The Pronk Pops Show 870, April 10, 2017: Story 1: Will President Trump Boldly Cut Taxes and Spending? — A Competitive Race Towards Lower Taxes And Less Government Spending: Replace All Income Based Taxes (All Income, Capital Gain and Payroll Taxes) With Broad-Based Consumption Tax With A Progressive Tax Prebate ( FairTax 23% Less Prebate or Fair Tax Less 20% Less $1,000 Per Month or $12,000 Per Year Prebate) And Real Cuts of 5% Per Year In Government Spending To Balance The Budget In 8 Years Or Less To Pay For Tax Cuts!) — Cut Taxes and Spending — Videos — Story 2: Stagnating United States Economy — The Great Stagnation –Videos

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The Pronk Pops Show Podcasts

Pronk Pops Show 870: April 10, 2017

Pronk Pops Show 869: April 7, 2017

Pronk Pops Show 868: April 6, 2017

Pronk Pops Show 867: April 5, 2017

Pronk Pops Show 866: April 3, 2017

Pronk Pops Show 865: March 31, 2017

Pronk Pops Show 864: March 30, 2017

Pronk Pops Show 863: March 29, 2017

Pronk Pops Show 862: March 28, 2017

Pronk Pops Show 861: March 27, 2017

Pronk Pops Show 860: March 24, 2017

Pronk Pops Show 859: March 23, 2017

Pronk Pops Show 858: March 22, 2017

Pronk Pops Show 857: March 21, 2017

Pronk Pops Show 856: March 20, 2017

Pronk Pops Show 855: March 10, 2017

Pronk Pops Show 854: March 9, 2017

Pronk Pops Show 853: March 8, 2017

Pronk Pops Show 852: March 6, 2017

Pronk Pops Show 851: March 3, 2017

Pronk Pops Show 850: March 2, 2017

Pronk Pops Show 849: March 1, 2017

Pronk Pops Show 848: February 28, 2017

Pronk Pops Show 847: February 27, 2017

Pronk Pops Show 846: February 24, 2017

Pronk Pops Show 845: February 23, 2017

Pronk Pops Show 844: February 22, 2017

Pronk Pops Show 843: February 21, 2017

Pronk Pops Show 842: February 20, 2017

Pronk Pops Show 841: February 17, 2017

Pronk Pops Show 840: February 16, 2017

Pronk Pops Show 839: February 15, 2017

Pronk Pops Show 838: February 14, 2017

Pronk Pops Show 837: February 13, 2017

Pronk Pops Show 836: February 10, 2017

Pronk Pops Show 835: February 9, 2017

Pronk Pops Show 834: February 8, 2017

Pronk Pops Show 833: February 7, 2017

Pronk Pops Show 832: February 6, 2017

Pronk Pops Show 831: February 3, 2017

Pronk Pops Show 830: February 2, 2017

Pronk Pops Show 829: February 1, 2017

Pronk Pops Show 828: January 31, 2017

Pronk Pops Show 827: January 30, 2017

Pronk Pops Show 826: January 27, 2017

Pronk Pops Show 825: January 26, 2017

Pronk Pops Show 824: January 25, 2017

Pronk Pops Show 823: January 24, 2017

Pronk Pops Show 822: January 23, 2017

Pronk Pops Show 821: January 20, 2017

Pronk Pops Show 820: January 19, 2017

Pronk Pops Show 819: January 18, 2017

Pronk Pops Show 818: January 17, 2017

Pronk Pops Show 817: January 13, 2017

Pronk Pops Show 816: January 12, 2017

Pronk Pops Show 815: January 11, 2017

Pronk Pops Show 814: January 10, 2017

Pronk Pops Show 813: January 9, 2017

Story 1: Will President Trump Boldly Cut Taxes and Spending?  — A Competitive Race Towards Lower Taxes And Less Government Spending:  Replace All Income Based Taxes (All Income, Capital Gain and Payroll Taxes) With Broad-Based Consumption Tax With Generous Tax Prebate ( FairTax or Fair Tax Less!) And Real Cuts of  5% Per Year In Government Spending To Balance The Budget In 8 Years Or Less To Pay For Tax Cuts!) — Cut Taxes and Spending — Videos —  

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Donald Trump: Simplify the Tax Code

Donald Trump: I pay as little as possible in taxes

Is Donald Trump serious about tax reform?

Sean Spicer: Trump wants to get tax reform right

Will tax reform really happen by August?

Dan Mitchell Discussing GOP Tax Plan and Corporate Rate Reduction

What Tax Reform Could Look Like Under Donald Trump | Squawk Box | CNBC

#Eakinomics – 4 Key Questions on Dynamic Scoring

What is Dynamic Scoring?

Trump Pushes ‘Major Border Tax’ to Keep Jobs in U.S.

Ryan Unexpectedly Joins Forces With Bannon on Border Tax

Kudlow: Freedom Caucus & Trump’s base is opposed to Border Adjustment Tax

Sen. Perdue: Border Adjustment Tax would “shutdown economic growth”

Sen. Tom Cotton: “I have serious concerns” w/ Border Adjustment Tax

Americans Need a Progressive Consumption Tax

Sen. Strange: “I would not” vote for a Border Adjustment Tax

Milton Friedman – Why Tax Reform Is Impossible

Milton Friedman – Is tax reform possible?

CNBC: Steve Forbes on Border Adjustment Tax – “Don’t Do It” 2.8.17

Meg Whitman: Border Adjustment Tax Will Not Create Jobs | CNBC

Art Laffer: Border tax is a major mistake

Border Tax Fight Is Economists Vs. Everybody Else | Squawk Box | CNBC

Dan Mitchell Discussing GOP Tax Plan and Corporate Rate Reduction

What is a Border Adjustment?

Border Tax: What You Need to Know

Will a border adjustment tax help American businesses?

Will a border adjustment tax kill free trade?

Border adjustment tax political suicide?

Fox Pol:l 73% Want Tax Reform This Year – Cavuto

Could the border tax debate stall tax reform?

Is A Border Adjustment Tax A Good Idea?

Border Adjustment Tax: Trump’s MAGA Ace

President Donald Trump Begins First Week By Meeting With Top Business Leaders | NBC News

Dan Mitchell Fretting about GOP Border-Adjustable Tax Plan

FairTax: Fire Up Our Economic Engine (Official HD)

Pence on the Fair Tax

Freedom from the IRS! – FairTax Explained in Details

The FairTax: It’s Time

Dan Mitchell explains the fair tax

Six Reasons Why the Capital Gains Tax Should Be Abolished

Is America’s Tax System Fair?

Sen. Moran Discusses FairTax Legislation on U.S. Senate Floor

What’s Killing the American Dream?

Robert Wolf: Border adjustment not going to happen

Paul Ryan on why he’s confident about tax reform

1/26/17 Border Adjustment Taxes, Tax Reform & Trade: Panel 1

1/26/17 Border Adjustment Taxes, Tax Reform and Trade: Panel 2 Part 2

Border Tax Adjustment and Corporate Tax Reforms: Panel 1

Border Tax Adjustment and Corporate Tax Reforms: Panel 2

Breaking Down The Republican Plan For A Border Tax | CNBC

Harvard Professor: Trump’s Border Tax ‘Misunderstood’

Making Sense Of The 20 Percent Tax Proposal | Morning Joe | MSNBC

Proposed Tax Package A Dramatic Cut Even With A Border Tax?

Treasury Secretary Steve Mnuchin On Tax Reform, Growth, Border Tax, China (Full) | Squawk Box | CNBC

Wilbur Ross On Border Tax: Something Will Be Found To Fill Trillion-Dollar Hole | Squawk Box | CNBC

Trump ditches tax reform plan he campaigned on and considers series of new options – including payroll tax cut in bid to woo Democrats

  • Trump had campaigned on rapid tax reform and a so-called border adjustment tax, which would effectively levy a duty on imports 
  • Now all options are back on the table as he tries to have a reform plan which will get Republican support 
  • There are signs the president will be willing to work with Democrats too as White House officials hold ‘listening sessions’ with the opposition 
  • One plan being considered is a cut in the payroll tax, which would benefit middle-earners and could garner Democratic support 

President Donald Trump has scrapped the tax plan he campaigned on and is going back to the drawing board in a search for Republican consensus behind legislation to overhaul the U.S. tax system.

The administration’s first attempt to write legislation is in its early stages and the White House has kept much of it under wraps. But it has already sprouted the consideration of a series of unorthodox proposals including a drastic cut to the payroll tax, aimed at appealing to Democrats.

Some view the search for new options as a result of Trump’s refusal to set clear parameters for his plan and his exceedingly challenging endgame: reducing tax rates enough to spur faster growth without blowing up the budget deficit.

Administration officials say it’s now unlikely that a tax overhaul will meet the August deadline set by Treasury Secretary Steve Mnuchin.

Off plan: Donald Trump is abandoning the tax overhaul he campaigned on 

Off plan: Donald Trump is abandoning the tax overhaul he campaigned on

Tough deadline: Steven Mnuchin, the Treasury Secretary who was at the table when Trump was briefed on the Syria missile strikes, had set an the August deadline for tax reform

Tough deadline: Steven Mnuchin, the Treasury Secretary who was at the table when Trump was briefed on the Syria missile strikes, had set an the August deadline for tax reform

But the ambitious pace to figure out a plan reflects Trump’s haste to move quickly past a bruising failure to broker a compromise within his own party on how to replace the health insurance law enacted under President Barack Obama.

The White House is trying to learn the lessons from health care. Rather than accepting a bill written by the lawmakers, White House officials are taking a more active role.

Administration officials have signaled that they want to pass tax legislation with only Republican votes, yet they’ve also held listening sessions with House Democrats.

White House aides say the goal is to cut tax rates sharply enough to improve the economic picture in depressed rural and industrial pockets of the country where many Trump voters live.

But the administration so far has swatted down alternative ways for raising revenues, such as a carbon tax, to offset lower rates.

Trump, who brands himself as a deal-maker, has not said which trade-offs he might accept and he has remained noncommittal on the leading blueprint, from Rep. Kevin Brady, chairman of the Ways and Means Committee.

Brady, a Republican from Texas, has proposed a border adjustment system, which would eliminate corporate deductions on imports, to raise $1 trillion over 10 years that could fund lower corporate tax rates.

But that possibility has rankled retailers who say it would lead to higher prices and threaten millions of jobs, while some lawmakers have worried that the system would violate World Trade Organization rules.

Brady has said he intends to amend the blueprint but has not spelled out how he would do so.

Other options are being shopped on Capitol Hill.

One circulating this past week would change the House Republican plan to eliminate much of the payroll tax and cut corporate tax rates. This would require a new dedicated funding source for Social Security.

The change, proposed by a GOP lobbyist with close ties to the Trump administration, would transform Brady’s plan on imports into something closer to a value-added tax by also eliminating the deduction of labor expenses.

This would bring it in line with WTO rules and generate an additional $12 trillion over 10 years, according to budget estimates.

Those additional revenues could then enable the end of the 12.4 percent payroll tax, split evenly between employers and employees, that funds Social Security, while keeping the health insurance payroll tax in place.

This approach would give a worker earning $60,000 a year an additional $3,720 in take-home pay, a possible win that lawmakers could highlight back in their districts even though it would involve changing the funding mechanism for Social Security, according to the lobbyist, who asked for anonymity to discuss the proposal without disrupting early negotiations.

Although some billed this as a bipartisan solution, and President Barack Obama did temporarily cut the payroll tax after the Great Recession, others note it probably would run into firm opposition from Democrats who are loathe to be seen as undermining Social Security.

The White House would not comment on the plan, but said a value-added tax based on consumption is not under consideration ‘as of now,’ according to a White House statement.

The lack of detail about how to significantly rewrite tax laws for the first time in 30 years may provide Trump some time to build consensus among Republicans. But without Trump laying down his hand, lawmakers appear reluctant to back a plan that will likely stir controversy.

How will markets react? Stocks rallied after the election on the promise of lower taxes and fewer regulations, but the Dow has dipped 1.2 percent over the past month

How will markets react? Stocks rallied after the election on the promise of lower taxes and fewer regulations, but the Dow has dipped 1.2 percent over the past month

Stock markets take a hit after Trump’s healthcare defeat

‘Because there are trade-offs, congressmen need cover from the president to withstand the lobbyists and constituents who are going to complain,’ said Bill Gale, an economist at the Brookings Institution who worked at the White House Council of Economic Advisers during President George H.W. Bush’s administration.

The Trump administration appears to have shut out the economists who helped assemble one of his campaign’s tax overhaul plans, which independent analyses show would have increased the budget deficit.

‘It’s a little frustrating that they feel they have to write a new tax plan when they have a tax plan,’ said Steven Moore, an economist at the conservative Heritage Foundation who helped formulate tax policy for the Trump campaign.

Rob Portman, the Republican senator from Ohio, a member of the Senate Finance Committee, said that all of the trial balloons surfacing in public don’t represent the work that’s being done behind the scenes.

‘It’s not really what’s going on,’ Portman said. ‘What’s going on is they’re working with on various ideas.’

Investors are beginning to show some doubts that Trump can deliver. Stocks rallied after his election on the promise of lower taxes and fewer regulations, but the Dow Jones Industrial Average has dipped 1.2 percent over the past month as the path for health care and tax revisions has become muddied.

‘The White House is going to need its own clear direction, or it’s going to need to defer to Congress, but saying that your plan is forthcoming and then not producing a plan kind of puts everything in stasis,’ said Alan Cole, an economist at the conservative Tax Foundation.

http://www.dailymail.co.uk/news/article-4396916/Trump-taxes-President-scraps-tax-plan-timetable-threatened.html#ixzz4dsZ74tNb
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Why the Border Adjustment Tax Should Be Killed

The BAT is a bad idea. There are far better ways to shrink the federal budget deficit.

March 18, 2017

“Anytime I hear border adjustment, I don’t love it,” Donald Trump told The Wall Street Journal shortly before his inauguration, noting that the proposed border adjustment tax was “too complicated.”

Trump isn’t always right when he makes off-the-cuff remarks such as that, but this time he was. The proposed border adjustment tax is so complicated that even its advocates can’t agree on how its disruptive effects on the U.S. economy will play out, and there’s nothing to love about that. The BAT is a bad idea, and it should be scrapped. And while taking it off the table will bring more red ink to the federal budget, there are better ways to stanch the bleeding than subjecting the economy to the trauma of a BAT.

Despite protestations to the contrary, the border adjustment levy is a tax hike embedded in the program of tax reductions that House Republicans put forward last June under the rubric of “A Better Way.” It’s there, presumably, to help offset the effect of the administration’s planned cuts, since the Republicans’ stated aim is to keep those cuts revenue-neutral. Barron’s fully supports the goal of not adding to deficits that, before too long, will be running above $1 trillion a year, given repeated warnings from the nonpartisan Congressional Budget Office about the risk of a financial crisis, due to exploding debt.

The attraction of a BAT is that it could generate an estimated $100 billion a year in revenue. There may be reasons to challenge that estimate, but we’ll accept it for now. There are, however, better ways to slash the fiscal deficit by $100 billion a year than the Better Way plan, and most fall under the heading of spending cuts.

President Trump has spoken about “waste, fraud, and abuse” in “every agency” of the federal government. Indeed, he promised that “we will cut so much, your head will spin.” He should therefore find plenty to love in our proposed reductions in spending. Just for starters, if all corporate welfare were cut from the budget, as much as $100 billion a year could be saved, about matching the total expected from the BAT.

The president also favors slashing the top rate on corporate income to 15% from 35%. Barron’s has proposed a more modest cut, to 22% (“Cut the Top U.S. Corporate Tax Rate to 22%,” Nov. 26, 2016). The Republican package calls for a reduction to 20%, which is close enough to our original proposal and which we believe should boost revenue rather than shrink it.

A list of potential cuts and revenue enhancements, totaling $200 billion, is in the table at the bottom of this page.

THE BETTER WAY PLAN, as noted, would reduce the top federal tax rate on corporate profits to 20% from 35%—which is all to the good. The proposed tax cut would not only be revenue-neutral; it would probably be revenue-enhancing.

In a study released this month by the London-based Centre for Policy Studies, analyst Daniel Mahoney traces the effect on revenue from Britain’s cuts in the corporate tax rate over a 34-year period. According to his calculations, the take from the corporate tax has added three-tenths of a percentage point annually to gross domestic product since rates were slashed.

Similarly, last year, in calling for a maximum U.S. rate of 22%, we traced the significant decline in the average top rate on corporate income for 19 countries in the Organization for Economic Cooperation and Development, which includes the U.S. and the United Kingdom. Over 33 years, their average tax take as a share of GDP rose six-tenths of a percentage point.

While that might not sound like much, every tenth of a percentage point of U.S. nominal GDP is worth $18.9 billion. So if revenue from the corporate tax rises by, say, three-tenths of a percentage point, to 2.5%—a conservative guess—that increase would translate into a bonus of nearly $57 billion a year in revenue. That alone gets us more than halfway to the $100 billion value of a BAT.

The idea of a revenue-enhancing cut in the corporate income tax was put forward in 1978, when economist Arthur Laffer was first cited as arguing that some rate decreases could generate enough added economic growth that the government wouldn’t lose revenue over the long run—and might, in fact, even gain revenue. Laffer also noted that most tax hikes generate less revenue than a conventional “static” analysis indicates, and that most tax cuts lose less.

Laffer’s “dynamic” analysis covered all of the behavioral changes likely to result from a cut. To begin with, if the tax collector claims a lower share of income, there is an incentive to produce more income. Second, a lower rate means there’s less incentive to spend time and effort avoiding the tax.

Corporations don’t pay taxes; only people do. And there is a tendency to forget that if a corporation nets more profits as a result of a lower tax, those funds will soon take the form of salaries, dividends, and capital gains, and will be taxed in those forms.

The second factor, less tax avoidance, applies with special force to a rollback of corporate taxes. As we noted last year, bringing down the top rate to 22% from 35% would dramatically reduce corporate flight to low-tax jurisdictions in the rest of the world.

Following the publication of our article, the CBO released a study confirming that U.S corporate tax rates are among the highest in the world. Among the Group of 20 countries—including Japan, China, Russia, Germany, France, Canada, and the U.K.—the U.S. is No. 1, 3, and 4, respectively, in “top statutory corporate tax rate,” “average corporate tax rate,” and “effective corporate tax rate.” The Better Way plan would narrow this gap significantly and make the U.S. more competitive.

But when it comes to the Better Way plan for cutting tax rates on personal income, Barron’s believes that there would be a loss of revenue even after taking into account behavioral changes. The revenue reduction from the proposed personal income-tax cuts has been estimated, on a static basis, at an average of $98 billion a year. We can assume that dynamic losses would run 10% less, or $88 billion, mainly because lower taxes are likely to encourage people to work.

Still, $88 billion a year is a huge loss of revenue. Barron’s proposes that the Better Way plan consider splitting the difference and going halfway on the tax cut, thus saving $44 billion.

THE REVENUE-ENHANCING corporate tax cut would include a special kicker in the form of the border adjustment tax. The BAT would deny corporations the ability to deduct the cost of imports from their taxable income, while all income earned from exports would be exempt from the 20% levy.

This means that companies selling imported goods in the domestic market would be taxed on the sale’s full proceeds—not just on the profit earned—which could more than offset the gains from the corporate tax reduction. At the same time, as noted, there would be no tax on the sale of exports.

The GOP’s Big Three Key players in the border adjustment tax debate: Senate Majority Leader Mitch McConnell, above, and House Speaker Paul Ryan and President Donald Trump, below. McConnell has said that he hasn’t made up his mind about the levy. Alex Wong/Getty Images

The BAT would bring uncertainty and disruption to the U.S. economy, making it hard to predict whether it really would raise $100 billion annually in revenue. The basic idea is that, because the U.S. imports more than it exports, the export exemption would be more than offset by hitting imports hard. Regardless of how it shakes out, the value of the transactions affected by the BAT is huge.

The U.S. trade deficit—the difference between exports and imports—ran at just 3.4% of real GDP in 2016, much lower than the 5.5% peak of 2005. But the actual gross flows of exports and imports are much larger than the difference between the two flows. Exports last year were valued at $2.2 trillion, or 12.8% of real GDP, and imports at $2.7 trillion, or 16.2% (see chart). Given those magnitudes, the tax plan is likely to require massive readjustments throughout the economy.

That’s why major importers, like Wal-Mart Stores, are objecting—and why exporters are clearly pleased. As you might expect, then, the BAT is pitting exporters against importers, creating needless discord at a time when the country is surely suffering from more discord than it can handle.

THE POSITION PAPER for the Better Way asserts that by “exempting exports and taxing imports,” the BAT does “not” consist of the “addition of a new tax.” But of course, the BAT’s designers know that imports normally exceed exports by about $500 billion a year. Apply a back-of-the-envelope 20% to that $500 billion, and you get the hoped-for $100 billion in revenue. So the maneuver of “exempting exports and taxing imports” certainly looks and sounds like a new tax.

The Better Way statement also argues that there is an imbalance in the tax treatment of imports and exports that the BAT must remedy. “In the absence of border adjustments,” it states, “exports from the United States implicitly bear the cost of the U.S. income tax, while imports do not bear any federal income tax cost. This amounts to a self-imposed unilateral penalty on American exports and a self-imposed unilateral subsidy for U.S. imports.”

Ryan strongly supports the tax. Chip Somodevilla/Getty Images

But all other countries impose this “implicit cost” on exports through their own corporate income tax. And since the Better Way would slash America’s top rate to 20%, this implicit cost would finally become competitive with that of other nations.

Some supporters of the BAT like it precisely because it would help exports and penalize imports. The mercantilist view of economics implicit in that aim was discredited in Adam Smith’s 1776 treatise, The Wealth of Nations. And apart from the massive dislocations that will occur if imports shrink, this calls into question whether the projected $100 billion a year in revenue is realistic. As Alan Greenspan once wisely said, “Whatever you tax, you get less of.”

Then again, whether we really will get fewer imports depends a lot on the exchange value of the dollar. Other supporters of the BAT predict that the dollar will respond by appreciating against other currencies, conforming to the dictates of textbook fundamentals. If the dollar appreciates enough, the advantage to exporters and disadvantage to importers will be nullified. Without getting into the technicalities of how all this would work, we concede that it is all quite possible.

But as currency analysts and traders can tell you, exchange rates are subject to all kinds of forces and can spend long periods flouting textbook fundamentals. So whether the dollar will really strengthen in response to the BAT is anyone’s guess. But even if it does, a much stronger greenback would bring other disruptions. American investors with holdings denominated in foreign currencies would take a huge hit. And America’s tourist industries, which are already hurting from what the Los Angeles Times has called a “Trump slump,” would be hurt even more, as the cost of traveling to the States jumps.

There are other questions. Would the World Trade Organization challenge the BAT? Might our trading partners respond in ways that would be unfavorable to us? The border adjustment tax is an experiment in Rube Goldberg economics that the U.S. can do without.

SINCE REVENUE NEUTRALITY is the goal of the Better Way package, what about making up for the $100 billion a year in revenue that the border adjustment tax is supposed to generate?

Whether this tax really will raise as much as $100 billion depends on how imports and exports respond, which is hard to predict. Also, the reduction in the corporate income tax would probably be revenue-enhancing and could generate more than $50 billion in annual revenue.

The president has declared that “anytime I hear border adjustment, I don’t love it” and has voiced concern that it’s overly complicated. Michael Reynolds/Getty Images

We note that the full title of the House Republican plan is “A Better Way: Our Vision for a Confident America,” which leaves room for a vision that includes cost-cutting, along with tax-cutting.

It’s actually possible to reduce outlays by as much as $8.6 trillion over the next 10 years, as we pointed out in Barron’s Prescription for U.S. Economic Growth” (Dec. 24, 2016).

That discussion revealed much low-hanging fruit. For example, the Medicare system is rife with “improper payments,” which Medicare itself estimates at 11% of its spending in 2016. That’s probably a low estimate, because those who get improperly paid tend to keep these payments hidden. Barron’s calculated that if the improper-payment rate could be halved, it would save more than $400 billion over 10 years.

That would contribute $40 billion a year to the $100 billion shortfall from forgoing the BAT. To that we add $65 billion, and perhaps as much as $100 billion, by eliminating corporate welfare.

The Better Way statement properly criticizes the tax code for being “littered with hundreds of preferences and subsidies that pick winners and losers” and “direct resources to politically favored interests.” Spending on corporate welfare is another form of subsidy that picks winners and losers and directs funds to politically favored interests.

IN A 2012 PAPER, “Corporate Welfare in the Federal Budget,” the Cato Institute identified nearly $100 billion worth of yearly spending on corporate handouts, broadly defined, that could be ended. At Barron’s request, Cato senior fellow Chris Edwards updated the scoring on just 10 of the institute’s 40 categories of corporate welfare and came up with $66 billion in potential cuts.

High on Edwards’ list: farm subsidy programs, which redistribute taxpayer money to relatively rich agribusinesses and landowners. That the farm industry receives subsidies makes about as much sense as channeling funds to the restaurant industry, which could well be riskier than farming, based on its high failure rate. This form of corporate welfare goes back to the Great Depression of the 1930s. But whatever argument might have been made for it then hardly applies today, with the yearly tab currently at $25 billion.

