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The Abstract
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> By Torie Ludwin, Arnold Ventures
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Are death and taxes inevitable? People try to squeak by as they can, but what happens in the wake of their efforts may have effects on all of us — to the tune of billions of dollars in lost tax revenue.
A large part of the tax code — the rules that govern who pays what — might be thrown into chaos depending on the outcome of the upcoming Moore v. United States case at the Supreme Court. And AV Executive Vice President of Public Finance George Callas, who worked on the transition tax in the 2017 tax reform, is sounding the alarm. Callas was senior tax counsel to then-Speaker of the House Paul Ryan.
“Major, long-standing, and mostly uncontroversial parts of the tax code could be declared unconstitutional,” he predicted. “The federal income tax could become largely voluntary for multinational corporations and sophisticated investors, and mandatory only for everyday Americans.”
What started out as a $15,000 tax dispute from an investment in an overseas firm with deferred profits has turned into a Supreme Court case with massive implications for the taxation of trillions of dollars of international corporate profits. However, that’s not what’s getting the spotlight.
Some are hoping the Supreme Court’s ruling in Moore — which could involve defining “income” for the purposes of the Sixteenth Amendment — will help stave off a wealth tax. The focus on this hot-button issue, however, ultimately masks the potential loss in U.S. tax revenue from the taxation of over three trillion dollars in undistributed international corporate earnings.
If the Supreme Court declares the Moores’ $15,000 tax on deferred profits unconstitutional, 20 U.S. companies could get tax rebates totaling $165 billion, including seven large pharmaceutical companies, which could receive nearly $46 billion. This is a sizeable loss for the U.S. public and gain for multinational corporations. The much larger issue is that the Moores’ logic of what is and isn’t taxable income could then be applied broadly to eviscerate other areas of the tax code, costing the country far, far more.
“This case is a complete misfire,” added Callas, who was also senior tax counsel for the House Ways and Means Committee from 2009-2015. “It has nothing to do with a wealth tax, but if the petitioners win, it could destroy the way we’ve always taxed partnerships, S corporations, and foreign subsidiaries, and it will create chaos in its wake.”
The 2017 Tax Cuts and Jobs Act (TCJA) reformed how foreign profits of U.S. multinational companies are taxed, with the goal of eliminating incentives for these companies to move both their headquarters and their profits offshore. As a nation, we can’t afford to lose our tax base to overseas havens.
Find out more about the underpinnings of this case at The Tax Policy Center’s set of panels How the Supreme Court Case Moore v. United States Could Alter the Tax Landscape.
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Risk-Based Bail in Illinois Begins
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By Thomas Hanna, communications manager
It’s one thing to pass legislation and another to make it work for constituents. After years of discussion and planning, Illinois successfully overhauled its pretrial justice system from wealth-based to risk-based detention. Now, the new system is rolling out.
What Happened: On Monday, September 18, Illinois began implementation of the Pretrial Fairness Act (PFA), landmark legislation that eliminates money bail and mandates new, rigorous legal standards to protect community safety. While it is still very early in the process, implementation appears to be progressing relatively smoothly across the state — albeit with hearings sometimes taking longer as parties get acquainted with the new system.
Why It Matters: Prior to implementation of the PFA, Illinois — like many states — often detained people before trial simply because they couldn’t afford their money bond. At the same time, the state released individuals who posed clear threats to community safety just because they had access to wealth. Pretrial release conditions were often inconsistent, and judges had few tools to handle pretrial violations. The new system focuses on improving community safety, upholding accountability, protecting individual liberty, and laying a foundation for better pretrial services.
What’s Next: As the roll-out of the PFA continues, court officials, researchers, and the media will be monitoring the law’s impact on community safety, individual and family well-being, racial discrimination, incarceration rates, and the criminal justice system as a whole.
Learn more about the Pretrial Fairness Act>
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By Evan Mintz, director of communications
How does the pharmaceutical supply chain affect drug prices? Researchers are looking at the roles and incentives of entities involved to learn more.
What’s Happening: As part of its Follow the Rx project, supported by Arnold Ventures, the National Opinion Research Center (NORC) at the University of Chicago published a series of playbooks tracking the production, commercialization, and access for drugs in five key fields — HIV treatments, insulin, age-related macular degeneration, biosimilars, and cell and gene therapy.
