Category: US Senator John Thune

Thune Questions Lew on Yet Another Obama Death Tax Proposal that Could Devastate South Dakota Family Farms

“…most farms…would not have the liquid assets to deal with that large of a tax bill, meaning the only way they would be able to pay Uncle Sam would be to break up the family farm and sell off portions of it…”

WASHINGTON, D.C.—U.S. Sen. John Thune (R-S.D.) today at a hearing before the Senate Finance Committee questioned U.S. Department of Treasury Secretary Jack Lew about the Obama administration’s proposal to institute a second death tax on South Dakota family farms and businesses. Thune offered an example of how the administration’s capital gains proposal will negatively impact family farms in South Dakota and called on the secretary to explain the intent behind their capital gains proposal.

Impact on South Dakota Farmers and Ranchers:

“[The administration’s] proposal, if enacted, would have a devastating impact on family farms and small businesses in my state of South Dakota. I want to give you an example… if you take a typical family farm that bought…640 acres back in 2000 for $640,000, which…in South Dakota that would be considered a small farm. Today that same farmland is probably worth somewhere between $3.5 million and $4.5 million, depending on where it’s located.

“So under the current estate tax law, which excludes assets up to $5.43 million, the family farm isn’t taxed when it passes from one generation to the next. Now under the administration’s proposal, this family farm would be hit with a significant tax when the family farm is transferred to the next generation of family members. …so in that example this South Dakota family would suddenly find themselves facing a tax bill of $1 million or more.”

Administration’s Intent Behind Capital Gains Proposal:

“…most farms of this size would not have the liquid assets to deal with that large of a tax bill, meaning the only way they would be able to pay Uncle Sam would be to break up the family farm and sell off portions of it…What is the administration’s intent with regard to this tax? If it is to break up family farms, obviously it is going to have that effect, or is it simply an unintended consequence of your interest in imposing yet another layer of taxation at death?”

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Thune, Brown Introduce Bipartisan Bill to Simplify Income Tax Collection for Individuals Working in Multiple States

-Bill would ease reporting burdens for employees and employers-

WASHINGTON, D.C. –U.S. Sens. John Thune (R-S.D.) and Sherrod Brown (D-Ohio), members of the tax-writing Senate Finance Committee, today introduced the Mobile Workforce State Income Tax Simplification Act, legislation that would simplify and standardize state income tax collection for employees who travel outside of their home state for temporary work assignments. The bill would also help employers who must file withholdings and reporting requirements. Currently, individuals and employers face up to 41 different state income tax reporting requirements that vary based on length of stay, income earned, or both.

“Our increasingly mobile workforce has created opportunities for businesses to grow and expand throughout the nation, but complex state tax reporting requirements place costly and time-consuming burdens on businesses with employees that work in multiple states,” said Thune. “Our legislation would establish a clear 30-day threshold test for state income tax purposes, preventing individuals from having to sort through complicated tax reporting burdens from the multiple states where they travel for work. This legislation will greatly simplify state income tax filings, is fairer to those residents in states without an income tax, and should help to encourage tax compliance.”

“This common-sense legislation will help simplify and standardize tax filing for employees and employers that conduct business in multiple states,” Brown said. “This is a great example of government working to reduce burdensome and confusing barriers to help ease the cost of doing business for employers and their workers.”

“Retailers welcome the introduction of this bill,” said National Retail Federation Vice President and Tax Counsel Rachelle Bernstein. “The current morass of state laws dealing with state income tax burdens for workers on business travel outside their home states creates confusion and undue compliance burdens for both employees and employers. This burden can be particularly onerous for the retail industry. Buyers for both large and small retailers frequently travel out of state to visit vendors or attend trade or fashion shows. Federal law to provide uniform rules for when these employees must file income tax returns in another state would greatly simplify this burden.”

“The current system is especially harmful to residents of states like South Dakota with no personal income tax, as these workers are forced to pay an out-of-pocket tax with no ability to obtain a home state credit or offset,” said Laura Coome, Executive Director of the South Dakota CPA Society. “This legislation would enhance compliance with state personal income tax laws and greatly simplify the onerous burdens placed on employees who travel outside of their resident states for temporary periods and on employers who have corresponding withholding and reporting requirements.”

