Last year, the Inflation Reduction Act was passed, which included $15 million to study the feasibility of the Internal Revenue Service (IRS) runnin...

Last year, the Inflation Reduction Act was passed, which included $15 million to study the feasibility of the Internal Revenue Service (IRS) running a tax prep system. We were skeptical of the objectivity of this study because just a few months ago, the agency contracted with New America (a left-leaning think tank) to conduct that study. New America has frequently supported the expansion of the IRS into tax prep. Well, earlier this week, New America released their findings that stated the IRS should create and implement their own tax prep system. Frustrating, but not surprising. What was surprising was that The Washington Post reported that the IRS has been using a pilot program before the study was completed. American Democracy is predicated on the separation of powers where Congress passes laws and the Executive Branch implements them. Instead, the IRS unilaterally built a pilot program to give itself the power to prepare and file tax returns without congressional approval and before
a study on the feasibility of such a system was even completed. For years, the IRS has claimed that the agency is underfunded. This unproven and secret tax preparation system would push government-run tax prep onto Americans as soon as next tax season. Congress must assert its constitutional authority and stand up for the hardworking taxpayers they represent. Congress also needs to oppose this unilateral effort by the Biden Administration and the IRS to implement an unnecessary and wasteful IRS-run tax preparation system.

Global Minimum Tax Means Maximum Fiscal Pain

The world is currently at a crossroads of economic uncertainty. Many businesses are finally getting out from underneath the impacts of COVID lockdowns and restrictions. Tensions between the world’s economic and military superpowers are higher than they have been in some time. The United States stands on the brink of a catastrophic debt default. Businesses – especially those that operate internationally – have a lot about which to be concerned. Companies should be focused on expanding their businesses rather than an added layer of taxation. Unfortunately, American and global leaders are not pursuing avenues to alleviate this uncertainty or that would create a more business-friendly climate. Rather, they are advancing quite the opposite. A global corporate minimum tax adds to this uncertainty. It would also incentivize allied nations to harm their domestic economies and business communities. Level-headed lawmakers ought to recognize the harm caused by continuing to usher this policy forward.
The global minimum tax – more commonly known as “Pillar Two” – is fairly straightforward. The Organization for Economic Cooperation and Development (OECD) provides a template for nations to ensure no one has an effective corporate tax rate below 15 percent. This is meant to prevent businesses from basing operations in low-tax jurisdictions. Countries that sign on allow foreign nations to tax their businesses to ensure they are paying at least a 15 percent tax rate across multiple jurisdictions.

First, this is transparently targeted towards American companies, with 65 percent of the companies paying the new Pillar Two tax being based in the United States. Most of the large corporations in the world are based in the United States. Instead of bemoaning this reality, American leaders should be encouraged that its tax law and economic climate encourages such bold innovation and development. In supporting this agreement, the Biden administration allowed foreign nations to target and tax American companies, setting them back compared to the rest of the world.

Secondly, the goals of the Pillar Two tax are counterintuitive. One of the stated reasons for advancing this policy is to stop the “race to the bottom” on corporate tax rates. Put another way, the OECD leaders who developed this plan and encouraged all nations to sign on want other nations to keep their tax rates high. Anyone who cares about the global economy – especially given the recent uncertainty – should want to encourage nations to create more favorable tax frameworks, not discourage it. Tax competition encourages economic growth while tax harmonization encourages bureaucratic growth.

Before tax reform was passed in 2017, the United States “won” the race to the top with the highest corporate tax rate (effectively 40 percent) which caused businesses to flee the country. Lowering the corporate tax rate to 21 percent incentivized businesses to come back to the United States…and they did. The Tax Foundation’s analysis of the plan does not paint a pretty picture for the world’s economic future. According to the report, Pillar Two would limit the ability of multinational companies to plan for taxes. It would discourage foreign direct investment (FDI), slow overall global economic growth, and introduce new complexities to international tax law. None of these signal a desire to improve on the current economic situation. It will certainly not add any certainty. The logistics of the plan – beyond the economic principles – only add to the problems. If the United States were to implement Pillar Two as a binding international treaty, it would be very difficult to pass in the Senate.
If it were merely a verbal agreement or a set of mutually-agreed-upon principles, it could be ripped up at any time. Businesses would have no idea whether or not to plan on the continuance of Pillar Two or not. This would drastically impact where investment goes or whether investment is made at all in some cases.

