How the Republican Tax Cuts Are Helping Connecticut
Connecticut is benefiting greatly from the Tax Cuts and Jobs Act enacted by Republicans in 2017:
213,800 Connecticut households are benefiting from the TCJA’s doubling of the child tax credit.
Every income group in every Connecticut 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.
1,028,380 Connecticut 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.
45,200 Connecticut 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, Connecticut residents are saving money on utility bills. Lower electric, water, and gas bills help households and small businesses operating on tight margins. For example, AVANGRID and The United Illuminating Company (see below) both passed their tax savings on to their customers.
Thanks to the tax cuts, Connecticut businesses of all sizes are hiring, expanding, raising pay and increasing employee benefits:
Charter Communications, Inc. (Stamford, Connecticut) – Base wage raised to $15 per hour; commitment to hire over 20,000 employees by 2020:
With the resources and investment confidence resulting from historic tax reform legislation and the FCC’s removal of the 1930’s era regulatory framework for internet service, Charter is increasing our investment in our workforce by ensuring all employees are paid a minimum wage of at least $15 per hour, including target commissions, within the next year.
In addition, the reforms in Washington are allowing Charter to increase its capital investment including in its broadband network. Last year, given the general deregulatory environment and anticipating the Administration, Congress, and the FCC enacting these pro-growth policies, we announced we would hire 20,000 employees and invest $25 billion in infrastructure.
Today, with tax reform and the removal of the Title II statutory framework both a reality, Charter will continue the capital investment program we started last year and will complete it by 2020. In 2017, we extended the reach of our high-speed broadband network in rural areas like Meeker, CO, Lakeview, OR, Hawthorne, NV, as well as to more than 42,000 underserved and unserved homes and businesses in New York State. Charter remains steadfast in our commitment to continue to bring our broadband service, with a minimum speed of 100 Mbps, to more communities across the country. – Feb. 2 2018, Charter Communications Inc. statement
Kaman Corp. (Bloomfield, Connecticut) – $1,000 tax reform bonuses:
Bloomfield manufacturer Kaman Corp. says it's joining the list of U.S. employers sharing the wealth with workers in the wake of federal tax reform.
The maker-supplier of aeroparts, custom aircraft and power-distribution products disclosed Wednesday that about 2,400 workers who were on its payroll on or before Oct. 1, 2017 and who earned less $75,000 a year are eligible for a $1,000 bonus. However, each must remain on the payroll through Aug. 31 to collect, CEO Neal J. Keating told staff in a memo. – April 18, 2018, Hartford Business Journal article excerpt
Thomas Hooker Brewery (Bloomfield, Connecticut) – The brewery used savings from the tax cut to expand the business and create new jobs:
U.S. Senator Richard Blumenthal of Connecticut says a federal tax credit for small-scale breweries, distilleries and wineries has helped create jobs in Connecticut.
The tax credit for small scale alcohol producers was initially part of the 2017 Trump tax cut. It’s been extended in the bipartisan federal budget passed by Congress last month. Blumenthal says he opposed Trump’s tax cuts to big business, but this particular tax cut is for small businesses and is a job creator.
“These craft breweries put the savings back into their businesses. They create jobs. They produce more beer. They meet demand. And they provide good value.”
Blumenthal spoke at Thomas Hooker Brewery in Bloomfield. Brewery owner Curt Cameron agrees that he’s putting 100% of his tax cut back into his business, “in our case a brand-new pizza kitchen, which is an offshoot of our existing business. It will create at least seven jobs immediately.”
If the tax break had not been extended, craft breweries like Thomas Hooker would have faced a federal excise tax increase of 400% this year. – Dec. 31, 2019, WSHU article.
Pitney Bowes (Stamford, Connecticut) – Pay raises for the majority of U.S. hourly employees:
Pitney Bowes, a global technology company that provides innovative products and solutions to power commerce, announced that, with the signing of the Tax Cuts and Jobs Act in December 2017, the Company will make an investment commitment of more than $18 million on an annualized basis to raise wages of the majority of its U.S. hourly employees. In addition, Pitney Bowes plans to fund key investment areas within the Company to provide more value to its small and medium business clients.
“The tax reform legislation provides Pitney Bowes the flexibility to invest in our people, our clients, our company, and the communities where we live and work,” said Marc B. Lautenbach, President and CEO. “We believe that the investments we make in our employees and our clients not only strengthen our business for the long term, but ultimately benefit our shareholders.”
In addition, Pitney Bowes plans to provide additional investments that contribute to the long-term growth of the Company, including funding the financing offerings within Pitney Bowes to support growth in its small and medium-sized business clients in the U.S. – Jan. 31 2018, Pitney Bowes press release excerpt
Shortway Brewing Co. (Newport, Connecticut) -- Increasing wages and hiring new employees:
Mr. Shortway said the new tax plan, along with the Craft Beverage Modernization and Tax Reform Act, also passed last year, have already helped the brewery save money. The craft beverage act greatly reduced excise taxes on small-scale brewers and the tax plan has additional provisions designed to help small businesses.
Mr. Shortway said he was able to give his employees a small raise and hire more workers as a result of the tax savings. He said although it is a bit early to know what the long-term impact of the tax plan will be, he expects it will keep helping going forward.
“Growth is picking up,” he said. - May 11, 2018, News-Times article excerpt
East Coast Kombucha (South Norwalk, Connecticut) -- The kombucha brewery is setting up shop in an Opportunity Zone created by the Tax Cuts and Jobs Act:
After plans fizzled last year for a brewery adjacent to the SoNo Ice House skating rink, a kombucha startup has identified a new location in South Norwalk.
East Coast Kombucha is now listing its planned brewery operation at the Chestnut Street building that once housed Pac-Kit Safety Equipment, which assembled first-aid kits there prior to its 2011 sale to Fairfield-based Acme United which subsequently moved the operation to Washington.
Last year, East Coast Kombucha began the process needed to secure city approval for a brewery on Wilson Avenue in an enclave of brick buildings next to SoNo Ice House but did not move forward, with co-founder Steve Gaskin telling Hearst Connecticut Media at the time that the company was no longer searching for space in Norwalk.
East Coast Kombucha now lists its address as 57 Chestnut St. in South Norwalk, both on its Facebook page and in a job advertisement it posted last week seeking a kombucha brewer, with the fizzy drink produced through the addition of yeast and bacteria to tea.
The property at 57 Chestnut St. was purchased last year by an entity led by Keith Brown of RBA Properties in Norwalk. The building is in a city enterprise zone that allows tax incentives for certain activities including manufacturing.
The property is located as well at the southwesternmost corner of one of Norwalk's three new "Opportunity Zone" districts authorized by the U.S. Department of the Treasury, which allows investors to claim tax breaks on any capital gains from the sale of startups, with the Wilson Avenue site lying outside that district.
Kombucha sales rose 37 percent in 2017 to $556 million, according to estimates published at last year's KombuchaKon conference sponsored by the Kombucha Brewers International trade group.
Both Coca Cola and Pepsico of Purchase, N.Y., have acquired kombucha labels in the past few years in Mojo and Kevita respectively, with the Greenwich private equity firm KarpReilly having been a past investor in Kevita. On Monday, KarpReilly announced it had led a $3.5 million investment in a Colorado startup called Rowdy Mermaid Kombucha, with other investors including Brendan Synnott, founder of Bear Naked granola once based in Norwalk and owned today by Kellogg's.
East Coast Kombucha is one of two KBI members in Connecticut, alongside Cross Culture Kombucha in Danbury which runs Thursday through Saturday a taproom on Division Street, while having expanded distribution to health food outlets like Green & Tonic and Sobol, the Westport Farmers Market and other cafes, restaurants and fitness centers.