Also on the corporate welfare list: pork-barrel handouts administered by the Department of Housing and Urban Development, totaling $13 billion, which go under the heading of “community development,” and which distribute funds to such recipients as museums, recreational facilities, and parking lots. Whatever one may think about the worthiness of these projects, they are better left to states and localities.

Another $10 billion could be saved by abolishing the Universal Service Fund, through which the Federal Communications Commission subsidizes telecommunications companies, among others. A creation of the Telecommunications Act of 1996, this attempt to pick winners and losers is more unnecessary than ever in this dynamic and competitive industry.

PRESIDENT TRUMP PROMISED to “drain the swamp” of Washington’s special interests. One route toward that admirable goal would be to cut corporate welfare. Trump should repeat his objections to a border adjustment tax that would favor the interests of some businesses over others. He can help make U.S. corporations great again by weaning them off subsidies and reducing their tax burdens.

http://www.barrons.com/articles/why-the-border-adjustment-tax-should-be-killed-1489814286

Concerns About The ‘Border Adjustable’ Tax Plan From The House GOP, Part I

The Republicans in the House of Representatives, led by Ways & Means Chairman Kevin Brady and Speaker Paul Ryan, have proposed a “Better Way” tax plan that has many very desirable features.

And there are many other provisions that would reduce penalties on work, saving, investment, and entrepreneurship. No, it’s not quite a flat tax, which is the gold standard of tax reform, but it is a very pro-growth initiative worthy of praise.

That being said, there is a feature of the plan that merits closer inspection. The plan would radically change the structure of business taxation by imposing a 20 percent tax on all imports and providing a special exemption for all export-related income. This approach, known as “border adjustability,” is part of the plan to create a “destination-based cash flow tax” (DBCFT).

When I spoke about the Better Way plan at the Heritage Foundation last month, I highlighted the good features of the plan in the first few minutes of my brief remarks, but raised my concerns about the DBCFT in my final few minutes.

Allow me to elaborate on those comments with five specific worries about the proposal.

Concern #1: Is the DBCFT protectionist?

It certainly sounds protectionist. Here’s how the Financial Times described the plan.

The border tax adjustment would work by denying US companies their current ability to deduct import costs from their taxable income, meaning companies selling imported products would effectively be taxed on the full value of the sale rather than just the profit. Export revenues, meanwhile, would be excluded from company tax bases, giving net exporters the equivalent of a subsidy that would make them big beneficiaries of the change.

Charles Lane of the Washington Post explains how it works.

…the DBCFT would impose a flat 20 percent tax only on earnings from sales of output consumed within the United States… It gets complicated, but the upshot is that the cost of imported supplies would no longer be deductible from taxable income, while all revenue from exports would be. This would be a huge incentive to import less and export more, significant change indeed for an economy deeply dependent on global supply chains.

That certainly sounds protectionist as well. A tax on imports and a special exemption for exports.

But proponents say there’s no protectionism because the tax is neutral if the benchmark is where products are consumed rather than where income is earned. Moreover, they claim exchange rates will adjust to offset the impact of the tax changes. Here’s how Lane explains the issue.

…the greenback would have to rise 25 percent to offset what would be a new 20 percent tax on imported inputs — propelling the U.S. currency to its highest level on record. The international consequences of that are unforeseeable, but unlikely to be totally benign for everyone. Bear in mind that many other countries — China comes to mind — can and will manipulate exchange rates to protect their own short-term interests.

For what it’s worth, I accept the argument that the dollar will rise in value, thus blunting the protectionist impact of border adjustability. It would remain to be seen, though, how quickly or how completely the value of the dollar would change.

Concern #2: Is the DBCFT compliant with WTO obligations?

The United States is part of the World Trade Organization (WTO) and we have ratified various agreements designed to liberalize world trade. This is great for the global economy, but it might not be good news for the Better Way plan because WTO rules only allow border adjustability for indirect taxes like a credit-invoice value-added tax. The DBCFT, by contrast, is a version of a corporate income tax, which is a direct tax.

The column by Charles Lane explains one of the specific problems.

Trading partners could also challenge the GOP plan as a discriminatory subsidy at the World Trade Organization. That’s because it includes a deduction for wages paid by U.S.-located firms, importers and exporters alike — a break that would obviously not be available to competitors abroad.

Advocates argue that the DBCFT is a consumption-base tax, like a VAT. And since credit-invoice VATs are border adjustable, they assert their plan also should get the same treatment. But the WTO rules say that only “indirect” taxes are eligible for border adjustability. The New York Times reports that the WTO therefore would almost surely reject the plan.

Michael Graetz, a tax expert at the Columbia Law School, said he doubted that argument would prevail in Geneva. “W.T.O. lawyers do not take the view that things that look the same economically are acceptable,” Mr. Graetz said.

A story in the Wall Street Journal considers the potential for an adverse ruling from the World Trade Organization.

Even though it’s economically similar to, and probably better than, the value-added taxes (VATs) many other countries use, it may be illegal under World Trade Organization rules. An international clash over taxes is something the world can ill afford when protectionist sentiment is already running high. …The controversy is over whether border adjustability discriminates against trade partners. …the WTO operates not according to economics but trade treaties, which generally treat tax exemptions on exports as illegal unless they are consumption taxes, such as the VAT. …the U.S. has lost similar disputes before. In 1971 it introduced a tax break for exporters that, despite several revamps, the WTO ruled illegal in 2002.

And a Washington Post editorial is similarly concerned.

Republicans are going to have to figure out how to make such a huge de facto shift in the U.S. tax treatment of imports compliant with international trade law. In its current iteration, the proposal would allow corporations to deduct the costs of wages paid within this country — a nice reward for hiring Americans and paying them well, which for complex reasons could be construed as a discriminatory subsidy under existing World Trade Organization doctrine.

Concern #3: Is the DBCFT a stepping stone to a VAT?

If the plan is adopted, it will be challenged. And if it is challenged, it presumably will be rejected by the WTO. At that point, we would be in uncharted territory.

Would that force the folks in Washington to entirely rewrite the tax system? Would they be more surgical and just repeal border adjustability? Would they ignore the WTO, which would give other nations the right to impose tariffs on American exports?

One worrisome option is that they might simply turn the DBCFT into a subtraction-method value-added tax (VAT) by tweaking the law so that employers no longer could deduct  expenses for labor compensation. This change would be seen as more likely to get approval from the WTO since credit-invoice VATs are border adjustable.

This possibility is already being discussed. The Wall Street Journal story about the WTO issue points out that there is a relatively simple way of making the DBCFT fit within America’s trade obligations, and that’s to turn it into a value-added tax.

One way to avoid such a confrontation would be to revise the cash flow tax to make it a de facto VAT.

The Economistshares this assessment.

…unless America switches to a full-fledged VAT, border adjustability may also be judged to breach World Trade Organisation rules.

Steve Forbes is blunt about this possibility.

One tax initiative that should be strangled before it sees the light of day is to give a tax rebate to exporters and to impose taxes on imports. …It’s a bad idea. Why do we want to make American consumers pay more for products while subsidizing foreign buyers? It also could put us on the slippery slope to our own VAT.

And that’s not a slope we want to be on. Unless the income tax is fully repealed (sadly not an option), a VAT would be a recipe for turning America into a European-style welfare state.

Concern #4: Does the DBCFT undermine tax competition and give politicians more ability to increase tax burdens?

Alan Auerbach, an academic from California who previously was an adviser for John Kerry and also worked at the Joint Committee on Taxation when Democrats controlled Capitol Hill, is the main advocate of a DBCFT (the New York Timeswrote that he is the “principal intellectual champion” of the idea).

He wrote a paper several years ago for the Center for American Progress, a hard-left group closely associated with Hillary Clinton. Auerbach explicitly argued that this new tax scheme is good because politicians no longer would feel any pressure to lower tax rates.

This…alternative treatment of international transactions that would relieve the international pressure to reduce rates while attracting foreign business activity to the United States. It addresses concerns about the effect of rising international competition for multinational business operations on the sustainability of the current corporate tax system. With rising international capital flows, multinational corporations, and cross-border investment, countries’ tax rates and tax structures are of increasing importance. Indeed, part of the explanation for declining corporate tax rates abroad is competition among countries for business activity. …my proposed reforms…builds on the [Obama] Administration’s approach…and alleviates the pressure to reduce the corporate tax rate.

This is very troubling. Tax competition is a very valuable liberalizing force in the world economy. It partially offsets the public choice pressures on politicians to over-tax and over-spend. If governments no longer had to worry that taxable activity could escape across national borders, they would boost tax rates and engage in more class warfare.

Also, it’s worth noting that the so-called Marketplace Fairness Act, which is designed to undermine tax competition and create a sales tax cartel among American states, uses the same “destination-based” model as the DBCFT.

Concern #5: Does the DBCFT create needless conflict and division among supporters of tax reform?

As I pointed out in my remarks at the Heritage Foundation, there’s normally near-unanimous support from the business community for pro-growth tax reforms.

That’s not the case with the DBCFT.

The Washington Examiner reports on the divisions in the business community.

Major retailers are skeptical of the House Republican plan to revamp the tax code, fearing that the GOP call to border-adjust corporate taxes could harm them even if they win a significant cut to their tax rate. As a result, retailers, oil refiners and other industries that import goods to sell in the U.S. could provide a major obstacle to the Republican effort to reform taxes. …The effect of the border adjustment, retailers fear, would be that the goods they import to sell to consumers would face a 20 percent mark-up, one that would force retailers like Walmart, the Home Depot and Sears…to raise prices and lose customers.

A story from CNBC highlights why retailers are so concerned.

…retailers are nervous. Very nervous. …About 95 percent of clothing and shoes sold in the U.S. are manufactured overseas, which means imports make up a vast majority of many U.S. retailers’ merchandise. …If the GOP plan were adopted as it’s currently laid out, Gap pays 20 percent corporate tax on the $5 profit from the sweater, or $1. Plus, 20 percent tax on the $80 cost it paid for that sweater from the overseas supplier, or $16. That means the tax goes from $1.75 to $17 for that sweater, more than three times the profit on that sweater. Talk about a hit to margins. …Retailers certainly aren’t taking a lot of comfort in the economic theory of dollar appreciation. …the tax reform plan will dilute specialty retailers’ earnings by an average of 132 percent. …Athletic manufacturers could take a 40 percent earnings hit… Gap, Carter’s , Urban Outfitters , Fossil and Under Armour are most at risk under the plan.

And here’s another article from the Washington Examiner that explains why folks in the energy industry are concerned.

…the border adjustment would raise costs for refiners that import oil. In turn, that could raise prices for consumers. The border adjustment would amount to a $10-a-barrel tax on imported crude oil, raising costs for drivers buying gasoline by up to 25 cents a gallon, the energy analyst group PIRA Energy Group warned this week. The report warned of a “potential huge impact across the petroleum industry,” even while noting that the tax reform plan faces many obstacles to passage.

Concern #6: What happens when other nations adopt their versions of a DBCFT?

Advocates of the DBCFT plausibly argue that if the WTO somehow approves their plan, then other nations will almost certainly copy the new American system.

That will be a significant blow to tax competition, which would be very bad news for the global economy.

But is also has negative implications for the fight to protect America from a VAT. The main selling point for advocates of the DBCFT is that we need a border-adjustable tax to offset the supposed advantage that other nations have because of border-adjustable VATs (both Paul Krugman and I agree that this is nonsense, but it still manages to be persuasive for some people).

So what happens when other nations turn their corporate income taxes into DBCFTs, which presumably will happen? We’re than back where we started and misguided people will say we need our own VAT to balance out the VATs in other nations.

The bottom line is that a DBCFT is not the answer to America’s wretched business tax system. There are simply too many risks associated with this proposal. I’ll elaborate tomorrow in Part II and also explain some good ways of pursuing tax reform without a DBCFT.

https://www.forbes.com/sites/danielmitchell/2017/01/03/concerns-about-theborder-adjustable-tax-plan-from-the-house-gop-part-i/2/#1edd1775d9e8

MAR 27,2017

Chairman Brady Acknowledges “Valid Concerns” About the Border Adjustment Tax Harming U.S. Businesses

Post by Freedom Partners

After months of insisting that a trillion-dollar Border Adjustment Tax (BAT) on American consumers is the best and only way to achieve pro-growth tax reform without adding to the deficit, Ways and Means Chairman Kevin Brady acknowledged that importers fearful of the new tax have “valid concerns.”

The proposed BAT from House Republicans would mean a new 20 percent tax on everything imported into the U.S., raising up to $1.2 trillion of new government revenue in the form of higher prices, shouldered by consumers. In effect, the regressive tax could undercut positive economic outcomes from lower rates and a simplified tax code through tax reform.

According to Chairman Brady, House Republicans need to “make sure that we allay the valid concerns of those that are importing today,” CNBC reports.

 Freedom Partners Vice President of Policy Nathan Nascimento issued the following statement:

“Some of the ‘valid concerns’ that Chairman Brady acknowledges include a devastating new trillion-dollar tax hike, higher costs on everyday goods, fewer jobs, and less economic opportunity. We hope to work with the administration and Congress to get pro-growth tax reform done, but a 20 percent tax hike on all imports would only undermine the point of tax reform – which is to provide much-needed relief for taxpayers and the economy. A massive tax hike on all imports is bad policy, and Americans deserve a better plan that can unite lawmakers in both the House and Senate behind comprehensive tax reform.”

U.S. manufacturers would be threatened by increased complexity and disruptions to supply chains, resulting in increased costs, fewer sales, and job loss. “Anytime I hear border adjustment, I don’t love it … And it’s too complicated,” President Donald Trump told The Wall Street Journal earlier this year.

Americans for Prosperity has already identified more than $2 trillion in wasteful spending, unnecessary programs, and corporate welfare that ought to be eliminated before any new tax on U.S. consumers. Freedom Partners and its coalition allies support the efforts of Congress and the administration to bring comprehensive tax reform to reality in a way that protects all Americans from a massive tax hike.

READ: Border Adjustment Tax Myth vs. Fact

U.S. Businesses Facing Massive Tax Increases Under A Border-Adjusted Tax System Have “Valid Concerns”

Wall Street Journal: “Some Retailers And Other Big Importers … Warn Of Tax Bills That Would Exceed Profits, Forcing Them To Pass Costs To Consumers. ”Cody Lusk, president of the American International Automobile Dealers Association, says his members are shocked that a Republican Congress is proposing a 20% tax on imports.” (Richard Rubin, “GOP Plan To Overhaul Tax Code Gets Held Up At The Border,” Wall Street Journal, 2/7/17)

LUSK: “We view this as a very, very serious potential blow to the auto sector and the economy.” (Richard Rubin, “GOP Plan To Overhaul Tax Code Gets Held Up At The Border,” Wall Street Journal, 2/7/17)

Financial Times: Border Tax Threatens To Devastate Importers Through Soaring Tax Bills. “Yet for Mr. Woldenberg the hope has turned to horror. Republicans are still promising the most sweeping changes since the Reagan reforms of 1986. But the only firm proposal on the table — from the House of Representatives — threatens to devastate his 150-person business because it includes a 20 per cent tax on imports … The problem for Mr. Woldenberg is that his goods come from China — 98 per cent of the products he sells in the US are imported. US factories could not produce them with the same low costs and specialized skills, he says. So he would have no choice but to pay the import levy. He estimates it would send his tax bill soaring to 165 per cent of earnings.” (Barney Jopson, Sam Fleming & Shawn Donnan, “Trump And The Tax Plan Threatening To Split Corporate America,” Financial Times, 2/13/17)

RICK WOLDENBERG: “To preserve cash flow I [would have to] raise my prices by a third, expect volume to go down by 40 per cent, and fire one out of five people.” (Barney Jopson, Sam Fleming & Shawn Donnan, “Trump And The Tax Plan Threatening To Split Corporate America,” Financial Times, 2/13/17)

RBC Capital Markets: Major Retailers Would Face Tax Bills That Exceed Their Operating Profits. “Major retailers like Wal-Mart, Best Buy, Costco and Dollar Tree would face tax bills that exceed their operating profits under House Republicans’ plans to create a ‘border adjustable’ business tax, RBC Capital Markets said. The investment bank sided with retailers in a debate over the proposal, saying in a research note it would have a ‘seriously adverse’ impact on them. ‘If the US moves to a border-adjusted tax system, most of our retailers would be forced to raise prices (and revenues) or meaningfully change their import/domestic sourcing mix, or their earnings would be materially reduced,’ it said.” (Brian Faler, “RBC Capital Markets: GOP Border-Adjustment Plan Bad For Retailers,” POLITICO Pro, 12/12/16)

POLITICO: “Retailers Fear Massive Tax Increases Under House Republican Tax Plan” “Many retailers fear that, even with Republicans promising to slash the corporate tax rate, they will still face big tax increases that in some cases will exceed their profits. On high alert over the proposal, retailers have begun a big lobbying campaign on the Hill, warning lawmakers and their aides that any tax hikes will get passed on to their constituents in the form of higher prices.” (Brian Faler, “Retailers Fear Massive Tax Increases Under House Republican Tax Plan,” POLITICO, 11/23/16)

The National Retail Federation Warns That A Border Tax Could Shut Businesses Down Completely. “‘Our members have told us that the import tax could be as high as five times their profits,’ said David French, chief lobbyist for the National Retail Federation. ‘I don’t know how viable some retailers would be in the face of this import tax.’” (Brian Faler, “Retailers Fear Massive Tax Increases Under House Republican Tax Plan,” POLITICO, 11/23/16)

POLITICO Pro: “Some Of The Biggest Losers Would Be Retailers Like Walmart, Best Buy And Home Depot That Import Massive Amounts Of Goods And Materials On Which They Would Suddenly Have To Pay Taxes.” “The border adjustment plan would affect individual companies differently, depending in part on how much they import and export. Some of the biggest losers would be retailers like Walmart, Best Buy and Home Depot that import massive amounts of goods and materials on which they would suddenly have to pay taxes.” (Brian Faler, “Some Companies May Never Pay Taxes Under Border-Adjustment Tax Plan,” POLITICO Pro, 1/9/17)

Axios: Cowen Research Released A Study Highlighting Some Of The Big Name Companies That Will Be Hurt By The Border Adjustments High Tax Hikes. “Cowen Research published a report Thursday that estimates the effect of the reform plan, and other planned measures, like eliminating the deductibility of interest and a headline corporate tax cut, on different industries and companies. Here are some of the big-name firms Cowen says will be hurt by reform: 1. Apple: The world’s largest company would see its tax bill jump because it won’t be able to deduct the expense of assembly abroad. 2. Constellation Brands: The largest beer importer in America will not be able to expense the cost of goods it brings across the border, like its Corona brand. 3. Gap: Between 50% and 80% of the retailer’s cost of the goods its sells comes from abroad. Walmart: 4. Walmart’s low margins means that it may not be able to survive a tax hike on imported goods without raising prices. 5. Target: Will suffer from the same conundrum as Walmart, but will be worse off since less of its revenue comes from domestically-sourced groceries. J.C. Penney: The department store has high debt loads, and interest on debt will not be deductible under the Republican plan. (Christopher Matthews, “These Companies Will Be Hit Hardest By GOP Tax Reform,” Axios, 1/27/17)

Border Adjustment Tax Would Result In Higher Costs For Hard-Working Families

Christian Science Monitor: Border Tax Could Raise Car Prices By Thousands Of Dollars. “Michigan-based Baum & Associates says that a border tax–one that applies not only to vehicles imported from factories abroad but also to foreign-made vehicle parts–could increase sticker prices by as much as $17,000 … Most increases would be smaller, but still very substantial. Volvo, for example, would need to up its prices by more than $7,500 to accommodate a border tax. Volkswagen wouldn’t be far behind, with increases of around $6,800. Even Detroit brands would see price upticks: Ford’s would climb $285, and General Motors’ would rise by nearly $1,000. Fiat Chrysler would have to boost prices by closer to $2,000.” (Richard Read, “How Trump’s Border Tax Could Raise Car Prices By Thousands Of Dollars,Christian Science Monitor, 2/8/17)

Auto Sales Would Plummet Under A Border Adjustment Tax. “A report from UBS Securities says that the higher car prices would slash U.S. auto sales by about 2 million vehicles per year. That would more than erase the increased capacity and almost certainly result in layoffs.” (Richard Read, “How Trump’s Border Tax Could Raise Car Prices By Thousands Of Dollars,Christian Science Monitor, 2/8/17)

More Than A Hundred American Businesses Are Opposing The Republican Border Tax: “Don’t Make Hard-Working Families Pay More On Essential Products.” “Nike, Rite Aid, The Gap, Best Buy and Abercrombie & Fitch have joined a new advocacy group aimed at killing House Republicans’ plans to create a border adjustable business tax. They are some of the more than 100 companies and trade associations behind Americans for Affordable Products, an organization launched today that is pushing lawmakers to dump a plan to begin taxing imports as part of a broader tax-code rewrite. The groups, which rely on imports, fear the House Republican plan will mean huge tax increase even as Republicans promise to simultaneously slash the corporate tax rate … Other well-known companies joining the effort include Target, Walmart, QVC, Petco, AutoZone, Macy’s and Levi Strauss.” (Brian Faler, “Border Adjustment Tax Opponents Launch New Group Targeting GOP Proposal,” Politico, 2/01/17)

“A Sweeping Tax Reform Proposal Meant To Boost U.S. Manufacturing Faces Mounting Pressure From Industries That Rely Heavily On Imported Goods …” “A sweeping tax reform proposal meant to boost U.S. manufacturing faces mounting pressure from industries that rely heavily on imported goods as President-elect Donald Trump and congressional Republicans work to finalize new tax legislation. As Republican members of the House of Representatives tax committee prepared to discuss tax reform this week, the panel received a letter from 81 industry groups rejecting the proposal known as ‘border adjustability.’ A lynchpin of the House Republican ‘Better Way’ agenda and viewed favorably by Trump’s team, the policy would help manufacturers by exempting export revenues from corporate taxes. But it would tax imports, hitting import-dependent industries.” (David Morgan, “U.S. Tax Reform Proposal On Border Trade Faces Growing Opposition,” Reuters, 12/15/16)

“Companies That Rely On Global Supply Chains Would Face Huge Business Challenges Caused By Increased Taxes And Increased Cost Of Goods.” “In a Dec. 13 letter to House Ways and Means Chairman Kevin Brady and incoming top Democrat Richard Neal, groups representing the auto and retailing industries, among others, said: ‘Companies that rely on global supply chains would face huge business challenges caused by increased taxes and increased cost of goods.’ They warned of ‘reductions in employment, reduced capital investments and higher prices for consumers’ as potential consequences.” (David Morgan, “U.S. Tax Reform Proposal On Border Trade Faces Growing Opposition,” Reuters, 12/15/16)

CNBC: Coach CEO Victor Luis Acknowledged That “Any Border Tax Will Lead To Higher Prices For The Consumer.” “If we see this border adjustment in an economy where 70 percent of GDP is driven by consumption that is driven on imports, any border tax will lead to higher prices for the consumer … That’s just a reality that we’ll have to face if it comes to that.” (Rachel Cao, “Coach CEO: Any Border Tax Will Lead To Higher Prices For The Consumer,” CNBC, 1/31/17)

National Retail Federation: The Border Adjustment Tax Could Cost The Average Family $1,700 In Just The First Year. “The imposition of a ‘border adjustment tax,’ a key provision of a pending House tax reform proposal, would end up seriously harming U.S. consumers. NRF analysis indicates that this plan could cost the average family $1,700 in the first year alone if the border adjustment provision is enacted. While economic theory suggests that trade flow of imports and exports would balance out over the long run due to offsetting exchange rate and price adjustments, there is no consensus as to the degree or the timing of these adjustments. In the near term, consumers would be left to pick up the significant tab while hoping that the economic theory proves out.” (Mark Mathews, “Border Adjustment Tax Would Cost American Households Up To $1,700 In First Year Alone,” National Retail Federation, 2/3/17)

NRF: Annual Family’s Savings Could Be Wiped Out By Nearly A Third. “For the average family, 27 percent of their savings (income after taxes and expenditures) could evaporate with the cost increases caused by the border tax.” (Mark Mathews, “Border Adjustment Tax Would Cost American Households Up To $1,700 In First Year Alone,” National Retail Federation, 2/3/17)

  • “Unmarried adults without children currently have only $443 left over annually after taxes and expenditures. If the border adjustment tax were enacted, they could see an $836 increase in costs — nearly 200 percent higher than their annual savings.”
  • “One-parent households, which are already in the red, could see an additional $1,000 added to their debt burden as they do what they can to make ends meet. Their apparel and footwear bills would increase by $271
  • “The average family (married with children) could see their apparel costs (including shoes) increase by $437 a year.”
  • “Single people could see their annual gasoline bills rise by $189, a whopping 43 percent of their annual average savings.”
  • “Married couples with children could see their annual gasoline bill could increase by over $400.”

