How the Republican Tax Cuts Are Helping Arizona

Posted by John Kartch on Friday, January 1st, 2021, 10:00 AM PERMALINK Follow @JohnKartch

Arizona is benefiting greatly from the Tax Cuts and Jobs Act enacted by Republicans in 2017:

483,360 Arizona households are benefiting from the TCJA’s doubling of the child tax credit.

Every income group in every Arizona congressional district received a tax cut. Nationwide, a typical family of four received a $2,000 annual tax cut and a single parent with one child received a $1,300 annual tax cut.

2,122,290 Arizona households are benefiting from the TCJA’s doubling of the standard deduction. Thanks to the tax cuts, nine out of ten households take the standard deduction which provides tax relief and simplifies the tax filing process.

107,360 Arizona households are benefiting from the TCJA’s elimination of the Obamacare individual mandate tax. Most households hit with this tax made less than $50,000 per year.

Lower utility bills: As a direct result of the TCJA’s corporate tax rate cut, Arizona residents are saving money on utility bills. Lower electric, water, and gas bills help households and small businesses operating on tight margins. Arizona utilities that have passed along tax savings include -- but are not limited to -- Arizona Public Service, Bermuda Water Company, EPCOR USA, and more (see below).

Thanks to the tax cuts, Arizona businesses of all sizes are hiring, expanding, raising pay and increasing employee benefits:

SmithCraft Signs (Phoenix, Arizona) -- Employee bonuses, purchasing new equipment:

MS. BERGSTROM: Oh, thank you. Thank you Mr. President. Wow. I’m Nicole, and I run Smithcraft Signs. We are a veteran-owned, small manufacturing company. We’re a job shop.

And what tax reform means for me is what we can do for our team. To improve our capabilities, we’re buying new equipment. We issued a special bonus to our midlevel employees.

Deeann, in our accounting department told me that she is using the extra money for what she describes as a “dream bucket-list vacation” to visit her daughter who was recently discharged from the Navy who is now in Hawaii.

Phil and NOAZ is using the money for a bathroom remodel he has been planning for over 10 years.

I’ve very excited about what the future holds for us. And again, so many thanks. - April 12, 2018, White House transcript

HT Metals (Tucson, Arizona) - Purchasing new equipment:

His Tucson-based company, HT Metals, cuts pieces for aerospace and medical device industries. In early May, Ruiz told a crowd gathered in Tempe to see Vice President Mike Pence that he recently spent a couple hundred thousand dollars on a new machine.

“And, we get to expense it immediately,” he said. - May 16, 2018, KJZZ.org article excerpt

Pacific Oak Capital and Defer Gain (Phoenix, Arizona) -- The company is building an affordable housing complex in downtown Phoenix that will be located in an Opportunity Zone created by the Tax Cuts and Jobs Act:

Three apartment complexes are headed to an Opportunity Zone in downtown Phoenix, addressing the need for affordable housing. These projects are valued at $61 million.

Investment company Pacific Oak Capital and Defer Gain, an Arizona-based real estate development company specializing in Opportunity Zone investments, have announced a joint venture to develop, finance, and operate multi-family, commercial, and industrial income-producing properties in Arizona Opportunity Zones.

In this first phase, three multi-family housing complexes are being built in downtown Phoenix, the 241-unit St. Ambrose Apartments and the 84-unit Presidential Apartments, and another housing development called Imperial Apartments.

"It's exciting to see Opportunity Zone developments providing support to a critical component of our state's economy — the workforce," said Sandra Watson, President and CEO of the Arizona Commerce Authority. "We thank Pacific Oak and Defer Gain for advancing these three projects in downtown Phoenix neighborhoods."

These properties will include amenities such as mail rooms including secured lockers for packages, grocery delivery and cold/ freezer storage, clubhouses, multi-purpose rooms, private conference rooms, exercise facilities, resort style swimming pools, cabanas with private BBQ's, and access to public transportation. There will also be street level retail and mixed use opportunities for the community.

"Adding quality housing is a top priority for our city. I am excited to see new housing, including much-needed workforce units, near our key job corridors in the downtown and airport area,” Phoenix Mayor Kate Gallego said. -- August 16, 2019 Housing Wire article

Lucid Moters Inc. (Pinal County, Arizona) -- The company is building a production plant in an Opportunity Zone created by the Tax Cuts and Jobs Act:

Arizona's Pinal County has purchased 500 acres of land that it plans to lease and eventually sell to Silicon Valley electric carmaker Lucid Motors Inc ., which plans to create a $700 million production facility on the site.

The plant in Casa Grande, Arizona, will focus be on the Lucid Air, an under-development all-electric luxury sedan that Lucid claims will have a 400-mile range and top speed of 200 mph when it hits the market next year. Lucid eventually plans to employ 2,300 people at the plant, which is expected to begin construction in the second quarter of this year.

In September, Lucid Motors secured a $1 billion investment from Saudi Arabia's sovereign wealth fund. Around the same time, the Business Journal confirmed that it had moved its headquarters and about 300 employees into the former Theranos space in Newark's Pacific Research Center campus, about four miles from incumbent rival Tesla Inc .'s Fremont factory.

Electric car promise

“The convergence of new technologies is reshaping the automobile, but the benefits have yet to be truly realized,” Lucid Chief Technology Officer Peter Rawlinson said when the Saudi investment was announced last year. “This is inhibiting the pace at which sustainable mobility and energy are adopted. At Lucid, we will demonstrate the full potential of the electric connected vehicle in order to push the industry forward.”

Rawlinson helped design Tesla's Model S sedan, but left the company in 2012.

Lucid has said it plans to build two versions of its electric vehicle, going head-to-head in the market that Palo Alto-based Tesla has pioneered. The Lucid vehicles will start at a base price of around $60,000 and will top $100,000 with options.

Arizona plant moves forward

In Arizona, Pinal County stepped in to help the deal for Lucid's new auto plant by consolidating the land under one ownership that eventually would be sold to the carmaker, Pinal County Manager Greg Stanley said. The county closed on the land at the end of 2018, spending $29.94 million through the issuance of bonds.

As part of the agreement, Lucid will pay $1.8 million per year in rent for the first four years of the agreement, and will buy the land in the fifth year, Stanley said. The county will break even on the deal.

Lucid is required to keep funds in an account that, if the plant does not come to fruition, will be used by the county to complete infrastructure improvements on the site to make it a shovel-ready industrial park.

Most of the land was owned by Scottsdale, Arizona, based Saint Holdings before being purchased by the county. Kirk McCarville of Land Advisors brokered a deal for 80 acres from a separate seller of adjacent land, which was purchased by the county as part of the 500-acre total purchase.

Saint Holdings is owner and developer of the Central Arizona Commerce Park, which contains the Lucid land.