Cross Culture hosted also a workshop last year to help people learn to brew kombucha at home. -- February 18, 2019 The Hour article
The Travelers Companies, Inc. (Hartford, Connecticut) -- $1,000 bonuses for 14,000 employees with a base salary less than $75,000:
Today, comprehensive U.S. tax reform has been signed into law. One objective of the legislation is to spur economic growth and therefore the U.S. economy.
In addition to benefiting from economic growth, Travelers will benefit directly from the legislation in two important ways. First, like all companies, our corporate tax rate will decrease from 35% to 21%. Second, the legislation will level the playing field for U.S. insurers by eliminating a loophole that foreign insurers have used to our disadvantage for decades to move their U.S. profits offshore to avoid paying their fair share of U.S. taxes.
One of the opportunities all of these benefits create for us is to make additional investments in our business. I shared at a recent all-employee meeting that our vision as it relates to investment and innovation is to strengthen our competitive advantages with two goals in mind: be the undeniable choice for the customer and an indispensable partner for our agents and brokers.
The leadership team decided that given our confidence in our business and the way we are successfully positioned for the opportunities ahead, we should start making additional investments immediately. We also came to the conclusion that we should use the opportunity to make our first investment in our most valuable asset and greatest competitive advantage — our people.
I’m pleased to announce that we will be giving approximately 14,000 employees with a base salary of $75,000 per year or less and who meet our performance expectations a special one-time bonus of $1,000. The bonus will be paid in January to then current employees. Eligible employees will hear more shortly.
In addition, while we have only a small number of U.S.-based employees making less than $15 an hour, we will increase their hourly wage to $15. – The Travelers Companies, Inc. note to employees
AVANGRID (Orange, Connecticut) – the utility is passing savings from tax reform to customers:
AVANGRID, Inc. (NYSE: AGR), a diversified U.S. energy company, today issued the following statement regarding the impact of the 2017 tax reform act.
AVANGRID’s regulated natural gas and electricity companies will pass along to customers the full benefit of any tax savings that the companies realize as a result of the 2017 federal tax reform act.
Among other changes, the tax reform act reduces the federal corporate tax rate from 35 to 21 percent. As a matter of fairness, AVANGRID believes that any resulting tax savings should be extended to customers. – Jan. 10, 2018 AVANGRID press release
United Technologies Corporation (Farmington, Connecticut) – 35,000 new employees to be hired, and $15 billion in capital expenditures and research/development over the next five years:
The competitive tax system resulting from U.S. tax reform is encouraging global companies, such as United Technologies, to make long-term investments in innovation in America. – May 23, 2018 United Technologies Corporation press release excerpt
Hartford Financial Services Group Inc. (Hartford, Connecticut) -- $1,000 bonuses for employees making less than $75,000 per year. This amounts to 9,500 employees:
The Hartford Financial Services Group Inc. on Friday became the latest company to announce bonuses tied to a federal overhaul reducing the corporate tax rate.
Chief Executive Officer Christopher Swift told reporters the investment and insurance company will distribute bonuses of $1,000 each to employees who are paid less than $75,000 a year. – Jan. 5 Hartford Courant article excerpt
Cigna Corporation (Bloomfield, Connecticut) – Base wage raised to $16 per hour; increased 401(k) matches:
Global health service company, Cigna (NYSE: CI), today announced that the net financial benefits of United States tax reform will allow the company to further accelerate investments in our employees, our capabilities and our customers, clients, partners, and communities.
Through a series of moves, Cigna is reaffirming the critical role of employees, further fueling the company’s commitment to be champions for its communities, and continuing its investments in innovation and capabilities that drive differentiated value for customers and clients.
“It is because of our employees that Cigna continues to deliver on our mission to improve the health, well-being and sense of security of those we serve,” said David Cordani, Cigna President and Chief Executive Officer. “Reinvesting a portion of savings from tax reform in our employees is a reinvestment in our mission.”
Effective today, Cigna is establishing a minimum wage across its U.S. employee base of $16 an hour, substantially exceeding the national minimum wage in the United States as well as the hourly rate paid at many global corporations.
Cigna will also provide salary increases above the $16 an hour level, largely to front line employees. These investments in employee wages will total more than $15 million.
Additionally, Cigna is adding $30 million to its 401(k) program to match an additional one percent of employee compensation contributed to the 401(k) in 2018. This match will benefit the retirement accounts of over 30,000 employees. – Jan. 31, 2018 Cigna Corporation press release
Information Services Group (Stamford, Connecticut) – $500 additional contribution to U.S. based employees’ 401(k) accounts, additional funds for global digital initiatives:
“Today it (Information Services Group) will earmark funds for additional investment in global digital initiatives over the next two years to accelerate growth, and make an additional contribution of $500 to every U.S. employee's 401(k) retirement account on U.S. Tax Day, April 17, 2018. The moves are in response to the recent passage of the federal Tax Cut and Jobs Act.”—Dec. 22, 2018 Information Services Group press release excerpt
Walmart – Connecticut employees at 33 Walmart store locations 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.
AT&T -- $1,000 bonuses to 1,272 Connecticut 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
The United Illuminating Company (New Haven, Connecticut) - the utility will pass tax reform savings to customers.
Webster Financial Corporation (Waterbury, Connecticut) – Base wage raised to $15 per hour; $1,000 bonuses to full-time employees below vice-president level; $1 million in additional charitable contributions:
Webster Financial Corporation (NYSE: WBS), the holding company for Webster Bank, N.A. and its HSA Bank division, today announced an acceleration of investment in its employees and the communities it serves following the passage of new federal tax reform legislation.
These investments include:
- Payment of a one-time $1,000 cash bonus in the first quarter of 2018 to full-time employees who are below the vice president level. This payment will benefit approximately 70 percent of all Webster full-time employees;
- Increasing Webster's minimum wage to $15 per hour by the end of 2018;
- Beginning in 2018, augmenting Webster's annual philanthropic and community investment by $1 million; and,
- Enhancing Webster's investment in strategic employee development initiatives and early career programs, creating new job opportunities in our markets. – Jan. 4 2018, Webster Financial Corporation press release excerpt
T.J. Maxx – 28 stores in Connecticut – 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
Windsor Federal Savings (Windsor, Connecticut) – $250 bonus for all employees with the exception of upper management:
With the signing of the tax reform bill into law all employees of Windsor Federal Savings with the exception of senior management will receive a one-time special bonus of $250. This bonus will coincide with their raising the hourly minimum wage of all full-time employees to $15.00 per hour.
George Hermann, President and CEO of Windsor Federal Savings, says the bank has a positive outlook on the economy due to the tax reform. “The relief that this tax bill provides to business should help to spur our economy, and is important to building meaningful, long-term growth in Connecticut, and beyond. The awarding of these bonuses and our minimum wage increase is our way of sharing our optimism with our most important asset: our valued employees.” – Windsor Federal Savings press release
Home Depot -- 29 locations in Connecticut, bonuses for all hourly employees, up to $1,000.
Lowe's --2,000+ employees at 17 stores and one distribution facility in Connecticut. Employees will receive bonuses of up to $1,000 based on length of service, for 260,000 employees; expanded benefits and maternity/parental leave; $5,000 of adoption assistance.
Waste Management Inc. (Multiple locations in Connecticut) -- $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
Ryder (Eight locations in Connecticut) – Tax reform bonuses to employees.
Cintas (Multiple locations in Connecticut) -- $1,000 bonuses for employees of at least a year, $500 for employees of less than a year.
Chipotle Mexican Grill (Multiple locations in Connecticut) – Bonuses ranging from $250 to $1,000; increased employee benefits; $50 million investment in existing restaurants.
Apple (Apple store locations in Danbury, Farmington, Greenwich, New Haven, South Windsor, Stamford, Trumbull) - $2,500 employee bonuses in the form of restricted stock units; Nationwide, $30 billion in additional capital expenditures over five years; 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.
