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House-Passed Trade Bills Would Lower Taxes

June 16, 2015

As we’ve noted many times, free trade is fundamentally about lowering trade barriers. Quite often that means lowering or eliminating tariffs on goods and services, which are little more than taxes. Hence, a major component of free trade is lower taxes. That’s one reason the conservative movement is so strongly behind free trade and trade promotion authority. That, however, hasn’t stopped some opponents of free trade from making bogus allegations—like the baseless charge that the trade bills considered by the House last week somehow amount to a tax increase. The folks over at Americans for Tax Reform, promoters of the famed “tax pledge,” are taking that false idea head on. They posted a very clear rebuttal on their blog, and we’ll just leave it right here:

Trade Bills Do Not Contain Tax Increases

Over the weekend, a left-wing Democrat consultant opposed to free trade (Curtis Ellis of an outfit known as the “American Jobs Alliance”) began spreading a rumor that there were tax increases in one of the trade bills passed by the U.S. House last week (H.R. 1295. the “Trade Preferences Extension Act of 2015”).

This assertion is factually inaccurate.

The provision in question increases the penalty for a business not filing a required 1099-MISC tax form from (in most cases) $30 to $50. This is a fine for failing to comply with tax law, not a tax increase. 

This penalty is intended to police bad actors in tax compliance, not ordinary businesses. There are already provisions in the penalty for holding small firms harmless, and this is not changed by this language.

The claim that increasing penalties for not complying with tax law is a tax increase doesn’t hold water. Tax increases happen when tax law itself changes to result in higher taxes being owed by families and businesses.

This bill does not change tax law.

When the House voted for this bill, it was not a violation of the Taxpayer Protection Pledge. Not even close.

Furthermore, the source is not legitimate. As reported last week by the Washington Free Beacon, the paid consultant putting this out is a lifetime liberal/progressive who is pretending to be a conservative for the purposes of scuttling free trade. Big Labor is also lobbying to scuttle free trade.

Conservatives should not have any tax-based objections to this package of trade legislation. The bigger picture is that free trade is about cutting tariffs (taxes on trade) both abroad and here at home. Free trade is a tax cut, and those putting up spurious objections now are merely showing their true colors.