CNBC: “The Republicans’ Plan To Enact A Border Adjustment Tax Will Leave Consumers Digging Deeper Into Their Pockets,” Increasing The Price Of Everyday Goods Like Clothes And Shoes By 20 Percent. “It will force consumers to pay as much as 20 percent more for the products they need. Gasoline is estimated to go up as much as 35 cents a gallon,’ said ‘Americans for Affordable Products’ advisor Brian Dodge … ‘Common household goods, apparel, things that people count on every day, pajamas, will cost more and really just so a certain, select group of corporations can avoid paying taxes forever. We think that’s bad policy…” (Michelle Fox, “Consumers Could See 20% Price Hike With Border Adjustment Tax, Retail Group Says,” CNBC, 2//17)

Economists And Analysts Weigh-In Against Border Adjustments

Dan Mitchell, Cato Institute: “I’ve Never Understood Why Politicians Think It’s A Good Idea To Have Higher Taxes On What Americans Consume And Lower Taxes On What Foreigners Consume.” (Dan Mitchell, “A Remarkably Good And Reasonably Bold Tax Reform Plan From House Republicans,” International Liberty, 6/25/16)

President Of The New York Fed Bill Dudley: “… There Could Be A Lot Of Unintended Consequences.” “Another prominent critic of a ‘border adjustment tax’ emerged Tuesday: the president of the New York Federal Reserve. Bill Dudley was asked by Macy’s CEO Terry Lundgren at a meeting of the National Retail Federation trade group what he thinks of the idea of a border adjustment tax, which involves taxing imports at 20 percent, while making U.S. exports tax-free. … ‘I think that it will lead to a lot of changes in the value of the dollar, the price of imported goods in the U.S., and I’m not sure that would all happen very smoothly,’ Dudley said. ‘I also think there could be a lot of unintended consequences.’” (Michelle Caruso-Cabrera, “NY Fed’s Dudley Sees ‘A Lot Of Unintended Consequences’ From Border-Tax Plan,” CNBC, 1/17/17)

Stephen Moore, Heritage Foundation: Border Tax Unlikely To Be Enacted. “A Heritage Foundation economist who advised President Trump’s campaign said he doubts a proposal from House Republicans to tax imports and exempt exports will gain traction.” (Naomi Jagoda, “Trump Campaign Adviser: Border Tax Unlikely To Be Enacted,” The Hill, 2/7/17)

MOORE: “I think it’s a distraction.” (Naomi Jagoda, “Trump Campaign Adviser: Border Tax Unlikely To Be Enacted,” The Hill, 2/7/17)

Steve Forbes: Border Adjustment Amounts To “Sneaky, Anti-Consumer Tax.” “This levy will cost American consumers at least a trillion dollars over the next ten years …  Prices for everyday items, such as socks, shoes and household appliances, will go up. So will tech devices like the iPad, not to mention automobiles and trucks. Gasoline? Millions of Americans will pay an additional 30 cents or more per gallon at the pump. Lower-income and struggling middle-class Americans will get hit the hardest.” (Steve Forbes, “OMG! House Republicans Are Preparing To Hit Consumers With A Horrible New Tax That Will Harm Trump And Hurt The Economy,” Forbes, 1/11/17)

POLITICO Pro: “Trump Adviser Larry Kudlow Slams Border-Adjustment Tax Plans.” “An economic adviser to President-elect Donald Trump slammed plans to create a so-called border adjustable business tax, and predicted it could kill efforts to overhaul the tax code. The House Republican proposal is overly complicated …  said Larry Kudlow, who helped write Trump’s tax-reform plans.” (Brian Faler, “Trump Adviser Larry Kudlow Slams Border-Adjustment Tax Plans,” POLITICO Pro, 1/12/17)

KUDLOW: “That is an exercise in government planning and complexity that I believe is doomed to fail … I think the whole corporate tax reform, which is the most important pro-growth measure, will go down the drain over this … There’s a problem that exists, but this is not the right solution …” (Brian Faler, “Trump Adviser Larry Kudlow Slams Border-Adjustment Tax Plans,” POLITICO Pro, 1/12/17)

KUDLOW: “GOP’s Border Adjustment Tax Is ‘Voodoo Economics” “President-elect Donald Trump is correct to criticize the House Republican plan to tax cross-border trade … said Larry Kudlow, who served as a senior economic adviser to Trump’s campaign…’I hate to say this, but it’s ‘voodoo economics’” (R. Williams, “Larry Kudlow: GOP’s Border Adjustment Tax Is ‘Voodoo Economics,” Newsmax, 1/17/17)

https://freedompartners.org/latest-news/chairman-brady-acknowledges-valid-concerns-border-adjustment-tax-harming-u-s-businesses/

Concerns about the”Border Adjustable” Tax Plan from the House GOP, Part II

I wrote yesterday to praise the Better Way tax plan put forth by House Republicans, but I added a very important caveat: The “destination-based” nature of the revised corporate income tax could be a poison pill for reform.

I listed five concerns about a so-called destination-based cash flow tax (DBCFT), most notably my concerns that it would undermine tax competition (folks on the left think it creates a “race to the bottom” when governments have to compete with each other) and also that it could (because of international trade treaties) be an inadvertent stepping stone for a government-expanding value-added tax.

Brian Garst of the Center for Freedom and Prosperity has just authored a new study on the DBCFT. Here’s his summary description of the tax.

The DBCFT would be a new type of corporate income tax that disallows any deductions for imports while also exempting export-related revenue from taxation. This mercantilist system is based on the same “destination” principle as European value-added taxes, which means that it is explicitly designed to preclude tax competition.

Since CF&P was created to protect and promote tax competition, you won’t be surprised to learn that the DBCFT’s anti-tax competition structure is a primary objection to this new tax.

First, the DBCFT is likely to grow government in the long-run due to its weakening of international tax competition and the loss of its disciplinary impact on political behavior. … Tax competition works because assets are mobile. This provides pressure on politicians to keep rates from climbing too high. When the tax base shifts heavily toward immobile economic activity, such competition is dramatically weakened. This is cited as a benefit of the tax by those seeking higher and more progressive rates. …Alan Auerbach, touts that the DBCFT “alleviates the pressure to reduce the corporate tax rate,” and that it would “alter fundamentally the terms of international tax competition.” This raises the obvious question—would those businesses and economists that favor the DBCFT at a 20% rate be so supportive at a higher rate?

Brian also shares my concern that the plan may morph into a VAT if the WTO ultimately decides that is violates trade rules.

Second, the DBCFT almost certainly violates World Trade Organization commitments. …Unfortunately, it is quite possible that lawmakers will try to “fix” the tax by making it into an actual value-added tax rather than something that is merely based on the same anti-tax competition principles as European-style VATs. …the close similarity of the VAT and the DBCFT is worrisome… Before VATs were widely adopted, European nations featured similar levels of government spending as the United States… Feeding at least in part off the easy revenue generate by their VATs, European nations grew much more drastically over the last half century than the United States and now feature higher burdens of government spending. The lack of a VAT-like revenue engine in the U.S. constrained efforts to put the United States on a similar trajectory as European nations.

And if you’re wondering why a VAT would be a bad idea, here’s a chart from Brian’s paper showing how the burden of government spending in Europe increased once that tax was imposed.

In the new report, Brian elaborates on the downsides of a VAT.

If the DBCFT turns into a subtraction-method VAT, its costs would be further hidden from taxpayers. Workers would not easily understand that their employers were paying a big VAT withholding tax (in addition to withholding for income tax). This makes it easier for politicians to raise rates in the future. …Keep in mind that European nations have corporate income tax systems in addition to their onerous VAT regimes.

And he points out that those who support the DBCFT for protectionist reasons will be disappointed at the final outcome.

…if other nations were to follow suit and adopt a destination-based system as proponents suggest, it will mean more taxes on U.S. exports. Due to the resulting decline in competitive downward pressure on tax rates, the long-run result would be higher tax burdens across the board and a worse global economic environment.

Brian concludes with some advice for Republicans.

Lawmakers should always consider what is likely to happen once the other side eventually returns to power, especially when they embark upon politically risky endeavors… In this case, left-leaning politicians would see the DBCFT not as something to be undone, but as a jumping off point for new and higher taxes. A highly probable outcome is that the United States’ corporate tax environment becomes more like that of Europe, consisting of both consumption and income taxes. The long-run consequences will thus be the opposite of what today’s lawmakers hope to achieve. Instead of a less destructive tax code, the eventual result could be bigger government, higher taxes, and slower economic growth.

Amen.

My concern with the DBCFT is partly based on theoretical objections, but what really motivates me is that I don’t want to accidentally or inadvertently help statists expand the size and scope of government. And that will happen if we undermine tax competition and/or set in motion events that could lead to a value-added tax.

Let’s close with three hopefully helpful observations.

Helpful Reminder #1: Congressional supporters want a destination-based system as a “pay for” to help finance pro-growth tax reforms, but they should keep in mind that leftists want a destination-based system for bad reasons.

Based on dozens of conversations, I think it’s fair to say that the supporters of the Better Way plan don’t have strong feelings for destination-based taxation as an economic principle. Instead, they simply chose that approach because it is projected to generate $1.2 trillion of revenue and they want to use that money to “pay for” the good tax cuts in the overall plan.

That’s a legitimate choice. But they also should keep in mind why other people prefer that approach. Folks on the left want a destination-based tax system because they don’t like tax competition. They understand that tax competition restrains the ability of governments to over-tax and over-spend. Governments in Europe chose destination-based value-added taxes to prevent consumers from being able to buy goods and services where VAT rates are lower. In other words, to neuter tax competition. Some state governments with high sales taxes in the United States are pushing a destination-based system for sales taxes because they want to hinder consumers from buying goods and services from states with low (or no) sales taxes. Again, their goal is to cripple tax competition.

Something else to keep in mind is that leftist supporters of the DBCFT also presumably see the plan as being a big step toward achieving a value-added tax, which they support as the most effective way of enabling bigger government in the United States.

Helpful Reminder #2: Choosing the right tax base (i.e., taxing income only one time, otherwise known as a consumption-base system) does not require choosing a destination-based approach.

The proponents of the Better Way plan want a “consumption-base” tax. This is a worthy goal. After all, that principle means a system where economic activity is taxed only one time. But that choice is completely independent of the decision whether the tax system should be “origin-based” or “destination-based.”

The gold standard of tax reform has always been the Hall-Rabushka flat tax, which is a consumption-base tax because there is no double taxation of income that is saved and invested. It also is an “origin-based” tax because economic activity is taxed (only one time!) where income is earned rather than where income is consumed.

The bottom line is that you can have the right tax base with either an origin-based system or a destination-based system.

Helpful Reminder #3: The good reforms of the Better Way plan can be achieved without the downside risks of a destination-based tax system.

The Tax Foundation, even in rare instances when I disagree with its conclusions, always does very good work. And they are the go-to place for estimates of how policy changes will affect tax receipts and the economy. Here is a chart with their estimates of the revenue impact of various changes to business taxation in the Better Way plan. As you can see, the switch to a destination-based system (“border adjustment”) pulls in about $1.2 trillion over 10 years. And you can also see all the good reforms (expensing, rate reduction, etc) that are being financed with the various “pay fors” in the plan.

I am constantly asked how the numbers can work if “border adjustment” is removed from the plan. That’s a very fair question.

But there are lots of potential answers, including:

  • Make a virtue out of necessity by reducing government revenue by $1.2 trillion.
  • Reduce the growth of government spending to generate offsetting savings.
  • Find other “pay fors” in the tax code (my first choice would be the healthcare exclusion).
  • Reduce the size of the tax cuts in the Better Way plan by $1.2 trillion.

I’m not pretending that any of these options are politically easy. If they were, the drafters of the Better Way plan probably would have picked them already. But I am suggesting that any of those options would be better than adopting a destination-based system for business taxation.

Ultimately, the debate over the DBCFT is about how different people assess political risks. House Republicans advocating the plan want good things, and they obviously think the downside risks in the future are outweighed by the ability to finance a larger level of good tax reforms today. Skeptics appreciate that those proponents want good policy, but we worry about the long-run consequences of changes that may (especially when the left sooner or late regains control) enable bigger government.

P.S. This is not the first time that advocates of good policy have bickered with each other. During the 2016 nomination battle, Rand Paul and Ted Cruz proposed tax reform plans that fixed many of the bad problems in the tax code. But they financed some of those changes by including value-added taxes in their plans. In the short run, either plan would have been much better than the current system. But I was critical because I worried that the inclusion of VATs would eventually give statists a tool to further increase the burden of government.

https://www.cato.org/blog/concerns-about-theborder-adjustable-tax-plan-house-gop-part-ii

THE CORNER THE ONE AND ONLY. Speaker Ryan’s Use of Reporters’ Recorders to Explain His Border Tax Was Cute — But Misleading

Faced with growing opposition to their border-adjustment tax, congressional Republicans are nonetheless on the offensive trying to sell it. I have expressed my many reasons for opposing the tax, including my disbelief that Republicans would support a massive tax increase alongside what is otherwise a pro-growth tax reform. While they oppose tax increases to pay for spending increases in other contexts and usually make the case that spending increases should be paid for by spending cuts, Republicans continue to push for this massive new source of revenue, in spite of the distortions it would introduce.

Until now, supporters of the tax have used many questionable arguments. For instance, they claim we shouldn’t worry about the protectionist aspect of a tax that imposes a 20 percent rate to imports but exempts exports under the hope that the U.S. dollar will adjust fully and quickly. However, there are reasons to believe that while the U.S. currency will adjust, it won’t adjust fully (Federal Reserve Board chairwoman Janet Yellen is only the latest one to stress that point), it won’t adjust as quickly as they claim (especially if the tax is challenged under the World Trade Organization as the Europeans have warned is going to be the case), and it won’t result in unicorns and rainbows.

But the latest misguided statements about the border-adjustment tax comes from House speaker Paul Ryan — who ought to know better. During a press conference last week, he repeated the claim that United States was at a disadvantage because other countries’ exports are exempted from taxes while U.S. goods aren’t. [Ryan] noted that most other countries already border-adjust their taxes and tax goods based on whether they were consumed in their jurisdiction.

That comment is bound to confuse reporters because, as Mr. Ryan must know, no other country border-adjusts their corporate income tax. They border-adjust their Value Added Tax. Conflating the two is misleading, to say the least.

Ryan continued:

The Speaker picked up two reporters’ recorders to give an example of how goods are taxed currently. He suggested one was American-made and the other was Japanese-made. Early on, he dropped one of the recorders, saying “oops” and receiving laughter from the reporters. “Here’s what Japan does when they make this tape recorder: When they send it for export they take the tax off of it, and then it comes to America and it’s not taxed, and it comes through to compete against our good, which was taxed. Theirs was untaxed twice,” Ryan said. “When America makes something, like a tape recorder, we tax it, and then we send it to Japan. As it enters Japan it’s taxed again, to compete against their tape recorder,” he continued. “So we are doing it to ourselves. We are hurting our manufacturing and jobs. We are putting a bias against making things in America in the tax code. . . . That is why we think this is very important. This is good manufacturing policy.”

Oh boy, where do I begin? First, it is true that U.S. companies are at a disadvantage but it is not because of other countries’ tax codes. It is because our corporate-income-tax system has the highest rate of all OECD countries and because, unlike most of our competitors, it taxes U.S. companies’ profits no matter where they are earned in the world. The solution to this disadvantage is to reduce the rates and move to a territorial system. Oh, and by the way, unlike what Ryan and other proponents of a border-adjustment tax would like you to believe, you do not need to move to an expansive destination-based-cash-flow tax to have a territorial tax.

Now let me address the cute tape-recorder example used by the speaker. It is totally misleading because it conflates foreign countries corporate tax and VAT taxes and it paints a picture that is incorrect. For instance, he claims that Japanese exports are exempt from taxes. No, Japanese products exported to the U.S. are exempt from the Japanese VAT but the Japanese company is still paying U.S. corporate tax on its U.S. profits. And you know what? In that sense, the Japanese export is treated exactly like the U.S. goods sold in the U.S. In other words, the playing field is even! I repeat: Japanese goods in the U.S. are taxed like U.S. goods in the U.S.

How about U.S. exports in Japan? Well, it gets hit by the Japanese VAT in Japan and by the Japanese corporate tax but so are Japanese goods sold in Japan. Again, the only disadvantage faced by U.S. companies selling tape recorders abroad comes from the U.S. tax system, which requires that income earned in Japan be taxed by Uncle Sam at 35 percent after benefiting from a tax credit for tax paid in Japan. If the U.S. company decides to keep its Japanese income outside the U.S., the U.S. rate won’t apply.

Dan Mitchell explains why the VAT doesn’t change the terms of trade in this video.

Finally, economists have debunked the idea implied by the speaker that foreign VATs give an advantage to foreign exports — and therefor boost foreign exports. It is simply not true. It follows that imposing a border-adjustment tax in the U.S. will not boost U.S. exports either. Period.

Let me summarize this for you:

  • No, other countries do not border-adjust their corporate income tax.
  • Comparing other countries’ VATs and our corporate tax is problematic to say the least.
  • No, foreign exports sold in the U.S. do not have an advantage over U.S. goods sold in the U.S. Foreign VATs do not boost foreign exports.
  • A border tax in the U.S. will not boost our exports but it will hurt consumers and many U.S. retailers.
  • The disadvantage faced by U.S. companies exporting goods abroad comes from the terrible worldwide tax and high rates of the U.S. tax regime, not from other countries’ tax system.
  • The way to fix the U.S. disadvantage is not to create a new expansive tax that would penalize imports in the U.S. — including imports for the benefit of U.S. domestic companies — and would penalize U.S. consumers.
  • The solution is to reform our corporate-tax rate by lowering the rate and moving to an origin-based territorial-tax regime. http://www.nationalreview.com/corner/445034/paul-ryan-border-adjustment-tax-mistake

Who’s Afraid of a Big BAT Tax?

The Border Adjustment Tax, a proposal favored by House Speaker Paul Ryan, has aroused serious opposition from Republican senators.

Joshua Roberts / Reuters

Donald Trump is feeling good about taxes. In his gonzo press conference last Thursday, he assured Americans that “very historic tax reform” is absolutely on track and is going to be—wait for it!—“big league.” The week before, he told a bunch of airline CEOs that “big league” reform was “way head of schedule” and that his people would be announcing something “phenomenal” in “two or three weeks.” And at his Orlando pep rally this past weekend, he gushed about his idea for a punitive 35 percent border tax on products manufactured overseas. The magic is happening, people. And soon America’s tax code will be the best, most beautiful in the world.

But here’s the thing. What Trump doesn’t know about the legislative process could overflow the pool at Mar-a Lago. And when it comes to tax reform, even minor changes make Congress lose its mind. Weird fault lines appear, and the next thing you know, warring factions have painted their faces blue and vowed to die on the blood-soaked battlefield before allowing this marginal rate to change or that loophole to close.

Such drama has, in fact, already begun over the proposal percolating in the House. At issue: a provision known as the border adjustment tax—let’s call it BAT—which, shrunk to its essence, incentivizes domestic manufacturing by slapping a 20 percent levy on imports, while making U.S. companies’ export-revenues tax deductible.

BAT fans—most notably House Speaker Paul Ryan and Ways and Means Chairman Kevin Brady—pitch the provision as an economically elegant twofer: an America-First measure that discourages companies from moving operations overseas while creating a revenue stream ($1 trillion every decade or so) that allows the overall corporate tax rate to be slashed.

Opponents—most vocally Senators David Perdue and Tom Cotton—argue that a BAT is another grubby government cash grab that will ultimately hurt consumers when, say, Walmart has to jack up the prices of underwear, bananas, and Playstations. In a February 8 letter to colleagues, Perdue, who spent four decades in the business world, charged that the BAT is “regressive, hammers consumers, and shuts down economic growth.”Thus the battle lines are drawn. And, make no mistake, this will not be some bush-league, penny-ante skirmish. Behind the legislative factions are amassing some of the heaviest hitters in corporate America, ready to spend millions to sway debate on behalf of their team.Roughly speaking, companies that do a lot of exporting dig the BAT (think: Boeing, Merck, and Dow Chemical) while import-dependent retailers (including Target, Nike, and, yes, Walmart) fear it will destroy their bottom lines. The oil industry isn’t feeling much BAT love either. The Koch brothers want it dead, like, yesterday.At this point, anti-BATers have an edge. Why? Partly, because the provision is super complicated and almost impossible to explain in terms that don’t sound like something a coven of economists vomited up. Ask BAT fans why the provision won’t, in fact, hurt retailers or consumers, and you’re instantly hip-deep in talk of currency revaluation, purchasing power, and territorial taxation. Last Wednesday, one day after Paul Ryan tried to educate Senate Republicans on the wonders of BAT at their weekly policy lunch, Tom Cotton (who represents Walmart’s home state of Arkansas) snarked on the Senate floor, “Some ideas are so stupid only an intellectual could believe them.”
This is in no way to suggest that the pro-BAT arguments are wrong. They simply don’t push the same buttons as anti-BAT warnings that Congress is poised to screw consumers in order to fund big tax cuts for corporations.For the past few weeks, in fact, an anti-BAT coalition called Americans for Affordable Products has been busy hawking this exact message. “This is a consumer tax—a means by which House Republicans are paying for other tax deductions,” asserted AAP member Brian Dodge. “It’s not about America First. It’s not a trade-deficit reduction tool. It is a pay-for.”AAP is lobbying lawmakers and staffers and doing public outreach. Last Wednesday, it dispatched eight CEOs to chat with Trump and Vice President Pence. “We view our job as leading a large education campaign,” said Dodge. “We believe the more that lawmakers understand about this proposal, the less inclined they’ll be to support it.”Of course, BAT fans are gearing up as well and promise to be equally aggressive. The day after the AAP roll out, the American Made Coalition launched, with an eye toward helping Ryan’s office spread the good word. “It takes time to educate both policy makers and businesses on what’s on the table,” said Brian Reardon, an adviser to the group.There is no place for subtlety in this war. Part of BAT supporters’ argument is that, without the provision, tax overhaul will implode altogether. Message: Get on board or kiss your once-in-a-lifetime reform opportunity good-bye.It’s a question of Senate math. To pass with a simple majority (and avoid a filibuster by Democrats), the GOP’s plan must go through under the procedure known as reconciliation. But to qualify for reconciliation, the package–which slashes both corporate and upper-bracket taxes–cannot blow a hole in the long-term budget. Without the $1 trillion in revenues from BAT, say advocates, there’s no way that hole can be plugged.“This is the only way at these rates and keeping things revenue neutral,” insisted a senior Republican aide. There is no other viable option. Period. End of story.But anti-BATers are eyeing a different Senate equation. To amass even a simple majority of votes, the BAT can lose only two of the 52 Republican members. (Unless Democrats cross the aisle, of course.) In addition to Cotton’s and Perdue’s open hostility, Senators John Boozman, Mike Rounds, John Cornyn, Tim Scott, and Mike Lee have all expressed reservations. “I have real concerns that this piece of the House blueprint will cause more disruption than necessary,” Lee said. “Will the dollar suddenly shoot up by 20 percent? Will U.S. manufacturers have to redo their international supply chains? These are all open questions.”

With the provision’s Senate prospects iffy, there’s less incentive for House conservatives to support something that smells even faintly like a tax. Both the current chairman of the Freedom Caucus, Mark Meadows, and the former chairman, Jim Jordan, have said they’d like reform done without a BAT.

“My reasoning is very basic,” Jordan told me. “Why in the world would we want to add another revenue stream?” You can debate the impact on exchange rates and purchasing power all day, said Jordan, but that doesn’t address many conservatives’ core objection. “We come at it from fundamental perspective,” he said. “The idea that you’re going to add an entirely new tax is a big problem.”

(BAT fans, for the record, dispute that this is a new tax. It is, they insist, replacing the existing system with an entirely new, far superior one that must be looked at, as Reardon put it, “holistically.”)

The only thing everyone can agree on is that this will be a long, ugly fight. If Trump drops his tariff idea and embraces BAT, it could boost the cause. But even then, he’d need to do major arm-twisting to get Senate skeptics on board (especially with the likes of Walmart and the Kochs twisting the other arm.) Like it or not, this is what the political big leagues are like: slow, messy, and infuriating.

The up side for Trump: He’ll have time to throw a lot more pep rallies on this topic before anything gets decided.

https://www.theatlantic.com/politics/archive/2017/02/border-adjustment-tax-congress/517287/

The Internal Revenue Service has recently released new data on individual income taxes for calendar year 2014, showing the number of taxpayers, adjusted gross income, and income tax shares by income percentiles.[1]

The data demonstrates that the U.S. individual income tax continues to be very progressive, borne mainly by the highest income earners.

  • In 2014, 139.6 million taxpayers reported earning $9.71 trillion in adjusted gross income and paid $1.37 trillion in individual income taxes.
  • The share of income earned by the top 1 percent of taxpayers rose to 20.6 percent in 2014. Their share of federal individual income taxes also rose, to 39.5 percent.
  • In 2014, the top 50 percent of all taxpayers paid 97.3 percent of all individual income taxes while the bottom 50 percent paid the remaining 2.7 percent.
  • The top 1 percent paid a greater share of individual income taxes (39.5 percent) than the bottom 90 percent combined (29.1 percent).
  • The top 1 percent of taxpayers paid a 27.1 percent individual income tax rate, which is more than seven times higher than taxpayers in the bottom 50 percent (3.5 percent).