McDonald’s (150+ locations in Connecticut) – 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
Comcast (Multiple locations in Connecticut) -- $1,000 bonuses; nationwide, at least $50 billion investment in infrastructure in next five years.
Starbucks Coffee Company (Multiple locations in Connecticut) –$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.
U-Haul (Multiple locations in Connecticut) – $1,200 bonuses for full-time employees, $500 for part-time employees.
CarMax (Retail locations in Hartford and New Haven) – $250-$1,500 bonuses depending on length of service:
“The nation’s largest retailer of used cars, announced plans to provide one-time bonuses to most hourly and commissioned full-time and part-time associates as a result of the recently passed Tax Cuts and Jobs Act of 2017. Bonus amounts will vary from $200 up to $1,500 based on length of service with the company.” – Feb 23. 2018, EPR Retail News article excerpt
FedEx (Multiple locations in Connecticut) – Accelerated and increased compensation; pension plan contributions:
“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. – Jan. 26 2018, FedEx press release
Wells Fargo – 69 locations in Connecticut; Raised base wage from $13.50 to $15.00 per hour; $400 million in charitable donations for 2018; $100 million increased capital investment over the next three years.
Note: If you know of other Connecticut examples, please email John Kartch at jkartch@atr.org
The running nationwide list of companies can be found at www.atr.org/list
More from Americans for Tax Reform
DC's Flavor Ban Would Harm Public Health, Criminal Justice, Businesses, & District Economy
Earlier today, Americans for Tax Reform (ATR) wrote to members of the Council of the District of Columbia, urging them to oppose B24-002, “The Flavored Tobacco Product Prohibition Amendment of 2021” which would introduce a prohibition on flavored cigarettes as well as reduced risk tobacco alternatives. No public hearings have been held on B24-002.
ATR Director of Consumer Issues Tim Andrews stated: “Policy must be driven by science and evidence, not by ideology. The evidence clearly demonstrates that if enacted, this bill would have a disastrous impact on public health, lead to an increase in smoking rates particularly among high schoolers, cause conflict between minorities and law enforcement with potentially tragic consequences, harm businesses, and reduce District Council Revenue by significantly more than the $3 million annually claimed.”
Andrews continued: “Reduced risk tobacco alternatives such as e-cigarettes are proven 95% safer than deadly combustible cigarettes, between two and four times more effective than any other form of nicotine replacement therapy, are endorsed by over 50 of the world’s leading medical authorities, and according to Georgetown University Medical Centre have the capacity to save 6.6 million American lives. Studies have repeatedly shown that flavored e-cigarettes are critical to helping adult smokers make the switch to vaping but have no impact on youth initiation. It is beyond belief that DC Council is considering a science-denial bill that will lead to more people smoking and dying as a result."
Andrews also commented on how B24-002 extends flavor prohibition to conventional tobacco, including menthol cigarettes, something strongly opposed by groups such as the ACLU and civil rights leaders like Rev Al Sharpton. “Banning menthol cigarettes will also significantly increase the policing of minority communities and lead to a rise in negative interactions between law enforcement and minorities, as was seen earlier this week in Ocean City.”
Andrews concluded, “DC has the experience of other states to learn from. The evidence is incontrovertible: When San Francisco imposed a flavor ban in 2018, the only impact was that youth smoking doubled. When Massachusetts banned menthols, the only result was sales moved interstate or to the black market, with no decrease in the smoking rate, but a loss to the state of $72 million in just the first 7 months. DC Councilors must put science above ideology and reject this truly dangerous bill.”
The full letter can be read here.
Photo Credit: Ted Eytan
More from Americans for Tax Reform
25+ Conservative Groups and Activists Urge Congress to Reject Democrat Antitrust Power Grab
A coalition of 26 conservative groups and grassroots activists at both the state and federal level released a letter today urging Congress to reject the Democrat antitrust power-grab spearheaded by Rep. David Cicilline (D-R.I.) and organized by far-left Members like Rep. Pramila Jayapal (D-Wash.).
The coalition's message is clear – Democrat lawmakers are attempting to harness legitimate conservative anger at Big Tech to give unelected Biden bureaucrats sweeping new power to regulate the economy. Democrats are dealing in bad faith, and this Trojan horse package does absolutely nothing to address conservative concerns with Big Tech. If implemented, these bills increase the likelihood of political abuse.
Republicans need to hold firm against this clear attempt by Democrats to weaponize antitrust law for their own political gain.
You can view the full letter here or below.
Dear Member of Congress:
We urge you to reject the package of European-style over-regulation in the antitrust bills spearheaded by Rep. David Cicilline (D-R.I.) and co-sponsored by Members from the far left like Rep. Pramila Jayapal (D-Wash.).
These bills are a deceitful attempt by Democrat lawmakers to exploit legitimate conservative anger over Big Tech in order to give the Biden administration sweeping new power to regulate the economy. But make no mistake about it – Democrats are dealing in bad faith, and this Trojan horse package does absolutely nothing to address conservative concerns with Big Tech censorship – and could increase those concerns.
If implemented, bureaucrats in the Biden administration would wield vast new powers at the expense of American business and households. This heavy-handed approach should offer no comfort for those worried that the platforms are biased against them, as it actually increases the likelihood of political abuse.
Republicans and free-market Democrats should hold firm and vote No.
One bill would give bureaucrats power to determine if “covered” platforms with over fifty million users and a market cap of $600 billion might operate businesses that present a “conflict of interest.” If so, “any person” who fails to sell off these alleged conflicts of interest within two years of the bill’s enactment faces steep civil penalties of up to 30 percent of revenue in a given year.
At the same time, another bill effectively bans covered platforms from selling or providing private-label goods that consumers value in their marketplaces, which makes about as much sense as banning grocery stores from selling generic cereal.
Another bill outlaws new acquisitions for covered platforms, a key driver of economic growth and innovation. The legislation inverts the burden of proof in certain antitrust cases that would presume that American companies are guilty of anticompetitive conduct until proven innocent. This would massively stack the deck in favor of government enforcers and litigious trial lawyers looking to score a quick buck by gaming the legal system. U.S. economic growth would be dealt a crippling blow just as we emerge from the pandemic.
Another bill would force covered platforms to share their data with competitors via a government-mandated “interface” – giving government agents and malicious hackers the ability to access sensitive consumer information all in one place. The final bill will give more resources to the Federal Trade Commission at a time when the agency, controlled by liberal activists like Commissioner Rebecca Slaughter and newly-installed Chair Lina Khan, seems likely to use rulemaking authority to effectively create new antitrust law. Once this power is claimed, they plan to deploy it in service of their social agenda
As a whole, this European antitrust approach would deliver Europe’s low levels of innovation and deprive Americans of choice and access to convenient services and products that we use each and every day. Apple would no longer be able to operate the App Store or Apple Music. Google would not be able to display YouTube links or Google Maps directions when searched. Amazon would lose the ability to offer free Prime shipping or AmazonBasics products.
And that’s just the beginning.
Meanwhile, these bills do absolutely nothing to address conservative concerns with Big Tech. This package is just a test run for Democrats to regulate entire sectors of the economy, and there is no reason to believe they will stop with technology companies. Sen. Amy Klobuchar has been crystal clear that she believes antitrust law is a tool for unelected bureaucrats to “rejuvenate capitalism.”
A vote for this package is a vote to give bureaucrats even more power to pick economic winners and losers. This is neither a conservative nor free-market approach, and would stifle the robust competition that guarantees the best products and lowest prices for every American.
Republicans need to hold the line and vote no against weaponizing antitrust law for Democrat political gains.