It will also be very likely that some nations will deem it in their best interest to avoid Pillar Two altogether. After all, if most all nations shoot themselves in the foot by making their country less attractive to business opportunities, there will be an enterprising few who will see a clear opportunity to fill the void. With several high-profile nations planning on abandoning the U.S. dollar as reserve currency, the U.S. should be trying to make itself more competitive, not less. This reflects the pure absurdity of encouraging nations to sign a pact that would get as many as possible to hurt their business communities. As more nations sign, the benefits of not signing only increase and threaten to draw business away from those that do. This is a major reason why 76 taxpayer groups across 40 different countries urged their respective leaders to avoid joining the deal. Pillar Two is the precise opposite of what the global economy needs. The global economy needs that “race to the bottom.”
Countries should be doing everything they can to recharge a lagging global economy. They should be eradicating regulations and lowering taxes to encourage innovation and invite multinational corporations to do business with them. Pillar Two misses the mark in every way possible.

DeSantis Weaponizing Government

Conservative lawmakers have long professed the principles of the free market. An over-inflated government cannot possibly know or understand the vastly different realities of all its constituencies. Therefore, a light-touch approach that allows local stakeholders, businesses, and individuals to determine what’s best for them is most effective. The state of Florida used to epitomize the wisdom of this vision and has been rewarded with nearly unrivaled growth as a result. Unfortunately, in a naked weaponization of government resembling that of which Republicans in Congress have accused the Biden administration, Gov. Ron DeSantis has abandoned the very same principles the made his state a magnet for businesses and families across the nation, particularly during his earlier administration.

DeSantis and his allies in the Legislature recently abolished the Reedy Creek Improvement District (RCID). The RCID was ushered in in 1967, creating a special governing board – which essentially functioned as a county government – to allow Disney a more streamlined environment to build infrastructure for its parks and resorts in the state. There are legitimate concerns about RCID being the kind of special treatment government should avoid. That said, in practice it had many qualities free market advocates could admire. RCID turned the frequent challenge of progressives about who would build infrastructure under limited government on its head—a private company would have that ability without the usual red tape and waste of government projects. With some oversight, they would largely govern themselves. In the over 50 years since its inception, RCID flourished. The world-famous parks generated massive revenue streams for the state, allowing it to continue with zero state income taxes for
residents. Whether or not RCID was corporate welfare, laissez-faire, or something in between, the First Amendment bars governments from using such economic tools to silence dissent. Yet, DeSantis recently replaced the RCID with a new board run by five hand-picked members of his choosing. After public disputes with the governor over a host of political topics, it came as no coincidence that DeSantis’ panel of supervisors decided to repeal the special tax status that Disney – as well as state taxpayers – enjoyed for decades.

On top of the troubling constitutional issues, the economic ramifications of DeSantis’s actions are grave. Florida is a very business-friendly environment with no income tax. The state depends on tourism, gas taxes, and sales taxes to generate revenue. Given the millions who visit Disney World on a yearly basis, Florida relies on Disney’s constant investment in the state’s economy. DeSantis’ pursuit of retribution jeopardizes this harmony. The recent moves also overturn existing property development agreements. On February 8, 2023, an agreement was made between Disney and Reedy Creek, giving the company the sole right to develop the district’s land for another 30 years. The deal was made publicly and carefully done so as to be in accordance with state law. Now, just a couple of short months later, DeSantis’ administration would wipe out that deal. This further imperils innovation and investment in the Floridian economy. After such actions, no business operating in Florida can be certain
that their contracts will be honored. Publicly opposing the governor – or expressing ideals contrary to his – could be met by a weaponized state government, specifically targeting its interests. This is a dangerous precedent for both good governance generally and future economic activity in the state. Meanwhile, Disney has planned to pour $17 billion in spending into its resorts over the next decade. This would create 13,000 jobs for Floridians by itself. In 2022 alone, the company paid $1.2 billion in taxes directly to state and local authorities. Disney’s success in the state is not just its own success, but the success of the rest of the state as well.