“CPAs are extremely grateful to Senator Brown and Senator Thune for introducing Mobile Workforce legislation again in this Congress,” said Scott D. Wiley, CAE, president and CEO, The Ohio Society of CPAs. “It provides much-needed relief to businesses across the United States from the current web of inconsistent state income tax and withholding rules weighing down our nation’s employers and employees. This bill is an important step forward and extends the benefits businesses will see through a similar municipal income tax reform legislation passed in Ohio.”

While some states require state income tax filing for as little as one day of work in the state, the Mobile Workforce State Income Tax Simplification Act would establish a common-sense, 30-day threshold to help ensure that an equitable tax is paid to the state and local jurisdiction where the work is being performed while alleviating employees and employers from burdensome tax requirements.

The Mobile Workforce State Income Tax Simplification Act is supported by over 250 organizations and business groups.

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The ObamaCare Taxman Cometh
By Senator John Thune

The Beatles aptly sang in their song “Taxman”: “If you get too cold, I’ll tax the heat / If you take a walk, I’ll tax your feet.” Had ObamaCare been the law of the land at the time, they perhaps would have added, “If you need a pill, I’ll tax the bill; if you need a doc, my tax will shock,” to represent the pain of the tax penalties that will be hitting South Dakotans and millions of Americans across the country this tax season.

ObamaCare was supposed to solve our nation’s health care problems. It was supposed to drive down premiums and make health care more affordable. Instead, it’s generally done the opposite. Since ObamaCare became law in 2010, health care premiums have risen. Millions of Americans have lost their health insurance plans. Others have lost access to their doctors. Still others are stuck in new insurance plans paying more for less coverage.

The American Action Forum recently ran the numbers and estimated that 6,000 South Dakotans will have to pay the ObamaCare tax penalty for not having government-approved health insurance. According to a calculator on the Wall Street Journal’s website, the average individual who must pay the ObamaCare tax for not having government-approved insurance in South Dakota will pay a $394 penalty this year, while the average family of four in South Dakota will pay a $650 penalty. That’s a lot of money for a South Dakota family. And it’s only going to go up, because the tax penalty will rise in 2016.

South Dakotans could be spending that tax money on a number of essential items if they didn’t have to pay the penalty. An individual could purchase 201 gallons of gas or six weeks of groceries with the money he will use to pay the tax penalty. A family of four could buy three weeks of groceries, or cover almost two months’ worth of car payments, or purchase 332 gallons of gas at South Dakota prices. That would cover a lot of trips to school and football practice and dance practice.

The last few years have involved government creating many burdens on American workers and the American economy to fund big-government programs and the president’s pet projects. Take the ObamaCare tax on lifesaving medical devices like pacemakers and insulin pumps. This tax was put in place to help pay for the president’s health care law, but it has ended up negatively affecting jobs in this industry.

ObamaCare has demonstrated big government is not the answer. Instead of pushing big-government solutions, we need to rebuild our economy from the bottom up. I will continue working with my colleagues in the Senate to repeal and replace the most onerous parts of ObamaCare with policies that lower health care costs for South Dakota families.

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Following Senate Passage of Keystone XL, All Eyes on the President

“This is the kind of common-sense legislating the American people hired America’s New Congress to do.”

WASHINGTON, D.C.—U.S. Sen. John Thune (R-S.D.) issued the following statement on the Senate’s bipartisan passage of a bill that would approve the job-creating Keystone XL pipeline:

“Keystone XL would support thousands of jobs and invest billions of dollars in the economy at no expense to taxpayers. This is the kind of common-sense legislating the American people hired America’s New Congress to do. The president is out of excuses. He should support this project and join Republicans in getting Washington working again for the American people.”

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Thune Holds Commerce Committee Hearing on Freight Rail Challenges

“As 2013 and 2014’s freight rail delays and service challenges highlighted, rail service is absolutely critical to our nation’s economy…Thankfully, this winter’s relatively mild weather and better service have provided some improvements, but there’s still work to be done.”

WASHINGTON, D.C.—U.S. Sen. John Thune (R-S.D.), chairman of the Senate Committee on Commerce, Science, and Transportation, today held his second hearing as chairman entitled, “Freight Rail Transportation: Enhancing Safety, Efficiency, and Commerce.” The hearing focused on challenges facing our nation’s freight rail network created by higher demand, pending and proposed rules and regulations, and infrastructure needs. Today’s hearing continued Thune’s work to improve freight rail service for ag producers and shippers and prevent future rail service disruptions from occurring.

Thune also invited Dave Brown, Chief Operating Officer of Genesee and Wyoming, parent company to South Dakota’s Rapid City, Pierre, and Eastern line (RCP&E), to testify before the hearing. Dave spoke about the opportunities and challenges that RCP&E and other shortline railroads face. Video of Mr. Brown’s statement is available here.