Sincerely,
Grover Norquist
President, Americans for Tax Reform
James L. Martin
Founder/Chairman, 60 Plus Association
Saulius “Saul” Anuzis
President, 60 Plus Association
Marty Connors
Alabama Center Right Coalition
Brent Wm. Gardner
Chief Government Affairs Officer, Americans for Prosperity
Kevin Waterman
Chair, Annapolis Center Right Coalition Meeting (Maryland)
Iain Murray
Vice President for Strategy, Competitive Enterprise Institute
Ashley Baker
Director of Public Policy, Committee for Justice
Chuck Muth
President, Citizen Outreach (Nevada)
Katie McAuliffe
Executive Director, Digital Liberty
Heather R. Higgins
CEO, Independent Women’s Voice
Dave Trabert
Chief Executive Officer, Kansas Policy Institute
Rodolfo Milani
Chairman, Miami Freedom Forum (Florida)
Brian McClung
Chair, Minnesota Center Right Coalition
Pete Sepp
President, National Taxpayers Union
William O’Brien
Former Speaker, NH House of Representatives
Co-chair, New Hampshire Center Right Coalition
Doug Kellogg
Executive Director, Ohioans for Tax Reform
Tom Hebert
Executive Director, Open Competition Center
Lorenzo Montanari
Executive Director, Property Rights Alliance
Wayne Brough
Director of Technology & Innovation, R Street Institute
Mike Stenhouse
CEO, Rhode Island Center for Freedom & Prosperity
Karen Kerrigan
President & CEO, Small Business & Entrepreneurship Council
Kerri (Houston) Toloczko
Meeting Chair, SWFL Center-Right Coalition
Senior Policy Fellow, Institute for Liberty
Patrick Hedger
Vice President of Policy, Taxpayers Protection Alliance
Ralph Benko
Chairman, The Capitalist League
Rusty Cannon
President, Utah Taxpayers Association
Photo Credit: Brookings Institution
Nevada Rams Tax Hike & Anti-Property Rights Bills Through Over Holiday Weekend
Tax hikes are not popular. So what to do if you are a state legislator trying to shove through costly tax increases? For Nevada legislators, the answer was to avoid public scrutiny with a total lack of transparency, shoving bills through with little review over Memorial Day weekend.
The state’s legislative session ended with unnecessary mining tax increases, along with a bill that would permit local governments to collect lodging taxes from short-term rental businesses like Airbnb.
A few Republicans in the Democrat-controlled Nevada Legislature went along with inflicting new taxes on gold and silver mining operations by passing Assembly Bill 495. Democrats needed a two-thirds majority to push these levies, per the Nevada constitution. Assemblyman Tom Roberts, R-Las Vegas, and Assemblywoman Jill Tolles, R-Reno, voted with the Democratic majority, moving the bill on to the Senate.
Silver and gold mines that report gross revenue of $20 million to $150 million will be charged 0.75% excise tax, while a 1.1% tax will be charged on mines that report any higher. The plan is expected to cost $88 million a year in new tax burdens, with the revenue marked for education. Gov. Steve Sisolak called the tax hike “one of the most significant steps our state could take on our road to recovery.” Yet, most advocates in the state say that almost $1 billion is needed to adequately address public school funding, which indicates more tax hikes may be coming. These tax hikes are completely unnecessary even from a big spending perspective. Nevada came out of the pandemic flush with billions in federal bailout cash. For context, Nevada’s entire budget is $4.5 billion. So a tax increase to yield $88 million in just a year seems like an unnecessary initiative by Democrats in the Mining State.
Another bad bill that passed will impose damaging restrictions on short-term rental properties. Assembly Bill 363 will apply to the most populous counties and cities in Nevada and will add restrictions to how short-term rentals operate.
As ATR wrote in a letter to legislators:
“AB 363 is the opposite of free market policy, it instead places onerous rules on short-term rentals that make a mockery of property rights, and make it difficult for many to operate.
“In particular, rules requiring a 500 ft. minimum distance between units, and rules requiring a 2500 ft. distance from existing hotels, would clearly force many hosts to stop offering their properties. This would have a harsh effect on these hosts’ income, and take away options for travelers, ultimately this would also hurt tourism activity in the state.”
Higher taxes, and absurd regulations that ignore property rights, not the way for Nevada to close out their bi-annual session. Families and businesses are watching the state go in the wrong direction by increasing burdens and following the lead of states like California, rather than sticking with the pro-taxpayer policies that have helped the state grow.
Photo Credit: Jimmy Everson DVM, Flickr
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Heat-Not-Burn Tobacco Products are Saving Lives in Japan
Cigarette sales in Japan have decreased by 43% over the past five years, the greatest decrease in recorded history. This drastic reduction in cigarette use is a direct result of heat-not-burn products, a recent innovation that is already saving lives.
Switching to a heat-not-burn (HNB) product reduces a cigarette smokers' exposure to harmful chemicals. HNBs produce a vapor by heating the tobacco rather than burning it, like in cigarettes, to create smoke. As there is no combustion, and therefore no smoke, thousands of toxic chemicals found in traditional cigarettes are eliminated, and HNBs are proven to contain significantly less chemicals than combustible tobacco, a claim supported by the U.S. Food and Drug Administration.
In July 2020, the FDA authorized the marketing of the IQOS Tobacco Heating System with “reduced exposure” information, meaning the product contains a reduced level of a substance. In their authorization, they noted that the heating process “significantly reduces the production of harmful and potentially harmful chemicals compared to cigarette smoke”. Further, the FDA stated that the product “significantly reduces the body’s exposure to 15 specific harmful and potentially harmful chemicals” as well as “potential carcinogens and toxic chemicals”.
A study from January 2021 tested the chemical composition of cigarettes, e-cigarettes, and heat-not-burn products, referred to in the study as heated tobacco products, in addition to their toxicological impacts on respiratory cells. Published in the Journal of Hazardous Materials, the researchers made sure to test each product at the levels a consumer would. As they noted in their article, studies that have claimed to show high levels of chemicals in e-cigarettes and other reduced harm products are often the result of “unrealistic or extreme conditions”, such as extreme levels of consumption, unnaturally high e-cigarette power and temperature, and even the use of broken vapes.
The key findings from the study can be read below. The full study can be accessed here.
Key Findings:
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Heated Tobacco Products (HTP) emitted 87.4% less carbonyl compounds than a conventional cigarette. Carbonyl compounds include formaldehyde, acetaldehyde and acrolein which are incredibly harmful.
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Amazingly, the levels of carbonyl compounds found in e-cigarette vapor were “at least 98.5% weaker than in HTP aerosols”.
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PAH (Polycyclic aromatic hydrocarbons) levels were also significantly lower in HTPs and e-cigarettes. A puff of a HTP produced 96.2% less PAHs than a conventional cigarette puff.
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E-cigarettes emitted between 64.9-78.2% less PAHs than HTPs depending on the e-cigarette.
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While PAHs “generally have a low degree of toxicity”, continued exposure to them, like long-term cigarette smoking, can cause lung, skin, and bladder cancer.
This study is clear evidence that HNB products are significantly less harmful than traditional cigarettes. Further, it adds to the ever-growing body of evidence in support of electronic nicotine delivery systems as a reduced harm alternative to tobacco.
While e-cigarettes are growing in popularity in the United States, the UK, and other countries, they are still prohibited in Japan. Therefore, HNBs provide Japanese smokers with an opportunity to continue to use nicotine, which does not cause cancer and is simply addictive, while decreasing the harm they are subject to. Incredibly, the 43% decrease in cigarette sales in Japan has come without any sort of educational campaign from the government. Rather, Japan’s government has largely avoided interfering in the HNB market, allowing the industry to flourish, improving public health.
South Korea is following Japan’s lead and is seeing similar results. Increases in HNB sales in South Korea has coincided with decreases in cigarette smoking, demonstrating that Japan's success can be replicated in other nations.