“We have quite a bit of interest in the northern parcels,” said Jackob Andersen, president and CEO of Saint Holdings of the Central Arizona Commerce Park, which is also part of an opportunity zone. “We are open for business on the neighboring sites, we hope the others will get auxiliary uses.” -- Feb. 13, 2019 Silicon Valley Business Journal article

Pacific Oak Capital Advisors (Phoenix, Arizona) -- The company is building affordable apartment units in downtown Phoenix in an Opportunity Zone created by the Tax Cuts and Jobs Act:

Thanks to downtown Phoenix's apartment building boom, there are thousands of new places for people to live in the popular area. Unfortunately, many who work or go to college downtown can't afford the pricey rents.

But three new apartment projects could help ease the rent crunch for hundreds of people who want to live near their job or school in central Phoenix.

An Arizona group is teaming with a national investor to develop three more affordable apartment projects in central Phoenix with almost 500 units. Rents for many of the apartments will be below the area's average, which is more than $1,737 a month, according to Colliers International.

The new tax incentive for developing in lower-income areas designated as Opportunity Zones is spurring the development of the new apartments. -- September 12, 2019 The Arizona Republic article

Pivot Manufacturing (Phoenix, Arizona) - Purchasing new equipment:

Two high-speed machines arrived less than a month after the president signed the tax bill. The law lets Macias avoid paying federal tax on 20 percent of his company’s income. - May 16, 2018, KJZZ.org article excerpt

Davcon Aviation, LLC and Mesa Hangar, LLC (Mesa, Arizona) -- The companies are planning to add 20 hangars to Mesa's Falcon Field Airport that will include office space, located in an Opportunity Zone created by the Tax Cuts and Jobs Act:

Mesa's Falcon Field Airport, known for its rich history and as a major economic engine for the city, is adding at least 20 hangars to accommodate its growing clientele.

The municipal airport, which serves private and military aircraft, announced last week that it's preparing for a 23-acre development -- complete with ancillary offices and manufacturing spaces.

Davcon Aviation, LLC, and Mesa Hangar, LLC, will construct the phased project on more than 1 million square feet of vacant city land on the northwest side of the airport.

"We are really excited about it," said airport Director Corinne Nystrom. "One of our big missions has been to finish developing the airport with a strong presence of hangars and aviation businesses and this is exactly what we've been looking for. It's a big win for mesa."

The land will be leased for 40 years, and the initial design concept estimates that the hangars will range from 5,000 square feet to 60,000 square feet.

The number and size of the hangars will vary, depending on the preferences of the new tenants, and will offer high ceilings and wide doors.

The hangars will seek to accommodate corporate jets and specialized fixed-wing and helicopter uses, explained Lynn Spencer, airport economic development project manager.

"One of the things that is so exciting about getting the new hangars is that a lot of the inventory will allow us to have a new stock of facilities that can attract a different variety of businesses and size aircrafts," she said.

"This is going to allow for more potential businesses and jobs to come here," Spencer added.

The project is anticipated to cost more than $30 million, but because the airport is self-sustaining, it won't be dipping into any of the city's general fund.

The U.S. Treasury Department designated Falcon Field as an "opportunity zone," meaning it's an economically-distressed community where new investments could be eligible for preferential tax treatment.

Opportunity Zones are designed to spur economic development and job creation, according to the federal Internal Revenue Service website. -- May 20, 2019 East Valley Tribune article

Banyan Residential (Scottsdale, Arizona) -- The company is revitalizing a vacant lot with apartments, retail, and office space which will be located on a Opportunity Zone, created by the 2017 GOP tax cut:

Banyan Residential announced the start of construction on the long-anticipated Scottsdale Entrada development this morning. Located at the northeast corner of 64th Street and McDowell Road, Scottsdale Entrada will revitalize a long vacant 33-acre lot with a vibrant mixed-use campus, including 736 apartment units, 250,000 square feet of office space, 5,000 square feet of retail and ample public open space. The project is located in an Opportunity Zone, part of a revitalization program formed under the Tax Cuts and Jobs Act of 2017 and will be developed with program-compliant funding.

"Because of its central location and proximity to Phoenix, this project is critical to the economic prosperity and urban renaissance of the area and surrounding neighborhoods," said Mayor Lane. "As the name conveys, this is a major entry point to Scottsdale. We are very excited for construction to start." -- March 27, 2020 Vertical News article

Crooked Tooth Brewery (Tucson, Arizona) – Because of the Tax Cuts and Jobs Act, the brewery is planning to invest in new jobs and has been able to give back to the community:

The Vernons have been in the brewery business for about three years. Most of that time has fallen under the Craft Beverage Modernization Tax Reform Act passed in 2017. Because of this, they pay $3.50 a barrel in taxes, but at the start of 2020 that could double.

“We had about two months of business where we had $7 a barrel,” Vernon said. “That two months of business we didn’t do a lot of brewing, you know.”

This tax break was like a glass half full for small business.

Like the glass, there was plenty of room to grow. But if it expires, there's fear that optimism goes down the drain.

“Something that we may be investing in employment or we also give a lot to the community,” Vernon said.

These are things Vernon said he's been able to do because of this tax break, like working with local nonprofits on events. – Dec. 7, 2019, KLOD article.

Caliber (Phoenix, Arizona) -- The company is building a behavioral health clinic that will be located in an Opportunity Zone created by the Tax Cuts and Jobs Act:

Caliber-The Wealth Development Company has closed a deal as the property owner and developer of a 62,592-square-foot behavioral health clinic in downtown Phoenix. The 96-bed facility will be occupied by Dr. Cameron Gilbert and his company, Medical Behavioral Hospital of Phoenix LLC., and will care for patients struggling with medical and psychiatric conditions. Caliber purchased the facility, located near 14th Street and McDowell Road, for $10 million and will complete $9.5 million of renovations in the next year.

“This is a great example of how opportunity zones can truly make a positive impact on communities by enabling projects that are profitable, yet otherwise may not have attracted traditional funding,” said Chris Loeffler, CEO and co-founder of Caliber-The Wealth Development Company. “The clinic is expected to bring 80 high-income jobs into downtown Phoenix and, more importantly, serve a population in desperate need for advanced care.”

The clinic is the fourth investment to be included in the Caliber Tax Advantaged Opportunity Zone Fund, LP. and is one of the first healthcare opportunity zone properties across the country. Over the past year, Caliber has emerged as an industry-leading expert in opportunity zones and its Qualified Opportunity Zone Fund (QOF) has raised more than $40 million since its launch in Q4 2018. The fund is open to investment of short- and long-term capital gains, providing significant tax savings to investors, and is expected to reach its $500 million goal within two years. -- August 7, 2019 AZ Big Media article

Sutter Masonry, Inc. (El Mirage, Arizona) -- The company employs approximately 100 people. Hourly wages were increased by $1.00 and over $50,000 in bonuses were distributed.

Liberty Utilities (Phoenix, Arizona) – The utility will pass along tax savings to customers:

The Arizona Corporation Commission is following through on its promise to pass savings created by the Tax Cuts and Jobs Act to Arizona utility ratepayers. As of August, the effort has totaled $189,088,437.

