Chet Edwards For Congress - Op-Eds by Congressman Chet Edwards

IRS should not violate taxpayer privacy

Kat — Thu, 06 Apr 2006 11:14:38 -0700

April 6, 2006
Chet Edwards: IRS should not violate taxpayer privacy

Waco Tribune Herald
By Chet Edwards |

WASHINGTON — Would you be shocked if the IRS allowed your private personal financial information, such as your Social Security number, bank balance, home mortgage information or other financial investments, to be sold to the highest bidder?

Get ready to be shocked.

If new proposed IRS regulations go into effect, accountants and tax preparers will be able to sell your tax returns and financial information to private marketers and data brokers who could then share them with anyone.

This disturbing practice could become a reality for millions of American households if these proposed IRS regulations are not blocked. That is why I have introduced H.R. 5063, the Taxpayer Privacy Protection Act of 2006

It is deeply troubling that the IRS is threatening to expose taxpayers to unregulated third party groups under this proposed rule. Those entities then could then sell personal information. It is dangerous for outside groups, governed by even looser rules than the IRS, to be given incentive to profit from your personal information. This should be absolutely prohibited in the interest of protecting consumer privacy.

Current IRS rules require tax preparers to obtain written consent of the taxpayer to pass information to affiliated financial groups, but prohibit any third party group from buying it. The new rule also requires written consent, but would allow anyone to buy the information. The fundamental problem with this is that many taxpayers do not fully read the forms they are signing and could easily sign away their private financial information unknowingly on one of the pages earmarked for their signature.

In today’s electronic information age, there is no guarantee that once taxpayer financial information becomes loose on the market, it would not be used for questionable or even illegal purposes such as identity theft.

The IRS says that its proposed regulations are meant to safeguard taxpayer information, yet the new rules made no mention of the potential to sell personal financial information to third party groups. Given the troubling reality of sharing private information electronically, the IRS saying it has the best interest of the taxpayers in mind with this rule change is a bit like the fox guarding the henhouse.

We must do more to strengthen taxpayer privacy rules, not weaken them.

The proposed rule by the IRS is a breach of trust between taxpayers and their tax preparers, a relationship that is second only to immediate family when it comes to the sharing of personal information. Not only that, but the IRS and the largely voluntary American system of taxation could be damaged permanently if people fear the system is responsible for their private information being sold to the highest bidder. The IRS can hardly afford lower public approval ratings than it currently enjoys.

I am not the only member of Congress troubled by these proposed rules. Republicans and Democrats alike in Congress, along with several consumer groups, are questioning the IRS’s motivation behind these new rules and seeking to block them from being implemented.

Just how is the public served by selling personal information for profit, and who or what is responsible for pushing the IRS for this regulatory change?

My legislation, the Taxpayer Privacy Protection Act of 2006, is a direct response to the proposed IRS rules and would prevent tax preparers from seeking the consent of taxpayers before selling their tax returns. Specifically, it would require the taxpayers themselves to actively request that tax preparers pass their information to outside groups instead. This would help prevent taxpayers from unknowingly signing forms that grant permission to share their information with groups that have questionable motives. It would also allow taxpayers to maintain their right to pass their financial information to institutions such as banks for home loans or other financial transactions needed by the taxpayer

Personal financial information we share with our tax preparers and accountants is highly sensitive, and most accountants don’t intend to sell your information. However, if you have any doubts, talk to your tax preparer.

U.S. Rep. Chet Edwards, D-Waco, represents District 17 in Congress.

Raising The Cost Of Student Loans Unwise

Kat — Sun, 06 Nov 2005 22:06:08 -0700

November 6, 2005
Edwards: Raising The Cost Of Student Loans Unwise
Special to the Eagle

Bryan-College Station Eagle
By REP. CHET EDWARDS | Op-Ed

I am deeply disappointed that the U.S. House leadership pushed through the Budget Committee on Thursday partisan legislation that could add $5,000 to $28,000 to the cost of college student loans. This legislation, contained in the 2006 Budget Reconciliation bill, could be on the House floor for a vote as early as this week.

Unless we can stop the higher interest rates and new origination fees in this bill, they, in effect, will amount to an expensive new student tax. This student tax would place a tremendous burden on thousands of college and university students in our district who have taken out loans to pay for their college educations.

With costs for gasoline, utility bills and higher education already rising rapidly, the new student tax could force some students to take on a second or third job, and for others it might mean dropping out of college. For high-achieving middle- and low-income high school students, it might mean many of them have to give up their dream of a college education.

By significantly increasing the interest payments on college loans, this bill might force future teachers into taking higher-paying jobs instead of pursuing their calling to teach.

As our nation faces both increasing foreign competition and the largest trade deficits in history, there could not be a worse time for Congress to increase the cost of college loans. Doing so would be unfair to students and a prescription for long-term economic stagnation.

Budget estimates are that this bill would reduce federal funding for college student loans by $14 billion over the next five years; $7.8 billion of that would be direct cost increases to students, and $6 billion would be from cutting subsidies and increasing fees to lenders. It is, in reality, a $7.8 billion tax on students and families with outstanding student loans. If half of the cost increase to lenders are also passed on to students, it would be a $10.8 billion tax on students.

How does this bill raise costs to students and families? First, it would mandate a new 1 percent origination fee on consolidated student loans. Second, there would be a new 1 percent increase in the interest rate for borrowers who want to consolidate their student loans at a fixed rate. Third, borrowers who are still in school would no longer be able to lock into their present low loan rates. Finally, the bill raises fees on new student loans as well as raising the cap on the interest rates that students and parents pay. With subsidies to banks and other lenders also cut by $6 billion, the bill will most likely reduce the private capital available to students for college loans.