Last Congress, the Commerce Committee held various rail related hearings, including a hearing on the rail service challenges facing shippers across the country, which included agriculture producers in South Dakota who struggled with access to reliable freight rail service during a record harvest. In addition, on September 17, 2014, the Commerce Committee passed the bipartisan Surface Transportation Board (STB) reform bill that Senator Thune and former Commerce Committee Chairman Jay Rockefeller (D-W.V.) introduced to institute common-sense reforms regarding how the STB works and to address rate disputes and service complaints. For a complete outline of Thune’s work to address last year’s rail service backlog, visit his website.

Video of Thune’s opening statement is here and text is below:

“As 2013 and 2014’s freight rail delays and service challenges highlighted, rail service is absolutely critical to our nation’s economy. South Dakota farmers scrambled to find rail cars and watched as rail turn times worsened, delaying shipments and creating grain storage challenges for the record breaking wheat, corn, and soybean crops.

“However, those delays were not just limited to the north central United States, they also extended across the country and impacted every shipping sector and industry.

“Thankfully, this winter’s relatively mild weather and better service have provided some improvements, but there’s still work to be done.

“I am pleased that Genesee and Wyoming, the parent company of South Dakota’s Rapid City, Pierre, and Eastern Railroad (RCP&E) has joined us for today’s hearing. I look forward to hearing from Dave Brown, the Chief Operating Officer of Genesee and Wyoming, which is the largest Class II railroad in the country with over 100 shortline and regional railroads, about the opportunities and challenges the RCP&E and other shortline railroads face.

“From automobiles, to coal, to ethanol, to agriculture, rail service moves goods from farm and factory to consumer marketplaces across the country and across the globe. The U.S. Department of Transportation (DOT) notes that freight rail moves roughly 40 tons per person each year. As a nation, we rely on cost efficient, timely service to move food, consumer products, and energy resources on a daily basis.

“The private infrastructure that makes up our nation’s freight rail system is costly, as old tracks and equipment require ongoing maintenance and investment. Our nation’s railroads continue to invest in new track, sidings, locomotives, and car resources with the goal of serving their customers. Class I railroads and shortlines alike face increasing demands for prompt, reliable, and safe service.

“In 2014 freight traffic increased nearly five percent over 2013 levels, and we should seek solutions that foster an even stronger freight rail network to meet this increasing demand.

“The Federal Railroad Administration (FRA) has proposed or finalized over 15 new freight rail safety rules since the passage of the Rail Safety Improvement Act of 2008, and many of these regulations will take effect in 2015.

“Not only is the Positive Train Control (PTC) mandate looming, with its December 31st deadline, but the DOT has announced that it expects a crude-by-rail regulation to be published around May of this year.

“Although the PTC deadline is quickly approaching, it remains unattainable. Through the end of 2014, railroads have invested over $5 billion in PTC, and they expect to spend billions more in the coming years.

“They have begun installation of the radio towers, locomotive technology, and other PTC infrastructure, but full compliance with the statutory requirements cannot be achieved by the end of this year. The FRA and the Government Accountability Office have documented the immense technical and programmatic challenges with implementing PTC.

“As a result of these challenges, the DOT has reported that the deadline will not be met and has offered a proposal to ensure the benefits of PTC are realized. I look forward to working with my colleagues on a legislative fix to ensure that we can set a more realistic implementation timeline for this important safety improvement.

“I am also closely monitoring the proposed crude-by-rail requirements.

“I have expressed concerns to the Office of Management and Budget as well as the DOT about the unintended harms that could result from the proposed rule. The DOT estimates its proposed crude-by-rail rule could cost nearly $6 billion, and it acknowledges the rule would increase network delays and out-of-service time for rail equipment.

“Without question, we must improve the safety of our nation’s rail system, but I am concerned about the unattainable deadlines the rule proposes. Like the PTC mandate, there are very real impacts when federal agencies set unreasonable and, many times, unachievable deadlines.

“Among other things, the DOT issued this proposed rule without analyzing the potential tank car shop capacity needed to retrofit or replace over 100,000 DOT-111 tank cars. Shippers have raised concerns about a tank car shortage, with a disruption in energy supply transportation, if DOT finalizes this rule with an unattainable deadline.  I look forward to working with my colleagues, stakeholders, and the Secretary of Transportation on a realistic timeline for such a phase-out.