Reported Income and Taxes Paid Both Increased Significantly in 2014

Taxpayers reported $9.71 trillion in adjusted gross income (AGI) on 139.5 million tax returns in 2014. Total AGI grew by $675 billion from the previous year’s levels. There were 1.2 million more returns filed in 2014 than in 2013, meaning that average AGI rose by $4,252 per return, or 6.5 percent.

Meanwhile, taxpayers paid $1.37 trillion in individual income taxes in 2014, an 11.5 percent increase from taxes paid in the previous year. The average individual income tax rate for all taxpayers rose from 13.64 percent to 14.16 percent. Moreover, the average tax rate increased for all income groups, except for the top 0.1 percent of taxpayers, whose average rate decreased from 27.91 percent to 27.67 percent.

The most likely explanation behind the higher tax rates in 2014 is a phenomenon known as “real bracket creep.” [2] As incomes rise, households are pushed into higher tax brackets, and are subject to higher overall tax rates on their income. On the other hand, the likely reason why the top 0.1 percent of households saw a slightly lower tax rate in 2014 is because a higher portion of their income consisted of long-term capital gains, which are subject to lower tax rates.[3]

The share of income earned by the top 1 percent rose to 20.58 percent of total AGI, up from 19.04 percent in 2013. The share of the income tax burden for the top 1 percent also rose, from 37.80 percent in 2013 to 39.48 percent in 2014.

Top 1% Top 5% Top 10% Top 25% Top 50% Bottom 50% All Taxpayers
Table 1. Summary of Federal Income Tax Data, 2014
Number of Returns 1,395,620 6,978,102 13,956,203 34,890,509 69,781,017 69,781,017 139,562,034
Adjusted Gross Income ($ millions) $1,997,819 $3,490,867 $4,583,416 $6,690,287 $8,614,544 $1,094,119 $9,708,663
Share of Total Adjusted Gross Income 20.58% 35.96% 47.21% 68.91% 88.73% 11.27% 100.00%
Income Taxes Paid ($ millions) $542,640 $824,153 $974,124 $1,192,679 $1,336,637 $37,740 $1,374,379
Share of Total Income Taxes Paid 39.48% 59.97% 70.88% 86.78% 97.25% 2.75% 100.00%
Income Split Point $465,626 $188,996 $133,445 $77,714 $38,173
Average Tax Rate 27.16% 23.61% 21.25% 17.83% 15.52% 3.45% 14.16%
 Note: Does not include dependent filers

High-Income Americans Paid the Majority of Federal Taxes

In 2014, the bottom 50 percent of taxpayers (those with AGIs below $38,173) earned 11.27 percent of total AGI. This group of taxpayers paid approximately $38 billion in taxes, or 2.75 percent of all income taxes in 2014.

In contrast, the top 1 percent of all taxpayers (taxpayers with AGIs of $465,626 and above) earned 20.58 percent of all AGI in 2014, but paid 39.48 percent of all federal income taxes.

In 2014, the top 1 percent of taxpayers accounted for more income taxes paid than the bottom 90 percent combined. The top 1 percent of taxpayers paid $543 billion, or 39.48 percent of all income taxes, while the bottom 90 percent paid $400 billion, or 29.12 percent of all income taxes.

Figure 1.

High-Income Taxpayers Pay the Highest Average Tax Rates

The 2014 IRS data shows that taxpayers with higher incomes pay much higher average individual income tax rates than lower-income taxpayers.[4]

The bottom 50 percent of taxpayers (taxpayers with AGIs below $38,173) faced an average income tax rate of 3.45 percent. As household income increases, the IRS data shows that average income tax rates rise. For example, taxpayers with AGIs between the 10th and 5th percentile ($133,445 and $188,996) pay an average rate of 13.7 percent – almost four times the rate paid by those in the bottom 50 percent.

The top 1 percent of taxpayers (AGI of $465,626 and above) paid the highest effective income tax rate, at 27.2 percent, 7.9 times the rate faced by the bottom 50 percent of taxpayers.

Figure 2.

Taxpayers at the very top of the income distribution, the top 0.1 percent (with AGIs over $2.14 million), paid an even higher average tax rate, of 27.7 percent.

Appendix

Year Total Top 0.1% Top 1% Top
5%
Between
5% & 10%
Top 10% Between 10% & 25% Top 25% Between 25% & 50% Top 50% Bottom 50%
Table 2. Number of Federal Individual Income Tax Returns Filed 1980–2014 (Thousands)
Source: Internal Revenue Service.
1980 93,239 932 4,662 4,662 9,324 13,986 23,310 23,310 46,619 46,619
1981 94,587 946 4,729 4,729 9,459 14,188 23,647 23,647 47,293 47,293
1982 94,426 944 4,721 4,721 9,443 14,164 23,607 23,607 47,213 47,213
1983 95,331 953 4,767 4,767 9,533 14,300 23,833 23,833 47,665 47,665
1984 98,436 984 4,922 4,922 9,844 14,765 24,609 24,609 49,218 49,219
1985 100,625 1,006 5,031 5,031 10,063 15,094 25,156 25,156 50,313 50,313
1986 102,088 1,021 5,104 5,104 10,209 15,313 25,522 25,522 51,044 51,044
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
1987 106,155 1,062 5,308 5,308 10,615 15,923 26,539 26,539 53,077 53,077
1988 108,873 1,089 5,444 5,444 10,887 16,331 27,218 27,218 54,436 54,436
1989 111,313 1,113 5,566 5,566 11,131 16,697 27,828 27,828 55,656 55,656
1990 112,812 1,128 5,641 5,641 11,281 16,922 28,203 28,203 56,406 56,406
1991 113,804 1,138 5,690 5,690 11,380 17,071 28,451 28,451 56,902 56,902
1992 112,653 1,127 5,633 5,633 11,265 16,898 28,163 28,163 56,326 56,326
1993 113,681 1,137 5,684 5,684 11,368 17,052 28,420 28,420 56,841 56,841
1994 114,990 1,150 5,749 5,749 11,499 17,248 28,747 28,747 57,495 57,495
1995 117,274 1,173 5,864 5,864 11,727 17,591 29,319 29,319 58,637 58,637
1996 119,442 1,194 5,972 5,972 11,944 17,916 29,860 29,860 59,721 59,721
1997 121,503 1,215 6,075 6,075 12,150 18,225 30,376 30,376 60,752 60,752
1998 123,776 1,238 6,189 6,189 12,378 18,566 30,944 30,944 61,888 61,888
1999 126,009 1,260 6,300 6,300 12,601 18,901 31,502 31,502 63,004 63,004
2000 128,227 1,282 6,411 6,411 12,823 19,234 32,057 32,057 64,114 64,114
The IRS changed methodology, so data above and below this line not strictly comparable
2001 119,371 119 1,194 5,969 5,969 11,937 17,906 29,843 29,843 59,685 59,685
2002 119,851 120 1,199 5,993 5,993 11,985 17,978 29,963 29,963 59,925 59,925
2003 120,759 121 1,208 6,038 6,038 12,076 18,114 30,190 30,190 60,379 60,379
2004 122,510 123 1,225 6,125 6,125 12,251 18,376 30,627 30,627 61,255 61,255
2005 124,673 125 1,247 6,234 6,234 12,467 18,701 31,168 31,168 62,337 62,337
2006 128,441 128 1,284 6,422 6,422 12,844 19,266 32,110 32,110 64,221 64,221
2007 132,655 133 1,327 6,633 6,633 13,265 19,898 33,164 33,164 66,327 66,327
2008 132,892 133 1,329 6,645 6,645 13,289 19,934 33,223 33,223 66,446 66,446
2009 132,620 133 1,326 6,631 6,631 13,262 19,893 33,155 33,155 66,310 66,310
2010 135,033 135 1,350 6,752 6,752 13,503 20,255 33,758 33,758 67,517 67,517
2011 136,586 137 1,366 6,829 6,829 13,659 20,488 34,146 34,146 68,293 68,293
2012 136,080 136 1,361 6,804 6,804 13,608 20,412 34,020 34,020 68,040 68,040
2013 138,313 138 1,383 6,916 6,916 13,831 20,747 34,578 34,578 69,157 69,157
2014 139,562 140 1,396 6,978 6,978 13,956 20,934 34,891 34,891 69,781 69,781
Year Total Top 0.1% Top 1% Top 5% Between 5% & 10% Top 10% Between 10% & 25% Top 25% Between 25% & 50% Top 50% Bottom 50%
Table 3. Adjusted Gross Income of Taxpayers in Various Income Brackets, 1980–2014 ($Billions)
Source: Internal Revenue Service.
1980 $1,627 $138 $342 $181 $523 $400 $922 $417 $1,339 $288
1981 $1,791 $149 $372 $201 $573 $442 $1,015 $458 $1,473 $318
1982 $1,876 $167 $398 $207 $605 $460 $1,065 $478 $1,544 $332
1983 $1,970 $183 $428 $217 $646 $481 $1,127 $498 $1,625 $344
1984 $2,173 $210 $482 $240 $723 $528 $1,251 $543 $1,794 $379
1985 $2,344 $235 $531 $260 $791 $567 $1,359 $580 $1,939 $405
1986 $2,524 $285 $608 $278 $887 $604 $1,490 $613 $2,104 $421
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
1987 $2,814 $347 $722 $316 $1,038 $671 $1,709 $664 $2,374 $440
1988 $3,124 $474 $891 $342 $1,233 $718 $1,951 $707 $2,658 $466
1989 $3,299 $468 $918 $368 $1,287 $768 $2,054 $751 $2,805 $494
1990 $3,451 $483 $953 $385 $1,338 $806 $2,144 $788 $2,933 $519
1991 $3,516 $457 $943 $400 $1,343 $832 $2,175 $809 $2,984 $532
1992 $3,681 $524 $1,031 $413 $1,444 $856 $2,299 $832 $3,131 $549
1993 $3,776 $521 $1,048 $426 $1,474 $883 $2,358 $854 $3,212 $563
1994 $3,961 $547 $1,103 $449 $1,552 $929 $2,481 $890 $3,371 $590
1995 $4,245 $620 $1,223 $482 $1,705 $985 $2,690 $938 $3,628 $617
1996 $4,591 $737 $1,394 $515 $1,909 $1,043 $2,953 $992 $3,944 $646
1997 $5,023 $873 $1,597 $554 $2,151 $1,116 $3,268 $1,060 $4,328 $695
1998 $5,469 $1,010 $1,797 $597 $2,394 $1,196 $3,590 $1,132 $4,721 $748
1999 $5,909 $1,153 $2,012 $641 $2,653 $1,274 $3,927 $1,199 $5,126 $783
2000 $6,424 $1,337 $2,267 $688 $2,955 $1,358 $4,314 $1,276 $5,590 $834
The IRS changed methodology, so data above and below this line not strictly comparable
2001 $6,116 $492 $1,065 $1,934 $666 $2,600 $1,334 $3,933 $1,302 $5,235 $881
2002 $5,982 $421 $960 $1,812 $660 $2,472 $1,339 $3,812 $1,303 $5,115 $867
2003 $6,157 $466 $1,030 $1,908 $679 $2,587 $1,375 $3,962 $1,325 $5,287 $870
2004 $6,735 $615 $1,279 $2,243 $725 $2,968 $1,455 $4,423 $1,403 $5,826 $908
2005 $7,366 $784 $1,561 $2,623 $778 $3,401 $1,540 $4,940 $1,473 $6,413 $953
2006 $7,970 $895 $1,761 $2,918 $841 $3,760 $1,652 $5,412 $1,568 $6,980 $990
2007 $8,622 $1,030 $1,971 $3,223 $905 $4,128 $1,770 $5,898 $1,673 $7,571 $1,051
2008 $8,206 $826 $1,657 $2,868 $905 $3,773 $1,782 $5,555 $1,673 $7,228 $978
2009 $7,579 $602 $1,305 $2,439 $878 $3,317 $1,740 $5,058 $1,620 $6,678 $900
2010 $8,040 $743 $1,517 $2,716 $915 $3,631 $1,800 $5,431 $1,665 $7,096 $944
2011 $8,317 $737 $1,556 $2,819 $956 $3,775 $1,866 $5,641 $1,716 $7,357 $961
2012 $9,042 $1,017 $1,977 $3,331 $997 $4,328 $1,934 $6,262 $1,776 $8,038 $1,004
2013 $9,034 $816 $1,720 $3,109 $1,034 $4,143 $2,008 $6,152 $1,844 $7,996 $1,038
2014 $9,709 $986 $1,998 $3,491 $1,093 $4,583 $2,107 $6,690 $1,924 $8,615 $1,094
Year Total Top 0.1% Top 1% Top 5% Between 5% & 10% Top 10% Between 10% & 25% Top 25% Between 25% & 50% Top 50% Bottom 50%
Table 4. Total Income Tax after Credits, 1980–2014 ($Billions)
Source: Internal Revenue Service.
1980 $249 $47 $92 $31 $123 $59 $182 $50 $232 $18
1981 $282 $50 $99 $36 $135 $69 $204 $57 $261 $21
1982 $276 $53 $100 $34 $134 $66 $200 $56 $256 $20
1983 $272 $55 $101 $34 $135 $64 $199 $54 $252 $19
1984 $297 $63 $113 $37 $150 $68 $219 $57 $276 $22
1985 $322 $70 $125 $41 $166 $73 $238 $60 $299 $23
1986 $367 $94 $156 $44 $201 $78 $279 $64 $343 $24
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
1987 $369 $92 $160 $46 $205 $79 $284 $63 $347 $22
1988 $413 $114 $188 $48 $236 $85 $321 $68 $389 $24
1989 $433 $109 $190 $51 $241 $93 $334 $73 $408 $25
1990 $447 $112 $195 $52 $248 $97 $344 $77 $421 $26
1991 $448 $111 $194 $56 $250 $96 $347 $77 $424 $25
1992 $476 $131 $218 $58 $276 $97 $374 $78 $452 $24
1993 $503 $146 $238 $60 $298 $101 $399 $80 $479 $24
1994 $535 $154 $254 $64 $318 $108 $425 $84 $509 $25
1995 $588 $178 $288 $70 $357 $115 $473 $88 $561 $27
1996 $658 $213 $335 $76 $411 $124 $535 $95 $630 $28
1997 $727 $241 $377 $82 $460 $134 $594 $102 $696 $31
1998 $788 $274 $425 $88 $513 $139 $652 $103 $755 $33
1999 $877 $317 $486 $97 $583 $150 $733 $109 $842 $35
2000 $981 $367 $554 $106 $660 $164 $824 $118 $942 $38
The IRS changed methodology, so data above and below this line not strictly comparable
2001 $885 $139 $294 $462 $101 $564 $158 $722 $120 $842 $43
2002 $794 $120 $263 $420 $93 $513 $143 $657 $104 $761 $33
2003 $746 $115 $251 $399 $85 $484 $133 $617 $98 $715 $30
2004 $829 $142 $301 $467 $91 $558 $137 $695 $102 $797 $32
2005 $932 $176 $361 $549 $98 $647 $145 $793 $106 $898 $33
2006 $1,020 $196 $402 $607 $108 $715 $157 $872 $113 $986 $35
2007 $1,112 $221 $443 $666 $117 $783 $170 $953 $122 $1,075 $37
2008 $1,029 $187 $386 $597 $115 $712 $168 $880 $117 $997 $32
2009 $863 $146 $314 $502 $101 $604 $146 $749 $93 $842 $21
2010 $949 $170 $355 $561 $110 $670 $156 $827 $100 $927 $22
2011 $1,043 $168 $366 $589 $123 $712 $181 $893 $120 $1,012 $30
2012 $1,185 $220 $451 $699 $133 $831 $193 $1,024 $128 $1,152 $33
2013 $1,232 $228 $466 $721 $139 $860 $203 $1,063 $135 $1,198 $34
2014 $1,374 $273 $543 $824 $150 $974 $219 $1,193 $144 $1,337 $38
Year Total Top 0.1% Top 1% Top 5% Between 5% & 10% Top 10% Between 10% & 25% Top 25% Between 25% & 50% Top 50% Bottom 50%
Table 5. Adjusted Gross Income Shares, 1980–2014 (percent of total AGI earned by each group)
Source: Internal Revenue Service.
1980 100% 8.46% 21.01% 11.12% 32.13% 24.57% 56.70% 25.62% 82.32% 17.68%
1981 100% 8.30% 20.78% 11.20% 31.98% 24.69% 56.67% 25.59% 82.25% 17.75%
1982 100% 8.91% 21.23% 11.03% 32.26% 24.53% 56.79% 25.50% 82.29% 17.71%
1983 100% 9.29% 21.74% 11.04% 32.78% 24.44% 57.22% 25.30% 82.52% 17.48%
1984 100% 9.66% 22.19% 11.06% 33.25% 24.31% 57.56% 25.00% 82.56% 17.44%
1985 100% 10.03% 22.67% 11.10% 33.77% 24.21% 57.97% 24.77% 82.74% 17.26%
1986 100% 11.30% 24.11% 11.02% 35.12% 23.92% 59.04% 24.30% 83.34% 16.66%
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
1987 100% 12.32% 25.67% 11.23% 36.90% 23.85% 60.75% 23.62% 84.37% 15.63%
1988 100% 15.16% 28.51% 10.94% 39.45% 22.99% 62.44% 22.63% 85.07% 14.93%
1989 100% 14.19% 27.84% 11.16% 39.00% 23.28% 62.28% 22.76% 85.04% 14.96%
1990 100% 14.00% 27.62% 11.15% 38.77% 23.36% 62.13% 22.84% 84.97% 15.03%
1991 100% 12.99% 26.83% 11.37% 38.20% 23.65% 61.85% 23.01% 84.87% 15.13%
1992 100% 14.23% 28.01% 11.21% 39.23% 23.25% 62.47% 22.61% 85.08% 14.92%
1993 100% 13.79% 27.76% 11.29% 39.05% 23.40% 62.45% 22.63% 85.08% 14.92%
1994 100% 13.80% 27.85% 11.34% 39.19% 23.45% 62.64% 22.48% 85.11% 14.89%
1995 100% 14.60% 28.81% 11.35% 40.16% 23.21% 63.37% 22.09% 85.46% 14.54%
1996 100% 16.04% 30.36% 11.23% 41.59% 22.73% 64.32% 21.60% 85.92% 14.08%
1997 100% 17.38% 31.79% 11.03% 42.83% 22.22% 65.05% 21.11% 86.16% 13.84%
1998 100% 18.47% 32.85% 10.92% 43.77% 21.87% 65.63% 20.69% 86.33% 13.67%
1999 100% 19.51% 34.04% 10.85% 44.89% 21.57% 66.46% 20.29% 86.75% 13.25%
2000 100% 20.81% 35.30% 10.71% 46.01% 21.15% 67.15% 19.86% 87.01% 12.99%
The IRS changed methodology, so data above and below this line not strictly comparable
2001 100% 8.05% 17.41% 31.61% 10.89% 42.50% 21.80% 64.31% 21.29% 85.60% 14.40%
2002 100% 7.04% 16.05% 30.29% 11.04% 41.33% 22.39% 63.71% 21.79% 85.50% 14.50%
2003 100% 7.56% 16.73% 30.99% 11.03% 42.01% 22.33% 64.34% 21.52% 85.87% 14.13%
2004 100% 9.14% 18.99% 33.31% 10.77% 44.07% 21.60% 65.68% 20.83% 86.51% 13.49%
2005 100% 10.64% 21.19% 35.61% 10.56% 46.17% 20.90% 67.07% 19.99% 87.06% 12.94%
2006 100% 11.23% 22.10% 36.62% 10.56% 47.17% 20.73% 67.91% 19.68% 87.58% 12.42%
2007 100% 11.95% 22.86% 37.39% 10.49% 47.88% 20.53% 68.41% 19.40% 87.81% 12.19%
2008 100% 10.06% 20.19% 34.95% 11.03% 45.98% 21.71% 67.69% 20.39% 88.08% 11.92%
2009 100% 7.94% 17.21% 32.18% 11.59% 43.77% 22.96% 66.74% 21.38% 88.12% 11.88%
2010 100% 9.24% 18.87% 33.78% 11.38% 45.17% 22.38% 67.55% 20.71% 88.26% 11.74%
2011 100% 8.86% 18.70% 33.89% 11.50% 45.39% 22.43% 67.82% 20.63% 88.45% 11.55%
2012 100% 11.25% 21.86% 36.84% 11.03% 47.87% 21.39% 69.25% 19.64% 88.90% 11.10%
2013 100% 9.03% 19.04% 34.42% 11.45% 45.87% 22.23% 68.10% 20.41% 88.51% 11.49%
2014 100% 10.16% 20.58% 35.96% 11.25% 47.21% 21.70% 68.91% 19.82% 88.73% 11.27%
Year Total Top 0.1% Top 1% Top 5% Between 5% & 10% Top 10% Between 10% & 25% Top 25% Between 25% & 50% Top 50% Bottom 50%
Table 6. Total Income Tax Shares, 1980–2014 (percent of federal income tax paid by each group)
Source: Internal Revenue Service.
1980 100% 19.05% 36.84% 12.44% 49.28% 23.74% 73.02% 19.93% 92.95% 7.05%
1981 100% 17.58% 35.06% 12.90% 47.96% 24.33% 72.29% 20.26% 92.55% 7.45%
1982 100% 19.03% 36.13% 12.45% 48.59% 23.91% 72.50% 20.15% 92.65% 7.35%
1983 100% 20.32% 37.26% 12.44% 49.71% 23.39% 73.10% 19.73% 92.83% 7.17%
1984 100% 21.12% 37.98% 12.58% 50.56% 22.92% 73.49% 19.16% 92.65% 7.35%
1985 100% 21.81% 38.78% 12.67% 51.46% 22.60% 74.06% 18.77% 92.83% 7.17%
1986 100% 25.75% 42.57% 12.12% 54.69% 21.33% 76.02% 17.52% 93.54% 6.46%
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
1987 100% 24.81% 43.26% 12.35% 55.61% 21.31% 76.92% 17.02% 93.93% 6.07%
1988 100% 27.58% 45.62% 11.66% 57.28% 20.57% 77.84% 16.44% 94.28% 5.72%
1989 100% 25.24% 43.94% 11.85% 55.78% 21.44% 77.22% 16.94% 94.17% 5.83%
1990 100% 25.13% 43.64% 11.73% 55.36% 21.66% 77.02% 17.16% 94.19% 5.81%
1991 100% 24.82% 43.38% 12.45% 55.82% 21.46% 77.29% 17.23% 94.52% 5.48%
1992 100% 27.54% 45.88% 12.12% 58.01% 20.47% 78.48% 16.46% 94.94% 5.06%
1993 100% 29.01% 47.36% 11.88% 59.24% 20.03% 79.27% 15.92% 95.19% 4.81%
1994 100% 28.86% 47.52% 11.93% 59.45% 20.10% 79.55% 15.68% 95.23% 4.77%
1995 100% 30.26% 48.91% 11.84% 60.75% 19.62% 80.36% 15.03% 95.39% 4.61%
1996 100% 32.31% 50.97% 11.54% 62.51% 18.80% 81.32% 14.36% 95.68% 4.32%
1997 100% 33.17% 51.87% 11.33% 63.20% 18.47% 81.67% 14.05% 95.72% 4.28%
1998 100% 34.75% 53.84% 11.20% 65.04% 17.65% 82.69% 13.10% 95.79% 4.21%
1999 100% 36.18% 55.45% 11.00% 66.45% 17.09% 83.54% 12.46% 96.00% 4.00%
2000 100% 37.42% 56.47% 10.86% 67.33% 16.68% 84.01% 12.08% 96.09% 3.91%
The IRS changed methodology, so data above and below this line not strictly comparable
2001 100% 15.68% 33.22% 52.24% 11.44% 63.68% 17.88% 81.56% 13.54% 95.10% 4.90%
2002 100% 15.09% 33.09% 52.86% 11.77% 64.63% 18.04% 82.67% 13.12% 95.79% 4.21%
2003 100% 15.37% 33.69% 53.54% 11.35% 64.89% 17.87% 82.76% 13.17% 95.93% 4.07%
2004 100% 17.12% 36.28% 56.35% 10.96% 67.30% 16.52% 83.82% 12.31% 96.13% 3.87%
2005 100% 18.91% 38.78% 58.93% 10.52% 69.46% 15.61% 85.07% 11.35% 96.41% 3.59%
2006 100% 19.24% 39.36% 59.49% 10.59% 70.08% 15.41% 85.49% 11.10% 96.59% 3.41%
2007 100% 19.84% 39.81% 59.90% 10.51% 70.41% 15.30% 85.71% 10.93% 96.64% 3.36%
2008 100% 18.20% 37.51% 58.06% 11.14% 69.20% 16.37% 85.57% 11.33% 96.90% 3.10%
2009 100% 16.91% 36.34% 58.17% 11.72% 69.89% 16.85% 86.74% 10.80% 97.54% 2.46%
2010 100% 17.88% 37.38% 59.07% 11.55% 70.62% 16.49% 87.11% 10.53% 97.64% 2.36%
2011 100% 16.14% 35.06% 56.49% 11.77% 68.26% 17.36% 85.62% 11.50% 97.11% 2.89%
2012 100% 18.60% 38.09% 58.95% 11.22% 70.17% 16.25% 86.42% 10.80% 97.22% 2.78%
2013 100% 18.48% 37.80% 58.55% 11.25% 69.80% 16.47% 86.27% 10.94% 97.22% 2.78%
2014 100% 19.85% 39.48% 59.97% 10.91% 70.88% 15.90% 86.78% 10.47% 97.25% 2.75%
Year Total Top 1% Top 5% Top 10% Top 25% Top 50%
Table 7. Dollar Cut-Off, 1980–2014 (Minimum AGI for Tax Returns to Fall into Various Percentiles; Thresholds Not Adjusted for Inflation)
1980 $80,580 $43,792 $35,070 $23,606 $12,936
1981 $85,428 $47,845 $38,283 $25,655 $14,000
1982 $89,388 $49,284 $39,676 $27,027 $14,539
1983 $93,512 $51,553 $41,222 $27,827 $15,044
1984 $100,889 $55,423 $43,956 $29,360 $15,998
1985 $108,134 $58,883 $46,322 $30,928 $16,688
1986 $118,818 $62,377 $48,656 $32,242 $17,302
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
1987 $139,289 $68,414 $52,921 $33,983 $17,768
1988 $157,136 $72,735 $55,437 $35,398 $18,367
1989 $163,869 $76,933 $58,263 $36,839 $18,993
1990 $167,421 $79,064 $60,287 $38,080 $19,767
1991 $170,139 $81,720 $61,944 $38,929 $20,097
1992 $181,904 $85,103 $64,457 $40,378 $20,803
1993 $185,715 $87,386 $66,077 $41,210 $21,179
1994 $195,726 $91,226 $68,753 $42,742 $21,802
1995 $209,406 $96,221 $72,094 $44,207 $22,344
1996 $227,546 $101,141 $74,986 $45,757 $23,174
1997 $250,736 $108,048 $79,212 $48,173 $24,393
1998 $269,496 $114,729 $83,220 $50,607 $25,491
1999 $293,415 $120,846 $87,682 $52,965 $26,415
2000 $313,469 $128,336 $92,144 $55,225 $27,682
The IRS changed methodology, so data above and below this line not strictly comparable
2001 $1,393,718 $306,635 $132,082 $96,151 $59,026 $31,418
2002 $1,245,352 $296,194 $130,750 $95,699 $59,066 $31,299
2003 $1,317,088 $305,939 $133,741 $97,470 $59,896 $31,447
2004 $1,617,918 $339,993 $140,758 $101,838 $62,794 $32,622
2005 $1,938,175 $379,261 $149,216 $106,864 $64,821 $33,484
2006 $2,124,625 $402,603 $157,390 $112,016 $67,291 $34,417
2007 $2,251,017 $426,439 $164,883 $116,396 $69,559 $35,541
2008 $1,867,652 $392,513 $163,512 $116,813 $69,813 $35,340
2009 $1,469,393 $351,968 $157,342 $114,181 $68,216 $34,156
2010 $1,634,386 $369,691 $161,579 $116,623 $69,126 $34,338
2011 $1,717,675 $388,905 $167,728 $120,136 $70,492 $34,823
2012 $2,161,175 $434,682 $175,817 $125,195 $73,354 $36,055
2013 $1,860,848 $428,713 $179,760 $127,695 $74,955 $36,841
2014 $2,136,762 $465,626 $188,996 $133,445 $77,714 $38,173
Source: Internal Revenue Service.
Year Total Top 0.1% Top 1% Top 5% Between 5% & 10% Top 10% Between 10% & 25% Top 25% Between 25% & 50% Top 50% Bottom 50%
Table 8. Average Tax Rate, 1980–2014 (Percent of AGI Paid in Income Taxes)
Source: Internal Revenue Service.
1980 15.31% 34.47% 26.85% 17.13% 23.49% 14.80% 19.72% 11.91% 17.29% 6.10%
1981 15.76% 33.37% 26.59% 18.16% 23.64% 15.53% 20.11% 12.48% 17.73% 6.62%
1982 14.72% 31.43% 25.05% 16.61% 22.17% 14.35% 18.79% 11.63% 16.57% 6.10%
1983 13.79% 30.18% 23.64% 15.54% 20.91% 13.20% 17.62% 10.76% 15.52% 5.66%
1984 13.68% 29.92% 23.42% 15.57% 20.81% 12.90% 17.47% 10.48% 15.35% 5.77%
1985 13.73% 29.86% 23.50% 15.69% 20.93% 12.83% 17.55% 10.41% 15.41% 5.70%
1986 14.54% 33.13% 25.68% 15.99% 22.64% 12.97% 18.72% 10.48% 16.32% 5.63%
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
1987 13.12% 26.41% 22.10% 14.43% 19.77% 11.71% 16.61% 9.45% 14.60% 5.09%
1988 13.21% 24.04% 21.14% 14.07% 19.18% 11.82% 16.47% 9.60% 14.64% 5.06%
1989 13.12% 23.34% 20.71% 13.93% 18.77% 12.08% 16.27% 9.77% 14.53% 5.11%
1990 12.95% 23.25% 20.46% 13.63% 18.50% 12.01% 16.06% 9.73% 14.36% 5.01%
1991 12.75% 24.37% 20.62% 13.96% 18.63% 11.57% 15.93% 9.55% 14.20% 4.62%
1992 12.94% 25.05% 21.19% 13.99% 19.13% 11.39% 16.25% 9.42% 14.44% 4.39%
1993 13.32% 28.01% 22.71% 14.01% 20.20% 11.40% 16.90% 9.37% 14.90% 4.29%
1994 13.50% 28.23% 23.04% 14.20% 20.48% 11.57% 17.15% 9.42% 15.11% 4.32%
1995 13.86% 28.73% 23.53% 14.46% 20.97% 11.71% 17.58% 9.43% 15.47% 4.39%
1996 14.34% 28.87% 24.07% 14.74% 21.55% 11.86% 18.12% 9.53% 15.96% 4.40%
1997 14.48% 27.64% 23.62% 14.87% 21.36% 12.04% 18.18% 9.63% 16.09% 4.48%
1998 14.42% 27.12% 23.63% 14.79% 21.42% 11.63% 18.16% 9.12% 16.00% 4.44%
1999 14.85% 27.53% 24.18% 15.06% 21.98% 11.76% 18.66% 9.12% 16.43% 4.48%
2000 15.26% 27.45% 24.42% 15.48% 22.34% 12.04% 19.09% 9.28% 16.86% 4.60%
The IRS changed methodology, so data above and below this line not strictly comparable
2001 14.47% 28.17% 27.60% 23.91% 15.20% 21.68% 11.87% 18.35% 9.20% 16.08% 4.92%
2002 13.28% 28.48% 27.37% 23.17% 14.15% 20.76% 10.70% 17.23% 8.00% 14.87% 3.86%
2003 12.11% 24.60% 24.38% 20.92% 12.46% 18.70% 9.69% 15.57% 7.41% 13.53% 3.49%
2004 12.31% 23.06% 23.52% 20.83% 12.53% 18.80% 9.41% 15.71% 7.27% 13.68% 3.53%
2005 12.65% 22.48% 23.15% 20.93% 12.61% 19.03% 9.45% 16.04% 7.18% 14.01% 3.51%
2006 12.80% 21.94% 22.80% 20.80% 12.84% 19.02% 9.52% 16.12% 7.22% 14.12% 3.51%
2007 12.90% 21.42% 22.46% 20.66% 12.92% 18.96% 9.61% 16.16% 7.27% 14.19% 3.56%
2008 12.54% 22.67% 23.29% 20.83% 12.66% 18.87% 9.45% 15.85% 6.97% 13.79% 3.26%
2009 11.39% 24.28% 24.05% 20.59% 11.53% 18.19% 8.36% 14.81% 5.76% 12.61% 2.35%
2010 11.81% 22.84% 23.39% 20.64% 11.98% 18.46% 8.70% 15.22% 6.01% 13.06% 2.37%
2011 12.54% 22.82% 23.50% 20.89% 12.83% 18.85% 9.70% 15.82% 6.98% 13.76% 3.13%
2012 13.11% 21.67% 22.83% 20.97% 13.33% 19.21% 9.96% 16.35% 7.21% 14.33% 3.28%
2013 13.64% 27.91% 27.08% 23.20% 13.40% 20.75% 10.11% 17.28% 7.31% 14.98% 3.30%
2014 14.16% 27.67% 27.16% 23.61% 13.73% 21.25% 10.37% 17.83% 7.48% 15.52% 3.45%
  1. For data prior to 2001, all tax returns that have a positive AGI are included, even those that do not have a positive income tax liability. For data from 2001 forward, returns with negative AGI are also included, but dependent returns are excluded.
  2. Income tax after credits (the measure of “income taxes paid” above) does not account for the refundable portion of EITC. If it were included, the tax share of the top income groups would be higher. The refundable portion is classified as a spending program by the Office of Management and Budget and therefore is not included by the IRS in these figures.
  3. The only tax analyzed here is the federal individual income tax, which is responsible for more than 25 percent of the nation’s taxes paid (at all levels of government). Federal income taxes are much more progressive than federal payroll taxes, which are responsible for about 20 percent of all taxes paid (at all levels of government), and are more progressive than most state and local taxes.
  4. AGI is a fairly narrow income concept and does not include income items like government transfers (except for the portion of Social Security benefits that is taxed), the value of employer-provided health insurance, underreported or unreported income (most notably that of sole proprietors), income derived from municipal bond interest, net imputed rental income, and others.
  5. The unit of analysis here is that of the tax return. In the figures prior to 2001, some dependent returns are included. Under other units of analysis (like the Treasury Department’s Family Economic Unit), these returns would likely be paired with parents’ returns.
  6. These figures represent the legal incidence of the income tax. Most distributional tables (such as those from CBO, Tax Policy Center, Citizens for Tax Justice, the Treasury Department, and JCT) assume that the entire economic incidence of personal income taxes falls on the income earner.