According to Dr. Charles Young, president emeritus of UCLA, the present 5.3 percent rate for consolidating federally insured student loans would increase to 7.18 percent. That is a 35 percent increase in the loan rate.

When stretched out over 20 years on a $20,000 loan, the new student tax would total an extra $5,255. For a $40,000 loan over 25 years, the student tax would add $13,932 to total loan repayments.

These increases assume that interest rates on 91-day T-bills do not go up. If, for example, those T-bill rates went up 0.75 percent between now and May 31, 2006, a student borrower could be forced to pay $19,709 more on a 25-year, $40,000 student loan.

College students and their families have a right to be outraged that the new student tax could be passed into law by Congress with very little input from those who will be hit the hardest.

The House leadership is no doubt hoping this bill will pass before college students and their families even know about it.

To add insult to injury, the Republican House leadership has chosen to cut $14 billion from student financial aid programs over the next five years in order to pay for an extension of its dividend cuts that gives a $220,000 annual tax break to those making $1 million a year in dividend income.

I believe the House leadership is out of touch with the values and priorities of American families, Democrats, Republicans and independents alike. If Congress would ask those making a million dollars a year in dividend income to give up just a part of their $220,000 annual tax cut, it wouldn't be necessary to pass a $14 billion student tax that will hurt high achieving students and harm our nation's future competitiveness.

The $14 billion student tax is a bad idea and should be defeated. I hope the voices of college students and their families will be heard in Congress before it is too late.

Renew Our Promise This Memorial Day

Kat — Fri, 20 May 2005 11:45:39 -0700

May 20, 2005
Renew Our Promise This Memorial Day
A Column by Chet Edwards

For 137 years, we have paused on the last Monday of May to remember and honor those Americans who have made the ultimate sacrifice in service to country. This year, as we salute fallen heroes from a new generation and those who have gone before, we should pledge to them and to ourselves to honor their sacrifice every day. One of the most meaningful actions the nation can take is for Congress to keep the many promises that have been made to our men and women in uniform, to our military veterans, to reservists and members of the National Guard, and to military retired.

In 1944, the Congress enacted the GI Bill of Rights, first drafted by the American Legion, in order to honor the Greatest Generation, who ultimately won World War II. In doing so, the federal government supported our returning troops with educational benefits, loans to buy a home, and medical assistance. Nearly 8 million veterans went to school under the original GI Bill. In effect, the GI Bill jumpstarted our economy and created a strong middle class.

Currently, more than 1 million have served thus far in Operations Iraqi and Enduring Freedom. And our National Guard and Reserve personnel have made an unprecedented contribution in the effort – providing nearly half of the troops in Iraq. These troops have served our nation with distinction, and it is time for a grateful nation to honor that service.

That is why I have introduced H.R. 2131, the G.I. Bill of Rights for the 21st Century, a package of legislative initiatives that will improve benefits for our service men and women and provide long overdue benefits for our veterans and military retirees. It will bolster support for troops serving abroad as well as their families here at home. There are special provisions for the National Guard and Reserve as well as improved education, health care, and job training benefits.

The GI Bill of Rights package will help meet the needs of those returning veterans, which is critical to helping our returning soldiers become a productive part of a prosperous economy, and also provide an important recruiting tool to encourage new soldiers to enlist.

Some of the major provisions of this legislation would:

Improve veterans’ health care. Currently, more than 50,000 veterans are waiting in line for at least six month for veterans’ health care and estimates indicate approximately 300,000 new veterans will enter the VA system next year.

Improve mental health support for returning soldiers. Mental health experts indicate that as many as 17% of the troops returning from Iraq and Afghanistan experience symptoms related to a mental health disorder, such as depression, anxiety or Post-Traumatic Stress Disorder (PTSD).

End the Disabled Veterans Tax. I have been fighting to end the disabled veterans’ tax, which forces disabled military retirees to give up one dollar of their pension for every dollar of disability pay they receive. The G.I. Bill of Rights would end this unfair tax for all of the nearly 400,000 military retirees who continue to pay it. End the Military Families Tax (SBP/DIC offset). The Survivor Benefit Plan penalizes survivors, mostly widows of soldiers killed as a result of combat. This would end the Military Families Tax for the 53,000 spouses who continue to pay this unfair tax, which affects families that have made the greatest sacrifice for our country.

Improve military pay with a targeted pay raise for mid-level and senior NCO’s and warrant officers. These pay raises are needed for the critical, senior enlisted personnel who are most involved in the fighting and key to military retention, so readiness does not suffer.

Expand military health care (TRICARE) for National Guard/Reservists. Despite the fact that more than 300,000 members of the National Guard and Reserves have been called up for active duty over the last two and one-half years, 20 percent of all reservists do not have health insurance, and 40 percent of reservists aged 19 to 35 lack health coverage.

Modernize and enhance the GI Bill Education and Job Training Programs. For those who enlist or reenlist for four years of active duty, the full cost of tuition, fees, books and supplies, and a subsistence allowance of $900/month for 36 months would be provided. It would also annually adjust veterans’ education benefits to keep pace with the cost of higher education.

We can never fully repay our soldiers and veterans for their sacrifice, but we have a moral obligation to keep our promises and provide those who serve the quality health care and benefits they have earned. The 21st Century Bill of Rights could be paid for by asking those who make more than $1 million a year to give up a small percentage of the recently passed temporary tax cuts. Surely, that is not too much to ask, given the long standing American principle of shared sacrifice during time of war.

Our servicemen and women have kept their promises to us. It’s now up to Congress to keep our promises to them.

Edwards is the ranking member on the House Military Quality of Life and Veterans Affairs Appropriations Subcommittee.

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