The Commission has been working on rate adjustments every month since February. At the July Open Meeting, the Commission addressed federal tax adjustments for both Southwest Gas and Liberty Utilities with adjustments made to their revenue requirements of $20 million and $1.9 million respectively. – August 24, Prescott News Online

San Tan Brewing (Chandler, Arizona) – The Tax Cuts and Jobs Act allowed the brewery to put their spirits on the market:

Anthony Canecchia owns San Tan Brewing, a company that produces large quantities of beer and a small amount of distilled spirits.

Canecchia and his team had been experimenting with spirits for a while before they put them on the market. In 2017, considering the tax cut, it seemed like a natural time to start production, he says. San Tan Distilling started selling its spirits, such as Saint Anne's vodka and Sacred Stave whiskey and bourbon, in 2018. – Dec. 20, 2019, The Arizona Republic article.

Quail Creek (Phoenix, Arizona) – The utility will pass tax savings on to customers

At the August Open Meeting, the Commission addressed tax adjustments for both the Quail Creek and Bermuda Water Companies. The largest tax adjustment occurred earlier this year when the Commission approved a $119 million dollar reduction to benefit APS customers. - August 24, Prescott News Online

Rastegar Property Company, LLC (Phoenix, Arizona) -- The company is building an apartment complex in an Opportunity Zone created by the Tax Cuts and Jobs Act:

Rastegar Property, a vertically-integrated real estate investment firm focused on value-add and development in all asset classes across the United States, today announced its acquisition of a prominently-located high-rise lot in downtown Phoenix, AZ in anticipation of the city’s rapidly growing demand for residential and commercial real estate space.

Located at 334 N. 4th Ave., the 26,500+ square foot high-rise lot is near many employers, higher education campuses, retail spaces including shops, restaurants and bars, and entertainment venues. The lot’s zoning allows for 550 feet of vertical development, and Rastegar Property plans to use the lot to develop a multifamily high-rise residential complex with office and retail components.

“The Phoenix metropolitan area is experiencing some of the most tremendous job growth in the country, and with that comes significant demand for residential and commercial properties,” said Ari Rastegar, CEO of Rastegar Property. “In addition to its attractive size and location, the property also falls within a designated opportunity zone, a program through which the state of Arizona is encouraging investment and development in the Phoenix metropolitan area. This program, combined with the city’s rapidly growing population, and nation-leading rent and job growth, makes Phoenix an ideal market for Rastegar to make strategic acquisitions that bolster our national portfolio.” -- July 17, 2019 Rastegar Property press release

Bermuda Water Company (Phoenix, Arizona) – The utility will pass tax savings on to customers:

Helio Basin Brewery (Phoenix, Arizona) – The Tax Cuts and Jobs Act allowed the brewery to expand:

Local breweries have been paying a $3.50 tax per barrel, but once the bill expires, it will double, increasing to $7 per barrel. "Even though it doesn't sound like a lot of money, a $3.50 increase, it really does matter a lot to us, especially at our scale," said Dustin Hazer, the owner of Helio Basin Brewery. "Pretty much anything we try to do to increase our efficiency, it's a matter of change. It's not even once the sale happens; it's once we process it. So, we're getting immediately taxed on that volume. It's not when we sell it; it's when we process it."

Hazer opened his brewery a little more than three years ago, before the tax break was put in place. "The first year we had the full tax and then the last couple we've had the nice tax," he said. "Basically, when that tax break happened, we started to launch into some of the bigger stores, can products. We wouldn't have been able to do that even though it doesn't seem like a lot of money." – Dec. 5, 2019, AZFamily article.

JMA Ventures LLC (Phoenix, Arizona) -- The firm is building an apartment community located in an Opportunity Zone created by the Tax Cuts and Jobs Act:

San Francisco-based JMA Ventures LLC is on track to break ground next week for a $75 million apartment community in the warehouse district in downtown Phoenix.

The last time the developer bought land in downtown Phoenix — about four blocks away from its current location at Fourth and Buchanan streets — it was 20 years ago.

...

Newmark Knight Frank (Nasdaq: NMRK) arranged $51.9 million in construction financing for the 278-unit apartment community, with the rest coming from JMA Ventures and "opportunity zone" funding. -- August 19, 2019 Phoenix Business Journal article

The Beer Shop Co. (Tempe, Arizona) – Because of the Tax Cuts and Jobs Act, the owner was able to open his business and create jobs:

Dylan DeMiguel is a partner at the The Shop Beer Co. in Tempe.

Originally he thought he’d head to law school, but it turns out his entrepreneurial spirit drew him into the booze business.

It's booming, he says, thanks in part to a tax break that went into effect in 2018.

“We’re taking this money to fuel the growth of this company. We’re literally hiring people,” DeMiguel said. “We’re buying equipment. And we’re investing in our community.” – Dec. 8, 2019, KPNX 12 News article.

CAVU Aerospace (Mesa, Arizona) -- The aerospace company is opening an aircraft component repair facility in an Opportunity Zone created by the Tax Cuts and Jobs Act:

CAVU Aerospace Inc. is opening a $5 million aircraft component repair facility in Mesa, with plans to hire up to 75 employees.

The Stuttgart, Arkansas-based aerospace company, which focuses on end-of-service aircraft dismantling, engine repair and aerospace maintenance, was founded in 2010.

Component repair is a new business for the company, and Mesa will be the first of this facility for the company, said Ken Kocialski, CAVU Aerospace’s managing partner.

"We’re very excited to get this operation started," said Kocialski, who has lived in Chandler since the 1980s and will work out of the new facility. "This will bring our operation full circle."

...

A Los Angeles-based investment firm purchased the 20 acres of land in an opportunity zone for $2.25 million in February. -- August 1, 2019 Phoenix Business Journal article

U-Haul (Headquarters in Phoenix, with many locations statewide) – $1,200 bonus for full-time employees, $500 for part-time employees; over 28,000 workers will receive a bonus:

Officials with U-Haul say Friday its employees will receive a one-time bonus, as a result of the tax cut bill that was signed by President Donald Trump.

According to a statement, full-time team members will get a $1,200 bonus, while part-time employees will get $500. The bonuses, which will be issued by the end of February, will cost the company $23 million.

Officials say over 28,000 workers will benefit from the bonus, with more than 3,800 of those in Arizona. – Feb. 9 2018, Fox 10 Phoenix news article

YAM Worldwide (Scottsdale, Arizona) -- $2,000 bonuses for the 595 employees who have been with the company more than six months; $1,000 bonuses for the 131 employees who have been with the company less than six months. More than $1.3 million in bonuses were paid:

American entrepreneur and philanthropist Bob Parsons today announced that in celebration of the passage of the GOP tax plan, all 725 YAM Worldwide employees will receive additional bonuses. The 594 staffers who have been with the company for more than six months will receive $2,000, and the remaining 131 employees who have been on the YAM Worldwide team six months or less will receive $1,000 each. The more than $1.3 million in bonuses will be distributed today.