Why It Matters: Families across the country are struggling to afford life-saving pharmaceutical drugs. One in four Americans report that they or another family member did not fill a prescription in the past year because of cost. Yet drug prices are often a black box, and policymakers need a better understanding of the supply chain to uncover opportunities for meaningful policies to address market distortions throughout the financing and distribution chain.
What’s Next: Lawmakers at the federal and state levels are working to tackle unaffordable prescription drugs. These playbooks will help policymakers target policy efforts that bring efficiencies to the supply chain to lower costs for patients, taxpayers, and employers.
Read the playbooks>
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"Patients are Shouldering
the Burden"
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(Photo credit: Politico)
By Evan Mintz, director of communications
In case you missed the POLITICO Live event with AV Co-Founder and Co-Chair John Arnold last week, we summarized our takeaways from the discussion on how site-neutral payments and greater transparency in hospital billing can reduce health care spending.
What’s Happening: As state and federal lawmakers look for ways to lower health care costs, patients, employers, doctors, and public officials are focusing on how consolidation by large health systems is driving up health care costs for the privately insured and Medicare beneficiaries. This consolidation is in part incentivized by hospitals’ ability to charge higher rates for the same services in hospital-based settings as compared to a doctor’s practice, even for routine procedures.
Why It Matters: These payment differences allow hospitals to increase their revenue by gaming the payment system without yielding benefits for patients. In fact, patients and families are facing extraordinary challenges in affording health care costs. Meanwhile, many large hospitals responsible for consolidation are on solid financial footing.
What’s Next: The Lower Costs, More Transparency Act, which is currently under consideration in the House of Representatives, begins to address rising health care costs by establishing site-neutral payments for drug administration services in Medicare and increasing billing and price transparency.
Read our five takeaways>
Related: Transparency is the Cure for High Hospital Prices
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$12 million
Amount that eight states may each receive from the federal government in start-up funding for a new Medicare payment model
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Criminal Justice
- The research journal community PLOS ONE recently shared a peer-reviewed article focusing on jail stays for failure to pay fines, fees, and other court debt in Wisconsin and Texas. The available data suggest 64% of jailings result from failure to pay costs related to underlying traffic offenses.
- The Sacramento Bee reports on how reform-minded California corrections officials and state and local lawmakers recently visited Norway to tour the country’s prison system, which is known for its low recidivism rate.
- The Marshall Project published an investigation into the state of bail reform in Cuyahoga County, Ohio, which has pursued reform based on internal and informal agreements. The analysis shows a decline in cash bail usage. However, significant disparities still exist.
Health Care
- The Wall Street Journal quotes AV's Executive Vice President for Health Care Mark E. Miller in its story about an Indiana employer group’s battle for legislation to limit hospital fees. (free link)
- The Georgetown Center on Health Insurance Reforms (CHIR) insurance rate review, Looking Under the Hood, explains how rates can be enhanced to lower provider prices and improve affordability.
- The Federal Trade Commission announced it is challenging U.S. Anesthesia Partners, one of the largest private-equity-backed physician groups in the United States, for anticompetitive market behavior and unfair price increases after essentially consolidating the Texas market.
- In the second Republican presidential debate, Nikki Haley, former United States ambassador to the United Nations, called for greater transparency in health care across the board, Axios reports.
- KFF finds that Medicare Advantage TV ads are sometimes misleading, often rely on celebrity endorsements, and routinely don't fully inform beneficiaries about tradeoffs.
Public Finance
- Pete Sepp, president of AV grantee the National Taxpayers Union Foundation, published a report on a “fiscally sound” path forward for Child Tax Credit reform.
- At a Punchbowl News event, Ways and Means Committee Chairman Jason Smith (R-MO) voiced support for expanding the Child Tax Credit, calling it “common ground” between Democrats and Republicans.
- Michael Strain, R. Glenn Hubbard, and Harry Holzer of the American Enterprise Institute unpack the impact of pandemic unemployment benefits on the unemployment rate.