[1] Individual Income Tax Rates and Tax Shares, Internal Revenue Service Statistics of Income, http://www.irs.gov/uac/SOI-Tax-Stats-Individual-Income-Tax-Rates-and-Tax-Shares.

[2] See Congressional Budget Office, The Budget and Economic Outlook: 2017 to 2027, Jan. 2017, https://www.cbo.gov/sites/default/files/115th-congress-2017-2018/reports/52370-outlook.pdf.

[3] There is strong reason to believe that capital gains realizations were unusually depressed in 2013, due to the increase in the top capital gains tax rate from 15 percent to 23.8 percent. In 2013, capital gains accounted for 26.6 percent of the income of taxpayers with over $1 million in AGI received, compared to 31.7 percent in 2014 (these calculations apply for net capital gains reported on Schedule D). Table 1.4, Publication 1304, “Individual Income Tax Returns 2014,” Internal Revenue Service, https://www.irs.gov/uac/soi-tax-stats-individual-income-tax-returns-publication-1304-complete-report.

[4] Here, “average income tax rate” is defined as income taxes paid divided by adjusted gross income.

https://taxfoundation.org/summary-latest-federal-income-tax-data-2016-update/

Story 2: Stagnating United States Economy — The Great Stagnation — Videos —

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National Income and Product Accounts
Gross Domestic Product: Fourth Quarter and Annual 2016 (Third Estimate)
Corporate Profits: Fourth Quarter and Annual 2016
Real gross domestic product (GDP) increased at an annual rate of 2.1 percent in the fourth quarter of
2016 (table 1), according to the "third" estimate released by the Bureau of Economic Analysis. In the
third quarter of 2016, real GDP increased 3.5 percent.

The GDP estimate released today is based on more complete source data than were available for the
"second" estimate issued last month.  In the second estimate, the increase in real GDP was 1.9 percent.
With this third estimate for the fourth quarter, the general picture of economic growth remains largely
the same; personal consumption expenditures (PCE) increased more than previously estimated (see
"Updates to GDP" on page 2).

Real GDP: Percent Change from Preceding Quarter
Real gross domestic income (GDI) increased 1.0 percent in the fourth quarter, compared with an
increase of 5.0 percent in the third. The average of real GDP and real GDI, a supplemental measure of
U.S. economic activity that equally weights GDP and GDI, increased 1.5 percent in the fourth quarter,
compared with an increase of 4.3 percent in the third quarter (table 1).

The increase in real GDP in the fourth quarter reflected positive contributions from PCE, private
inventory investment, residential fixed investment, nonresidential fixed investment, and state and local
government spending that were partly offset by negative contributions from exports and federal
government spending. Imports, which are a subtraction in the calculation of GDP, increased (table 2).

The deceleration in real GDP in the fourth quarter reflected downturns in exports and in federal
government spending, an acceleration in imports, and a deceleration in nonresidential fixed investment
that were partly offset by accelerations in private inventory investment and in PCE, and upturns in
residential fixed investment and in state and local government spending.

Current-dollar GDP increased 4.2 percent, or $194.1 billion, in the fourth quarter to a level of $18,869.4
billion. In the third quarter, current-dollar GDP increased 5.0 percent, or $225.2 billion (table 1 and
table 3).

The price index for gross domestic purchases increased 2.0 percent in the fourth quarter, compared
with an increase of 1.5 percent in the third quarter (table 4). The PCE price index increased 2.0 percent,
compared with an increase of 1.5 percent. Excluding food and energy prices, the PCE price index
increased 1.3 percent, compared with an increase of 1.7 percent (appendix table A).


Updates to GDP

The upward revision to the percent change in real GDP primarily reflected upward revisions to PCE and
to private inventory investment that were partly offset by downward revisions to nonresidential fixed
investment and to exports. Imports, which are a subtraction in the calculation of GDP, were revised
upward. For more information, see the Technical Note. For information on updates to GDP, see the
"Additional Information" section that follows.

                                       Advance Estimate          Second Estimate            Third Estimate

                                                     (Percent change from preceding quarter)
Real GDP                                     1.9                       1.9                       2.1
Current-dollar GDP                           4.0                       3.9                       4.2
Real GDI                                     ---                       ---                       1.0
Average of Real GDP and Real GDI             ---                       ---                       1.5
Gross domestic purchases price index         2.0                       1.9                       2.0
PCE price index                              2.2                       1.9                       2.0


2016 GDP

Real GDP increased 1.6 percent in 2016 (that is, from the 2015 annual level to the 2016 annual level),
compared with an increase of 2.6 percent in 2015 (table 1).

The increase in real GDP in 2016 reflected positive contributions from PCE, residential fixed investment,
state and local government spending, exports, and federal government spending that were partly offset
by negative contributions from private inventory investment and nonresidential fixed investment.
Imports, which are a subtraction in the calculation of GDP, increased (table 2).

The deceleration in real GDP from 2015 to 2016 reflected downturns in private inventory investment
and in nonresidential fixed investment and decelerations in PCE, in residential fixed investment, and in
state and local government spending that were partly offset by a deceleration in imports and
accelerations in federal government spending and in exports.

Current-dollar GDP increased 3.0 percent, or $532.5 billion, in 2016 to a level of $18,569.1 billion,
compared with an increase of 3.7 percent, or $643.5 billion, in 2015 (table 1 and table 3).

Real GDI increased 1.6 percent in 2016, compared with an increase of 2.5 percent in 2015 (table 1).

The price index for gross domestic purchases increased 1.0 percent in 2016, compared with an increase
of 0.4 percent in 2015 (table 4).

During 2016 (that is, measured from the fourth quarter of 2015 to the fourth quarter of 2016), real GDP
increased 2.0 percent, compared with an increase of 1.9 percent during 2015.  The price index for gross
domestic purchases increased 1.5 percent during 2016, compared with an increase of 0.4 percent during
2015.  Real GDI increased 1.9 percent during 2016, compared with an increase of 1.5 percent during
2015 (table 7).


Corporate Profits (table 12)

Profits from current production (corporate profits with inventory valuation adjustment and capital
consumption adjustment) increased $11.2 billion in the fourth quarter of 2016, compared with an
increase of $117.8 billion in the third quarter.

Profits of domestic financial corporations increased $26.5 billion in the fourth quarter, compared with
an increase of $50.1 billion in the third. Profits of domestic nonfinancial corporations decreased $60.4
billion, in contrast to an increase of $66.4 billion. The estimate of nonfinancial corporate profits in the
fourth quarter was reduced by a $4.95 billion ($19.8 billion at an annual rate) settlement between a U.S.
subsidiary of Volkswagen and the federal and state governments. For more information, see the FAQ,
"What are the effects of the Volkswagen buyback deal on GDP and the national accounts?”. The
rest-of-the-world component of profits increased $45.1 billion, compared with an increase of $1.3 billion.
This measure is calculated as the difference between receipts from the rest of the world and payments to
the rest of the world. In the fourth quarter, receipts increased $9.1 billion, and payments decreased
$36.0 billion.

In 2016, profits from current production decreased $2.3 billion, compared with a decrease of $64.0
billion in 2015. Profits of domestic financial corporations increased $20.5 billion, compared with an
increase of $8.5 billion. Profits of domestic nonfinancial corporations decreased $47.0 billion, compared
with a decrease of $47.3 billion. The rest-of-the-world component of profits increased $24.3 billion, in
contrast to a decrease of $25.2 billion.


                                      *          *          *
                           Next release:  April 28, 2017 at 8:30 A.M. EDT
                   Gross Domestic Product:  First Quarter 2017 (Advance Estimate)




                                       Additional Information

Resources

Additional Resources available at www.bea.gov:
•	Stay informed about BEA developments by reading the BEA blog, signing up for BEA’s email
        subscription service, or following BEA on Twitter @BEA_News.
•	Historical time series for these estimates can be accessed in BEA’s Interactive Data Application.
•	Access BEA data by registering for BEA’s Data Application Programming Interface (API).
•	For more on BEA’s statistics, see our monthly online journal, the Survey of Current Business.
•	BEA's news release scheduleNIPA Handbook:  Concepts and Methods of the U.S. National Income and Product Accounts

Definitions

Gross domestic product (GDP) is the value of the goods and services produced by the nation’s economy
less the value of the goods and services used up in production. GDP is also equal to the sum of personal
consumption expenditures, gross private domestic investment, net exports of goods and services, and
government consumption expenditures and gross investment.

Gross domestic income (GDI) is the sum of incomes earned and costs incurred in the production of GDP.
In national economic accounting, GDP and GDI are conceptually equal. In practice, GDP and GDI differ
because they are constructed using largely independent source data. Real GDI is calculated by deflating
gross domestic income using the GDP price index as the deflator, and is therefore conceptually
equivalent to real GDP.

Current-dollar estimates are valued in the prices of the period when the transactions occurred—that is,
at “market value.” Also referred to as “nominal estimates” or as “current-price estimates.”
Real values are inflation-adjusted estimates—that is, estimates that exclude the effects of price changes.
The gross domestic purchases price index measures the prices of final goods and services purchased by
U.S. residents.

The personal consumption expenditure price index measures the prices paid for the goods and services
purchased by, or on the behalf of, “persons.”

Profits from current production, referred to as corporate profits with inventory valuation adjustment
(IVA) and capital consumption adjustment (CCAdj) in the NIPAs, is a measure of the net income of
corporations before deducting income taxes that is consistent with the value of goods and services
measured in GDP. The IVA and CCAdj are adjustments that convert inventory withdrawals and
depreciation of fixed assets reported on a tax-return, historical-cost basis to the current-cost economic
measures used in the national income and product accounts.

For more definitions, see the Glossary: National Income and Product Accounts.


Statistical conventions

Annual rates. Quarterly values are expressed at seasonally-adjusted annual rates (SAAR), unless
otherwise specified. Dollar changes are calculated as the difference between these SAAR values. For
detail, see the FAQ “Why does BEA publish estimates at annual rates?”

Percent changes in quarterly series are calculated from unrounded data and are displayed at annual
rates, unless otherwise specified. For details, see the FAQ “How is average annual growth calculated?”

Quantities and prices. Quantities, or “real” volume measures, and prices are expressed as index
numbers with a specified reference year equal to 100 (currently 2009). Quantity and price indexes are
calculated using a Fisher-chained weighted formula that incorporates weights from two adjacent
periods (quarters for quarterly data and annuals for annual data). “Real” dollar series are calculated by
multiplying the published quantity index by the current dollar value in the reference year (2009) and
then dividing by 100. Percent changes calculated from real quantity indexes and chained-dollar levels
are conceptually the same; any differences are due to rounding.

Chained-dollar values are not additive because the relative weights for a given period differ from those
of the reference year. In tables that display chained-dollar values, a “residual” line shows the difference
between the sum of detailed chained-dollar series and its corresponding aggregate.


Updates to GDP

BEA releases three vintages of the current quarterly estimate for GDP:  "Advance" estimates are
released near the end of the first month following the end of the quarter and are based on source data
that are incomplete or subject to further revision by the source agency; “second” and “third” estimates
are released near the end of the second and third months, respectively, and are based on more detailed
and more comprehensive data as they become available.

Annual and comprehensive updates are typically released in late July. Annual updates generally cover at
least the 3 most recent calendar years (and their associated quarters) and incorporate newly available
major annual source data as well as some changes in methods and definitions to improve the accounts.
Comprehensive (or benchmark) updates are carried out at about 5-year intervals and incorporate major
periodic source data, as well as major conceptual improvements.
The table below shows the average revisions to the quarterly percent changes in real GDP between
different estimate vintages, without regard to sign.

Vintage                               Average Revision Without Regard to Sign
                                         (percentage points, annual rates)
Advance to second                                     0.5
Advance to third                                      0.6
Second to third                                       0.2
Advance to latest                                     1.1
Note - Based on estimates from 1993 through 2015. For more information on GDP updates, see Revision
Information on the BEA Web site.

The larger average revision from the advance to the latest estimate reflects the fact that periodic
comprehensive updates include major statistical and methodological improvements.

Unlike GDP, an advance current quarterly estimate of GDI is not released because data on domestic
profits and on net interest of domestic industries are not available. For fourth quarter estimates, these
data are not available until the third estimate.

https://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm 

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The Pronk Pops Show 723, July 22, 2016, Breaking News — Story 1: Mentally Depressed/Deranged Teenager Attack in Munich Germany — 9 Killed, Shooter Commits Suicide — 27 Injured – — Germany Borders Shut-Down — Videos — Story 2: Part 1 of 2, Jump On Trump Train/Plane — Videos

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Story 1: Mentally Depressed/Deranged Teenager Attack in Munich Germany — 9 Killed, Shooter Commits Suicide — 27 Injured – — Germany Borders Shut-Down — Videos 

HT_csm_Olympia_Einkaufszentrum_Muenchen_Aussenansich_hb_160722_4x3_992GTY_Munich_mall_shootingGermanyMunichShootingmunich police 2GTY_Munich_shooting_mall_peoplehgermany munich police GTY_Munich_shooting_mall munich (1)

MUNICH, GERMANY - JULY 22: Police officers respond to a shooting at the Olympia Einkaufzentrum (OEZ) at July 22, 2016 in Munich, Germany. According to reports, several people have been killed and an unknown number injured in a shooting at a shopping centre in the north-western Moosach district in Munich. Police are hunting the attacker or attackers who are thought to be still at large. (Photo by Joerg Koch/Getty Images)

MUNICH, GERMANY – JULY 22: Police officers respond to a shooting at the Olympia Einkaufzentrum (OEZ) at July 22, 2016 in Munich, Germany. According to reports, several people have been killed and an unknown number injured in a shooting at a shopping centre in the north-western Moosach district in Munich. Police are hunting the attacker or attackers who are thought to be still at large. (Photo by Joerg Koch/Getty Images)

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Munich shooting: shopping centre attack treated as terrorism by police as hunt for three gunmen continues and six confirmed dead

Watch live: Munich shooting latestPlay!Live

  • 00:24POLICE ARRIVE AT THE SCENE OF SHOOTING IN MUNICH
  • 00:32PEOPLE RUN FROM SCENE OF SHOOTING IN MUNICH
  • 00:25FOOTAGE APPEARS TO SHOW SHOOTER OPEN FIRE ON PEOPLE OUTSIDE SHOPPING MALL IN MUNICH

 

  • Gunman in Munich opens fire at a McDonalds by the Olympia shopping centre
  • Police describe shooting as terrorism
  • Police hunt three gunmen, believed to still be in Munich
  • Six confirmed dead
  • Unconfirmed reports that there could be shootings in city centre
  • Islamic State supporters celebrate on social media

Munich police are hunting for three gunmen who they believe have carried out attacks at three locations in the city.

On Twitter, the local forces said shootings had taken place at Hanauer Straße, then the Riesstraße, and also at the Olympia shopping center.

Yet the local state broadcaster said there was only one location – the shopping centre.

Police described the attacks as terrorism, and said the three gunmen are believed to still be in the city.

