get a court order in order to access the content of domestic communications when looking for evidence of a crime. The information accessed must be directly related to an investigation. The bill provides exceptions for getting foreign intelligence information (which is the point of the surveillance authorization in the first place), if the subject qualifies under federal law for an emergency surveillance authorization, or if the target's life is directly threatened and the information may be used to assist them. The bill creates specific procedures to document requests fo[...]

Current Farm Bill Waste Targeted as Congress Moves Toward Next Farm Bill

Sat, 18 Nov 2017 08:00:00 -0500

As Congress ramps up plans to renew the quinquennial Farm Bill next year, two separate efforts in Washington this month called for cuts to wasteful spending enabled by the stinky current Farm Bill. Both efforts—one a bill introduced last week, the other a report released this week—are making waves. The Farm Bill, in part, is intended to set federal farm policy for the next five years. While taxpayer-funded payments to farmers—farm subsidies—have under past farm bills always been wasteful, subsidies under the most recent Farm Bill grew by billions of dollars. Last week, Congress sought to rein in a portion of the out-of-control spending it enabled in 2014 when it passed the latest Farm Bill. A new, bi-partisan bill, dubbed the Harvest Price Subsidy Prohibition Act, was introduced in the Senate by Sen. Jeff Flake (R-Ariz.) and Sen. Jean Shaheen (D-N.H.). The bill—a companion was also introduced in the House—would eliminate the Harvest Price Option (HPO), a subsidy (tied to already subsidized crop insurance) that guarantees a higher price for farmers at harvest if their crop's price rose after planting. If that sounds needlessly confusing, it is. The short of it is, as Sen. Flake says, is that the HPO acts as "a taxpayer-subsidized profit guarantee." No business—small or large, farm or industrial, rural or urban—should have its profitability guaranteed by the government. Why not? "HPO is like insuring your car for $5,000, and getting a check for $10,000 after it's totaled," says Sen. Flake. "It's the kind of program that only makes sense in Washington." The HPO program has cost taxpayers more than $21 billion. Along similar lines, a report issued Tuesday by the Environmental Working Group, which monitors and criticizes farm subsidies, exposes how two other Farm Bill-enabled programs waste billions more. The EWG report, "Double Dipping: How Taxpayers Subsidize Farmers Twice for Crop Losses," focuses on two Farm Bill programs, known as Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC). Farmers who receive taxpayer-subsidized crop insurance may still choose to participate in either ARC or PLC, even though "all three programs essentially pay subsidies for exactly the same reasons." According to the EWG report, hundreds of thousands of farmers have taken advantage of the loophole by double dipping. That's put American taxpayers on the hook for nearly $24 billion in unnecessary double payments to farmers. "Farm state politicians sell farm subsidy programs to taxpayers on the premise that they help keep family farmers on the land," said Don Carr, a senior advisor with the Environmental Working Group, in an email to me this week. "But when year after year the same well off mega farms enjoy millions in redundant subsidies while the bruising agriculture economy continues to drive small and mid-sized farmers out of business, it becomes clear that the original intent of these programs has strayed way of course." These out-of-control giveaways are even more galling because the current Farm Bill was touted as the one that would help rein in spending. (To be clear, though, pretty much every Farm Bill is touted by Congress and lobbyists as a cost-saving measure.) Farm Bill critics, including me, predicted growing waste under the current Farm Bill. "During the most recent debates over passage of a Farm Bill, Sen. Thad Cochran (R-Miss.) urged support for crop insurance, which he referred to as a set of 'important risk management tools for farmers and ranchers nationwide' that 'can help reduce costs,'" I detail in my recent book, Biting the Hands that Feed Us: How Fewer, Smarter Laws Would Make Our Food System More Sustainable. "Sen. Debbie Stabenow (D-Mich.), who chaired the Senate Agriculture Committee, of which Sen. Cochran is also a member, [...]

