How the Trump Republican Tax Cuts are Helping Mississippi

Posted by John Kartch on Wednesday, July 1st, 2020, 11:10 AM PERMALINK Follow @johnkartch

Mississippi is benefiting greatly from the Tax Cuts and Jobs Act enacted by congressional Republicans and President Trump:

204,900 Mississippi households are benefiting from the TCJA’s doubling of the child tax credit.

Every income group in every Mississippi 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.

933,540 Mississippi 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.

32,260 Mississippi 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, Mississippi residents are saving money on utility bills. Lower electric, water, and gas bills help households and small businesses operating on tight margins. For example, Entergy Mississippi (see below) passed its tax savings on to its customers.

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

Treppendahl’s Super Foods (Woodville, Mississippi) - employee raises, facility upgrades, expand product selection, developing plan to upgrade checkout lanes, purchasing new equipment:

“The new tax law has had an immediate positive impact on my family business’ ability to invest in our store and local community. Independent grocery stores are capital intensive businesses that survive on 1 to 2 percent profit margins. As a direct result of tax reform, we have upgraded and replaced 12doors in the frozen foods section of our store during the past few months. That may not sound like a big project to some people, but that investment cost over $65,000 and most importantly provided work for our local refrigeration company. Because of these new freezers we have been able to expand our selection of frozen foods to our customers and save on energy costs.

We are also in the process of working with the Associated Grocers of Baton Rouge, our wholesaler, to develop a plan for upgrading our checkout lanes, which are currently 18 years old. We hope to install new checkout counters in our store next year. The grocery business also requires us to purchase expensive equipment such as coolers and air conditioners to remain functioning. If it were not for tax reform, we would not have been able to make these improvements to our store. Being able to invest our savings back into our business and community is a good thing. The new tax law has increased my confidence in making important business decisions, now and in the future, which has allowed me to be more comfortable investing in my business. If these tax cuts were to be reversed, I would not feel comfortable reinvesting in my store. Tax reform has also allowed me to provide all full-time, rank and file, employees with raises, which has boosted our employees’ confidence and ability to support themselves and their families.” - July 25, 2018 excerpt from House Small Business Committee hearing on “The Tax Law’s Impact on Main Street”

Lazy Magnolia Brewery (Kiln, Mississippi) - provide employee benefits, give employee promotions, and complete facility upgrades:

Known for its Southern Pecan Nut Brown Ale, Lazy Magnolia opened in 2005 and is the oldest packaging brewery in Mississippi. With the money saved from the tax cut, Henderson said the brewery has been able to improve benefits for employees, convert two part-time jobs to full time and improve the brewery's taproom. - June 2, 2018 CNN article excerpt

Renasant Bank (Tupelo, Mississippi) - plans to share benefits with employees, community, and clients:

Renasant Bank also announced plans to share benefits from the tax reform legislation with their 2,000 associates, communities, and clients.

"Our focus on these three constituencies for more than 114 years has provided us with the success we enjoy as a company," Renasant Chairman and CEO E. Robinson McGraw said. "We look forward to continuing our legacy of understanding and meeting the needs of the communities we serve." - January 9, 2018, Rep. Trent Kelly letter excerpt

Claiborne County, Mississippi -- Over 30,000 jobs are coming to to the Mississippi county because of the Tax Cuts and Jobs Act.

A stretch of economic development on the verge of breaking in Claiborne County could eventually create more than twice as many jobs than the counties current population.

In 2017 under the Tax Cuts and Jobs Act passed by Congress and signed by President Trump low income urban and rural areas could receive special attention for investors and businesses to develop and create jobs and get federal tax deductions. Now Claiborne County is next in line.

Out of 100 areas declared “opportunity zones”, Claiborne County is taking advantage to seek big changes.

….

Leading the charge to be the first to move in is Houston Engineering Services Company, (HESCO)looking to bring the liquidating natural gas (LNG) business along the Mississippi River.

“It’s taking natural gas and liquefying it to below -260 degrees Fahrenheit,” HESCO CEO Monte Burton stated. “Allowing it to be turned into a liquid state which allows it to be transported.”

Burton expects to have his company break ground on building the plant west of Alcorn State by January requiring up to 1,000 construction jobs alone. But many question if the community can handle that production.

Following HESCO the County Chamber expect more plants and companies to follow totaling 6400 acres of industrial space filled around the southwestern Claiborne County region estimating 30,000 new jobs when finished. -- August 16, 2019 WJTV Article

Kevin-Charles Furniture (New Albany, Mississippi) - 5 percent employee pay raises, new facility investments:

Kevin-Charles Furniture in New Albany opened its doors in 2002 with just six employees. The New Albany-based furniture manufacturer has grown to 65 employees. Company President Rusty Berryhill said 2018 is going to be a good year for the company and its employees because of the new tax law. Kevin-Charles Furniture will be among the companies in Mississippi and across the nation who will have their corporate tax rate reduced from 35 percent to 21 percent.