Lynn Stein, who works inside the Olympia centre, told CNN a woman told her “masked gunmen dressed in black” had been seen running through the centre.

Germany’s Muencher Abendzeitung reported that the death toll was higher, with up to 15 people killed in the incident at the Olympia Einkaufszentrum shopping centre.

Police told another paper, the Sueddeutsche Zeitung, that there were multiple deaths.

“There is a major police operation under way in the shopping centre,” Munich police said on Twitter, without elaborating.

An employee inside the shopping centre told the Reuters news agency “many shots were fired”.

Video shows people fleeing from the scene, which has now been cordoned off, according to reports.

 

Footage appears to show shooter open fire on people outside shopping mall in MunichPlay!00:25

Germany has been on high alert after a teenage asylum seeker attacked people with an axe on a train on Monday, injuring five.

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8:35pm

Has one of the gunmen killed himself?

BREAKING:  A report by German magazine Focus, citing police sources, claims a gunman shot himself in the head. The report has not been verified.

8:33pm

Panic around the McDonalds

Our correspondent Zia Weise, who is from Munich, has been listening to Bavarian Radio, where a woman has given an eyewitness account.

We were in McDonald’s and wanted to eat something. We were queueing.

Then panic erupted.

The staff ran out and all the people followed behind them. Children were crying. Everybody running out in panic.

We heard three shots. Bang, bang… bang.

I didn’t see him. As far as I know this was upstairs at the Douglas [drug store, like Boots], we were downstairs.

8:23pm

Munich police giving press conference now

– Attack is terrorism

– At least five dead; unclear if children involved

– We believe three perpetrators, we think they are still at large

– They used a long weapon, longer than a pistol, something like a rifle

– We assume the gunmen are still in Munich

– All the clinics in Munich are on alert

8:22pm

Police swarm over the city

Muich

Police in Munich CREDIT: AP

 

8:20pm

Obama speaking now

We don’t yet know what is happening there.

Obviously our heart goes out to those caught up with it.

It’s a good reminder of something I’ve said over the last few weeks.

Our way of life, our freedoms, our ability to go about our daily lives, to raise our kids, to see them grow up and leave – I’m sorry, I’m getting too personal.

That all depends on law enforcement.

Obviously we have gone through a really tough time in the last few weeks, on a whole lot of fronts.

In recent weeks I’ve had the job of speaking to the widows of those police killed in Baton Rouge.

He is still speaking now, but has moved on to domestic issues.

8:03pm

Obama has been briefed on Munich

President Obama is at the White House, hosting his Mexican counterpart Enrique Pena Nieto.

He has described Germany as “a great ally” and says he is monitoring the situation.

8:01pm

Islamic State supporters celebrate on social media

(Reuters) – Supporters of the Islamic State jihadi group celebrated on social media a shooting rampage in a shopping mall in the southern German city of Munich on Friday that killed and wounded many people.

“Thank God, may God bring prosperity to our Islamic State men,” read one tweet in Arabic on an account that regularly favours the radical Islamist movement.

“The Islamic State is expanding in Europe,” read an Arabic-language tweet on another account also known to support the group.

The attack was the third major act of violence against civilian targets in Western Europe in eight days. Previous attacks in France and Germany were claimed by Islamic State and Munich police said they suspected the latest assault was a terrorist attack.

7:47pm

Police request – in three languages – that people avoid centre

Munich police are now tweeting in German, English and French.

7:35pm

Munich’s main train station evacuated

The city of Munich is in chaos.

  • Main train station evacuated
  • Helicopters overhead
  • Subway and bus stations shut
  • Olympia shopping centre attacked
  • Some reports suggest city centre attack, too

7:33pm

Image of the gunman at McDonalds

Munich McDonalds has been attacked
This image appears to show the gunman, on the right of the screen, just before he opens fire CREDIT: TWITTER

 

7:28pm

One site or multiple?

In news that contradicts the Munich police:

BAVARIAN BROADCASTER BR SAYS SIX PEOPLE DEAD AND MANY INJURED IN MUNICH SHOOTING IN SHOPPING CENTRE, NO ADDITIONAL SITES

7:26pm

Calls for doctors and nurses to report to hospital

Our Germany correspondent, Justin Huggler, has the following:

General call put out for any doctors and nurses available to report to the hospital where injured have been taken.

Bavarian state government holding crisis meeting

7:21pm

“Masked gunmen in black”

Lynn Stein, who worked in a shop inside the centre, tells CNN that a woman told her she’d seen masked gunmen, in black, running through the shopping centre.

7:19pm

Unconfirmed footage appears to show shooter open fire in Munich

Footage appears to show shooter open fire on people outside shopping mall in MunichPlay!00:25

 

7:18pm

Lynn Stein was inside the shopping centre at the time

Lynn Stein, who works in a shop inside the centre, told CNN:

I was in a neighbouring store when shots were fired.

People started running. More shots were fired.

People were screaming.

Then I heard several shots at the parking house next to the mall. I went back inside the wall, to check on my co-workers.

When I went there there was a couple of people coming in towards me, and I told them to leave as I continued towards my store.

A man told me he saw a gunman.

I ran outside, and police told me to leave. Which I did.

This was about 15 minutes after it happened, and I was evacuated.

7:15pm

British witness Victor Wood, who lives in Munich, speaks to BBC

I was leaving the shopping centre from the side entrance and as we were about to go into the U-bahn, we heard shooting.

We couldn’t see where it was coming from – there was a building in between us.

When I got out of the U-bahn a couple of minutes later we saw all the police cars and realised what had happened.

The shopping centre is like a L-shape. It was quite busy – there were a lot of people in there.

We didn’t hear screaming but we were leaving from the side exit so it was hard to see what was going on. But local media reports someone coming out of the McDonalds and shooting a hand gun.

It took about four or five minutes for police to arrive I would say. We managed to get on one of the last trains before they closed the transport system.

Before I came out to Germany, I had been in the air force, so I am used to the sound of gunshots, and it was definitely shooting – you don’t hear that kind of sound in the city.

No one expects something like this to happen in their front garden.

I think Munich is well equipped to handle it though. Police presence is fairly low key, police officers have weapons but you don’t see people walking around with machine guns, for example.”

7:12pm

Three gunmen being hunted

Munich police are searching for three gunmen, they said on Twitter.

7:06pm

Second location under attack?

Munich police believe that a second site, in the centre of town, may have been attacked.

All very unclear at the moment.

7:04pm

Munich residents open their homes to terrified locals

More from Zia Weise:

Munich residents are using the hashtag #offenetür (“open door”) to offer shelter. 

There are reports (unconfirmed) on Twitter that taxi drivers are getting messages from police to avoid the city centre and not to pick up any passengers. 

7:03pm

German police trying to get the situation under control

Munich is on lockdown
German police rush to the scene CREDIT: EPA

 

7:00pm

Situation chaotic in Munich

Our correspondent Zia Weise, who was born in Munich, has translated the German police twitter feed for us.

It gives a sense of how confused the situation remains.

We do not know where the shooter is. Take care and avoid going outside.” – 10 mins ago

We are aware of shooting rumours in city centre. Situation is unclear. Please stay inside.” – 17 mins ago (But reporters there say nothing’s happening)

Please do not put images or videos of police operations online. Do not support the perpetrators!” – 20 mins ago

Avoid public places in Munich. The situation is unclear.” – 40 mins ago

6:57pm

Munich police do not know where the gunmen are

Police have just said that they do not know where the perpetrators – plural – are.

6:56pm

Police request that no photos or videos be posted online

Interior ministry confirms three dead

Bild, the German tabloid, quotes the German interior ministry as saying three people have been killed.

6:43pm

Images from the scene

A gunman has been seen inside a German shopping centre
Police outside the shopping centre in Munich CREDIT: TWITTER
German shopping centre has been attacked
Police in Munich CREDIT: AP

 

6:37pm

Munich residents told to stay indoors

Our correspondent, Zia Weise, reports:

Süddeutsche Zeitung is reporting an unspecified number of deaths. Police has confirmed injuries, but no deaths. 

Police have told people to remain inside as the situation is still not resolved. Rumours of a second attacker in the city centre are untrue, reporters in Munich say. 

The shopping centre (Olympia Einkaufszentrum) is a complex built in the 70s, close to the Olympic sports complex in Western Munich.

6:32pm

“A shooting rampage”

From Reuters:

MUNICH POLICE SPOKESWOMAN SAYS “WE BELIEVE WE ARE DEALING WITH A SHOOTING RAMPAGE”

6:25pm

‘More than one gunman involved’

Police in Munich apparently believe that more than one gunman is involved in the shopping center attack.

6:21pm

Transport services halted

Transport authorities have halted services on multiple train, tram and bus lines.

6:18pm

Pictures emerge of the scene

Pictures have emerged of the massive police operation outside the shopping centre.

Munich attack
CREDIT: AP
The scene outside the shopping centre in Munich
Police outside the shopping centre in Munich CREDIT: TWITTER

 

6:14pm

Witness: “many shots”

Employees are still hiding out in the shopping centre, with one telling Reuters by phone that “many shots were fired” during the shooting.

6:13pm

“Multiple deaths”: police

Police told the Sueddeutsche Zeitung newspaper that there were multiple deaths in the shooting at the Olympia Einkaufszentrum shopping centre.

6:06pm

Shooting over: police spokesperson

Police spokeswoman Claudia Kvenzel has told CNN that the shooting is now over.

5:59pm

Reports of deaths

There have been reports of at least one death, though details are hazy.

A police source has told the AFP news agency that one person has died and ten people have been injured in the attack, while local media is saying as many as 15 people may have died.

http://www.telegraph.co.uk/news/2016/07/22/shots-fired-at-munich-shopping-centre/

Second shooting in Munich as gunman opens fire at Marienplatz Metro station

A SECOND shooting has unfolded in a U-Bahn/Metro station in Munich, Germany just minutes after a gunman opened fire at a shopping centre in the Bavarian city.

Munich police live footage of the aftermath of the second shootingTWITTER/GETTY

MUNICH: Second shooting in German city

**WATCH LIVE FOOTAGE FROM THE AFTERMATH OF THE TWO SHOOTINGS**

An evacutation has taken place at the Marienplatz Metro station.

It is not yet known how many people have been wounded.

The second shooting follows an attack which took place earlier today at a shopping centre in Munich.

Over a dozen people are believed to have died at the scene – with six deaths already having been confirmed.

It is thought that the three attackers who carried out the shooting at the Munich shopping centre, fled into the U-Bahn/Metro network.

HELICOPTERS: Police choppers circle over an area near Marienplatz

Munich’s main train station – München Hauptbahnhof – has also been evacuated according to AFP.In addition to the train station, U-Bahn/Metro and the city’s bus station has been closed with no services set to resume until further notice.Transport in the German capital has ground to a halt as a consequence.
Webcam footage in the Marienplatz U-Bahn square emptyEVACUATED: The square – Marienplatz has been cleared as webcam footage shows
http://www.dailystar.co.uk/news/latest-news/532147/Munich-shooting-Deutschland-Metro-Station

 

Munich shopping centre attack: Video shows moment gunman opens fire at shopping centre

19:58, 22 JUL 2016 UPDATED 20:17, 22 JUL 2016
BY SAM ADAMS , SAM WEBB , GEMMA MULLIN
The busy city centre street is plunged into chaos when a man in a cap and sunglasses open fire with what appears to be a handgun outside a McDonalds restaurant
This chilling video captures the moment a gunman opened fire on innocent bystanders outside a packed shopping centre in Munich.

The busy street is plunged into chaos when a man wearing a cap and sunglasses opens fire with what appears to be a shotgun outside a McDonald’s.

Terrified bystanders, including the unnamed witness filming the scene, flee in fear as a barrage of at least 18 shots can be heard ringing out.

Six people have been killed and many more have been injured at around 6pm tonight, according to German public broadcaster BR.

Witnesses have reported shooting inside the Olympia mall with terrified shoppers filming the scenes inside.

READ MORE
Munich shooting: Live updates as armed police swoop on shopping centre where active gunman is on loose
The shooting took palce outside a McDonalds
He raises his gun and fires at passers by
Further video footage shows a man dressed in black with a red rucksack shooting from the roof of a car park.

Armed and armoured cops flooded the streets around the Olympia-Einkaufszentrum (OEZ) shopping mall in the centre of the German city, which has been sealed off.

It is unclear how many gunmen were involved but witnesses have reported seeing at least three different attackers.

Police told people to stay in their homes or to seek shelter indoors – and admit they don’t know where the gunmen are.

Munich police tweeted: “The suspects are still on the run. Please avoid public places.”

The force added: “Please don’t take Fotos or Video of Police Action in order to avoid any helpful Information for the suspects.”

TwitterSuspected shooter seen on the roof of the Munich shopping centreSuspected shooter seen on the roof of the Munich shopping centre

In a second video, captured by a terrified member of the public, an unknown man is seen walking across the roof of the shopping centre’s car park.

Clad in all black, the man wanders all alone before he suddenly turns and pulls out what looks like a handgun.

ISIS-related social media accounts have been sharing reports of the attack, but reports in German newspaper Bild suggests right-wing extremists are responsible.

In pictures posted online, a person can be seen lying on the ground covered in blood.

Dozens of police vehicles can be seen lining the street outside the shopping centre, and a number of armed officers and a helicopter are at the scene.

A cordon appears to be in place and the area has been evacuated.
The shopping centre in the northern part of Munich is not far from the city’s Olympic stadium in the Moosach district of the Bavarian capital.

British nationals in Germany are being advised to comply with instructions from local authorities.

A Foreign Office spokesman said: “We are urgently investigating an incident in Munich and stand ready to provide assistance to British nationals.”
Munich Police said in a statement: “At around ten to six today there were witnesses who called the police and said there was a shooting at the Hanauer Street.

“The shooting moved from that street to the shopping centre. The witnesses said there were three different people with weapons.”

GettyPolice secure the entrance to a subway station
Police secures teh area of a subway station Karlsplatz (Stachus) near a shopping mall following a shooting on July 22, 2016 in Munich. Several people were killed on Friday in a shooting rampage by a lone gunman in a Munich shopping centre, media reports said / AFP PHOTO / dpa / Andreas Gebert / Germany OUTANDREAS GEBERT/AFP/Getty Images
NTV television reported that German police special forces had arrived at the scene.

“Many shots were fired, I can’t say how many but it’s been a lot,” an employee, who declined to be identified, said from the mall in Munich.

“All the people from outside came streaming into the store and I only saw one person on the ground who was so severely injured that he definitely didn’t survive.”

“We have no further information, we’re just staying in the back in the storage rooms.”

PArmed cops run near the shopping mall
This unverified picture from the scene appears to show emergency services and a person lying on the ground
The shopping centre is next to the Munich Olympic stadium, where the Palestinian militant group Black September took 11 Israeli athletes hostage and eventually killed them during the 1972 Olympic Games.

Friday’s attack took place a week after a 17-year-old asylum-seeker wounded passengers on a German train in an axe rampage claimed by Islamic State.

http://www.mirror.co.uk/news/world-news/munich-shopping-centre-attack-video-8474976

 

Story 2: Jump On Trump Train/Plane — Videos

Full speech: Ivanka Trump addresses the 2016 RNC

Donald J. Trump | Full Speech | Republican National Convention

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Full speech: Donald Trump accepts GOP nomination, Part 2

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PLEASE NOTE THESE VIDEOS WERE POSTED 6 Years Ago

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What is the FairTax legislation?

Does the FairTax repeal the federal income tax?

Is the FairTax truly progressive?

How does the “prebate” work?

Will the prebate create a massive new entitlement system?

Is it fair for rich people to get the same prebate as poor people?

How does the FairTax affect the economy?

Is consumption a reliable source of revenue?

How does the FairTax impact the middle class?

How does the FairTax impact savings?

Is education taxed under the FairTax?

How will used goods be taxed?

Isn’t it a stretch to say the IRS will go away?

How does the FairTax affect compliance costs?

Does the FairTax protect privacy and other civil liberties?

How will the FairTax affect state sales tax systems?

Why is the FairTax better than other tax reform efforts?

How does the FairTax rate compare to today’s?

Is the FairTax rate really 23%?

Are any significant economies funded by a sales tax?

What will the transition be like from the income tax to the FairTax?

How does the FairTax impact charitable giving?

If people bring home their whole paychecks how can prices fall?

What will happen to government programs like Social Security and Medicare?

How will Social Security payments be calculated under the FairTax?

How will the FairTax impact seniors?


Below are Senator Ted Cruz’s full remarks at the 2016 GOP Convention 

Thank you. Heidi and I are honored to join you here in Cleveland, where Lebron James just led an incredible comeback victory. I’m convinced America is going to come back too.

I congratulate Donald Trump on winning the nomination last night.

Conventions are times of excitement. But given the events of the last few weeks, I hope you’ll allow me a moment to talk to you about what’s really at stake.

Just two weeks ago, a nine-year-old girl named Caroline was having a carefree Texas summer – swimming in the pool, playing with friends, doing all the things a happy child might do.

Like most children, she took for granted the love she received from her mom, Heidi, and her dad, a police sergeant named Michael Smith. That is, until he became one of the five police officers gunned down in Dallas.

The day her father was murdered, Caroline gave him a hug and kiss as he left for work. But as they parted, her dad asked her something he hadn’t asked before:

“What if this is the last time you ever kiss or hug me?'”

Later, as she thought of her fallen father, and that last heartbreaking hug, Caroline broke down in tears. How could anything ever be OK again?

Michael Smith was a former Army ranger who spent three decades with the Dallas Police Department. I have no idea who he voted for in the last election, or what he thought about this one. But his life was a testament to devotion. He protected the very protestors who mocked him because he loved his country and his fellow man. His work gave new meaning to that line from literature, “To die of love is to live by it.”

As I thought about what I wanted to say tonight, Michael Smith’s story weighed on my heart. Maybe that’s because his daughter, Caroline, is about the same age as my eldest daughter and happens to share the same name. Maybe it’s because I saw a video of that dear, sweet child choking back sobs as she remembered her daddy’s last question to her. Maybe it’s because we live in a world where so many others have had their lives destroyed by evil, in places like Orlando and Paris and Nice and Baton Rouge. Maybe it is because of the simple question itself:

What if this, right now, is our last time? Our last moment to do something for our families and our country?

Did we live up to our values? Did we do all we could?

That’s really what elections should be about. That’s why you and millions like you devoted so much time and sacrifice to this campaign.

We’re fighting, not for one particular candidate or one campaign, but because

each of us wants to be able to tell our kids and grandkids, our own Carolines, that we did our best for their future, and for our country.

America is more than just a land mass between two oceans. America is an idea, a simple yet powerful idea: freedom matters.

For much of human history, government power has been the unavoidable constant in life – government decrees, and the people obey.

Not here. We have no king or queen. No dictator. We the People constrain government.

Our nation is exceptional because it was built on the five most powerful words in the English language: I want to be free.

Never has that message been more needed than today.

We stand here tonight a nation divided. Partisan rancor, anger, even hatred are tearing America apart.

And citizens are furious—rightly furious—at a political establishment that cynically breaks its promises and ignores the will of the people.

We have to do better. We owe our fallen heroes more than that.

Of course, Obama and Clinton will tell you that they also care about our children’s future. And I want to believe them. But there is a profound difference in our two parties’ visions for the future.

Theirs is the party that thinks ISIS is a “JV team,” that responds to the death of Americans at Benghazi by asking, “What difference does it make?” That thinks

it’s possible to make a deal with Iran, which celebrates as holidays “Death to America Day” and “Death to Israel Day.”

My friends, this is madness.

President Obama is a man who does everything backwards – he wants to close Guantanamo Bay and open up our borders, he exports jobs and imports terrorists.

Enough is enough.

There is a better vision for our future: A return to freedom.

On education, your freedom to choose your child’s education, even if you aren’t as rich as Hillary Clinton or Barack Obama.

On healthcare, your freedom to choose your own doctor, without Obamacare.

On taxes, your freedom to provide for your family without the IRS beating down your door.

The Internet? Keep it free from taxes, free from regulation. And don’t give it away to Russia and China.

Freedom means free speech, not politically correct safe spaces.

Freedom means religious freedom, whether you are Christian or Jew, Muslim or atheist. Gay or straight, the Bill of Rights protects the rights of all of us to live according to our conscience.

Freedom means the right to keep and bear arms, and protect your family.

Freedom means Supreme Court Justices who don’t dictate policy, but instead follow the Constitution.

And freedom means recognizing that our Constitution allows states to choose policies that reflect local values. Colorado may decide something different than Texas. New York different than Iowa. Diversity. That’s the way it’s supposed to be. If not, what’s the point of having states to begin with?

Hillary Clinton believes government should make virtually every choice in your life. Education, healthcare, marriage, speech – all dictated out of Washington.

But something powerful is happening. We’ve seen it in both parties. We’ve seen it in the United Kingdom’s unprecedented Brexit vote to leave the European Union.

Voters are overwhelmingly rejecting big government. That’s a profound victory.

People are fed up with politicians who don’t listen to them, fed up with a corrupt system that benefits the elites, instead of working men and women.

We deserve an immigration system that puts America first. And yes, builds a wall to keep us safe.

That stops admitting ISIS terrorists as refugees.

We deserve trade policies that put the interests of American farmers and manufacturing jobs over the global interests funding the lobbyists.

And if we choose freedom, our future will be brighter.

Freedom will bring back jobs, raise wages.

Freedom will lift people out of dependency, to the dignity of work.

We can do this. 47 years ago today, America put a man on the moon. That’s the power of freedom.

Our party was founded to defeat slavery. Abraham Lincoln, the first Republican president, signed the Emancipation Proclamation.

We passed the Civil Rights Act, and fought to eliminate Jim Crow laws.

Those were fights for freedom, and so is this.

Sergeant Michael Smith stood up to protect our freedom.

So do our soldiers, sailors, airmen, and Marines fighting radical Islamic terrorism.

So did the family of Alton Sterling, who bravely called to end the violence.

So did the families of those murdered at the Charleston Emanuel AME church, who forgave that hateful, bigoted murderer.

And so can we.

We deserve leaders who stand for principle. Unite us all behind shared values. Cast aside anger for love. That is the standard we should expect, from everybody.

And to those listening, please, don’t stay home in November. Stand, and speak, and vote your conscience, vote for candidates up and down the ticket who you trust to defend our freedom and to be faithful to the Constitution.

It’s love of freedom that has allowed millions to achieve their dreams. Like my Mom, the first in her family to go to college, and my Dad, who fled prison and torture in Cuba, coming to Texas with just $100 sewn into his underwear.

And it is love that I hope will bring comfort to a grieving 9-year-old girl in Dallas – and, God willing, propel her to move forward, and dream, and soar . . . and make her daddy proud.

We must make the most of our moment – to fight for freedom, to protect our God-given rights, even of those with whom we don’t agree, so that when we are old and gray . . . and our work is done . . . and we give those we love one final kiss goodbye . . . we will be able to say, “Freedom matters, and I was part of something beautiful.”

Thank you. And may God bless the United States of America.

 https://www.conservativereview.com/commentary/2016/07/full-text-of-cruzs-speech-trump-supporters-didnt-want-you-to-hear#sthash.d09iO504.dpuf

All day, buzz was surrounding the highly anticipated Sen. Ted Cruz, R-Texas (A, 97%) primetime speech at the GOP Convention. “Will he endorse Trump?” “Will he orchestrate his speech for a 2020 run?”

But when Ted Cruz took the stage at 9:30 p.m. Wednesday, everyone was silent, and it was all his show. But the speech wasn’t about “any particular candidate or campaign,” as Cruz said. It was about freedom.

Here’s the reaction:

Then came the big story when Cruz bravely uttered the phrase:“vote your conscience.” Having given a speech about foundational conservative principles, Cruz closed his speech without endorsing the GOP nominee.

Many praised Cruz for his “courage.”

Even Republican strategist Rick Wilson credited Cruz with a hashtag “strange new respect!”

The New York delegation and others, once they realized Cruz’s speech would not include an endorsement, shouted “we want Trump!” to protest.

But according to some “sources,” Trump’s team may have orchestrated that …

What’d you think of the powerful, eloquent, highly controversial speech?

 https://www.conservativereview.com/commentary/2016/07/verdict-on-ted-cruzs-biggest-speech-ever-nailed-it#sthash.QxlAXumP.dpuf

 

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The Pronk Pop Show 703, June 21, 2016, June 21, 2016, Story 1: Timeline of Radical Islamic Terrorist Jihadist Shootings at Pulse Night Club in Orlando, Florida –The Missing 911 Transcripts Pages, Audio and Videos Not Released — For Three Hours Victims Were Bleeding Out From Wounds — Do Not Depend On Government To Protect You; Story 2: It is Jobs, The Economy and National Security — Stopping and Reversing The 30-50 Million Illegal Alien Invasion of The United States — Hillary Reads Prepared Speech On Economy and Attacks Trump To Small Ohio Audience — Indict Hillary and Vote Trump — Videos

Posted on June 21, 2016. Filed under: 2016 Presidential Campaign, 2016 Presidential Candidates, American History, Blogroll, Breaking News, Communications, Congress, Corruption, Countries, Crime, Donald J. Trump, Donald J. Trump, Donald Trump, Economics, Education, Employment, Fiscal Policy, Government, Government Dependency, Government Spending, Hillary Clinton, Hillary Clinton, Hillary Clinton, History, Homicide, House of Representatives, Illegal Immigration, Illegal Immigration, Immigration, Independence, Labor Economics, Language, Law, Legal Immigration, Life, Monetary Policy, Philosophy, Photos, Politics, Scandals, Second Amendment, Senate, Taxation, Taxes, Terror, Terrorism, Trade Policy, United States Constitution, United States of America, Videos, War, Wealth, Wisdom | Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , |

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Story 1: Timeline of  Radical Islamic Terrorist Jihadist Shootings at Pulse Night Club in Orlando, Florida –The Missing 911 Transcript Pages, Audio and Videos Not Released — For Three Hours Victims Were Bleeding Out From Wounds — Do Not Depend On Government To Protect You!