Why the Senate Tax Reform Bill Is a Big Deal for Gig Economy Workers

Fri, 10 Nov 2017 10:55:00 -0500

A key provision in the tax bill that Senate Republicans unveiled yesterday clarifies the role of workers in the so-called "gig economy." It also sets up a showdown over whether platforms like Uber and Airbnb will be required to withhold taxes on behalf of their users. As I detailed in a Reason feature back in September, the current federal tax code—last updated in 1986, long before Uber, Airbnb, and the rest of the gig economy came along—fails to adequately account for the estimated 2.5 million Americans who earn income through on-demand platforms every month, according to an estimate from JP Morgan Chase. There have always been independent contractors, of course, but their numbers have shot upwards over the past decade as online platforms made it easier than ever to offer rides, lodging, or other services at the tap of an app. Many workers who sign up to drive for Lyft or sell homemade goods on Etsy are unaware that they are also signing up for a far more complex tax status by earning a few hundred dollars in a side gig. The tax debate offers a rare opportunity to fix some of these problems. The Senate version of the tax reform bill makes a solid attempt at doing that by including portions of the South Dakota Republican John Thune's New Economy Works to Guarantee Independence and Growth Act—the NEW GIG Act. Thune's legislation clarifies that gig economy workers are independent contractors, and that neither service recipients nor third party apps are employers. At the same time, the bill would require gig economy businesses to withhold income tax from their contractors—a provision that would ease the confusion facing Uber drivers who might expect income tax to be taken out of their pay in the same way it is for W-2 employees. Thune says his bill "would provide clear rules so these freelance-style workers can work as independent contractors with the peace of mind that their tax status will be respected by the IRS." Researchers at Boston College and American University have found that gig economy workers confused by their status as independent contractors, or by other elements of the tax code, often do not pay taxes at all or have to hire expensive tax help to figure out what they owe on a relatively small income. Thune's proposal would also set a new reporting threshold for all miscellaneous income earned by independent contractors. Workers who earn less than $1,000 would not have to report their income at all, while those who earn more would. Under current law, this threshold is a bit fuzzy. Some income is subject to reporting after $600 is earned, but credit card payments that total less than $200,000 do not—unless the income was earned via 200 or more separate credit card transactions. A similar bill has been introduced in the House by Rep. Tom Rice (R-S.C.) and could be incorporated in the House version of the tax bill, the Tax Cuts and Jobs Act. (The House and Senate bills both use the same name, despite some differences in substance.) The potential sticking point has to do with the idea of requiring sharing economy platforms to withhold income taxes from their users. As written, the Thune amendment would require income tax withholding as part of a three-pronged test that grants independent contractor status to gig economy workers. The platforms themselves want this clarification included in the law as a way to short-circuit lawsuits, like one already launched by Uber drivers in California, aimed at forcing them to treat workers as employees. In return for clarifying that gig economy workers are contractors, Congress appears to be saying, those platforms will have to collect income taxes from those same workers. By doing that, Congress guarentees that more taxes will be paid—rather than the current system, whi[...]