“The passage of the tax credit is a catalyst for explosive economic growth. On a massive scale, the lowered federal tax burden on businesses will increase investment, entrepreneurship and corporate philanthropy,” said Parsons. “I’ve always believed in sharing good news and have decided to celebrate the tax plan by mgiving back to my staff.” – Dec. 17 2017, YAM Worldwide press release

Data Sales Co., Inc. (Scottsdale, Arizona) – $1,000 bonuses for all 80 employees:

Data Sales Co., Inc. announced today that the Company will celebrate the recent passage of tax reform legislation by distributing to all 80 plus employees a special bonus of $1,000 each. Data Sales Co. will benefit from the new tax law lowering the corporate tax rate from 35 percent to 21 percent:

“Our hard-working employees make this company succeed, and we wanted them to share in the savings the company will see and also help grow our economy. Today I’m announcing that every employee will receive a cash bonus of $1,000 each,” said Paul Breckner, President of Data Sales Co. “I also want to thank our local Congressman, Jason Lewis, for his consistent advocacy of tax reform and seeing it through to becoming law. With the majority of our 80+ strong workforce here in Burnsville, I’m pleased that the benefits of tax reform will be felt at home.”

Background on tax reform bonuses and Data Sales Co.:
All employees, whether full-time or part-time, hourly, salaried, commission or non-commission will receive the bonus to show our appreciation and heartfelt thanks for their service. We believe this tax reform will be good for Data Sales, spur economic growth, continue to grow jobs and keep unemployment at an all-time low. – Jan. 22, 2018 Data Sales Co., Inc. press release

Virtua Partners (Phoenix, Arizona) - Launched an Opportunity Zone Fund, raising $200 million for the fund:

Virtua Partners (Virtua), a global private-equity real-estate investment firm, today announced the launch of the first-ever Opportunity Zone Fund. This groundbreaking fund is the first vehicle designed to invest in the newly created Opportunity Zones -- one of the lesser known provisions of the Tax Cuts and Jobs Act of 2017 (the Tax Reform Act). Virtua Opportunity Zone Fund I, LLC aims to raise $200 million and is designed to utilize the tax-savings opportunities created by the tax-reform law. - June 20, 2018 Virtua Partners press release

Pacific Oak Capital and Defer Gain (Phoenix, Arizona) -- The company announced an investment into affordable multi-family, commercial, and industrial income-producing properties within the Opportunity Zones, which will create jobs:

“Three apartment complexes are headed to an Opportunity Zone in downtown Phoenix, addressing the need for affordable housing. These projects are valued at $61 million.

EPCOR USA (Phoenix, Arizona) - The utility will pass along tax cut savings to customers:

More than 57,000 EPCOR wastewater customers will receive more than $1.1 million in federal corporate tax cut savings, reducing the amount of their monthly wastewater bill starting with the July 2018 billing cycle.

Today, the Arizona Corporation Commission (ACC) approved EPCOR’s request to refund $1,106,392 in tax reform savings to all of the company’s residential and commercial wastewater customers.

Residential customers will receive a monthly credit of $1.26 until new rates are determined in a future rate case. Because wastewater service is billed at a flat rate, all residential customers will receive the same monthly credit. Residential customers will also receive a one-time credit of $7.56 on their July 2018 bill, refunding corporate taxes collected through June 2018 at the previous tax rate before today’s ACC approval of EPCOR’s application.

“We are extremely pleased to help our wastewater customers save more than $1 million each year, and it’s important to us that we put this into effect as soon as possible,” commented Joe Gysel, President of EPCOR USA, Arizona’s largest regulated water utility. “All our customers deserve to share in the savings generated by federal tax reform. It's positive for them, for their communities and for our state.” - June 12, 2018 EPCOR press release

Western Alliance Bancorporation (Phoenix, Arizona) – Base pay raise of 7.5 percent for the lowest-paid 50% of employees; increased bonuses; increased 401(k) match; etc.

Western Alliance, which has $20 billion in assets, plans to increase the base pay of the lowest-paid 50% of employees by 7.5% once the bill becomes law, the bank’s chief executive Robert Sarver said in an interview Wednesday. Bonuses will also go up, bringing the total pay increase for this group of employees to around 10%. These employees generally make $75,000 or less.

Western Alliance, which operates units including Bank of Nevada and Torrey Pines Bank, also plans to increase its 401(k) match from 50% of an employee’s contribution up to 6% of pay to 75% of an employee’s contribution up to that same level. The bank, which has about 1,700 total employees, also plans to improve maternity leave benefits, though Mr. Sarver declined to detail those changes. – Dec. 20, 2017 Wall Street Journal article excerpt

Arizona Public Service (Phoenix, Arizona) -- The utility requested a $119 million bill reduction for customers due to tax reform:

"APS has requested the Arizona Corporation Commission approve a $119 million bill reduction for customers, based on federal corporate tax cuts, effective February 1, 2018.

If approved, the $119 million decrease will offset the $95 million revenue increase that resulted from APS’s last rate review. The savings of $0.004258/kWh will be passed directly to customers through the Tax Expense Adjustor Mechanism (TEAM), a new adjustor mechanism that was included in the company’s rate review, and customer savings will vary with actual energy usage. APS customers would receive the credit on their monthly bill. – Jan. 9, 2018 Arizona Public Service press release

Tucson Electric Power Company (Tucson, Arizona) – The utility will pass tax reform savings to customers:

EP and its sister utilities “believe it is in the public interest to share a substantial portion of the expected income tax savings with their respective customers on an expedited basis,” the companies said.

TEP says its proposals may include a fast-tracked regulatory approval process to implement a billing credit as soon as possible; a higher seasonal credit that would help offset customer bills during higher usage months; or bill credits that would decline over time while still smoothing the bill impacts of future rate requests. – Feb. 2, 2018 Tucson.com article excerpt

AT&T - $1,000 bonuses to 1,510 Arizona employees; Nationwide, $1 billion increase in capital expenditures:

Today, Congress approved legislation representing the first comprehensive tax reform in a generation. The President is expected to sign the bill in the coming days.

Once tax reform is signed into law, AT&T* plans to invest an additional $1 billion in the United States in 2018 and pay a special $1,000 bonus to more than 200,000 AT&T U.S. employees — all union-represented, non-management and front-line managers. If the President signs the bill before Christmas, employees will receive the bonus over the holidays.

“Congress, working closely with the President, took a monumental step to bring taxes paid by U.S. businesses in line with the rest of the industrialized world,” said Randall Stephenson, AT&T chairman and CEO. “This tax reform will drive economic growth and create good-paying jobs. In fact, we will increase our U.S. investment and pay a special bonus to our U.S. employees.”