“I pledge allegiance to Abu Bakr al-Baghdadi may Allah (God) protect him [Arabic], on behalf of the Islamic State.”

~Omar Marteen, Islamic Soldier

Judge Nap Blasts DOJ for ‘Trying to Rewrite History’ With Orlando Transcripts

Orlando nightclub shooting: Shooter used SIG Sauer MCX to kill 49 people and not a AR-15 – TomoNews

New Sig Sauer MCX 5.56 Rifle

ORLANDO SHOOTING – WEAPON USED – SIG SAUER MCX – BLACK MAMBA

What’s an ASSAULT RIFLE for DUMMIES

EDUCATE YOURSELF ~ Semi-Auto Firearms vs Fully-Automatic Firearms

AR-15 – The Beginner’s Guide – What to Know About the AR-15

ULTIMATE AR-15 MELTDOWN!

In this video we attempt to burn out an AR-15 upper on an M16 lower. We are testing the durability of not only the upper receiver assemby but few specific products as well including the SRC Relia-Bolt BCG, Geissele Super Gas Block, and one of the most affordable AR barrels on the market from Faxon Firearms.

The results may surprise you.

Tavor TAR-21 Assault Rifle

What rifle should I buy?

AR-15 Reliability Demonstration

AR vs AK: Practical Accuracy

The Truth About Wolf Ammo

Transcript of Orlando Police Department 911 Calls, June 12, 2016

Transcript of Orlando Police Department 911 Calls, June 12, 2016

2:35 a.m.: Shooter contacted a 911 operator from inside Pulse. The call lasted approximately 50 seconds, the details of which are set out below:

(OD) Orlando Police Dispatcher

(OM) Omar Mateen

OD: Emergency 911, this is being recorded.

OM: In the name of God the Merciful, the beneficent [Arabic]

OD: What?

OM: Praise be to God, and prayers as well as peace be upon the prophet of God [Arabic]. I wanna let you know, I’m in Orlando and I did the shootings.

OD: What’s your name?

OM: My name is I pledge of allegiance to Abu Bakr al-Baghdadi of the Islamic State.

OD: Ok, What’s your name?

OM: I pledge allegiance to Abu Bakr al-Baghdadi may God protect him [Arabic], on behalf of the Islamic State.

OD: Alright, where are you at?

OM: In Orlando.

OD: Where in Orlando?

[End of call.]

Patrial 911 transcript released by the FBI (including redacted material):

The following is based on Orlando Police Department (OPD) radio communication (times are approximate): 2:02 a.m.: OPD call transmitted multiple shots fired at Pulse nightclub. 2:04 a.m.: Additional OPD officers arrived on scene. 2:08 a.m.: Officers from various law enforcement agencies made entrance to Pulse and engaged the shooter. 2:18 a.m.: OPD S.W.A.T. (Special Weapons & Tactics) initiated a full call-out. 2:35 a.m.: Shooter contacted a 911 operator from inside Pulse. The call lasted approximately 50 seconds, the details of which are set out below:

Orlando Police Dispatcher (OD)
Shooter (OM)

OD: Emergency 911, this is being recorded.
OM: In the name of God the Merciful, the beneficial [in Arabic]
OD: What?
OM: Praise be to God, and prayers as well as peace be upon the prophet of God [in Arabic]. I let you know, I’m in Orlando and I did the shootings.
OD: What’s your name?
OM: My name is I pledge of allegiance to [omitted].
OD: Ok, What’s your name?
OM: I pledge allegiance to [omitted] may God protect him [in Arabic], on behalf of [omitted].
OD: Alright, where are you at?
OM: In Orlando.
OD: Where in Orlando?
[End of call.]

(Shortly thereafter, the shooter engaged in three conversations with OPD’s Crisis Negotiation Team.) 2:48 a.m.: First crisis negotiation call occurred lasting approximately nine minutes. 3:03 a.m.: Second crisis negotiation call occurred lasting approximately 16 minutes. 3:24 a.m.: Third crisis negotiation call occurred lasting approximately three minutes.

In these calls, the shooter, who identified himself as an Islamic soldier, told the crisis negotiator that he was the person who pledged his allegiance to [omitted], and told the negotiator to tell America to stop bombing Syria and Iraq and that is why he was “out here right now.” When the crisis negotiator asked the shooter what he had done, the shooter stated, “No, you already know what I did.” The shooter continued, stating, “There is some vehicle outside that has some bombs, just to let you know. You people are gonna get it, and I’m gonna ignite it if they try to do anything stupid.” Later in the call with the crisis negotiator, the shooter stated that he had a vest, and further described it as the kind they “used in France.” The shooter later stated, “In the next few days, you’re going to see more of this type of action going on.” The shooter hung up and multiple attempts to get in touch with him were unsuccessful. 4:21 a.m.: OPD pulled an air conditioning unit out of a Pulse dressing room window for victims to evacuate.

(While the FBI will not be releasing transcripts of OPD communication with victims, significant information obtained from those victims allowed OPD to gain knowledge of the situation inside Pulse.) 4:29 a.m.: As victims were being rescued, they told OPD the shooter said he was going to put four vests with bombs on victims within 15 minutes.

(An immediate search of the shooter’s vehicle on scene and inside Pulse ultimately revealed no vest or improvised explosive device.) 5:02 a.m.: OPD SWAT and OCSO Hazardous Device Team began to breach wall with explosive charge and armored vehicle to make entry. 5:14 a.m.: OPD radio communication stated that shots were fired. 5:15 a.m.: OPD radio communication stated that OPD engaged the suspect and the suspect was reported down.

American ISIS Video Praises Orlando & Threatens Euro 2016

Published on Jun 20, 2016

ISIS has released a new video in the wake of the mass shooting at the Pulse gay nightclub in Orlando, which left 49 people dead. The video shows a man named Abu Isma’il Al-Amriki, who claims to be an American ISIS fighter, along with other alleged fighters identified as American, French, Russian and Uzbek. In the video, the fighters praise Orlando shooter Omar Mateen and urge other Muslims to follow his example by carrying out more “lone wolf” attacks on the US. One fighter also mentions a “surprise” operation at the Euro 2016 soccer tournament in France. We take a look at the video on the Lip News with Jo Ankier, Mark Sovel and Elliot Hill.

Orlando Shooting Video Inside Nightclub Bathroom

Orlando Shooting 911 Transcripts Reveal Timeline

Government Censors, Then Restores Terror Details of Orlando Shooting

How the Pulse nightclub shooting unfolded

Orlando nightclub survivor: He wanted to kill us all

From nightclub to room full of bodies: The Orlando shooting timeline

Orlando: New footage and survivor accounts

‘He was right next to me’: Orlando shooting survivor – BBC Newsnight

Extended cut: Orlando shooting survivor describes horror of attack

RAW VIDEO: Patience Carter recalls Orlando shooting massacre

Orlando Nightclub Massacre: A Timeline of What Happened

Orlando Shooting Latest: Unredacted Transcript of Gunman’s 911 Call Released [UPDATE]

The FBI has released transcripts of Omar Mateen’s conversation with a 911 operator the night of the Pulse Orlando massacre.

By June 21, 2016

Just more than a week after Omar Mateen walked into a crowded Orlando nightclub and opened fire on those gathered there, the FBI has shed more light on just what happened during the early morning hours of June 12.

Ron Hooper, the FBI’s special agent in charge, on Monday spoke of Mateen’s 911 calls to Orlando dispatchers the night of the worst mass shooting in American history. Mateen, Hooper said, was “chilling, calm and deliberate” during those calls.

The FBI released transcripts of Mateen’s calls on Monday. The agency also provided a timeline of events that unfolded at the Pulse Orlando Night Club & Ultra Bar, a popular gay club. Audio of Mateen’s 911 calls and those placed by victims are not being released.

Initially, authorities released only a partial transcript of calls, redacting Mateen’s pledges of allegiance to the Islamic State. U.S. Attorney General Loretta Lynch said in interviews on various news channels on Sunday that the purpose of redacting the transcripts was to not re-victimize those that lived through the attack.

Shortly after the transcripts were released, the government came under criticism for redacting the transcripts, prompting the FBI and the Department of Justice to release a joint statement with the full transcript from the 911 call.

The president should reverse his administration’s decision to censor the shooter’s 911 transcript ⇩

“The purpose of releasing the partial transcript of the shooter’s interaction with 911 operators was to provide transparency, while remaining sensitive to the interests of the surviving victims, their families, and the integrity of the ongoing investigation. We also did not want to provide the killer or terrorist organizations with a publicity platform for hateful propaganda,” the joint FBI and DOJ statement said. “Unfortunately, the unreleased portions of the transcript that named the terrorist organizations and leaders have caused an unnecessary distraction from the hard work that the FBI and our law enforcement partners have been doing to investigate this heinous crime. As much of this information had been previously reported, we have re-issued the complete transcript to include these references in order to provide the highest level of transparency possible under the circumstances.”

The FBI’s investigation into Mateen’s past remains very much active, Hooper said. So does its probe into what motivated Mateen to kill 49 people and wound 53 others before he was shot and killed by authorities.

Hooper on Monday said the FBI has found no evidence that Mateen was connected to an Islamic terrorist group. Instead, he said, the 29-year-old was “radicalized domestically.”

Lynch is expected to visit Orlando on Tuesday. Lynch will be updated on the investigation and is expected to speak to survivors of the attack, authorities said Monday.

The timeline and transcripts of the calls are as follows, quoted directly from the FBI’s release of information. The transcript of the 911 call is not redacted, however the transcripts of the calls with hostage negotiators remain redacted:

2:35 a.m.: Shooter contacted a 911 operator from inside Pulse. The call lasted approximately 50 seconds, the details of which are set out below:
(OD) Orlando Police Dispatcher
(OM) Omar Mateen
OD: Emergency 911, this is being recorded.
OM: In the name of God the Merciful, the beneficent [Arabic]
OD: What?
OM: Praise be to God, and prayers as well as peace be upon the prophet of God [Arabic]. I wanna let you know, I’m in Orlando and I did the shootings.
OD: What’s your name?
OM: My name is I pledge of allegiance to Abu Bakr al-Baghdadi of the Islamic State.
OD: Ok, What’s your name?
OM: I pledge allegiance to Abu Bakr al-Baghdadi may God protect him [Arabic], on behalf of the Islamic State.
OD: Alright, where are you at?
OM: In Orlando.
OD: Where in Orlando?
[End of call.]

(Shortly thereafter, the shooter engaged in three conversations with OPD’s Crisis Negotiation Team.)

2:48 a.m.: First crisis negotiation call occurred lasting approximately nine minutes.

3:03 a.m.: Second crisis negotiation call occurred lasting approximately 16 minutes.

3:24 a.m.: Third crisis negotiation call occurred lasting approximately three minutes.

In these calls, the shooter, who identified himself as an Islamic soldier, told the crisis negotiator that he was the person who pledged his allegiance to [omitted], and told the negotiator to tell America to stop bombing Syria and Iraq and that is why he was “out here right now.” When the crisis negotiator asked the shooter what he had done, the shooter stated, “No, you already know what I did.” The shooter continued, stating, “There is some vehicle outside that has some bombs, just to let you know. You people are gonna get it, and I’m gonna ignite it if they try to do anything stupid.” Later in the call with the crisis negotiator, the shooter stated that he had a vest, and further described it as the kind they “used in France.” The shooter later stated, “In the next few days, you’re going to see more of this type of action going on.” The shooter hung up and multiple attempts to get in touch with him were unsuccessful.

4:21 a.m.: OPD pulled an air conditioning unit out of a Pulse dressing room window for victims to evacuate.

(While the FBI will not be releasing transcripts of OPD communication with victims, significant information obtained from those victims allowed OPD to gain knowledge of the situation inside Pulse.)

4:29 a.m.: As victims were being rescued, they told OPD the shooter said he was going to put four vests with bombs on victims within 15 minutes.

(An immediate search of the shooter’s vehicle on scene and inside Pulse ultimately revealed no vest or improvised explosive device.)

5:02 a.m.: OPD SWAT and OCSO Hazardous Device Team began to breach wall with explosive charge and armored vehicle to make entry.

5:14 a.m.: OPD radio communication stated that shots were fired.

5:15 a.m.: OPD radio communication stated that OPD engaged the suspect and the suspect was reported down.

In a media release, the FBI noted that there were no reports of shots fired inside the Pulse nightclub between the initial exchange of gunfire with Mateen and the time of the final breach.

The FBI is still asking for anyone with information about Mateen to contact it by calling 1-800-CALL-FBI or by going to tips.fbi.gov.

http://patch.com/florida/southtampa/orlando-shooting-latest-timeline-transcripts-released

 

SIG MCX

From Wikipedia, the free encyclopedia
Sig Sauer MCX
Type Semi-automatic rifle
Place of origin U.S. design
Production history
Manufacturer SIG Sauer
Produced 2015
Variants MCX SBR
MCX Pistol
MCX Carbine
Specifications
Weight 2.61 kg (5.75 lbs)
Length 730 mm (28.75 in) SBG
610 mm (24.0 in) stock extended
 length 165 mm (6.5 in)

The SIG Sauer MCX is a gas-operated NATO STANAG compatible semi-automatic rifle that is convertible to fire several ammunition sizes. Manufactured by SIG Sauer, it was designed for U.S. Special Forces and released to the general public in 2015. It features a SIG Sauer short stroke push-rod gas system to reduce recoil and improve the reliability of the weapon. The weapon features a system that allows for conversion between 300 AAC Blackout (7.62×35mm), 7.62×39mm or 5.56×45mm NATO ammunition, all using AR-15 compatible magazines with 30-round capacity.

References

https://en.wikipedia.org/wiki/SIG_MCX

AR-15

From Wikipedia, the free encyclopedia
AR-15
Stag2wi .jpg

The AR-15 comes in many sizes and has many options, depending on the manufacturer. The part shown bottom center is the lower receiver with pistol grip and trigger assembly.
Type Semi-automatic rifle
Place of origin United States
Service history
In service 1958–present
Production history
Designer Eugene Stoner, Jim Sullivan, Bob Fremont
Designed 1957
Manufacturer ArmaLite, Colt, Bushmaster,Rock River Arms, Stag Arms,DPMS Panther Arms, Smith & Wesson, Ruger, Anderson,Daniel Defense, CMMG,Olympic Arms and others.
Specifications
Weight 2.27 kg–3.9 kg (5.5–8.5 lb)
Barrel length
  • 24 inches (610 mm)
  • 20 inches (510 mm) (standard)
  • 18 inches (460 mm)
  • 16 inches (410 mm) (civilian standard)[1]
  • 14.5 inches (370 mm) M4 Military Standard
  • 11.5 inches (290 mm)
  • 10 inches (250 mm)
  • 7 inches (180 mm)
  • 6.5 inches (170 mm)

Cartridge 5.56×45mm NATO and others; see list of AR platform calibers
Action Direct impingement or Gas Piston[2] / Via a Rotating bolt
Muzzle velocity 975 m/s (3,200 ft/s)[3]
Effective firing range 400–600 m (avg 547 yd)[4][5]
Feed system Various STANAG magazines. 5–100-round capacity[6][7]
Sights Adjustable front and rear iron sights

Modified AR-15

The prototype AR-15 rifle was designed by ArmaLite as a selective fire weapon for military purposes. Armalite sold the design to Colt due to financial difficulties. After some modifications, the rifle eventually became the US Army’s M16 rifle.

The term “AR-15” signifies “Armalite rifle, design 15”.[8] Today, Colt uses “AR-15” for its semi-automatic civilian rifles, and thus many use the term only for Colt AR-15s and clones made by other manufacturers. This article discusses the original design intended for military users and its major variants.

AR-15 rifles are lightweight, gas-operated, magazine-fed, and air-cooled. They fire an intermediate cartridge, and are manufactured with extensive use of aluminum alloys and synthetic materials. The design splits the rifle into two major components: the lower half, containing the trigger and buttstock, and the upper half, which contains the bolt and barrel. This approach allows modular replacement of components.

The name AR-15 remains a Colt registered trademark, but variants of the firearm are made, modified, and sold under various names by multiple manufacturers.

History

The AR-15 is based on the 7.62 mm AR-10 designed by Eugene Stoner, Robert Fremont, and L. James Sullivan of the Fairchild Armalite corporation.[9] The AR-15 was developed as a lighter, 5.56 mm version of the AR-10. The “AR” in all ArmaLite pattern firearms simply stands for “ArmaLite Rifle”,[10] and can be found on most of the company’s firearms: AR-5, a .22 caliber rifle; the AR-7, another .22 caliber; the AR-17shotgun; the AR-10 rifle; and the AR-24 pistol.[11][12]

1973 Colt AR-15 SP1 rifle with ‘slab side’ lower receiver (lacking raised boss around magazine release button) and original Colt 20-round box magazine

In 1959, ArmaLite sold its rights to the AR-10 and AR-15 to Colt. After a tour by Colt of the Far East, the first sale of AR-15s was made to Malaya on September 30, 1959, and Colt manufactured their first 300 AR-15s in December 1959.[13] Colt marketed the AR-15 rifle to various military services around the world. After modifications (most notably the relocation of the charging handle from under the carrying handle to the rear of the receiver), the redesigned rifle was adopted by the United States military as the M16 rifle.[14]

In 1963, Colt started selling the semi-automatic version of the M16 rifle as the Colt AR-15 for civilian use and the term has been used to refer to semiautomatic-only versions of the rifle since then.[15] Colt continued to use the AR-15 trademark for its semi-automatic variants (AR-15, AR-15A2) which were marketed to civilian and law-enforcement customers. The original AR-15 was a very lightweight weapon, weighing less than 6 pounds with empty magazine. Later heavy-barrel versions of the civilian AR-15 can weigh upwards of 8.5 lb.[16]

Today, the AR-15 and its variations are manufactured by many companies and are popular among civilian shooters and law enforcement forces around the world due to their accuracy and modularity.[citation needed] (For more history on the development and evolution of the AR-15 and derivatives, see M16 rifle.)

The trademark “AR15” or “AR-15” is registered to Colt Industries, which maintains that the term should only be used to refer to their products. Other AR-15 manufacturers make AR-15 clones marketed under separate designations, although colloquially these are sometimes referred to by the term AR-15.

Some notable features of the AR-15 include:

  • Aircraft-grade forged 7075-T6 aluminum receiver that is lightweight, highly corrosion-resistant, and machinable.
  • Modular design that allows the use of numerous accessories such as after market sights, vertical forward grips, lighting systems, night vision devices, laser targeting devices, muzzle brakes/flash hiders, sound suppressors,bipods, etc., and makes repair easier.
  • Straight-line stock design that eliminates the fulcrum created by traditional bent stocks, reducing muzzle climb.
  • Small caliber, accurate, lightweight, high-velocity round (.223/5.56×45mm)
  • Support for numerous other rounds with easy conversions
  • Front sight adjustable for elevation
  • Rear sight that is adjustable for windage (most models) and elevation (some models)
  • Wide array of optical aiming devices available in addition to or as replacements of iron sights
  • Stoner gas system (as designed), with short or long stroke gas piston, or direct blowback operating systems available
  • Synthetic pistol grip and butt stock that do not swell or splinter (regulated in some states)
  • Various magazine capacities, ranging from 10 to 30-round or more
  • Ergonomic design that makes the charging handle, selector switch (which also engages the safety), magazine release, and bolt catch assembly easy to access.
  • 4 MOA accuracy

AR-15 sight picture

Semi-automatic AR-15s for sale to civilians are internally different from the full automatic M16, although nearly identical in external appearance. The hammer and trigger mechanisms are of a different design. The bolt carrier and internal lower receiver of semi-automatic versions are milled differently, so that the firing mechanisms are not interchangeable. The design changes were done to satisfy United States Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) requirements that civilian weapons may not be easily convertible to full-automatic. Even so, the full automatic M16 bolt carrier is now the most popular type, and is approved by ATF.

In the late 1970s and early 1980s, items such as the “Drop In Auto Sear” or “lightning link,” made conversion to full automatic straightforward. In some cases such conversion did require machining the lower receiver with use of a mill, as well as the substitution of a M16 bolt carrier group.[17][18] Such modifications, unless made using registered and transferable parts prior to May 19, 1986, are illegal. The Firearm Owners Protection Act in 1986 has redefined a machine gun to include individual components with which a semi-automatic firearm can be converted to full-automatic, based on a 1981 ATF ruling on machine gun parts. Since 1993, the bolt carrier groups used in AR-15 type rifles for civilians have employed additional measures to prevent modification to full auto. Colt AR-15’s use a metal alloy wall separating the fire control group from the sear, preventing use of full automatic parts.

Automatic variants have a three-position rotating selective fire switch, allowing the operator to select between three modes: safe, semi-automatic, and either automatic or three-round burst, depending on model. Civilian Colt AR-15 models do not have three-round burst or automatic settings; they can only be fired as a semi-automatic, and are therefore not selective fire weapons. In semi-automatic-only variants, the switch only selects between safe and fire modes. Some other manufacturers may mark their rifles with three-positions for collectors and re-enactors, though the guns will not fire in those modes. Weapons modified to full automatic using a lightning-link are capable only of full automatic fire unless a special full automatic fire select mechanism and a modified selector-switch are substituted.[17] Many AR-15’s made before 1986 were converted to be M16’s by gunsmiths who legally turned them into Form One rifles in the U.S.[19] A converted AR will have an auto sear in a lower receiver marked as an AR-15.[19]

Today, while the civilian manufacture, sale, and possession of post-1986 select-fire AR-15 variants is prohibited, it is still legal to sell templates, tooling, and manuals to complete such conversion. These items are typically marketed as being “post-sample” materials for Federal Firearm Licensees, and are used in the manufacturing of select-fire variants of the AR-15 for law enforcement, military and overseas customers.[20]

Operating mechanism

Diagram of an M16 rifle, firing

U.S. Patent 2,951,424 describes the cycling mechanism used in the AR-15. The bolt carrier acts as a movable cylinder, and the bolt itself acts as a stationary piston. This mechanism is often called “direct gas impingement“, but it differs from prior gas systems.

direct impingement

Gas is tapped from the barrel as the bullet moves past a gas port located above the rifle’s front sight base. The gas rushes into the port and down a gas tube, located above the barrel, which runs from the front sight base into the AR-15’s upper receiver. Here, the gas tube protrudes into a “gas key” (bolt carrier key), which accepts the gas and funnels it into the bolt carrier.

At this point, the bolt is locked into the barrel extension by locking lugs, so the expanding gas forces the bolt carrier straight backward a short distance. As the bolt carrier moves toward the butt of the gun, the bolt cam pin, riding in a slot on the bolt carrier, forces the bolt to rotate and thus unlocks it from the barrel extension. Once the bolt is fully unlocked it begins its rearward movement along with the bolt carrier. The bolt’s rearward motion extracts the empty cartridge case from the chamber. As soon as the neck of the case clears the barrel extension, the bolt’s spring-loaded ejector forces it out the ejection port in the side of the upper receiver.

Behind the bolt carrier is a plastic or metal buffer, which rests in line with a return spring. The buffer spring begins to push the bolt carrier and bolt back toward the chamber once it is compressed sufficiently. A groove machined into the upper receiver guides the bolt cam pin and prevents it and the bolt from rotating into a closed position. The bolt’s locking lugs push a fresh round from the magazine as the bolt moves forward. The round is guided by feed ramps into the chamber. As the bolt’s locking lugs move past the barrel extension, the cam pin twists into a pocket milled into the upper receiver. This twisting action follows the groove cut into the carrier and forces the bolt to twist and “lock” into the barrel extension.

Variants

See also: AR-15 variants

Colt AR-15 Carbine

The AR-15 rifle is available in a wide range of configurations from a large number of manufacturers. These configurations range from short carbine-length models with features such as adjustable length stocks and optical sights, to heavy barrel models.

Due to the rifle’s modular design, one upper receiver can quickly and easily be substituted for another. There are many aftermarket upper receivers that incorporate barrels of different weights, lengths and calibers.[21] Some available calibers for the AR-15 are the .223 Remington/5.56×45mm, .300 Blackout, 7.62×39mm, 5.45×39mm, .45 ACP, 5.7×28mm, 6.5mm Grendel, 6.8mm Remington SPC,[22] .50 Beowulf, and .458 SOCOM.[23]

Colt AR-15 A3 Tactical Carbine. Rifle is shown with a CQB Tactical Sling and a Colt 4×20 scope.