The tax credits available for investment in equipment will make it possible for the company to purchase additional machinery. "We're really excited about the tax bill and what it is going to do for our operation," Rusty said. "I applaud the efforts of Congress to build back a business climate that makes it easier to invest in our people and facilities."

Additionally, the tax savings made it easier for Kevin-Charles Furniture to give employees a five percent pay raise. Carol Crisel, a seamstress for Kevin-Charles Furniture, has worked at the New Albany operation for 15 years. She and her husband are helping to raise two of their grandchildren. Carol said she is thankful that the new tax law made it possible for the pay increase. Doubling the child tax credit from $1,000 to $2,000 for each child is also going to be a tremendous help. - January 9, 2018, Rep. Trent Kelly letter excerpt

Whittington Scrap Metal (Union County, Mississippi) - business investments:

Michael and Heather Whittington, owners of Whittington Scrap Metal in Union County, are optimistic about what tax relief will bring to their family, business, and their customers. The Whittington's have three children, including one in college. Heather said tax breaks will help them save more money which they will invest in their business.

"If we are getting a cut on our taxes, that could be another employee we could hire," Heather said. "When our customers see an increase in their bottom line, that becomes a win-win situation for everyone." - January 9, 2018, Rep. Trent Kelly letter excerpt

Ingalls Shipbuilding (Pascagoula, Mississippi) -- $500 bonuses; $300 million in increased capital expenditures; increased pension contributions; increased charitable contributions:

The government's Tax Cuts and Jobs Act has made way for big news at Huntington Ingalls Industries.

The company announced Thursday that it will give employees a bonus, increase voluntary contributions for qualified pension plans and grow charitable contributions.

In addition, the company said the tax reform will also allow a $300 million increase of investment into major capital projects to strengthen the core shipbuilding business.The majority of the 38,000 employees with the company will get an extra $500.

Since Ingalls Shipbuilding is so intertwined into the South Mississippi community, the increase is likely to have a big business impact as well.

The news has several business owners in downtown Pascagoula excited about the potential for growth. Most said that 50 percent or more of their business comes from Ingalls employees.

“It’s pretty big. It’s good news, actually,” said Robynn Rankin, owner of Bridget Blue boutique. “Because I know the past couple of years have been really slow all over town. I think it will help a lot. I mean, we’ve seen businesses on the street shut down because of the down turn of the economy.”

Ariel Hebert will see benefits from two sides.

She owns Itty Bitty Boutique and Monogramming, while her husband works at Ingalls.

“I feel like that that would be a little extra cash in our hands to do a few renovations we want to do at our house,” she said, “Or, you know, to support other local businesses.”

Each employee should get the check by the second week of March on their normal payday. -- Feb. 15, 2018 WLOX news report

Ridgewood Consulting (Brookhaven, Mississippi) -- The firm is building 48 new homes that are located in an Opportunity Zone created by the Tax Cuts and Jobs Act:

If all goes as planned, construction of four dozen three-bedroom homes will begin off South First Street next year.

Mayor Joe Cox announced at Tuesday's meeting of the Brookhaven Board of Aldermen that developers recently received $10 million in funding for Mill Creek, a housing community that will be built just north of Dale Trail Northeast.

"At this point, they're vetting their investors and they hope to begin construction in April of 2020," Cox said.

Cox read an email from Len Reeves of Ridgewood Consulting: "With Mill Creek, Brookhaven will be home to the only new construction community that was funded under the State of Mississippi's recent Opportunity Zone housing initiative."

Opportunity Zones is a federal initiative created under the 2017 Federal Tax Cuts and Jobs Act, which provides incentives for qualified investors to invest capital gains in distressed communities across the United States. -- October 17, 2019 The Daily Leader article

Great Southern Wood Preserving, Inc. (Brookhaven, Mississippi) -- Significantly increased employee benefits: lower healthcare costs, more paid time off, scholarships, and more:

Great Southern Wood Preserving, Incorporated, has begun an active and ongoing process to increase employee benefits by reinvesting its tax savings in its people, the company has announced. The company expects full implementation to take place in 2018.

In late 2017, Congress passed and the President signed into law legislation providing significant tax breaks for corporations. Across America, many companies have chosen a variety of options for applying these savings, such as providing one-time bonuses to employees, increasing charitable giving and reinvesting in facilities upgrades.

For its part, Great Southern Wood will make investments on an ongoing basis to lower healthcare costs for eligible employees, allow employees to accrue more paid time off based on length of service, develop scholarships for dependents of employees and enhance other benefits going forward.

“I’m very pleased that every employee across the company will see the results of the change in tax laws,” said Jimmy Rane, Great Southern Wood’s founder, president and CEO. “The success we’ve enjoyed as a company comes from every one of us working hard and doing our part, and I can’t think of a better way to apply our tax savings than by further investing in benefits programs for our employees. We strive to be an employer that draws the best and brightest to our company, and we believe that providing stronger benefits is essential to this continuing effort.”