This should serve as an example for the United States, where lawmakers and government agencies are constantly waging war on e-cigarettes. This has resulted in an increase in cigarette sales after decades of steady decrease. If Japan and South Korea are any indication, serious improvements in public health are possible when government stays out of the way and allows reduced harm alternatives to be marketed as safer than cigarettes.
Photo Credit: Abdulla Binmassam
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Fact or Fiction? Debunking Claims About Vaping
Misconceptions about vaping are incredibly common, particularly among the people who vaping would benefit most. For adult smokers, switching from cigarettes to vape products can save their life. In fact, if a majority of American smokers made the switch to vaping, 6.6 million lives would be saved. In the interests of public health, it is critical that myths about vaping are debunked so people can better understand these products. This fact check confronts several of the most widely-spread misconceptions about vaping.
Myth: Vaping is just as harmful as cigarette smoking.
Fact: Vaping is estimated to be at least 95% less harmful than cigarette smoking. More than 50 public health organizations and medical bodies have publicly endorsed vaping as safer than smoking.
Myth: Nicotine causes cancer.
Fact: No, nicotine does not cause cancer. Nicotine, while addictive, is not classified as a carcinogen and is relatively benign, like caffeine. Cigarette harm comes, not from nicotine, but from tar and thousands of chemicals produced by the combustion process - the "smoke". E-cigarettes do not have a combustion process and produce vapor, not smoke, so these harmful chemicals are absent.
Myth: Vaping causes “popcorn lung”.
Fact: No, vaping does not cause bronchiolitis, known as “popcorn lung”. Multiple scientific studies have found no indication that e-liquids cause it and there has never been a recorded case of a vaper developing this condition.
Myth: E-cigarettes and vaping caused the 2019 outbreak of EVALI (severe lung injury).
Fact: Nicotine vaping did not cause severe lung disease. The outbreak of EVALI that occurred a few years ago was tied directly to a chemical present in black-market THC vapes, Vitamin E Acetate, that has never been found in nicotine-containing vapes or e-cigarettes.
Myth: There is a youth vaping “epidemic”.
Fact: Claims of a youth vaping epidemic lack supporting evidence. Surveys showing high usage among teens have artificially high response rates because they routinely classify someone as a vaper if that person has tried even one puff in a 30-day period. Academic analysis found that National Tobacco Youth Survey data did not support claims of a new epidemic of nicotine addiction.
Myth: Vaping, like combustible cigarettes, disproportionately harms vulnerable populations.
Fact: Vaping has tremendously positive effects on disadvantaged populations and helps to reverse the damage that big tobacco companies caused by targeting the impoverished, racial minorities, LGBTQ persons, and those suffering from mental illness and substance abuse. Vaping is critical to helping these vulnerable people quit the deadly habit of smoking and has been found to be more effective than any other nicotine replacement therapy.
Myth: The reason teenagers vape is the available flavors.
Fact: Flavors have no effect on youth use. A mere 5% of young vapers reported it was the flavors that attracted them to e-cigarettes and academic studies have found that teenage non-smokers willingness to try plain versus flavored e-cigarettes does not differ. However, flavors are essential for smoking cessation which is why adult access must be preserved.
Photo Credit: Massachusetts General Hospital
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California Residents Will Get Stuck with Even Higher Utility Bills Due to Biden Corporate Tax Rate Hike
If Feinstein and Padilla enact a corporate income tax rate increase, they will have to explain why they just increased your utility bills
If President Biden and Sens. Dianne Feinstein and Alex Padilla hike the corporate income tax rate, California households and businesses will get stuck with higher utility bills as the country tries to recover from the pandemic.
Democrats plan to impose a corporate income tax rate increase to 28%, even higher than communist China's 25%. This does not even include state corporate income taxes, which average 4 - 5% nationwide.
Customers bear the cost of corporate income taxes imposed on utility companies. Corporate income tax cuts drive utility rates down, corporate income tax hikes drive utility rates up.
Electric, gas, and water companies must get their billing rates approved by the respective state utility commissions. When the 2017 Tax Cuts and Jobs Act cut the corporate income tax rate from 35% to 21%, utility companies worked with state officials to pass along the tax savings to customers, including at least twelve California utilities.
The savings typically come in the form of a rate reduction, a bill credit, or a reduction to an existing or planned rate increase.
According to a report published in the trade publication Utility Dive, customers nationwide were to receive a $90 billion utility benefit from the Tax Cuts and Jobs Act:
Estimates derived from 2017 annual SEC 10-K filings indicate that the 14-percentage-point reduction in the corporate tax rate enacted under the 2017 Tax Cuts and Jobs Act (TCJA) resulted in investor-owned utilities establishing significant regulatory liability balances, totaling approximately $90 billion to be refunded back to customers.
Americans for Tax Reform has compiled a 90-second nationwide utility savings video from local news reports which may be viewed here.
If Democrats now impose a corporate income tax rate increase, they will have to reckon with local news coverage noting utility bills are going up. A vote for a corporate income tax hike is a vote for higher utility bills as households try to recover from the pandemic.
Tax Cuts and Jobs Act Impact: Working with the California Public Utilities Commission, California Water Service, Pacific Gas and Electric Company, Golden State Water Company, Suburban Water Systems, San Jose Water Company, California American Water Company, California-Oregon Telephone Company, Southern California Gas Company, Southern California Edison, San Diego Gas & Electric, Calaveras Telephone Company and Sierra Telephone Company passed along tax savings to their customers.
Southern California Gas Company: As noted in this January 2020 Energy Division document:
SoCalGas tax savings from the TCJA to be refunded to ratepayers is $75 million.
California Water Service: As noted in this May 30, 2018 California Water Service press release:
California Water Service (Cal Water) submitted a filing with the California Public Utilities Commission (CPUC) yesterday to decrease revenue needed in its service areas by almost $18 million, due to changes in federal tax laws and CPUC-authorized capital equity and debt financing costs. If approved as submitted, new rates reflecting the lower tax rates and financing costs will be effective July 1, 2018.
Pacific Gas and Electric Company: As noted in this March 30, 2018, PG&E press release:
PG&E is taking action to pass along approximately $450 million in annual tax savings to its customers. As a first step, today PG&E made three separate filings requesting to pass along approximately $325 million per year in federal tax savings from the federal Tax Cuts and Jobs Act for 2018 and 2019. PG&E has proposed to the CPUC that the benefits of the federal tax savings be used to offset expected rate increases.
Golden State Water Company: As noted in this June 13, 2018 CBS Sacramento news excerpt:
Golden State Water Company, which services Rancho Cordova, Gold River, and Arden Manor, wants to lower water rates for customers.
The water agency filed paperwork with the California Public Utilities Commission to decrease the rate by 2.88% for metered customers and 2.86% for flat-rate customers. The change, if approved, would take effect July 1, 2018.
Golden State Water made the decision to cut rates after the Tax Cuts and Jobs Act lowered its income tax rate from 35% to 21% on January 1, 2018. Golden State Water may retroactively credit customers if it determines there was a revenue surplus from January 1, 2018-June 30, 2018. It is also adjusting its rate proposal for 2019-2021, which it submitted in July 2017- before the Tax Cuts and Jobs Act was signed into law.
Suburban Water Systems: As noted in this September 24, 2020 California Public Service Commission document:
This Resolution grants Suburban Water Systems’ (Suburban) request in Advice Letter No. 348 the authority to amortize the 2019 amount of $289,879 or 0.34% of authorized revenues, recorded in the Tax Cuts and Jobs Act Memorandum Account (TCJAMA) related to the 2019 excess accumulated deferred federal income tax (ADFIT) not reflected in rates for the period January 1, 2019 through December 31, 2019. The 2019 balance of the TCJAMA will be amortized as a single monthly bill credit based on the customer’s meter size. The credit amount includes interest and is to refund the excess ADFIT related to 2019 revenue requirement not currently reflected in rates.