Meanwhile, the DeSantis administration has zeroed in on the company, advocating more measures that are transparently meant to punish Disney – and only Disney. DeSantis has asked the state legislature to implement stringent regulatory oversight over the theme parks’ rides and monorail system. However, the proposal would exempt other theme parks in the state. The governor has also suggested building prisons near the children’s theme parks – a move that might deter tourism and depress property values. This blatant targeting has forced Disney to file a lawsuit against the state. This threatens to cost taxpayers millions in legal fees fighting one of the state’s greatest success stories. Instead, the Florida government should be trying to help Disney continue to boost the economic outlook for millions of Floridians – even those who don’t go to its parks. This episode is particularly shocking and unfortunate because DeSantis used to understand the beauty of the free market and a hands-off
government approach. In just the last few years, he became synonymous with allowing businesses to remain open and operational while other politicians imposed strict mandates and closures. It was on this hopeful message that he was overwhelmingly re-elected. Now, as he eyes higher office, he’s abandoned that to pursue patently unconstitutional retribution and a heavy-handed approach. DeSantis’ previous record of success and de-regulation is a main reason why his state’s population has grown and businesses are increasingly relocating to the state. It is not worth throwing that away to go after a private company for expressing constitutionally-protected opinions while leaving Florida taxpayers in the crossfire.
BLOGS:

Monday: Testimony before the Texas Senate Committee on Finance on HB 9 ([link removed])

Monday: Cleveland, Tennessee Council votes to build GON, despite residents’ concerns ([link removed])

Tuesday: TPA Sounds Alarm on Biased New America IRS E-File Study, Launches New Ad Campaign ([link removed])

Wednesday: Tobacco & Vaping 101: 50 State Analysis ([link removed])

Wednesday: Consumer Watchdog Group Releases ‘Tobacco Harm Reduction 101: 50 State Analysis’ ([link removed])

Thursday: TPA Applauds Rulings in Twitter v. Taamneh and Gonzalez v. Google ([link removed])

Friday: Op-Ed: A Global Corporate Minimum Tax Misses the Mark In Every Way ([link removed])

MEDIA:

May 13, 2023: The Santa Barbara News-Press ([link removed]) (Santa Barbara, Calif.) ran TPA’s op-ed, “Congress looks to ease broadband regulations ahead of BEAD funds distribution.”

May 15, 2023: WBFF Fox45 ([link removed]) (Baltimore, Md.) interviewed me about the debt ceiling.

May 15, 2023: Real Clear Markets ran TPA’s op-ed, “Congress looks to ease broadband regulations ahead of BEAD funds distribution ([link removed]) .”

May 15, 2023: Florida Daily ([link removed]) ran TPA’s op-ed, “Ron DeSantis’ Disney Focus Betrays What Makes Florida Great.”

May 16, 2023: Filter ran TPA’s op-ed, “Will a Change of Leadership End the CDC’s Vaping Misinformation? ([link removed]) ”

May 16, 2023: The Washington Examiner ([link removed]) (Washington, D.C.) quoted TPA in their article, “IRS launching free tax-filing pilot program, in threat to TurboTax and H&R Block.”

May 16, 2023: WMAR CBS2 ([link removed]) (Baltimore, Md.) quoted TPA in their story, “Retired cop works for nearly 3 years to clear fraudulent COVID loan.”

May 16, 2023: Inside Sources ran TPA’s op-ed, “With Youth Cigar Use at Record Low, We Need to Prioritize Health, Not Bans. ([link removed]) ”

May 16, 2023: The Colorado Springs Gazette ([link removed]) quoted TPA in their piece, “IRS launching free tax-filing pilot program, in threat to TurboTax and H&R Block.”

May 18, 2023: I appeared on WBOB 600 AM (Jacksonville, Fla.) to talk about the potential debt ceiling compromise.

May 18, 2023: WBFF Fox45 (Baltimore, Md.) interviewed me about taxpayer funds being used for horse racetracks in Maryland (The%20Redevelopment%20Of%20Pimlico%20Racetrack%20And%20How%20It%20May%20Impact%20Taxpayers) .

May 18, 2023: I joined “Stacy on the Right” on SiriusXM to talk about the IRS and a government run tax prep system.

Have a great weekend!

Best,
David Williams
President
Taxpayers Protection Alliance
1101 14th Street, NW
Suite 1120
Washington, D.C. xxxxxx
www.protectingtaxpayers.org ([link removed])

============================================================
** ([link removed])
** Like Us On Facebook ([link removed])
** ([link removed])
** Follow Us On Twitter ([link removed])
Our mailing address is:
1101 14th Street NW
Suite 1120
Washington, DC xxxxxx

Want to change how you receive these emails?
You can ** update your preferences ([link removed])
or ** unsubscribe from this list ([link removed])