Since 2012, AT&T has invested more in the United States than any other public company. Every $1 billion in capital invested in the telecom industry creates about 7,000 jobs for American workers, research shows. -- Dec. 20, 2017 AT&T Inc. press release

Apple (Apple store locations in Chandler, Gilbert, Glendale, Phoenix, Scottsdale, Tucson ) -- Arizona-based Apple employees received $2,500 bonuses in the form of restricted stock units. Nationally, $30 billion in additional capital expenditures; 20,000 new employees will be hired; increased support of coding education and science, technology, engineering, arts, and math; increased support for U.S. manufacturing.

Wal-Mart – Arizona employees at 113 Walmart stores received tax reform bonuses, wage increases, and expanded maternity and parental leave. Walmart employees who adopt children will be given $5,000 to help cover expenses.

Lowe's -- 4,000 employees at 32 stores in Arizona. Employees will receive bonuses of up to $1,000 based on length of service; expanded benefits and maternity/parental leave; $5,000 of adoption assistance.

Home Depot -- 57 locations in Arizona, bonuses for all hourly employees, up to $1,000:

"This incremental investment in our associates was made possible by the new tax reform bill." -- Jan. 25, 2018 Home Depot press release

Ryder (Six locations in Arizona) -- Tax reform bonuses for employees.

Waste Management Inc. (Multiple locations in Arizona) -- $2,000 bonuses:

In light of the meaningful contributions of its employees and the new U.S. corporate tax structure, the company will distribute US $2,000 in 2018 to every North American employee not on a bonus or sales incentive plan; that includes hourly and other employees.

“We are about to get a tax benefit as our U.S. corporate tax rate goes from 35 percent to 21 percent. In considering how to best spend that, we wanted to find a way to help grow our economy, which in turn, will help grow our business, and give some of the tax savings back to those hardworking employees who do not get the opportunity to participate in our salaried incentive plans,” said Jim Fish, president and chief executive officer, Waste Management.

“So, we are offering each North American hourly full-time employee and salaried employee who does not participate in any sales incentive or bonus plan during 2018, a cash bonus of US $2,000 to show our appreciation to so many of our valued employees while growing our business and returning a good portion of the tax savings directly to the overall economy,” he continued. – Jan. 10 2018, Waste Management Inc. press release excerpt

T.J. Maxx – 17 stores in Arizona – Tax reform bonuses, retirement plan contributions, parental leave, enhanced vacation benefits, and increased charitable donations:

The 2017 Tax Act benefited the Company in the fourth quarter and full year Fiscal 2018. The Company expects to continue to benefit from the 2017 Tax Act going forward, primarily due to the lower U.S. corporate income tax rate. As a result of the estimated cash benefit related to the 2017 Tax Act, the Company is taking the following actions:

Associates

A one-time, discretionary bonus to eligible, non-bonus-plan Associates, globally
An incremental contribution to the Company’s defined contribution retirement plans for eligible Associates in the U.S. and internationally
Instituting paid parental leave for eligible Associates in the U.S.
Enhancing vacation benefits for certain U.S. Associates

Communities

Made meaningful contributions to TJX’s charitable foundations around the world to further support TJX’s charitable giving. – Feb. 28 2018, The TJX Companies Inc. press release excerpt

FedEx (Multiple locations in Arizona) – More than $3.2 billion in wage increases, bonuses, pension funding due to the recent tax cuts. Pay raises, bonus increases, pension plan increases, and at least $1.5 billion in capital expenditures:

“FedEx Corporation is announcing three major programs today following the recently enacted U.S. Tax Cuts and Jobs Act:

Over $200 million in increased compensation, about two-thirds of which will go to hourly team members by advancing 2018 annual pay increases by six months to April 1st from the normal October date. The remainder will fund increases in performance- based incentive plans for salaried personnel.
A voluntary contribution of $1.5 billion to the FedEx pension plan to ensure it remains one of the best funded retirement programs in the country.
Investing $1.5 billion to significantly expand the FedEx Express Indianapolis hub over the next seven years. The Memphis SuperHub will also be modernized and enlarged in a major program the details of which will be announced later this spring.

FedEx believes the Tax Cuts and Jobs Act will likely increase GDP and investment in the United States.

The company has made no change to its fiscal 2018 earnings or capital expenditure guidance as issued on December 19, 2017 as a result of these actions.” – Jan. 26 2018, FedEx press release

Cintas (Multiple locations in Arizona) -- $1,000 bonuses for employees of at least a year, $500 for employees of less than a year.

Comcast (Multiple locations in Arizona) -- $1,000 bonuses; nationally, at least $50 billion investment in infrastructure in next five years.

Chipotle Mexican Grill (Multiple locations in Arizona) – Bonuses ranging from $250 to $1,000; increased employee benefits; nationally, $50 million investment in existing restaurants.

Starbucks Coffee Company (Multiple locations in Arizona) – $500 stock grants for all retail employees, $2,000 stock grants for store managers, and varying plan and support center employee stock grants. Nationally, 8,000 new retail jobs; an additional wage increase this year, totaling approximately $120 million in wage increases, increased sick time benefits and parental leave.

McDonald’s (280+ locations in Arizona) – Increased tuition investments which will provide educational program access for 400,000 U.S. employees. $2,500 per year (up from $700) for crew working 15 hours a week, $3,000 (up from $1,050) for managers, and more:

McDonald’s Corporation today announced it will allocate $150 million over five years to its global Archways to Opportunity education program. This investment will provide almost 400,000 U.S. restaurant employees with accessibility to the program as the company will also lower eligibility requirements from nine months to 90 days of employment and drop weekly shift minimums from 20 hours to 15 hours. Additionally, McDonald’s will also extend some education benefits to restaurant employees’ family members. These enhancements underscore McDonald’s and its independent franchisees’ commitment to providing jobs that fit around the lives of restaurant employees so they may pursue their education and career ambitions.

The Archways to Opportunity program provides eligible U.S. employees an opportunity to earn a high school diploma, receive upfront college tuition assistance, access free education advising services and learn English as a second language.

“Our commitment to education reinforces our ongoing support of the people who play a crucial role in our journey to build a better McDonald’s,” said Steve Easterbrook, McDonald’s President and CEO. “By offering restaurant employees more opportunities to further their education and pursue their career aspirations, we are helping them find their full potential, whether that’s at McDonald’s or elsewhere.”

Accelerated by changes in the U.S. tax law, McDonald’s increased investment in the Archways to Opportunity Program includes:

Increased Tuition Investment:
- Crew: Eligible crew will have access to $2,500/year, up from $700/year.
- Managers: Eligible Managers will have access to $3,000/year, up from $1,050.
- Participants have a choice for how they apply this funding – whether it be to a community college, four year university or trade school. There is no lifetime cap on tuition assistance – restaurant employees will be able to pursue their education and career passions at their own pace. The new tuition assistance is effective May 1, 2018 and retroactive to January 1, 2018.
Lowered Eligibility Requirements: Increase access to the program by lowering eligibility requirements from nine months to 90 days of employment. In addition, dropping from 20 hours minimum to 15 hours minimum (roughly two full time shifts) per week to enable restaurant employees more time to focus on studies.
Extended Services to Families: Extension of Career Online High School and College Advisory services to restaurant employees’ family members through existing educational partners Cengage and Council for Adult and Experiential Learning (CAEL).
Additional Resources: Career exploration resources for eligible restaurant employees to be available later this year.
Creation of an International Education Fund: Grants to provide local initiatives and incentives in global markets to further education advancement programs.