Showdown Looming over Reform of Federal Surveillance Laws

Thu, 09 Nov 2017 13:10:00 -0500

The House Judiciary Committee has advanced a bill that would provide Americans modest protections from unwarranted surveillance, but falls far short of what civil liberties and privacy groups (and several legislators) demand. It's no surprise the USA Liberty Act passed out of the committee, 27-8, yesterday, having been hammered out by committee members and lawyers. But the committee resisted amendments that would make the privacy protections for Americans stronger. The USA Liberty Act is meant to address the pending sunset of Section 702 of the Foreign Intelligence Surveillance Act (FISA) Amendments. Section 702 is one of several federal authorities for foreign surveillance by the National Security Agency (NSA) and FBI to keep tabs on potential spies and terrorists. But Section 702 has also been abused, allowing for "backdoor searches" of communications of American citizens. These communications are collected "incidentally" during the surveillance of foreign targets and are used by federal agencies in the investigation of domestic crimes. All of it happens without a warrant with the oversight of the secretive FISA court. After Edward Snowden helped Americans understand the full extent to which our communications and metadata were being collected by the federal government, there's been a concerted effort by civil rights groups and lawmakers, with strong support for the Fourth Amendment, to restrain the feds. The USA Liberty Act does modestly restrict the feds and requires that they seek court orders to view these communications when looking for evidence of a crime. But it doesn't do much about the collection of the data. And there are enough exceptions to worry that little will actually change. The Electronic Frontier Foundation warns: But the warrant requirement is limited due to a number of troubling carve-outs. First, this court oversight requirement won't be triggered except for those searches conducted to find evidence of a crime. No other searches for any other purposes will require court oversight, including when spy agencies search for foreign intelligence, and when law enforcement agencies explore whether a crime occurred at all. Metadata—how many communications are sent, to whom, at what times—won't require court oversight at all. In fact, the Liberty Act doesn't include the reforms to metadata queries the House had previously passed (which unfortunately did not pass the Senate). In the Massie-Lofgren Amendment, which passed the House twice, agents who conducted queries for metadata would be required to show the metadata was relevant to an investigation. That relevance standard is not in the Liberty Act. Reps. Zoe Lofgren (D-Calif.) and Ted Poe (R-Texas), co-founders of the House's Fourth Amendment Caucus, attempted to amend the Liberty Act to end these "backdoor searches" without a warrant. Their efforts were rejected. According to The Hill, leaders of the House would not continue supporting the bill with the increased restrictions. But it's not clear that rest of the House will support the USA Liberty Act without these reforms. Several civil rights groups, like the American Civil Liberties Union, are warning the bill needs these strong protections from searches. And members of the Republican Freedom Caucus have expressed opposition to a renewal that doesn't have strong protections for Americans against unwarranted snooping. Rep. Justin Amash (R-Mich.) tweeted that the Liberty Act, as it stands now, codifies Fourth Amendment violations in searches, so we explect a "no" vote from him. Members of the Senate have their own ideas. Sens. Rand Paul (R-Ky.) and Ron Wyden (D-Ore.) have teamed up on the USA RIGHTS Act, which more thoroughly restricts and allows fewer exceptions to unwarranted[...]

Law Enforcement Groups Oppose Senate Sentencing Reform Bill, Again

Wed, 08 Nov 2017 08:30:00 -0500

A group of prosecutor and police organizations are lining up again to oppose the bipartisan Sentencing Reform and Corrections Act that would reduce some federal mandatory minimum sentencing guidelines. Concerted opposition by hardline law enforcement groups and a small core of conservative Republicans helped torpedo the same bill in the last session of Congress, at the time considered by criminal justice advocates to be one of the best chances in more than a decade to pass major legislation. After the bill was initially introduced in 2015, Senate Judiciary Committee chairman Chuck Grassley (R-Iowa) and bipartisan co-sponsors watered it down significantly to assuage hardline conservatives like Sen. Tom Cotton (R-Ark.). The compromise bill would have reduced some mandatory minimum sentencing guidelines, eliminating none, and adding new ones for crimes such as interstate domestic abuse and fentanyl trafficking. The bill was reintroduced this September by Grassley and Sen. Dick Durbin (D-Ill.), but law enforcement groups still say it goes too far. In a letter to Republican and Democrat leaders on the Senate Judiciary Committee released Tuesday, the National Association of Assistant U.S. Attorneys, the National Sheriffs Association, and four other law enforcement groups warned that the proposed legislation "undermines mandatory minimum penalties for drug trafficking and weakens the tools that law enforcement authorities need to enforce the law, prosecute criminals and dismantle domestic and international drug trafficking organizations." The letter cites rising violent crime in some major cities and "a national epidemic of overdose deaths, caused largely by heroin and opioid drug abuse," as a reason not to take those tools away. Families Against Mandatory Minimums (FAMM), and other advocacy groups have long argued federal mandatory minimum sentencing guidelines are incredibly punitive and an ineffective crime deterrent. "These groups are making a strange argument: We have the worst drug overdose crisis in history and so we should keep doing exactly what we are doing," says Kevin Ring, the president of FAMM. "This letter comes on the heels of a new report by the US Sentencing Commission, which concluded that mandatory minimum sentences are being applied to too many low-level drug offenders. Senator Grassley's bill actually addresses that misuse of resources." Law enforcement groups not only want the U.S. to continue its current criminal justice policies; they contend the relatively modest drop in the federal prison population is, in part, responsible for the rise in violent crime rates nationally. "Misguided legislation like the Sentencing Reform and Corrections Act comes about when myth and misunderstanding overwhelm fact and reality," the letter says. "The assertion that the federal prison population is exploding is myth; the federal prison population is, in fact, decreasing and the rate of decrease—and the likely relationship to the rise in violent crime—will only accelerate as early releases continue as a result of unworthy changes." U.S. Attorney General Jeff Sessions has in many of his public speeches and written op-eds explicitly linked the drop in federal prison population—a result of several changes to prosecutor charging policies for drug offenses under former Attorney General Eric Holder—to the rise in crime rates. As my Reason colleague Jacob Sullum has explained, it's nonsensical to attribute a modest drop in the federal prison population, accounting for 14 percent of the 2.2 million incarcerated people in the U.S., to a national crime wave: Even if we assume that every drug offender who got relief under Holder's policy was a violent predator in disguise, t[...]