Great Southern employs almost 1,200 at locations in eleven states. [Texas, Missouri, Arkansas, Georgia, Alabama, Mississippi, Louisiana, Pennsylvania, Virginia, Maryland, Florida] -- March 29, 2018 Great Southern Wood Preserving, Inc. press release

BancorpSouth Bank (Tupelo, Mississippi) – Pay raises for over 70 percent of employees; $1,000 bonuses for nearly 20 percent of employees:

BancorpSouth Bank (NYSE: BXS) today announced an additional investment in its employees, which includes pay increases and /or one-time bonuses to nearly all non-commissioned employees.

The investment of over $10 million in 2018 will benefit 96% of the Company's non-commissioned workforce. Pay increases were effective January 1, 2018.

"We are proud to reward our team with this opportunity since the Tax Cuts and Jobs Act should benefit everyone" said Dan Rollins, Chairman and CEO. "BancorpSouth's continued and future success is based on the economic vitality of the communities we serve and taking care of our teammates allows us to provide the very best service to our customers, communities and shareholders." – Jan. 3, 2018 BancorpSouth Bank press release

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The increased compensation overall at BancorpSouth affected more than 70 percent of all employees, and provided a $1,000 bonus to nearly 20 percent of all employees.

BancorpSouth employs some 4,000 employees in more than 230 locations in Alabama, Arkansas, Florida, Louisiana, Mississippi, Missouri, Tennessee and Texas, plus an insurance location in Illinois. – Jan. 4, 2018 Daily Journal/BizBuzz article

Vicksburg Forest Products LLC (Vicksburg, Mississippi) -- Because of the Tax Cuts and Jobs Act, local Opportunity Zones are bringing in jobs:

“...I was a part of the first one (opportunity zone development) in the United States,” Flaggs said. “They asked me to speak about Vicksburg; its progress and why the opportunity zone worked for us and how it can be a model for the country.”

Vicksburg has three opportunity zones, “And we’re going to make every effort to utilize them,” Flaggs said. The Forestland Group, which bought Anderson-Tully in 2006, announced earlier in 2018 that it was closing the mill — a move affecting the 158 workers at the plant.

Jackson-based Vicksburg Forest Products LLC, the parent company of Vicksburg Forest Products, was able to take advantage of opportunity zone funding and bought the Anderson-Tully mill operation in June 2018, saving 125 jobs...

He said another opportunity zone includes the Mississippi Hardware building, which is being converted into the Mississippi Center for Innovation & Technology, an innovation and tech transfer center to serve the Vicksburg area and the entire central Mississippi region.” – October 3rd, 2019, The Vicksburg Post

Entergy Mississippi (Jackson, Mississippi): The utility is passing tax reform savings to customers:

If approved by the MPSC, the multi-million dollars in tax savings will benefit customers in three ways:

short-term bill credits,
long-term rate reductions and
alleviation of some future rate increases.

These are projected to begin this summer, when usage and bills are typically at their highest. Based on its plan, Entergy Mississippi expects residential customer bills to drop more than $30 per month during July, August and September, from a combination of lower-rates and short-term bill credits.

Without the tax reform, which reduced the corporate tax from 35 percent to 21 percent, substantial projects undertaken by Entergy to strengthen and modernize the grid would have required significant rate increases.

“We intend to ensure that our customers receive timely benefits from the new tax reforms,” said Haley Fisackerly, Entergy Mississippi president and CEO. “The tax reduction will allow us to reduce rates, provide substantial bill credits and lower our customers’ bills during the high-usage summer months.” – Feb. 26, 2018 Entergy Mississippi press release excerpt

AT&T -- $1,000 bonuses to 2,576 Mississippi employees; Nationwide, $1,000 bonuses for 200,000 employees and a $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

Walmart – Mississippi employees at 78 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.

Home Depot -- 14 locations in Mississippi - Bonuses for all hourly employees, up to $1,000.

Lowe's -- 3,000 employees at 24 stores and one distribution center in Mississippi. 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.

Ryder (Six locations in Mississippi) – Tax reform bonuses to employees.

Best Buy -- Nine locations in Mississippi; $1,000 bonuses for full-time employees; $500 bonuses for part-time employees.

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

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

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

Starbucks Coffee Company (32 locations in Mississippi) –$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.

T.J. Maxx – (Ten locations in Mississippi) – 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

U-Haul (Multiple locations in Mississippi) – $1,200 bonuses for full-time employees, $500 for part-time employees.

Dollar Tree, Inc. (Multiple locations in Mississippi) - Nationwide, $100 million investment in raising base wages, enhanced benefits including maternity leave for qualifying employees, and employee training.

FedEx (Multiple locations in Mississippi) – 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

Waste Management Inc. (Multiple locations in Mississippi) -- $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

McDonald’s (150+ locations in Mississippi) – 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 (12 locations in Mississippi) - 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 Mississippi examples, please email John Kartch at jkartch@atr.org

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

Photo Credit: edgrawes/Flickr

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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.

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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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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.”