“Since its inception, Archways to Opportunity was meant to match the ambition and drive of restaurant crew with the means and network to help them find success on their own terms,” said David Fairhurst, McDonald’s Chief People Officer. “By tripling tuition assistance, adding education benefits for family members and lowering eligibility requirements to the equivalent of a summer job, we are sending a signal that if you come work at your local McDonald’s, we’ll invest in your future.”

After launching in the U.S. in 2015, Archways to Opportunity has increased access to education for over 24,000 people and awarded over $21 million in high school and college tuition assistance. Graduates have received college degrees in Business Administration, Human Resources, Communications, Accounting, Microbiology and more. – March 29, 2018 McDonald’s Corporation press release excerpt

Wells Fargo – 181 bank locations in Arizona; raised base wage from $13.50 to $15.00 per hour; nationally, $400 million in charitable donations for 2018; $100 million increased capital investment over the next three years.

Note: If you know of other Arizona examples, please email John Kartch at jkartch@atr.org

The running nationwide list of companies can be found at www.atr.org/list

Dems Rushing Through Small Biz Tax Paperwork Mandate in Biden Spending Bill

Posted by Isabelle Morales on Friday, February 26th, 2021, 4:27 PM PERMALINK Follow @IsabelleAliciaa

Congressional Democrats are sneaking through new reporting requirements that will increase tax complexity for independent contractors, small businesses, and freelancers. They have included this proposal in the 200 page manager’s amendment to President Biden’s $1.9 trillion stimulus bill. This is another attempt by the Left to exploit the COVID-19 crisis by passing unrelated policy measures long desired by progressives.

The provision in question would lower the reporting threshold to $600 or more for 1099-K reporting and eliminates the transactions threshold. Currently, one is only required to report when there is more than $20,000 in sales and more than 200 transactions in a year. The proposal also extends the 1099-K reporting to "specified electronic payment processors."

This would impact freelancers and independent contractors including freelancers compensated via PayPal, Etsy sellers, Airbnb hosts, Uber and Lyft drivers, food delivery couriers, and others participating in the sharing economy.

This provision would end up harming low- and middle-income contractors, small businesses, and freelancers, many of which have been devastated by the coronavirus pandemic. Implementing new, burdensome reporting rules will only do more damage. It is quite ironic that a provision like this may be included in the so-called “American Rescue Plan.”

The House plans to vote on the stimulus package today, so Democrats are trying to rush these provisions through with no debate or public scrutiny.

Democrats last enacted burdensome new 1099 reporting requirements in Obamacare, when they required businesses to send 1099 forms for all purchases of goods and services over $600 annually.

Soon after this provision was signed into law, the National Taxpayer Advocate raised concerns that these reporting requirements would cause “disproportionate” harm to small businesses and do little to improve tax compliance.

This provision was so unpopular that it was quickly repealed in 2011 with a bipartisan vote of 87 to 12 in the Senate and 314 to 112 in the House. The Obama administration even hailed repeal of the provision a “big win” for small businesses in a press release:

“Today, President Obama signed a law that removes the expanded ‘1099’ reporting requirement from the Affordable Care Act. This is a big win for small businesses.

The SBA and President Obama supported repealing this provision, which would have required businesses to send 1099 forms for all purchases of goods and services over $600 annually. With this bipartisan effort, we have removed a requirement that would have been an undue barrier to small business growth.”

This provision being rushed through today is eerily similar to the Obamacare reporting requirement.

We should not make the same mistakes again. Expanding reporting requirements for 1099-K receivers will harm independent contractors, small businesses, and freelancers. Increasing compliance costs and the regulatory burden on already-struggling workers and small business owners is especially alarming given they have been disproportionately harmed by the pandemic.

Photo Credit: Kentucky Democratic Party

Posted by Ben Rajadurai on Friday, February 26th, 2021, 2:05 PM PERMALINK

Massachusetts is home to the 16th worst Business Tax Climate in the United States, according to the Tax Foundation. Aside from high taxes and a poorly structured code, small businesses in Massachusetts contend with soaring rent and costly regulatory regimes. Despite all of this and after suffering from a year of economic downturn, pandemic-induced lockdowns, and new expenses, small businesses in Massachusetts face even more new fees and regulations from their state government.

Members of the Massachusetts legislature are again considering a real-time sales tax remittance requirement for retailers, which does not increase revenue for state coffers like other tax grabs, but does impose significant new costs on employers at a time when many businesses are struggling just to stay open. While this misguided proposal wouldn’t raise any new revenue, a real-time sales tax collection and remittance requirement would force businesses to create an entirely new payment system that would saddle employers with new compliance costs, further reducing the job-creating and sustaining capacity of Bay State small businesses while raising new privacy concerns for consumers.

The retail infrastructure required to fully comply with a real-time sales tax remittance mandate does not exist. Current payment processors only collect a final purchase amount and aren’t built to collect the data required to remit a sales tax instantaneously. As a result, the real-times sales tax requirement some on Beacon Hill are calling for would force businesses and financial institutions to build new systems from scratch in order to comply, all to generate no new revenue, just earlier collection. The State Tax Research Institute estimatesthat this process would cost businesses almost 1.2 billion dollars in costs.

Aside from the added costs, the real-time sales tax proposal raises significant consumer privacy and information security questions. The current sales tax collection and remittance system is already a complex web that requires coordination from multiple government agencies and stakeholders. Any new information needed to make a transaction compliant presents another point of attack for bad actors to access even more consumer information.

Forcing the nation’s first real-time sales tax requirement on employers would only serve to make Massachusetts a more costly and less hospitable place to do business and invest. The real-time sale tax proposal being advocated for in Massachusetts would inflict pain on in-state employers, with no gain for state coffers. This misguided policy would create no additional revenue for the state. It would only levy new rules and associated costs for businesses that are just beginning to recover from the adverse effects of the pandemic-driven downturn. Several state legislatures have proposed and eventually rejected instant sales tax remittance because they ultimately understood that it was an onerously expensive and unnecessary policy that brought no new revenue to the state. Massachusetts lawmakers should heed the lessons from those failed attempts.

Posted by Elias Korpela on Friday, February 26th, 2021, 11:52 AM PERMALINK Follow @eliasjkorpela

The Paycheck Protection Program (PPP), created in March 2020 as part of the CARES Act, was meant to help businesses retain workers and avoiding permanent closure amid government-mandated lockdowns. PPP loans issued to businesses were forgivable and not subject to federal income tax, so long as 60% of the loans went to keeping employees on the payroll. In some states, however, employers now face the prospect of being hit with higher state taxes as a result of accepting federal relief.