San Jose Water Company: As noted in this January 16, 2020 California Public Service Commission document:
This Resolution grants San Jose Water Company’ (SJWC) request in Advice Letter No. 537 & 537A, the authority to refund the over collected amount of $6,624,690 for the period January 1, 2018 through December 31, 2018, or 1.75% of authorized revenues,recorded in the 2018 Tax Accounting Memorandum Account (TAMA). The balance is associated with changes in tax expenses resulting fromTax Cut and Jobs Act signed into law December 22, 2017 that among other matters reduced the federal corporate tax rate from 35% to 21% effective January 1, 2018. The TAMA should be closed and the balance transferred to a 2018 Tax Accounting Balancing Account to amortize the refund. The 2018 balance in the TAMA will be refunded as a one-time bill credit based on the customer’s meter size. The bill credit is effective beginning on January 21, 2020 as shown below. Any over or under refunded balance in the 2018 Tax Accounting Balancing Account once the amortization period concludes should be addressed in the context of SJWC’s 2022 Test Year general rate case.
California American Water Company: As noted in this December 13, 2018 American Water press release:
The California Public Utilities Commission (CPUC) today approved a decision in the company’s general rate case for new water and wastewater rates for customers statewide.
The company’s rate request, which was filed in July 2016, will set rates through 2020. The decision approves approximately $103 million in capital investment in infrastructure replacements and improvements in 2018 and 2019.
“We are extremely proud of our significant level of system investment, combined with operational efficiency measures and innovative technologies, to ensure continued water quality, service reliability and fire protection for the more than 600,000 Californians who depend on us every day,” said Rich Svindland, President of California American Water. “This decision enables us to continue this important work on behalf of our customers, while balancing the cost impact for them.”
The decision approves a $10.3-million annual increase in authorized water and wastewater revenues for California American Water compared to previously authorized rates in the fall of 2016. The increase reflects savings generated by changes in federal tax law from the 2017 Tax Cuts and Jobs Act and the 2018 Cost of Capital decision.
California-Oregon Telephone Company: As noted in this August 9, 2018 California Public Service Commission document:
Staff has recalculated the tax impact of the TCJA to include the excess deferred tax impact. Prior to the enactment of the TCJA, Cal-Ore’s deferred income tax liability balance was $1,182,356. On January 1, 2018, the new tax rate of 21% resulted in deferred income tax of $730,279 causing an excess deferred tax reserve of $452,077. This $452,077 should be returned to ratepayers ratably over the remaining life of the assets that gave rise to the excess tax reserve balance. The TCJA provides guidance for the return of the excess deferred tax reserve under normalization rules. In summary, the TCJA rules say that if the excess deferred taxes are to be reduced, they should be reduced no faster than using the average rate assumption method (ARAM). But if the utility does not have the appropriate vintage data to use ARAM, an alternative method based on a composite rate is allowed.
As a result, Staff recommends the $452,077 excess deferred income tax reserve should be returned to ratepayers over the weighted average of the remaining useful life of Cal-Ore’s depreciable assets as of December 31, 2017. Appropriately, as the excess deferred tax reserve is returned to Cal-Ore’s ratepayers, rate base will be incrementally increased by $33,737 per year (as the $452,077 excess remaining in the deferred tax account will be incrementally decreased as it is returned to ratepayers).
Southern California Edison: As noted in this August 16, 2018 San Diego Union-Tribune article:
Representatives from Southern California Edison told the Union-Tribune the utility is reducing the total revenue it is requesting before the CPUC in its general rate case by about $139 million this year, about $185 million in 2019 and $235 million in 2020, largely due to the tax cut.
Without the legislation, Edison expected residential customers would see an average monthly increase of $1.51 a month this year, $5.01 in 2019 and $6.83 in 2020.
With the tax cut, the figures would drop to a 6-cents decrease per month in 2018, a $3.98 increase in 2019 and a $5.56 increase in 2020, based on average monthly usage of 550 kilowatt-hours.
San Diego Gas & Electric: As noted in this January 2020 Energy Division document:
Sempra GRC Gas Highlights:
- Disallowed SDG&E’s request to use 2018 tax savings from Tax Cuts & Job Act (TCJA) to offset expense for helicopter for fires and liability insurance, and to refund the $12 million tax savings to ratepayers over 2 years
Calaveras Telephone Company: As noted in this August 23, 2018 California Public Service document:
Staff recalculated the tax impact of the TCJA to include the excess deferred tax impact. Prior to the enactment of the TCJA, Calaveras’ deferred income tax liability balance was $145,643. On January 1, 2018, the new tax rate of 21% resulted in deferred income tax of $89,956 causing an excess deferred tax reserve of $55,687. This $55,687 should be returned to ratepayers ratably over the remaining life of the assets that gave rise to the excess tax reserve balance, The TCJA provides guidance for the return of the excess deferred tax reserve under normalization rules. In summary, the TCJA rules say that if the excess deferred taxes are to be reduced, they should be reduced no faster than using the average rate assumption method (ARAM).
Accordingly, Staff has adjusted the $55,687 excess deferred income tax reserve and returned it to ratepayers over the weighted average of the remaining useful life of Calaveras’ depreciable assets as of December 31, 2017. Appropriately, as the excess deferred tax reserve is returned to Calaveras’ ratepayers, rate base will be incrementally increased by $10,507 per year (as the $55,687 excess remaining in the deferred tax account will be incrementally decreased as it is returned to ratepayers).
Sierra Telephone Company: As noted in this August 9, 2018 California Public Service Commission document:
Staff has recalculated the tax impact of the TCJA to include the excess deferred tax impact. Prior to the enactment of the TCJA, Sierra’s deferred income tax liability balance was $5,131,347. On January 1, 2018, the new tax rate of 21% resulted in deferred income tax of $3,169,361 causing an excess deferred tax reserve of $1,961,986. This $1,961,986 should be returned to ratepayers ratably over the remaining life of the assets that gave rise to the excess tax reserve balance. The TCJA provides guidance for the return of the excess deferred tax reserve under normalization rules. In summary, the TCJA rules say that if the excess deferred taxes are to be reduced, they should be reduced no faster than using the average rate assumption method (ARAM). But if the utility does not have the appropriate vintage data to use ARAM, an alternative method based on a composite rate is allowed.
As a result, Staff recommends the $1,961,986 excess deferred income tax reserve should be returned to ratepayers over the weighted average of the remaining useful life of Sierra’s depreciable assets as of December 31, 2017. Appropriately, as the excess deferred tax reserve is returned to Sierra’s ratepayers, rate base will be incrementally increased by $316,449 per year (as the $316,449 excess remaining in the deferred tax account will be incrementally decreased as it is returned to ratepayers).
Conversely, if Biden and Democrats raise the corporate tax rate, they will add to the burden faced by working families. And any small businesses operate on tight margins and can't afford higher heating, cooling, gas, and refrigeration costs.
President Biden should withdraw his tax increases.
Report: IRS Fails to Screen Contractors for Tax Delinquency
The IRS failed to screen two-thirds of agency contractors for tax delinquencies and other errors, according to a new TIGTA report. This serves as yet another example of the IRS’s inability to complete basic tasks, even when it is required of them.
This report comes at a time when the Biden administration has proposed $80 billion in more funding for the agency, along with new powers and responsibilities. This report is just another example of the agency’s incompetency and demonstrates that the IRS needs reform, not more power and responsibility.
TIGTA reviewed 71 randomly selected new awards and found that 66 percent had one or more deficiencies related to the contractor tax check process. Based on sample results, TIGTA estimated that 2,435 of the 3,679 new award contracts granted between October 1, 2018, and March 30, 2020, have one or more of these errors identified.
