How the Trump Republican Tax Cuts Are Helping Nevada
Nevada is benefiting greatly from the Tax Cuts and Jobs Act enacted by congressional Republicans and President Trump:
228,870 Nevada households are benefiting from the TCJA’s doubling of the child tax credit.
Every income group in every Nevada 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.
1,040,450 Nevada 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.
52,130 Nevada 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, Nevada residents are saving money on utility bills. Lower electric, water, and gas bills help households and small businesses operating on tight margins. Nevada utilities that have passed along tax savings include -- but are not limited to -- Southwest Gas and Nevada Energy (see below.)
Thanks to the tax cuts, Nevada businesses of all sizes are hiring, expanding, raising pay and increasing employee benefits:
Universal Plumbing & Heating Co. (Las Vegas, Nevada) – Hiring new employees, purchasing new equipment, giving employee bonuses:
President Donald Trump added some Sin City flavor to a Rose Garden event Thursday to highlight the impact of his tax cut on small businesses and working families: a pair of Las Vegas plumbers.
Kerzetski said the tax cuts paid for purchases of “much-needed trucks, tools and office equipment.” Then there were “bonuses of $500 and $1,000 to all our employees.” And his firm hired several new employees, he said. – April 13, 2018 Las Vegas Review-Journal
Junk King (Reno, Nevada) -- Purchase of additional truck; increased hiring:
These provisions allow job creators to save money on a new oven, delivery vehicles or added storefronts the moment they buy them. Perhaps more importantly, small business owners are left with more resources for new hiring, wage increases and bonuses.
For my own business, an environmentally friendly debris, clutter and junk removal franchise in Reno, tax savings will translate to hiring more workers and investing in another truck to keep up with demand.
If there’s one thing I’ve learned since opening Junk King three years ago, it’s that success in my business is also indicative of the economic health of the Greater Reno area. When homes and commercial property are sold, or families and businesses decide to upgrade their spaces, they need junk removal services. Just as the 2018 tax cuts will allow me to invest in more employees and new equipment, they also give American families the leg up to finance the projects they had once put off under harder economic times. -- Jan. 26, 2018 Nevada Independent op-ed excerpt by Brian Cassidy, owner of Junk King
Kalb Industries of Nevada, Ltd. (Las Vegas, Nevada) – Pay raises for employees who have been with the company three months or longer:
We received a tax cut from the bill that Congress passed last night and as part of our family, we would like to pass along some of that savings to you all. On your next payroll check, all employees that have been here more than three months will receive a raise on their next check. Again thank you all for all the hard work, and dedication this year. – Dec. 20, 2017 note to employees
HBM Technology Partners (Reno, Nevada) – Tax reform bonuses for employees.
Prospector Hotel & Gambling Hall (Ely, Nevada) - $500 bonuses and increase base wage to $12 per hour.
South Point Hotel, Casino and Spa (Las Vegas, Nevada) - Doubling of bonuses for 2,300 employees.
Following the passing of the 2018 Trump Tax Reform Bill, South Point Hotel Owner Michael Gaughan will distribute more than $1 million among the property's employees. As part of the contribution, Gaughan will double all the employees' 2017 bonuses in addition to rescinding the price increase for employee health insurance.
"Las Vegas has experience a significant amount of growth over the past two years, and this tax reform will continue to drive the economy of the city," said Gaughan. "The new bill will have a monumental effect on our economy and, in turn, our property. We want to be sure that our extended family is taken of." -- April 1, 2018 South Point Hotel, Casino and Spa press release excerpt
Fontainebleau (2755 Las Vegas Boulevard, Las Vegas, Nevada): Plans to resume the resort project which had previously committed to creating over 10,000 jobs.