Businesses like Macromatic Industrial Controls in Wisconsin used PPP loans to help keep their workers employed. With taxes due this spring, the company’s president Steve Sundlov had been raising concerns about PPP loans being taxed by the state.

“The PPP money was again presented to us as tax-free money, and those were the rules that we were give,” Sundlov said, adding that “now, it seems like the rules are changing and that’s very difficult to deal with.”

Though it had originally appeared as though Governor Tony Evers (D) was going to subject PPP relief to state taxation, after increasing pressure from the Republican-controlled Wisconsin legislature, Gov. Evers agreed last week to sign into law a bill exempting PPP loans from state income tax.

The prospect of state taxation of PPP loans that Wisconsin lawmakers rectified last week is a problem that’s not limited to Wisconsin. While it was good to see Governor Evers make the right decision, the threat of state taxation of PPP loans continues to hang over employers in many other states. Governors and legislators in a number of states still need to take action to ensure businesses are not subject to higher state taxes on account of their utilization of pandemic aid authorized under the CARES Act.

Unless state legislators in Georgia, Kentucky, Maine, and 16 other states take action soon, PPP relief aid that businesses received during the pandemic will be subject to state taxation because state lawmakers declined to exempt PPP loans as taxable income and disallowed expense deductions. The good news is that legislators in some of those states are in the process of taking such action.

Meanwhile in Maine, the Democrats who run state government seem less concerned about protecting businesses from surprise tax bills on their PPP relief aid. Gov. Janet Mills (D) introduced an executive budget on January 25, 2021 that did not exempt forgiven PPP loans from state income tax. The Governor argued that by taxing this relief aid, the state could get an additional $100 million revenue shortfall on top of the windfall of additional federal revenue that Congress is about to send.

After public backlash, Gov. Mills announced that she would look towards additional aid from the federal government to avoid taxing PPP funds, which the state is sure to get as part of the $1.9 trillion spending package now working its way through Congress.

While efforts to exempt PPP aid from state income tax are encouraging and necessary, lawmakers in many states still need to approve conformity legislation before taxes come due this spring. While Mr. Sundlov’s worries that he will “owe tens of thousands of dollars in income tax” have abated thanks to the prudent action recently taken by Wisconsin lawmakers to conform with the CARES Act’s tax exemption for pandemic relief funds, thousands of other small businesses across the U.S. still face the prospect of unexpected state tax bills. Unless lawmakers in those states act soon, some employers might have to resort to the sort of payroll reductions that PPP loans and the other liquidity enhancing provisions of the CARES Act were designed to prevent.

Photo Credit: Robert English

More from Americans for Tax Reform

Wisconsin’s Democratic Governor Proposes $1 Billion in State Tax Hikes

Kamala Harris Called Out for "Starting from Scratch" Claim

How the Republican Tax Cuts Are Helping Wisconsin

Posted by Michael Mirsky on Friday, February 26th, 2021, 7:00 AM PERMALINK

Reporting from Watford City, North Dakota, the Fargo Forum interviewed local residents regarding President Biden’s hostility to oil and gas workers:

"I think everybody up here feels like we’re absolutely screwed," said Tara Paul, a Denver native who followed her sons to western North Dakota oil country just months before the pandemic hit.

Despite the claims of the Biden administration, workers cannot simply switch to working on solar panels. One of Tara’s sons, Shawn, shared his frustration over Biden’s lack of empathy:

For Shawn, 23, even if oil prices rebound in the next few years, the Biden climate agenda and the newly secured Democratic control in Washington look like writing on the wall for his long-term hopes in the oil business. "You build your lifestyle on these things, and you have to change your whole life up because of politics," Shawn said.

On Dec. 19, 2019, Biden said he would be willing to displace "hundreds of thousands of blue collar workers" in pursuit of a "Green New Deal."

Biden also suggested energy workers who lose their job due to his policies should learn to code.

On Dec. 30, 2019, Joe Biden said: "Anybody who can go down 300 to 3,000 feet in a mine can sure as hell learn to program as well...Give me a break! Anybody who can throw coal into a furnace can learn how to program, for god's sake!”

If you would like to read the rest of the Fargo Forum article, it can be found here.

Posted by Michael Mirsky on Thursday, February 25th, 2021, 4:02 PM PERMALINK

Americans for Tax Reform is collecting personal testimonials of Americans hit by President Biden's energy restrictions. (If you would like to submit a short video, please send it to Mike Mirsky at mmirsky@atr.org). Please see the examples below:

“I am currently unemployed due to Joe Biden’s executive order to halt construction of the KeystoneXL pipeline."”

Pipeline Worker: "I've got my whole life invested in this."

Oilfield Welder on Biden's Hostility to Oil and Gas Jobs: "You have to change your whole life up because of politics."

Posted by Sheridan Nolen on Thursday, February 25th, 2021, 2:48 PM PERMALINK Follow @sheridannolen

New Hampshire may soon join the list of 27 right-to-work states, giving private sector workers the freedom to choose whether or not they join and pay dues to a union. This would be a huge win for employees across the Granite State and a boon to the economy.

Thanks to the U.S. Supreme Court’s 2018 ruling in Janus v. AFSCME, public sector workers in New Hampshire and across the country are no longer forced to pay union dues as a condition of employment. That landmark victory for workplace freedom, however, did not apply to private sector unions. Private sector employees in states that do not have right-to-work laws in place still do not have this basic right to choose.

But now that New Hampshire is back under Republican control, there is a strong chance that things will soon change. Sen. John Reagan’s Senate Bill 61, which was recently approved by the Senate in a 13-11 vote, would prohibit collective bargaining agreements from including mandatory union dues, making New Hampshire the 28th right-to-work state. This commonsense law, if enacted, would give New Hampshire private sector workers the freedom to exercise their First Amendment right to decide to associate or not associate with an organization and give them the option to keep more of their hard-earned paychecks.

In addition, SB 61 is also smart economic policy. Scholarly research over the years has found that right-to-work states are more prosperous than forced-unionism states. The National Institute for Labor Relations Research, for example, found that the percentage growth in the number of people employed from 2009-2019 was 16.9% for right-to-work states and just 9.6% in forced unionism states.

These findings are not surprising. Right-to-work laws make states significantly more attractive to businesses looking to expand. John Boyd, founder of the Boyd Company, a business consulting firm that advises where to make job-creating investments, explained that right-to-work is a “common denominator among states attracting both aerospace and other types of advanced manufacturing.”

“I believe right-to-work, along with lower business taxes and workers compensation costs, will make New Hampshire more competitive and attractive to grow and locate a business,” said Senate Majority Leader Jeb Bradley, who is a cosponsor of the bill.

Joining Sen. Reagan and Leader Bradley as co-sponsors of SB 61 are Senate President Chuck Morse, Sen. Gary Daniels, Sen. Bill Gannon, Sen. James Gray, Sen. Harold French, Rep. Richard Marston, Rep. Carol McGuire, Rep. Alicia Lekas, and Rep. James Spillane. SB 61 has been placed at the top of House Speaker Sherman Packard’s legislative agenda and Gov. Chris Sununu, a longtime supporter of right-to-work laws, is expected to sign the bill into law if it reaches his desk.