“While safety can and should be improved, we certainly do not need to build in system-wide delays and congestion like we have witnessed during the past year and a half.

“Our transportation network connects port to rail to truck. Delays, burdensome regulations, and failing infrastructure disrupt our nation’s economy and cost jobs. So, we must work together to find workable solutions.

“In addition, we must ensure that the Surface Transportation Board, which is tasked with resolving railroad rate and service disputes and reviewing proposed railroad mergers, can provide effective and efficient oversight of the rail industry.

“This committee has a great deal of work to do in addressing freight rail service and safety in addition to passenger rail reauthorizations. I hope members will bring forward thoughtful solutions as we address these challenges.”

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Uncle Sam Can’t Tax Us into Prosperity
By Senator John Thune

Every State of the Union address includes at least one or two “buzz” words. For the past six years under President Obama, one of the phrases that has stuck out to me in his annual address to Congress is the term “restore prosperity.” The president usually follows these words with his laundry list of ways he believes Congress should act, usually by growing the size of government, to “restore prosperity” for millions of Americans. What the president always seems to forget is that Uncle Sam can’t tax us into prosperity.

This year, the president called yet again for higher taxes on individuals and families, ranging from South Dakota middle class families saving for their kid’s college education, to small businesses and ag producers who are creating jobs and stimulating the economy. This top-down approach to “restoring prosperity” is precisely what the American people rejected in the last election, yet the president continues to promote the same stale, failed policies of big government.

The president is proposing $320 billion in new taxes on top of the more than $1.5 trillion in higher taxes already forced upon the American people during his administration. Under his plan, South Dakotans who have their assets invested in a farm operation or small business would get hit with a new capital gains tax when assets that have appreciated in value are passed on to the next generation. This is especially damaging to the family farm, the assets of which are often comprised largely of farmland that can appreciate considerably in value over time. And this new tax is in addition to the federal estate tax, better known as the death tax, which already imposes an unnecessary tax burden on family farms and businesses.

Without question, these tax proposals would make it more difficult for South Dakota families to pass land and other capital assets along to the next generation. We need to move in the opposite direction, by eliminating the death tax and making certain that family farms and business are not targeted with new, punitive tax increases.

South Dakota middle class families planning ahead for their kid’s college educations through tax preferred 529 college savings plans would also feel the pinch under the president’s plan. Right now the earnings in these accounts are tax-free, but the president would subject them to tax, meaning there would be fewer funds available for education expenses. We’re not talking about the ultra-wealthy; we are talking about middle class families trying to do right by their children by saving for an investment in their educations. If anything, we should make it easier for families to save for a college education, not make it more difficult.

These are not the ways in which we will restore prosperity for the American people. It’s time for Washington to stop putting forward proposals that would penalize job-creators and middle class families and instead work to make our outdated tax code simpler and fairer, ensuring we reduce Americans’ tax burdens while also making U.S. businesses more competitive in the global economy.

I believe in tapping into the potential of the American people, not the government. I will continue to work with my colleagues in Congress to oppose ill-conceived tax hikes and to create a simplified tax system that works better for all Americans.

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Thune Holds Inaugural Hearing as Chairman of Commerce Committee

“Regulating the Internet like a public utility monopoly will harm its entrepreneurial nature, chill investment, and lead to prolonged litigation. I believe the most enduring way to protect both the Internet and individual Internet users is through legislation that establishes clear rules of the digital road as well as clear limits on the FCC’s regulatory authority.”

WASHINGTON, D.C.—U.S. Sen. John Thune (R-S.D.), chairman of the Senate Committee on Commerce, Science, and Transportation, yesterday held his inaugural hearing as chairman entitled, “Protecting the Internet and Consumers through Congressional Action.” The hearing focused on insights into government regulation of the Internet and fears that the Federal Communications Commission (FCC) is about to chart a course that will lead to overregulation that harms investment and job creation in the digital economy.

Last week, Thune and Representative Fred Upton (R-Mich.), Chairman of the House Energy and Commerce Committee, released a discussion draft on principles for bipartisan legislation to provide clear rules of the road for open and unfettered access to the Internet.

Thune also invited Tom Simmons, Senior Vice President of Public Policy at Midcontinent Communications (Midco), to testify before the hearing. Tom spoke to his first-hand knowledge of the current light touch regulatory approach that has sparked innovation and driven success at Midco. Video of Mr. Simmon’s statement is available here, and his written testimony is attached.