- In The Washington Post, former Senators Rob Portman and Kent Conrad explore options to put the nation on a path to fiscal sustainability. (free link)
Higher Education
- A USA Today story and an op-ed in Forbes both quote AV's Vice President of Higher Education Kelly McManus on the newly released gainful employment rule, a federal policy that's designed to weed out predatory or ineffective colleges.
- In its coverage of the gainful employment rule, The Washington Post cites AV Higher Education Fellow Clare McCann, who calls it “the strongest rule we’ve seen to date.” (free link)
Related: See AV’s statement in support of the new accountability rule, which calls for Congress to “work across the aisle to strengthen legislative protections for students and taxpayers and hold institutions accountable for the outcomes they produce.”
- Higher Ed Dive covers how the Missouri Higher Education Loan Authority, a federal loan servicer known as MOHELA, has incorrectly notified students they’ll need to start making repayments on their loans after their debts were discharged in a $6 billion class action lawsuit.
- Budget negotiations in Congress are putting at risk funding for the Postsecondary Student Success Program, which supports evidence-based programs aimed at improving postsecondary persistence, retention, and completion, Inside Higher Ed reports.
Infrastructure
- Why is it so tough to convert office buildings into residential structures? The Washington Post editorial board lays out the physical and regulatory challenges. (free link)
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- On the Competitive Enterprise Institute’s Free the Economy podcast, Matt Darling of AV grantee the Niskanen Center talks about ways to improve the unemployment insurance system in the United States. Listen here.
- The Tradeoffs podcast tackles Complex Care: More than 12 million of the country’s sickest, poorest and costliest patients are enrolled in both Medicare and Medicaid, America’s two biggest public health insurance programs. You might think these two programs would work together to give this vulnerable population more help and better benefits. In reality, they often clash in ways that make health care harder to access and trap people with the fewest resources in one of America’s most complex bureaucracies. This week, listen to one person’s attempt to navigate this maze of dead ends and denials — and what lawmakers are trying to do about it. Listen here.
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On October 16-17, 2023, Arnold Ventures will partner with the Center for Justice and Human Dignity (CJHD) to present the " Rewriting the Sentence II Summit on Alternatives to Incarceration" in Washington, D.C. The Summit will convene judges, prosecutors, and other key stakeholders to expose participants to effective alternatives to incarceration and build sustained networks for their expansion throughout the country. Learn more and register here.
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- A week-by-week leaf-peeping forecast map for the whole country is my dream-come-true infographic of the moment.
- Leaves from the katsura tree in fall are reported to smell like caramel or toffee, due to the maltol in the leaves.
- From Arkansas Black to Winesap, count on the Farmer's Almanac for a complete guide to 21 varieties of apple and Alton Brown for a super apple pie recipe.
- The longest serving woman Senator in U.S. history, Dianne Feinstein had a storied life in politics, having authored the federal assault weapons ban of 1994, the anti-torture amendment of 2015 with Sen. John McCain, the Violence Against Women Reauthorization Act, and several anti-drug laws. Tributes from both sides of the aisle are pouring in about her leadership, tenacity, integrity, and mentorship.
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The National Collaborative on Gun Violence Research will be awarding more than $3 million in funding, provided by AV, to study extreme risk protection orders (ERPOs). Access the RFP here.
The Pretrial Justice team has released a request for proposals that will help inform and advance the field’s collective understanding of the policies and practices related to pretrial release decisions, pretrial release conditions, and pretrial services.
The Higher Education and Evidence-Based Policy teams have created a request for proposals for rigorous impact evaluations of programs and practices (“interventions”) to promote college success in the United States.
The Criminal Justice and Evidence-Based Policy teams at Arnold Ventures are teaming up to learn more about what works in criminal justice reform in an ongoing request for proposals for randomized controlled trials (RCTs) that will test programs and practices. There is no deadline for submissions.
The Evidence-Based Policy team invites grant applications to conduct randomized controlled trials (RCTs) of social programs in any area of U.S. policy. Details are here.
View our RFPs here.
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Have an evidence-based week,
– Torie
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Torie Ludwin leads digital, multimedia, and print branding projects for Arnold Ventures, including the Abstract.
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