Finally making New Hampshire a right-to-work state would be a win for all residents of the Granite State. It would give private sector employees the freedom to choose how they wish to assemble and allow them to keep more of their hard-earned paychecks, while also attracting new jobs and opportunities.

Photo Credit: James Walsh

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Letter: Make New Hampshire A True No Income Tax State

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New Hampshire Taxpayers Can Look Forward to Much Needed Tax Relief Under Republican Trifecta

Posted by Dan Kim on Thursday, February 25th, 2021, 2:29 PM PERMALINK

Over the past year, American banks were instrumental in supporting the survival of 51 million American jobs. The Paycheck Protection Program is currently in the middle of a successful second round as banks helped extend a lifeline to over 700,000 small businesses. Banks have been on the front lines throughout the healthcare emergency, retaining thousands of employees and remaining open to help Americans meet their financial needs. They should be applauded. But their resiliency is now a target as Democrats are preparing to tax these institutions at a time when access to affordable financial services is necessary to rebuild a prosperous economy.

President Biden consistently campaigned on reversing the Tax Cuts and Jobs Act and increasing the corporate tax rate from 21% to 28%, creating the highest corporate income tax rate in the industrialized world. For banks, S&P Global estimates a tax hike like this could cost the ten largest U.S. banks $7 billion annually.

Bloomberg reported the nation's top six banks saved $32 billion since Trump’s tax cuts. These savings helped them invest in their hundreds of thousands of employees and continue to expand access to affordable financial services and products. Wells Fargo, JPMorgan Chase, and Citigroup raised their minimum wage to $15 per hour after the tax cut. Bank of America increased hourly wages to a minimum of $20 per hour.

The Biden administration also plans on instituting a financial risk fee on banks. Democrats, including Secretary Hillary Clinton, have been pushing for this double tax since 2015. And Biden may find a likely ally in the Senate to spearhead this initiative. During Senator Amy Klobuchar's (D-Minn.) presidential campaign, she proposed a financial risk fee to pay for her “Climate Smart and Green Infrastructure” ambitions. She also chairs the Democratic Steering and Outreach Committee which helps craft Senate Democrat's policies.

The mechanics of the financial risk fee could be similar to President Obama’s plan in 2015. His administration proposed an annual seven basis point fee on the non-depository liabilities of financial institutions with assets over $50 billion. These liabilities include Federal Funds Market Repurchase Agreements, commercial paper, and bond issuances, and would directly affect 42 depository institutions with assets over $50 billion. A large institution like Bank of America, which borrows to finance its lending and market-making activities, can see an annual $540 million fee in addition to their record increase in corporate tax.

This tax risks the employment of 1.4 million bank employees, and the tens of millions of customers who rely on these banks daily, especially during the healthcare emergency. Although many small banks would be exempt, this arbitrary penalty would discourage smaller banks from taking on new customers to remain below the $50B asset threshold.

Proponents of these policies claim that taxing bank’s borrowing reduces the chance of bank failures. However, economists have shown that bank taxes like this are ineffective and have failed elsewhere.

Essentially banks could be taxed for simply being banks, serving customers, facilitating financial transactions, and providing loans to small businesses or entrepreneurs. This tax would raise the cost of financial services and punish many of the unbanked and underbanked who need access the most to affordable financial products.

Without banks' further participation in programs like PPP to meet the financial needs of Americans, small businesses could see a pullback in lending, and the economy will be slow to recover. It is inappropriate for the administration to punish the banking sector in light of the essential services they have continued to provide almost a year into the healthcare crisis. Banks should, instead, be rewarded and bolstered for their ongoing support in stimulating the American economic recovery.

Photo Credit: Steve Walser

Posted on Thursday, February 25th, 2021, 2:22 PM PERMALINK

Oklahoma Lawmakers Should Reject Price Controls

In a letter to the Oklahoma Senate Appropriations Committee, Grover Norquist, president of Americans for Tax Reform, urged lawmakers to reject Senate Bill 734, which would impose price controls on prescription medication.

If implemented, SB 734 would cap the amount state-regulated commercial insurance plans could pay for prescription drugs at a reference price. “[T]his bill, which is a price control, would jeopardize innovation in the pharmaceutical industry and result in patients having less access to their medicines,” warned Norquist.

To read the full letter, click here.

February 25, 2021

To: Members of the Senate Appropriations Committee

From: Americans for Tax Reform

Re: Oppose Senate Bill 734, Price Controls on Prescription Medications

Dear Senator,

On behalf of Americans for Tax Reform (ATR) and our supporters across Oklahoma, I urge you to oppose Senate Bill 734, legislation that would cap the amount state-regulated commercial insurance plans can pay for prescription drugs at a “reference price.” If implemented, this bill, which is a price control, would jeopardize innovation in the pharmaceutical industry and result in patients having less access to their medicines.

Currently in the United States, it costs around $2.6 billion and takes approximately 10 years – which includes the six to seven-year clinical trial process the Food and Drug Administration (FDA) requires for drug approval – for a new drug to enter the market. Given this long and expensive process, it is unsurprising that less than 12 percent of drugs that begin preclinical testing make it to approval.

As such, forcefully reducing the price of prescription medications is a very shortsighted “solution.” Legislation such as SB 734 would leave pharmaceutical manufacturers with fewer resources available to invest in the next generation of lifesaving and life-improving medicines. Similarly, it would also make it more difficult for potential manufacturers to successfully launch their operations. This would result in the people of Oklahoma being left with even fewer, lower quality choices.

Buttressing this point is experience from countries with a more heavy-handed approach to healthcare policy, which has demonstrated that government intervention neither lowers costs nor increases access. Rather, it stifles development, creates shortages, and leads to fewer choices for consumers and patients.

The best thing state lawmakers can do to mitigate rising healthcare costs is embrace free market solutions, which promote the competition that spurs innovation, improves quality, increases the number of available options, and naturally keeps prices low. ATR opposes Senate Bill 734 and urges lawmakers to vote NO.

Sincerely,

Grover Norquist

President

Americans for Tax Reform

Photo Credit: Jimmy Emerson, DVM

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Posted by Mike Mirsky on Thursday, February 25th, 2021, 9:20 AM PERMALINK

Americans for Tax Reform is collecting personal testimonials of Americans hit by President Biden's executive actions. (If you would like to submit a short video, please send it to Mike Mirsky at mmirsky@atr.org).

Please watch this video from Jason, a member of Pipeliners Local Union 798:

“My name is Jason Jernigan, I’m 45 years old and I’m a member of Local 798, Pipeliners Union. I’ve been a pipeliner for 21 years. This is all I know how to do. The recent administration has taken my livelihood from me and expected me to get a job somewhere else. I’ve got my whole life invested in this.”