In the Consolidated and Further Continuing Appropriations Act of 2015, Congress specified that the Government “will not enter into a contract with any corporation that has any unpaid Federal tax liability that has been assessed, unless an agency has considered suspension or debarment of the corporation and made a determination that suspension or debarment is not necessary to protect the interests of the Government.”
In TIGTA’s words:
“… not completing tax checks within the required time frame increases the risk that an offeror’s recently incurred tax liability will not be identified during the tax check process… untimely or incomplete notification to the Treasury Suspension and Debarment official increases the chances that contractors with a tax deficiency will obtain a contract award with another Federal agency.”
This tax check is a multi-step process that the IRS simply did not complete for multiple contractors. In the sample TIGTA used, the IRS failed to complete checks on 25 percent of the contract awards selected. Further, 29 percent of contracts did not have a signed Tax Check Notice and Consent provision, and 37 percent did not have a Tax Check Notice and Consent provision attached to the contract.
While TIGTA did independently verify that the 71 contractors did not have any delinquent Federal taxes at the time the contracts were awarded, the IRS would still be required to assess these delinquencies and make determinations based on them. To be clear, this was just a review of 71 of the 3,679 new award contracts; it is untold how many contractors had delinquent federal taxes out of the 2,435 contracts TIGTA estimates had errors. Moreover, given that TIGTA was able to screen all these candidates, presumably, it should not be difficult for the IRS to do the same.
This is one of several audit reports that demonstrates the incompetence of the IRS:
- The agency has repeatedly failed to compile legally required tax complexity reports. These reports are supposed to contain the IRS's specific recommendations on how to make the tax code easier to comply with. Since 1998, the IRS has done so just twice – in 2000 and 2002.
- A TIGTA report on the 2021 Filing Season found that almost 40 percent of printers were not working at tax processing centers in Ogden, Utah and Kansas City, Missouri. However, in many cases the only thing wrong with the printers is that no employee had replaced the ink or emptied the waste cartridge container: “IRS employees stated that the only reason they could not use many of these devices is because they are out of ink or because the waste cartridge container is full.”
- This year, despite having funding for new hires, the IRS only achieved 37 percent of their hiring goal. They had trouble onboarding new hires as well, as it was “difficult to find working copiers (as noted previously) to be able to prepare training packages.”
- In 2016, the IRS has lost track of laptops containing sensitive taxpayer data. TIGTA estimates that the IRS had failed to properly document the return of 84.2 percent, or more than 1,000 computers due to be returned by contract employees.
- A TIGTA report in 2017 showed that the IRS rehired more than 200 employees who were previously employed by the agency, but fired for previous conduct or performance issues.
- Each year the IRS hangs up on millions of callers -- a practice they refer to as “Courtesy Disconnects.” Currently, if you call the IRS, you have a 1-in-50 chance of reaching a human being.
- According to the National Taxpayer Advocate’s 2014 Annual Report to Congress the IRS was unable to justify spending decisions. As the report stated: "The IRS lacks a principled basis for making the difficult resource allocation decisions necessitated by today’s tight budget environment.”
- The IRS has repeatedly failed to include required information on notices they send to taxpayers, thus eroding taxpayers’ ability to understand said notices, figure out the right office/number to correspond with, file appeals, etc.
- The IRS is required by law to assign a single employee to each taxpayer’s case for mutually generated correspondence, and, in more cases than not, fails to do so.
While the IRS continues to blame its poor performance on a lack of taxpayer funding, the real problem is the inability of the agency to competently complete basic tasks and spend taxpayer dollars in a responsible way. Biden’s plan to give the IRS $80 billion would do nothing to fix existing problems and would only exacerbate them.
Photo Credit: Jason Dirks
Republicans Should Reject Liberal Academic Lina Khan For FTC Commissioner
The Senate will vote this week to confirm Lina Khan to a seat on the Federal Trade Commission.
Khan is a radical left-wing academic that will remake the FTC as a super-regulator of the entire economy and turn the clock back decades on antitrust law.
Senate Republicans should vote NO on Khan’s nomination.
Khan is a leading scholar in the progressive “hipster antitrust” movement to abandon the long-held consumer welfare standard, under which business conduct is evaluated on whether or not it harms consumers. If consumers are not being harmed through tangible economic effects like higher prices or reduced quality products, antitrust enforcement action is not taken.
Instead of protecting consumers, Khan’s approach would turn antitrust law into a weapon wielded equally by inefficient companies and unelected Biden bureaucrats.
According to liberals leading the hipster antitrust movement, big companies are responsible for every social ill under the sun, including racism, poverty, and income inequality, among others. Liberals believe these companies abuse their bigness to stifle competition, cheat rivals, and harm workers. For these reasons and others, antitrust hipsters believe that government enforcers should step in and break these companies up, regardless of how it would impact consumers.
This “big-is-bad” approach is how antitrust law was enforced before the consumer welfare standard was adopted, and it was an abject disaster. Antitrust law’s vague and unfocused nature made all manner of routine business conduct presumptively unlawful. Philosopher-king judges handed down inconsistent rulings designed to punish political enemies or reward political allies. In Supreme Court Justice Potter Stewart’s dissent to United States v. Von’s Grocery, he remarks: “The sole consistency that I can find is that in litigation under [Section 7 of the Clayton Act], the government always wins.”
If confirmed, Khan would be instrumental in moving antitrust law back to this broken tradition. European-style antitrust legislation introduced last week by House Democrats would give the FTC sweeping new power and increased resources to regulate American companies.
If Khan makes it on the FTC, the liberal activist-controlled agency would likely use its rulemaking authority to create substantive new antitrust law, circumventing Congress in the process. In such a hostile regulatory environment, companies afraid of aggressive and predatory antitrust litigation would be less likely to engage in robust competition that delivers low prices and quality products for American shoppers. In this new regime, instead of focusing on what is good for consumers, Biden bureaucrats would focus on what is good for Democrat political gain.
For these reasons, Americans for Tax Reform urges all Senate Republicans to vote against Lina Khan’s confirmation.
Photo Credit: Norman Maddeaux
Florida Residents Will Get Stuck with Even Higher Utility Bills Due to Biden Corporate Tax Rate Hike
If Biden and the Democrats enact a corporate income tax rate increase, they will have to explain why they just increased your utility bills
If President Biden and congressional Democrats hike the corporate income tax rate, Florida households and businesses will get stuck with even higher utility bills.
Democrats plan to impose a corporate income tax rate increase to 28%, even higher than communist China's 25%. This does not even include state corporate income taxes, which average 4 - 5% nationwide.
Customers bear the cost of corporate income taxes imposed on utility companies. Corporate income tax cuts drive utility rates down, corporate income tax hikes drive utility rates up.
Electric, gas, and water companies must get their billing rates approved by the respective state utility commissions. When the 2017 Tax Cuts and Jobs Act cut the corporate income tax rate from 35% to 21%, utility companies worked with officials to pass along the tax savings to customers, including at least seven Florida utilities. The savings take the form of either a rate reduction, or, a reduction to an existing/planned rate increase.
Working with the Florida Public Service Commission, Duke Energy Florida, Gulf Power Company, Tampa Electric, Florida Public Utilities Company, Peoples Gas System, Florida Power and Light and Florida City Gas passed along tax savings to their customers.
Florida Power and Light: As noted in this January 17, 2018 WPTV excerpt:
Florida Power and Light customers will not have to pay for Hurricane Irma.
The power company said Tuesday that savings from recent tax reform signed by President Trump will offset any planned costs.
FPL said it will apply its savings to the $1.3 billion in costs from Irma that it had intended to recoup from customers.
Thousands of customers lost power for days and weeks during September because of the hurricane.