The NFL Wants to Block Tax Reform Because It Would End a Common Stadium Subsidy

Sun, 05 Nov 2017 11:10:00 -0500

The tax reform bill unveiled this week by House Republicans would do away with the federal tax exemption for municipal bonds, commonly claimed by states and cities to subsidize the construction of stadiums. The National Football League is gearing up big time to lobby against it, The Wall Street Journal reported this week. Municipal bonds were made tax exempt in 1986 as a way to encourage investors to buy them at lower interest rates, saving cities money when they need to build new infrastructure or make expensive repairs. While the bonds are designed for building roads, sewer systems, and schools, cities have issued more than $13 billion in untaxed bonds for stadium projects since 2000, according to a recent Brookings Institute estimate. That tax break is "an unseen subsidy," according to Victor Matheson, a sports economist at the College of the Holy Cross, who is critical of using public money for stadiums. "It's a tax break that we never get to vote on, and it's one that don't even think about and don't see," he told Reason in June. There's bipartisan support for directing the exemption specifically for public infrastructure, rather than multi-billion dollar playgrounds for multi-millionaire athletes and billionaire franchise owners. Sens. Cory Booker (D–N.J.) and James Lankford (R–Okla.) in June introduced an independent piece of legislation to prohibit local officials from using municipal bonds for stadium projects. If that prohibition becomes law—either on its own or as part of a revamped federal tax code—those "unseen subsidies" would go away and the cost of those projects would increase. So, too, would public opposition to spending public money on stadiums. "It's something that the NFL will oppose because we believe that the construction of new stadiums and renovations of stadiums are economic drivers in local communities," NFL spokesman Joe Lockhart tells the Journal's Andrew Beaton. The 32 team owners who make up "the NFL" in this context are allowed to believe whatever they want, but the idea that new stadiums or renovations are economic drivers is not supported by facts. A landmark study published in 2000 by the Journal of Economic Perspectives reviewed 36 major metropolitan areas that had built stadiums for professional sports teams and found that, on the whole, they represented a drag on the economy. More recently, a 2015 study by the Stanford Institute for Economic Policy Research, found that "NFL stadiums do not generate significant local economic growth, and the incremental tax revenue is not sufficient to cover any significant financial contribution by the city." Local governments, however, continue to put taxpayers on the hook for football stadiums. In his book The King of Sports: Football's Impact on America, Gregg Easterbrook, a journalist and longtime critic of taxpayer subsidies for the sport, says taxpayers have covered more than 70 percent of the total cost of NFL stadiums built in the past two decades. Maybe we're heading toward the end of that tradition. President Donald Trump, in between tweeting criticisms of NFL players kneeling during the national anthem to protest police abuse, has whacked the NFL for taking advantage of special loopholes in the tax code. "Why is the NFL getting massive tax breaks while at the same time disrespecting our Anthem, Flag and Country? Change tax law!" Trump tweeted in October. Why is the NFL getting massive tax breaks while at the same time disrespecting our Anthem, Flag and Country? Change tax law! — Donald J. Trump (@realDonaldTrump) October 10, 2017 President Barack Obama proposed eliminating tax exemptions for municipal bonds attached to stadium projects as part of his 20[...]