Establishment Republicans desperately trying to secure the passage of Trade Promotion Authority (TPA), which would give President Obama fast-track authority to secure congressional approval of at least three secretive trade deals, are now willing to increase taxes on small businesses in a way that would violate a pledge almost every Republican Congressman has taken when elected into office.
To secure final passage through Congress of a package that would include TPA fast-track authority—which would ensure finalization of the secretive Trans Pacific Partnership (TPP), Transatlantic Trade and Investment Partnership (T-TIP) and Trade in Services Agreement (TiSA), among other deals—the House would need to pass the Trade Adjustment Assistance (TAA) package that was necessary for Senate passage of TPA. The House voted TAA down 302-126 with widespread bipartisan opposition to last week, but House Ways and Means Committee chairman Rep. Paul Ryan (R-WI) and his allies in House GOP leadership have pledged that they will try to pass it again early next week. The vote would potentially be on Monday, but more likely on Tuesday—and if there is no vote by Tuesday, it’s unlikely that Ryan will be able to succeed in his ploy to revive TPA.
TAA is a big government program usually favored by Democrats—it increases the size and scope of government, and is essentially viewed by Republicans as a welfare program—so their opposition to it during Friday’s complicated and confusing House vote schedule was not opposition to TAA as a specific concept, but opposition to the full Obamatrade package, especially TPA.
House Minority Leader Nancy Pelosi gave a blistering floor speech against the full Obamatrade deal, causing a Democratic rebellion against TAA—and forcing Ryan to push Republicans to vote for that part of the package.
TAA was originally supposed to be financed with Medicare cuts – which sparked major outrage, and cries of hypocrisy in what would have certainly turned into boldly negative campaign advertisements against Republicans by Democrats this next cycle. But under pressure, Republican leadership, mainly Boehner and Ryan, negotiated with Democrats to remove the Medicare cuts from the financial backing of TAA and instead using direct tax hikes by raising the penalties for misfiled taxes.
“A vote for Obamatrade on Tuesday is a vote to give the IRS more power and more incentives to go after small businesses,” said Curtis Ellis, founder of the Obamatrade.com website, in an exclusive interview with Breitbart News.
Democrats overwhelmingly opposed TAA Friday after Pelosi voiced opposition to giving President Obama fast-track trade authority.
“So while I am a big supporter of TAA, if TAA slows down the fast-track, I am prepared to vote against the TAA because then its defeat, sad to say, is the only way that we will be able to slow down the fast-track,” Pelosi said just minutes before the crucial vote. She concluded: “The facts are these: If TAA fails, the fast-track bill is stopped.”
“It’s pretty outrageous what is called for in this bill that Congress is going to vote on Tuesday – it literally doubles and triples the taxes on small businesses,” explained Ellis.
Ellis spent hours researching this legislation and explained to Breitbart News how it could impact small business taxes if Congress passes the TAA during its vote on Tuesday.
“Small businesses that are already over-burdened with IRS paperwork will be penalized even further if they make a technical mistake on filing informational paperwork,” he said. “There’s a lot of dishonesty going on when the bill is described as raising the fines on tax violations. That’s dishonest because the fines aren’t for people who failed to pay their taxes, the fines are on businesses that for no fault of their own, they forget to fie a piece of paperwork telling the IRS how much someone else owes on their taxes.”
“It’s outrageous that Republicans who complain all the time – rightfully so – about the IRS’s overreach and over burdening small business are actually increasing the incentive for the IRS to spy on people – to spy on small businesses,” he added.
Essentially, as explained by Ellis, any time a small business paid an independent contractor or freelancer a commission or any tips, it must be reported to the IRS with a 1099 form, which a copy is also sent to the contractor or freelancer. If the small business is late in filing this form, then it is fined by the IRS. The proposal Tuesday, as it stands, would double and triple these fines.
“It is the height of cynicism for Congress to plan on paying for a welfare program for unions by increasing the penalties for small businesses,” Ellis reacted.
President of Americans for Limited Government Rick Manning agrees with Ellis about this increasing penalty being a tax increase on small businesses.
“There is no question that raising the penalty on small businesses who commit a paperwork error is a tax increase. It is directly intended to raise revenues, so it can’t be considered anything else. For Republican leadership to ask their members to vote to raise taxes on small business to fund a union bailout that Big Labor doesn’t want is both horrific policy and terrible politics,” Manning told Breitbart News.
This program was so unpopular with both Democrats and Republicans that they removed it from Obamacare.
“This is very similar to one of the ways Obamacare was going to be paid for – as Obamacare was enacted they were looking for revenue to pay for it by increasing the penalties on small businesses who failed to file 1099 forms – that was repealed because it was so unpopular,” Ellis said. “Republicans led the charge in repealing it and now they’re the ones leading the charge to once again increase the penalties in already burdensome paperwork for the IRS.”