The utility had previously announced that it would have to implement a surcharge in March to pay for Irma after a year-long surcharge for 2016's Hurricane Matthew ends in February.
Each of FPL's customers will save an average of $250.
Duke Energy Florida: As noted in this June 11, 2019 Florida Public Service Commission news release:
The Florida Public Service Commission (PSC) today approved Duke Energy Florida, LLC’s (DEF) agreement to apply federal tax savings to offset storm restoration costs for Hurricane Michael, thereby avoiding a surcharge to DEF customers.
DEF had originally requested approval to recover $223.5 million, equating to $6.95 on a monthly 1,000 kWh residential bill for 12 months, beginning in July 2019. This agreement avoids these charges and continues DEF’s use of 2017 Tax Cuts and Jobs Act savings to cover hurricane recovery costs for its customers.
Gulf Power Company: As noted in this October 30, 2018 Florida Public Service Commission news release:
The Florida Public Service Commission (PSC) today ordered Gulf Power Company (Gulf) to pass additional savings from the Tax Cuts and Jobs Act of 2017 to its customers. The Commission approved an additional $9.6 million in customer bill reductions.
As a result, Gulf’s base rates will be reduced by $9.6 million, allowing residential customers to see a monthly bill reduction of $1.11 per 1,000 kWh in January 2019. In addition, Gulf proposes to reduce its 2019 fuel cost recovery amount by $9.9 million. This proposal will be considered at the PSC’s annual cost recovery clause hearing in November.
Tampa Electric: As noted in this March 1, 2018, Tampa Electric press release:
Tampa Electric bills won’t rise to pay for Hurricane Irma restoration costs, thanks to new tax savings. The Florida Public Service Commission (PSC) unanimously approved the measure today.
Because of recent changes made to the federal tax law, customers will directly benefit. What Tampa Electric would have paid in corporate income taxes will instead be used to cover the cost of restoring power after Hurricane Irma and several other earlier named storms. Additionally, Tampa Electric bills will reflect the ongoing benefits from tax reform starting in 2019.
Florida Public Utilities Company: As noted in this January 24, 2019 Chesapeake Utilities Corporation press release:
The Florida Public Service Commission has approved the settlement agreement between Florida Public Utilities Company (FPU), a subsidiary of Chesapeake Utilities Corporation (NYSE: CPK), and the Office of Public Counsel (OPC). The settlement agreement, which was filed on October 17, 2018, reduces electric rates as a result of the federal Tax Cuts and Jobs Act.
“This decision provides an immediate benefit to FPU electric customers, and we are appreciative of the Public Service Commission’s decision to approve our agreement which passes financial savings to customers,” said Jeffry M. Householder, President and Chief Executive Officer of Chesapeake Utilities Corporation. “The federal tax credit combined with declining electricity commodity costs reduces the average FPU residential customer’s total bill, which has remained unchanged from nearly a decade ago.”
FPU residential electric customers will be receiving an average estimated $3.32 decrease on their monthly bills. Commercial electric customers will also receive monthly bill reductions. Reduced rates for FPU electric customers are reflected on their January bills. The terms of the settlement will further reduce the average residential electric bill by an additional estimated $0.45 beginning January 1, 2021.
Peoples Gas System: As noted in this September 12, 2018 Florida Public Service Commission document:
The Florida Public Service Commission (PSC) today approved a Settlement Agreement that will reduce monthly bills for TECO Peoples Gas System (Peoples) customers beginning in January 2019.
A result of the Tax Cuts and Jobs Act of 2017, the Agreement reduces Peoples revenue requirement by $11.6 million annually. The revenue decrease will affect the base rate portion of the bill for all customer classes. For example, a residential customer using a monthly average of 20 therms would see a $1.00 reduction in the base rate portion of the bill.
Florida City Gas: As noted in this December 11, 2018 State of Florida Public Service Commission news release:
The Florida Public Service Commission (PSC) today approved Settlement Agreements for Florida Public Utilities Company (FPUC) and for Florida City Gas (FCG) to implement savings from the Tax Cuts and Jobs Act of 2017.
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In the Florida City Gas case, the company, OPC, and the Federal Executive Agencies agreed to a 2018 Stipulation and Settlement that will reduce the gas utility’s base rates by a total of $305,000 in January 2019 to reflect ongoing tax savings. Also starting in January 2019, the company’s revenues will be reduced by an additional $305,000 annually for five years to compensate customers for retroactive impacts of the tax law.
Conversely, a vote for a corporate income tax rate hike is a vote for higher utility bills as households try to recover from the pandemic.
Many small businesses operate on tight margins and can't afford higher heating, cooling, gas, and refrigeration costs. President Biden should withdraw his tax increases.
ATR Opposes Efforts to Undermine the Contact Lens Rule
In a letter to members of Congress, Americans for Tax Reform detailed its opposition to S.1784/ H.R. 3353, the “Contact Lens Prescription Verification Modernization Act” and all other efforts to undermine the Contact Lens Rule.
This bill would eliminate automated phone prescription verification, which guarantees that bad actors cannot refuse to verify prescriptions, thus preventing their patients from buying lenses from other retailers.
This kind of verification is one of the most effective ways to preserve competition. Reeling back this protection would hurt a market that has become more accessible, convenient, and affordable due to steps taken to ensure consumer freedom.
Click here or see below to view the letter.
June 14th, 2021
Dear Members of Congress:
I write in opposition to S.1784/ H.R. 3353, the “Contact Lens Prescription Verification Modernization Act” and all other efforts to undermine the Contact Lens Rule. If implemented, this legislation would undermine the Federal Trade Commission (FTC) Contact Lens Rule that ensures 45 million contact lens users have the choice and freedom to shop where they choose.
This legislation would make it more difficult and more costly for Americans to fill their prescriptions, creating unnecessary financial and healthcare burdens on the American people. All members of Congress should reject this legislation.
In 2003, President George W. Bush signed the Fairness to Contact Lens Consumers Act (FCLCA) into law. The legislation required that optometrists provide patients with a copy of their prescription.
The FTC’s Contact Lens Rule built on the FCLCA, ensuring that consumers have the freedom to purchase contact lenses from wherever they want, whether that is from their optometrists or from a third party. Specifically, the rule required optometrists to obtain signed acknowledgement from patients that they have received a copy of their prescription. It also continued to allow automated phone prescription verification, a feature of the FCLCA, which is one of the most effective ways to preserve competition and consumer freedom.
Rather than forcing a third-party retailer to wait indefinitely for a prescriber to verify the prescription, this requires the retailer to wait a full business day (eight hours) before fulfilling a consumer’s order.
S.1784/ H.R. 3353 seek to end this effective, efficient prescription verification option. This will open the door to bad actors who, before the FCLCA, would refuse to verify prescriptions in the hopes of preventing their patients from buying lenses from other retailers.
Contact lenses have become more accessible, convenient, and affordable because of these steps taken to ensure consumers have a multitude of choices. To reel back the protections which transformed the contact lens marketplace for the better would be a mistake.
While lawmakers should support proposals that lower the regulatory burden and reduce red tape, there should not be concerns that the FTC rule adds to an optometrist’s regulatory burden. The requirements set forth by the rule are modest and easy to comply with. Optometrists are already required to maintain detailed patient records so this new verification should require little if any increase in resources in order to comply with.
The Contact Lens Prescription Verification Act, and other efforts to undermine the Contact Lens Rule should be rejected. The legislation would undermine patient freedom by chipping away at their right to purchase contact lenses from optometrists or a third party. Passing this legislation now, while the economy is still recovering, would increase costs and reduce healthcare choice and access for Americans across the country.
Onward,
Grover G. Norquist President, Americans for Tax Reform
Photo Credit: Marco Verch Professional Photographer
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