When installing a new complete upper receiver, particularly one designed to handle a different caliber of ammunition (i.e., other than .223 Remington or 5.56×45mm NATO), some modification to the lower receiver may be required, depending on the particular conversion. For example, a conversion to 9 mm typically would involve the installation of a magazine well block (to accommodate a typical 9 mm magazine, such as Uzi or Colt SMG), replacing the .223 hammer with one designed for 9 mm ammunition, and depending on the original stock, replacing the buffer, action spring and stock spacer with those designed for the new 9 mm AR-15 configuration. The 9mm cartridge fires from an unlocked breech, or straight blow-back—rather than a locked breech, because the spring and bolt provide enough weight to allow this type of functioning. These guns do not utilize the direct gas impingement method of operation like the original.

5.56×45mm NATO compared to .50 Beowulf cartridges.

Some AR-15s like the POF, LWRCI, H&K, Sturm Ruger, SIG Sauer, United Defense Manufacturing Corporation, CMMG, and Adams Arms offerings replace the DGI (direct gas impingement) operating system with a short stroke/long stroke gas piston system. These guns usually have modified bolt carriers, gas keys, and gas blocks. When fired, DGI systems dump high pressure hot gas through the gas tube to the bolt carrier key and into the bolt carrier group. This can rapidly heat up the bolt carrier group and cause excessive fouling, one of the main complaints about the design. Gas piston operating systems alleviate these problems, but can cause other issues, such as carrier tilt, which can lead to increased bolt fractures.

Some manufacturers offer upper and lower receivers machined from a solid billet (block) of aluminum as opposed to an aluminum forging. Forgings typically have a comparatively higher strength to weight ratio than billet-based receivers.

Upper receivers that combine a railed hand guard and upper receiver into one unit are made by companies like Colt’s Manufacturing Company, Lewis Machine and Tool (LMT MRP), POF-USA, and VLTOR. This is done to provide a continuous rail section that runs along the top of the gun from the weapon’s charging handle to the front sight/gas block. This rail section is used for the mounting of sights, laser aiming devices, night vision devices, and lighting systems.

A side charging upper receiver has been developed by LAR Grizzly. Blackwood Arms has also developed a side charging upper receiver.[24] The charging handle can be had in a left side, right side, or ambidextrous configuration. The side charging handle is attached to the bolt carrier, making it a reciprocating design. The handle thus can be used as a forward assist device.

Early models had a 1:14 rate of twist for the original 55 grain (3.6 g) bullets. This was changed to 1:12 when it was found that 1:14 was insufficient to stabilize a bullet when fired in cold weather. Most recent rifles have a 1:9 or 1:7 twist rate. There is much controversy and speculation as to how differing twist rates affect ballistics and terminal performance with varying loads, but heavier, longer projectiles tend to perform better with faster rifling rates.[25] Additionally, the various non .223 / 5.56 calibers have their own particular twist rate, such as 1:10, 1:11 and 1:12 for 6.8×43mm SPC, 1:10 for 7.62×39mm, 1:9 for the 6.5 Grendel, and 1:8 for .300 Blackout.

A Colt AR-15 on display at the National Firearms Museum. This example is fitted with an early waffle-patterned 20-round magazine.

Standard issue magazines are 20- or 30-round staggered-column magazines and traditional box magazines exist in 40- and 45-round capacities. Drum magazines with 90- and 100-round capacities, such as Beta C-Mags are available, as well. Low-capacity magazines, usually of a 5- or 10-round capacity, are available to comply with some areas’ legal restrictions, for hunting, and for benchrest shooting, where a larger magazine can be inconvenient. Surefire is now offering extended capacity magazines in 60- and 100-round capacity configurations. These are of a staggered column design, dubbed casket magazines due to their shape. Usable magazines have been constructed from a variety of materials including steel, aluminum, and high-impact plastics.

Muzzle devices

Most AR-15 rifles have a barrel threaded in 1⁄2″-28 threads to incorporate the use of a muzzle device such as a flash suppressor, sound suppressor or muzzle brake.[26] The initial design had three tines or prongs and was prone to breakage and getting entangled in vegetation. The design was later changed to close the end to avoid this problem. Eventually, on the A2 version of the rifle, the bottom port was closed to reduce muzzle climb and prevent dust from rising when the rifle was fired in the prone position.[27] For these reasons, the US military declared this muzzle device a compensator, but it is more commonly known as the “GI” or “A2” flash suppressor.[28]

Flash suppressors are designed to reduce the muzzle flash from the weapon to preserve the shooter’s night vision. A flash suppressor does not improve the ballistic performance of a rifle or make it more lethal, but some jurisdictions have banned or severely restrict usage of flash suppressors. In most of these areas, AR-15 shooters have installed muzzle brakes or compensators on their rifles.

The threaded barrel allows sound suppressors with the same thread pattern to be installed directly to the barrel, however this can result in complications such as being unable to remove the suppressor from the barrel.[29] A number of suppressor manufacturers have turned to designing “direct-connect” sound suppressors which can be installed over an existing flash suppressor as opposed to using the barrel’s threads.[29]

Legal status of civilian ownership

Australia

AR-15 rifles, like all semi-automatic rifles, are subject to strong restrictions on ownership in all states and territories in Australia. The only means of legally owning a functional AR-15-type rifle in Australia today (other than law enforcement uses) is to have a Category D Firearms License (e.g. a professional animal culler). Individuals with a Firearms Collector’s License may own a deactivated firearm (with the barrel plugged up and the action welded shut), and members of a military re-enactment organization may own rifles converted to firing only blanks.[citation needed]

Restrictions on semi-automatic rifles were introduced in 1996 in response to the Port Arthur massacre – one of the firearms used was an AR-15. Previously, AR-15 rifles were legal to own in Queensland and Tasmania.[citation needed]

Imported AR-15 rifles are too expensive for television and film production because the company must destroy or export semi-automatic rifles after use. Warwick Firearms & Militaria, a Melbourne prop maker, manufactures AR-15-type “WFM4” rifles locally,[30][31] with approximately three dozen having been sold.[32] They are fully functional, but may be purchased only with government permission.[citation needed]

Austria

In Austria, semi-automatic centerfire rifles have to be classified as sporting or hunting firearms in order to obtain civilian-legal status. After this classification, they are considered “category B” firearms, which means that holders of gun licenses may own them. These licenses are may-issue items if the applicant specifies a valid reason (self-defense at home for example is considered valid by law in any case), passes a psychological test and attends a gun-basics course.[citation needed]

Three AR-15 manufacturers (“Hera Arms”, “Schmeisser” and “Oberlandarms”), all producing in Germany have had versions of their AR-15 models successfully classified as class B weapons. These Austrian versions differ slightly from the original design in order to ensure that no military full-auto trigger, bolt and barrel may be installed. Additionally, bayonet lugs, flash hiders and weapon lights are prohibited on semi-automatic rifles while muzzle brakes and compensators are legal. There is no minimum length for barrels, therefore even barrel lengths as short as 7.5″ are possible, and there are no magazine capacity limits.[citation needed]

Belgium

Semi-automatic firearms and thus AR-15 type rifles are legal to own, if in possession of the correct license.[citation needed]

Canada

The Government of Canada classifies the AR-15 (and its variants) as a restricted firearm. For anyone wanting to lawfully own an AR-15, they must obtain a Possession and Acquisition License (PAL) valid for restricted firearms (RPAL) and then each acquisition of a restricted class firearm is subject to approval by the Chief Firearms Officer (CFO) of the would-be buyer’s province of residence.[33][34] With the introduction of strict gun control measures by former Prime Minister Jean Chretien (Bill C-68), the AR-15 had been intended to be classified as a prohibited firearm, making it impossible to privately own one. However, due to the presence of nationwide Service Rifle target shooting competitions, the AR-15 was granted a sporting exception.[citation needed]

As with all Restricted firearms (including most pistols, some shotguns, and some rifles) AR-15s are allowed to be fired only at certified firing ranges since the CFOs of all provinces and territories have agreed to issue ATTs (Authority To Transport) for these guns only to certified ranges. Since owners cannot legally take these guns anywhere else that shooting is allowed, they can in effect only shoot them on certain ranges. In order to legally own and transport a Restricted firearm, the firearm must be registered with the Royal Canadian Mounted Police Canadian Firearms Program and must apply for an Authorization to Transport (or ATT) from the Chief Firearms Officer (CFO) for their province or territory. Additionally, the firearm must be unloaded, deactivated by a trigger or action lock, and be in a locked, opaque “hard to break into” container during transport.[35] (“Hard to break into” is not legally defined within the Canadian firearms act or the CCC.)

The issuance of ATTs varies considerably from province to province, and is generally reflective of a particular province’s political and social levels of acceptance of gun ownership. In Ontario the “policy” of the CFO (currently Chris Wyatt) for obtaining an ATT for restricted firearms is to become a member of a range. However policy is not law and when challenged they have no choice but to either issue the ATT requested or do a formal refusal which can be challenged (for free) in court since they must abide by the law. It is not legal for them to refuse on the phone since the only acceptable method for that is in writing as per FA s.72(1).[36]

Czech Republic

The Czech Firearms Act categorizes semi-automatic rifles as “Class B” firearm. Class B firearms are available to anyone with a firearm license, which is shall issue (i.e. cannot be denied) subject to fulfillment of the act’s conditions (e.g. clean criminal record, no history of mental illness, no DUI in past three years, passing gun license exam). Prior to purchase, a licensed civilian needs to fill a permit to “buy, possess and carry”, which is also shall issue and takes about 15 minutes to process, with the local police station. The purchase permit is valid for one year. Any firearm must be registered with the police within ten days of purchase.[citation needed]

There is no magazine capacity limitation for sport or self-defense use. On the other hand, only magazines with maximum capacity of two rounds may be used for hunting. AR-15 as well as any other semi-automatic rifle may be carried loaded for self-defense only inconcealed manner. Hunters may carry the firearm openly to and from the area of a hunt in way preventing its immediate use (i.e. unloaded, with empty magazines). There are no limitations on flash suppressors and bayonets, while lasers and silencers fall into “Class A” category requiring a may-issue permit (usually difficult to obtain). Night vision falls also into “Class A” category; however, the permit process for it has been simplified since 2014 for hunters. Moreover, in 2015 the Ministry of Agriculture started subsidizing up to 80% of purchase price of night vision equipment to hunters who shoot more than 20 wild boar a year in order to cull boar infestation.[citation needed]

AR-15s are quite popular in the Czech Republic. As of 2015, there are three manufacturers of AR-15 in the Czech Republic: V-AR, Proarms Armory and LUVO.[citation needed]

Finland

In Finland, possession of semi-automatic rifles, including the AR-15, is legal, provided that the rifle’s owner acquires a permit for owning one. A license is required for each individual firearm and there needs to be a specific reason for ownership such as participation in the shooting sports and hunting. In Finland maximum magazine capacity in hunting is 3 rounds. But in addition a hunter can have 1 round chambered which brings their direct ammo capacity up to 4 rounds. There is no magazine capacity limit on guns for target or other sporting shooting.[citation needed]

Germany

The AR-15, like other semi-automatic rifles, is categorized as a “Class B” firearm. Possession of semi-automatic rifles, including the AR-15, is legal with a gun license (Waffenbesitzkarte). These licenses are shall-issue, if all criteria defined by the law are met. The applicant must specify a valid reason (collecting, hunting or sports shooting), have no criminal background and attend a gun-basics course.[citation needed]

While hunting in Germany, if a semi-automatic firearm is used, the magazine must be blocked to accept no more than two rounds of ammunition, meaning that when hunting game animals only three shots in total can be fired (as one additional round is loaded in the chamber) without reloading. This rule is stated in German hunting law and not in German gun law, and does not apply to handguns. Also, it is not allowed to use a magazine that is capable of accepting more than 10 rounds of ammunition while sports shooting in Germany; however, ownership of a magazine that can accept more than two rounds (for hunters) or ten rounds (for sports shooters) is legal in Germany without a license.[citation needed]

The acquisition and possession of ammunition requires a license in Germany, which is usually given with the gun license itself. When purchasing ammunition at a shooting range for immediate use, no license is required.[citation needed]

France

In France, any semi-automatic firearms using military calibers (9mm, 5.56 NATO, 7.62×39, 7.62 NATO, .45 ACP, .50 BMG, .50 AE.) are authorized as ‘B category’ weapons. While fully automatic ‘A category’ weapons are highly restricted, semi-automatic ones are legal for civilian possession. A hunting or sports shooting license is required to possess and purchase any firearm, as well as ammunition, in France.[citation needed]

Ireland

In Ireland, legal possession of a semi-automatic AR-15 requires a restricted firearms licence from the applicant’s local Garda chief superintendent, who has wide discretion to approve or deny the license. Semi-automatic centrefire rifles are generally may-issue items and the requirements to own one can vary greatly from province to province. Upgraded security measures may be a pre-condition of granting this licence.[37]

Italy

In Italy, the AR-15 rifle belongs to B7 class and can be owned by civilians, provided it is incapable of fully automatic fire. Like every other gun, it must be registered and to purchase it citizens must have a valid license, which is granted to every person who qualifies.[citation needed]

The rifles are chambered in .223 or 5.56×45 (M193 ball). NATO ammo in 5.56 mm is illegal for civilian use. Due to the Italian legal catalog of rifles, an AR-15 can be considered for hunting use or sports use. If the rifle is classified for hunting use, it is legal to own any number of AR-15s. If the rifle is classified for sporting use, it is possible to own only 6 guns with the same “sporting” classification.[citation needed]

New Zealand

The AR-15 rifle is treated like any other semi-automatic rifle. They are legal to own by individuals holding a firearms license; however, specific features (folding stock, pistol grip, magazines holding more than 7 rounds, etc.) will require it to be registered as a Military-Style Semi-Automatic (MSSA) requiring an ‘E Category’ endorsement on their license.[citation needed]

Poland

According to Polish laws on firearms, AR-15s and clones do not have any special status. Any civilian holder of firearm licence can purchase and use one without any restrictions, excluding full auto versions. Stock types, magazine capacity, and barrel length are not regulated, although hunting is allowed only with magazines holding six or fewer rounds.[citation needed]

Russia

Russian laws on weapons treat AR-15 rifles as any other rifle. In general, semi-auto only versions with magazine capacity not exceeding 10 rounds are legal for civilians to own, provided that a special “rifled firearm license” is acquired by that individual.[citation needed]

Sweden

The AR-15, like all other semi-automatic rifles, is legal for individuals who need one for competitive use (IPSC rifle or 3-gun matches). A valid competition license is required, and all weapons are registered with the police. The AR-15 is not allowed for hunting use.[citation needed]

South Africa

The AR-15 like any other semi-automatic long arm in South Africa, is legal for anyone who holds any of the following licenses:

  • Licence to possess firearm for dedicated hunting and dedicated sports-shooting
  • Licence to possess firearm for business purposes
  • Licence to possess restricted firearm for self-defence

While not prohibited, common citizens can only own semi-automatic AR-15s if they are members of a hunting or target club, and possess dedicated sport person or dedicated hunter status granted by organisations accredited by the South African Police Service(SAPS).[38][39] Other licenses allowing the possession of semi-automatic rifles are only available to people who require their use in the conduct of their business (e.g. security personnel), and citizens who can convincingly prove to the Registrar that non-restricted firearms are not sufficient to provide protection. The latter requires a specific motivation for the need of a restricted firearm for self-defence[38] and have been granted to rhino farmers.[40][41][42]

United Kingdom

As with all semi-automatic, centerfire rifles, AR-15s are classed as a Section 5 weapon (Prohibited), i.e., a person must provide an exceptional reason and gain permission from the Home Secretary, making ownership all but impossible for a private citizen. However, centerfire AR-15s in a manually operated straight pull configuration or semi-automatic AR-15s that are chambered to fire a .22 rimfire cartridge are legal and can be held on a standard Section 1 Firearms Certificate. There are no restrictions on assault weaponfeatures in the UK, and no restrictions on magazine capacity. There are a number of UK manufacturers of “straight-pull” AR-15 variants. Southern Gun Company has tried to introduce a 9mm “self-ejecting” variant for gallery rifle shooting nicknamed the “Unicorn” but, despite numerous units being sold on the understanding that the rifle was a compliant Section 1 firearm, the rifles were seized and subjected to stringent testing by the UK Forensic Science Service (FSS). A small number of pre-production models were found to be non-compliant with section 1 status. However, later models were deemed Section 1 compliant and were returned to their owners.[citation needed]

United States

At the federal level, AR-15s are legal and considered the same as any other rifle.

During the period 1994–2004, variants with certain features such as collapsible stocks, flash suppressors, and bayonet lugs were prohibited for sales to civilians by the Violent Crime Control and Law Enforcement Act of 1994, with the included Federal Assault Weapons Ban. Included in this was a restriction on the pistol grip that protrudes beneath the stock, which was considered an accessory feature under the ban and was also subject to restrictions. Some rifles were manufactured with a grip not described under the Ban installed in its place. Those AR-15s that were manufactured with the restricted features, as well as the accompanying full capacity magazines, were stamped “Restricted Military/Government/Law Enforcement/Export Only”. The restrictions only applied to guns manufactured after the ban took effect. It was legal to own, sell, or buy any gun built before 1994. Hundreds of thousands of pre-ban ARs were sold during the ban as well as new guns redesigned to be legal.

Since the expiration of the Federal AWB in September 2004,[43] these features became legal in most states.[44] Also, the manufacture and sale of formerly-restricted rifles has resumed.

Six states, Massachusetts, New York, New Jersey, California, Maryland, and Connecticut, heavily regulate possession of AR-15 type rifles either by the restriction of certain features or outright bans of certain manufacturers’ models. California residents may own certain AR-15 type rifles, but they are required to have a fixed magazine not exceeding 10 rounds. Massachusetts and New Jersey have essentially continued following the 1994 Assault Weapons Ban criteria on numerous semiautomatic rifles. New York, Maryland, and Connecticut enacted a ban on sales of AR-15 (and other types of firearms) in response to the December 2012 Sandy Hook Elementary School shooting Massacre. These various state laws have been heavily criticized by many pro-gun organizations.

Under U.S. firearms laws, the lower receiver of the AR-15 is considered a firearm and is subject to purchasing restrictions. The AR-15 upper receiver assembly is considered a part, and may be purchased and mail-ordered in most locations. This is a desirable feature for enthusiasts, who can purchase a number of upper receivers (often in different calibers and barrel lengths) and interchange them with the same lower receiver.

Adding a shoulder stock to an AR-15 with a barrel shorter than 16″ would constitute constructing a Short-Barreled Rifle (SBR) under NFA rules, and thus is subject to a $200 tax stamp. The receiver, or serial-numbered part, is still considered a firearm, but a receiver has unique status assigned by the Gun Control Act of 1968 as amended, and by ATF regulations or rulings. ATF ruling July 7, 2009 illustrates a receiver’s unique legal status even if the receiver can only be made into a rifle.[45] Under the United States v. Thompson-Center Arms Company Supreme Court ruling, an individual can possess parts for both the rifle and pistol so long as they are not assembled improperly.[46] This ruling has been further clarified by the ATF Director in a ruling (ATF Ruling 2011-4[47]) dated July 25, 2011 which restates most of the findings in the Thompson case.

Following the 1992 ruling, the ATF claimed that the finding in United States v. Thompson-Center Arms Company only applies to products of Thompson Contender, and not to any other companies’ products.[48] This has changed under ATF ruling 2011–4, which states

A firearm, as defined by the National Firearms Act (NFA), 26 U.S.C. 5845(a)(3), is made when unassembled parts are placed in close proximity in such a way that they: (a) serve no useful purpose other than to make a rifle having a barrel or barrels of less than 16 inches in length; or (b) convert a complete weapon into such an NFA firearm.[49] A firearm, as defined by 26 U.S.C. 5845(a)(3) and (a)(4), is not made when parts within a kit that were originally designed to be configured as both a pistol and a rifle are assembled or re-assembled in a configuration not regulated under the NFA (e.g., as a pistol, or a rifle with a barrel or barrels of 16 inches or more in length).[49] A firearm, as defined by 26 U.S.C. 5845(a)(3) and (a)(4), is not made when a pistol is attached to a part or parts designed to convert the pistol into a rifle with a barrel or barrels of 16 inches or more in length, and the parts are later unassembled in a configuration not regulated under the NFA (e.g., as a pistol).[49] A firearm, as defined by 26 U.S.C. 5845(a)(4), is made when a handgun or other weapon with an overall length of less than 26 inches, or a barrel or barrels of less than 16 inches in length, is assembled or produced from a weapon originally assembled or produced only as a rifle.[49] Such a weapon would not be a “pistol” because the weapon was not originally designed, made, and intended to fire a projectile by one hand.

Furthermore, adding a forward pistol grip to an AR-15 designated as a pistol constitutes manufacture of an AOW (any other weapon).[50] Both of these actions require an approved “Form 1” and payment of a $200 tax prior to the actual construction of the item. Current wait times for approval average 5–8 months, during which time no modifications or construction may be done.

As of 2012, there are an estimated 2.5-3.7 million rifles from the AR-15 family in civilian use in the United States.[51][unreliable source?] They are favored for target shooting, hunting, and personal protection, and have become the most popular rifle in the U.S.[52]

Individual states

California
Main article: AR-15s in California

The Roberti-Roos Assault Weapons Control Act of 1989 banned Colt AR-15 rifles by name in the State of California. California’s assault weapons ban following the Supreme Court of California‘s 2000 decision in Kasler v. Lockyer went further and banned AR-15s made by other manufacturers by name.[53] AR-15-style rifles that are not named specifically by the Roberti-Roos or other restricted lists can be purchased in the state with some major modifications. Since these are not on the various lists of prohibited firearms, their lower receivers (the part that is legally the firearm) are referred to as “Off List Lowers” (OLL). These OLLs are very common in California, and at least several hundred thousand of them have been sold in the state since the ban went into effect.[citation needed]

Reliability

Early versions of the AR-15 were often considered unreliable due to problems encountered by American soldiers in Vietnam. At least part of the problems were due to the ammunition.[54] The choice of propellant (powder) went through a number of alternatives, starting with IMR 4475 for the Army, and WC 846 for the Air Force. Continued testing of WC 846 (a ball powder) showed problems with fouling and issues with the cyclic rate being too high.[55] Other powders showed problems, as well. The rifles were also issued without any cleaning kits, and many soldiers were not trained to use the M16s when they were first issued.[56]

Malfunctions

With the plethora of manufacturers of complete weapons and aftermarket barrels, there is a potential hazard associated with chamber specifications. Both civilian (SAAMI) specification .223 Remington and 5.56mm NATO are available. Though the external dimensions of the two cases are the same and both chambers typically accept both types of ammunition, the firing of military specification ammunition in civilian specification chambers can produce chamber pressures greater than the barrel is designed to handle. Internally the 5.56×45mm case wall is identical to the .223, though the NATO round is typically loaded to produce higher pressure than the .223. The most common malfunction resulting from firing military 5.56×45mm ammunition in a .223 Remington chamber is that the primer can be forced out of the case by chamber pressure, often resulting in the primer becoming lodged somewhere in the action of the rifle. Disassembly of the rifle is often necessary to remove the jammed primer.[57]

A few AR-15 manufacturers incorporate the use of a hybrid chamber specification known as the Wylde chamber. Designed by and named after Bill Wylde of Greenup, Illinois, this chambering was designed to accurately shoot the military ball ammo of the day while still feeding reliably. Coincidentally, it shoots the longer 80 gr bullets commonly used in the sport of Highpower Rifle Competition very well and is one of the preferred chambers for that use. While the Wylde chamber allows for optimal seating depth of 80 grain bullets over .223 Remington and 5.56 NATO, it is capable of accepting both ammunition types. The Wylde chamber is used by many manufacturers who sell “National Match” configuration AR-15 rifle, barrels, and upper receivers. The type of chamber, manufacturer, and rifling twist in inches is typically found stamped into the barrel in front of the front sight assembly.

An additional point of concern in the design is the inertial firing pin. A lightweight firing pin rides in a channel inside the bolt unrestrained. When the bolt locks forward during loading, the firing pin typically rides forward and impacts the primer of the chambered round. In military specification ammunition and quality civilian ammunition, this is not normally enough to fire the round and only leaves a small “ding” on the primer. With more sensitive primers or improperly seated primers, this can cause a slamfire during loading.[58]Another type of malfunction, hammer follow, is also a potential problem for AR type rifles.

AR-15 and variant manufacturers

Calibers

Pistol cartridges

Metric
Imperial

Rifle cartridges

Metric
Imperial

Shotgun shells

In addition, the AR-15 lower receiver can be used as a trigger mechanism for single shot or side-fed upper receivers for a variety of larger calibers, including .50 BMG[59] and crossbow[60] bolts.

See also

References

 

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Listen To Pronk Pops Podcast or Download Shows 565-574

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Listen To Pronk Pops Podcast or Download Shows 01-09

 

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