Therefore, the Republicans that voted for TAA Friday, essentially voted to finance TAA at the expense of increasing small business taxes – a direct violation of the Grover Norquist tax pledge, which many Republican Congressmen took, pledging to the American public not to raise any more taxes.
Norquist, President of Americans for Tax Reform, a group for taxpayer advocacy to limit size of government, organized the Taxpayer Protection Pledge. The pledge asks all politicians for both federal and state office to sign the pledge, committing themselves to oppose tax increases.
“This is clearly a tax increase – and it’s a violation of Grover Norquist’s no tax increase pledge that most of these Congressmen signed,” Ellis said. “This legislation assumes that there are small businesses out there that will fail to file the 1099 form and will therefore have to pay a fine.”
“It assumes small businesses will be forced to pay the IRS and then it goes further and says ‘let’s make them pay more’ – it doubles and triples the fines,” he argued.
Nearly every elected Republican in America—with rare exception—has signed Norquist’s anti-tax pledge. As such, the 86 Republicans who voted to raise small business taxes through the TAA on Friday most likely did as well.
ATR spokesman John Kartch told Breitbart News he doesn’t think TAA as it’s structured now in the House is a tax and that it does not violate the tax pledge—but that ATR is vehemently opposed to the program and is recommending all Republicans vote against it. That means ATR is in agreement with other groups from a more conservative perspective—albeit for slightly different reasons—on this matter, and won’t back down to help Obamatrade across the finish line.
“The Trade Adjustment Assistance (TAA) is, like most government jobs training programs, a well intentioned, but flawed program,” Kartch said in an email on Sunday night.
“Americans for Tax Reform opposes the TAA program and any increase in funding for it. The TAA is tied to the Trade Promotion Authority designed to facilitate trade agreements that reduce tariffs. Tariffs are taxes. For most of our nation’s history our national government was largely funded by tariffs. The increases in fines for not filing 1099s are not tax hikes. Tax increases come from changes in tax law. ATR opposes the increase in the fines. Not every stupid move by government is a tax. Civil asset forfeiture is a vicious misuse of government power — but it is not a tax. Excise taxes are taxes and the bottom line of the drive to expand free trade is that — even with silly ‘bribes’ to Democrats like the TAA –freer trade driven by tariff reductions will reduce the taxes paid by American consumers and increase the nation’s economic strength. As has happened with every tariff reduction in our history.”
This is extraordinarily significant, since Norquist and his organization did support the TPA portion of Obamatrade, but the public opposition to its TAA portion means it’s unlikely any GOP votes will budge if and when leadership brings up TAA again next week. In fact, if any Republicans change their votes, they’re likely to switch from voting in favor of TAA to against it so not to violate their pledge.
Ellis, Manning and Norquist are hardly the only influential right-of-center figures opposing TAA.
“Regardless of how TAA is financed, it is a wasteful ineffective program that undermines the virtues of free trade,” Dan Holler, Communications Director for Heritage Action for America, told Breitbart News.
Heritage Action and Club for Growth – a conservative group – both oppose the TAA program saying it’s a wasteful welfare program. Heritage Action scored against TPA and TAA, but Club For Growth supported—like ATR—TPA but not TAA.
When TAA went down in the House last week, only 86 Republicans voted for it—and they were joined by just 40 Democrats.
A whopping 158 Republicans joined 144 Democrats to oppose TAA. To pass TAA this week, the only way to truly keep Obamatrade alive without having to go through a grueling conference committee strategy that would likely lead to even more lost votes on both the House and Senate side when they would vote on an eventual conference report, the establishment would need to pick up 92 votes to get to 218.
That seems highly unlikely, given that the widespread GOP opposition and the revelation that voting for this TAA portion is technically voting for a tax increase. That alone is likely to keep the 158 Republican noes in their column and probably add GOP opposition as several of the 86 GOP ayes are likely to change their votes to oppose it as Democrat opposition is getting stronger too. On Sunday, former Secretary of State Hillary Rodham Clinton—the likely eventual Democrat nominee for president in 2016—urged Democrats to trust Pelosi and oppose granting Obama fast track trade authority until a good deal is assured.
“The president should listen to and work with his allies in Congress, starting with Nancy Pelosi,” Clinton said in Iowa.
If TAA were to pass—which is even more unlikely now that there’s probably not going to be any Democrat or GOP defections into supporting it—then so does TPA. The bills would move on to President Obama’s desk together, giving him fast-track authority to finalize his trade deals without any amendments to his deals by Congress.
Ryan’s office has not responded to a request for comment in response to these revelations about Obamatrade’s tax increases.