Video of Thune’s opening statement is here and text is below:

“Today we convene the committee’s first hearing of the 114th Congress to consider an issue that has divided policymakers for more than a decade – how best to protect the open Internet. The Federal Communications Commission believes it already has the answer – impose public utility regulations on the Internet. But there is well-founded fear that regulating the Internet like a public utility monopoly will harm its entrepreneurial nature, chill investment, and lead to prolonged litigation.

“Instead of using outdated regulations, I believe the most enduring way to protect both the Internet and individual Internet users is through legislation that establishes clear rules of the digital road as well as clear limits on the FCC’s regulatory authority. Certainty about how consumers will be protected and certainty about the government’s role in the online world is critical to preserve the Internet as an engine for innovation, creativity, economic growth, and free expression.

“I want us to pass legislation providing certainty that users will have unfettered access to the entire Internet. I want us to pass legislation that provides certainty for creators at the edge of the Internet, so that they can continue to reach users across the Internet without interference. I want us to pass legislation that provides certainty for Internet service providers about precisely what rules they will be required to follow. I want us to pass legislation that provides certainty for the FCC, so that it can enforce legally-sound open Internet rules that survive beyond the current administration. The entire Internet needs this kind of statutory certainty, and only Congress can provide it.

“Last week, I put forward a set of eleven principles that I believe can be the framework for a bipartisan consensus.

“Prohibit blocking
“Prohibit throttling
“Prohibit paid prioritization
“Require transparency
“Apply rules to both wireline and wireless
“Allow for reasonable network management
“Allow for specialized services
“Protect consumer choice
“Classify broadband Internet access as an information service under the Communications Act
“Clarify that Section 706 of the Telecommunications Act may not be used as a grant of regulatory authority
“Direct the FCC to enforce and abide by these principles

“The discussion draft that Chairman Upton and I released is our attempt to turn these principles into statutory text. The details matter greatly in this debate, and we felt there could be no progress toward a solution until legislators started discussing those details. I do not expect our draft to be a final product, but I also believe that it is not a partisan starting point to the conversation. We have put forth a good faith proposal to find common ground between the parties. We hope today’s hearings will facilitate a serious conversation around a long term solution.

“I am willing to discuss how the eleven principles will be implemented, and I am eager to get to work with my colleagues, many of whom I have already spoken with. But I also want to be clear that I will not compromise these principles, particularly if doing so would leave the FCC’s authority unbounded or would leave open the possibility for harmful regulatory burdens being leveled on the Internet.

“Chairman Upton, Chairman Walden, and I have been working with our colleagues on the Commerce Committees and across the aisle since late last year to find a lasting resolution that protects the open Internet. My colleague, the new ranking member of this committee, Senator Bill Nelson of Florida, has been serious and substantive in discussions with me. I appreciate his efforts, and they underscore that there is a bipartisan interest in finding a legislative solution.

“In the absence of clear legislative guidance, the FCC has floundered for more than a decade to forge its own regulatory powers from legal authorities crafted prior to the emergence of the Internet as the most consequential communications platform of our lifetime. We have now reached an unfortunate point where both the president and the chairman of the FCC feel compelled to move forward using a tool box built 80 years ago to regulate a literal monopoly. And they do so without any apparent interest in working with Congress to solve the FCC’s legal dilemma.

“Even if the executive branch seems willing to go alone down a politically toxic and legally uncertain path, I sincerely hope that a willingness to collaborate develops within the legislative branch. After a decade of failure and wasted taxpayer resources, we should not continue to leave this issue to a five-member regulatory agency. Congress needs to reassert its responsibility to make policy, and let the FCC do what it does best – enforce clear statutory rules. I want to work together with my colleagues to finally settle the question of the FCC’s authority over retail Internet service. If Chairman Wheeler moves ahead as planned, however, the only certainty is that the FCC will again find itself tangled up in court for years to come.

“Before I finish my remarks, I want to put forward a challenge to the members of this committee. Let’s find common ground and forge a permanent solution. I have offered the president an opportunity to engage, I have spoken with Chairman Wheeler on numerous occasions, and I will engage any senator who wants to find a workable legislative solution. Having the FCC regulate the Internet as a public utility while Congress sits idly on the sideline is an outcome that will prove to be short-sighted. Let’s find a consensus solution that none of us have to call a ‘compromise.’

“I look forward to hearing from our diverse panel of experts, and also to working with my colleagues in the coming days and weeks.”

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