Nevada Energy (Las Vegas, Nevada) – The utility is passing tax reform savings to customers:
Effective April 1, 2018, we are passing on to you a monthly savings as a result of federal tax reform – Excerpt from NVEnergy’s Energy Pricing Plans
AT&T -- $1,000 bonuses to 1,102 Nevada 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
Taco John’s (Reno, Nevada): All full-time and part-time crew members received a $200 after-tax bonus:
Taco John’s International, Inc. announced today that in response to the 2018 Tax Cut and Jobs Act, the company gave part of its projected tax savings to its restaurant crews, general managers, corporate staff and CORE (Children of Restaurant Employees).
On Friday, Feb. 23, Taco John’s International, Inc.’s employees received a one-time bonus, as follows:
- Every restaurant crew member - full-time and part-time - received $200 (after taxes);
- General managers and employees at the Taco John’s Franchisee Support Center in Cheyenne received $1,000 each; and,
- The Executive Council of Taco John’s International, Inc. (Vice Presidents and above) donated their $1,000 bonuses (a total of $10,000) to CORE, a national not-for-profit organization that grants support to children of food and beverage service employees who are navigating life-altering circumstances.
“At Taco John’s International, our team is our family, so sharing the financial benefits that were a result of the recent tax reform legislation only makes sense,” said Jim Creel, CEO of Taco John’s International, Inc. “We encourage other restaurant brands to follow our example and give a portion of their savings to the people that are at the heart of what we do and to great organizations like CORE that support our crew. One hundred percent of CORE’s funds directly benefit children of restaurant employees who have been afflicted with life-threating conditions.”
“We are so grateful to the Taco John’s team for their generous donation to our CORE family members,” said Lauren LaViola, executive director of CORE. “Donations like theirs help us provide for our food and beverage service families experiencing loss, illness and other life-changing circumstances, and help us get closer to our goal of helping even more families across all 50 states in 2018.”
The total amount that Taco John’s International, Inc. gave exceeded $150,000.00. – Feb. 28, 2018 Taco John’s International, Inc. press release
Southwest Gas (Las Vegas, Nevada) – The utility will pass along tax cut savings to customers:
Southwest Gas said its rate request incorporates reduced tax liability associated with the 2017 federal tax overhaul, which cut the corporate tax rate to 21%, among other changes. The tax cuts partially offset the rate increase the utility is requesting, the company said. – June 1, 2018 SNL Financial article excerpt
Walmart – Nevadans employed at 42 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.
Apple (Four Apple store locations in Las Vegas and one in Reno) -- $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.
Home Depot -- 21 locations in Nevada, bonuses for all hourly employees, up to $1,000:
"This incremental investment in our associates was made possible by the new tax reform bill." -- Jan. 25, 2018 Home Depot press release
Best Buy -- Thirteen locations in Nevada; $1,000 bonuses for full-time employees; $500 bonuses for part-time employees.
CarMax (Locations in Reno and Las Vegas) – $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
Ryder (Four locations in Nevada) -- Tax reform bonuses for employees.
Lowes -- 2,000 employees at 17 stores in Nevada; bonuses of up to $1,000 based on length of service; expanded benefits and maternity/parental leave; $5,000 of adoption assistance.
Starbucks Coffee Company (253 locations in Nevada) – $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 Nevada) – $1,200 bonuses for full-time employees, $500 for part-time employees.
T.J. Maxx – (9 locations in Nevada) – 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
Cintas (Multiple locations in Nevada) -- $1,000 bonuses for employees of at least a year, $500 for employees of less than a year.
Comcast (Multiple locations in Nevada) -- $1,000 bonuses; nationally, at least $50 billion investment in infrastructure in next five years.
Chipotle Mexican Grill (Multiple locations in Nevada) – Bonuses ranging from $250 to $1,000; increased employee benefits; nationally, $50 million investment in existing restaurants.
McDonald’s (150+ locations in Nevada) – 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
Western Alliance Bancorporation (16 branch locations in Nevada) – Base pay raise of 7.5 percent for the lowest-paid 50% of employees; increased bonuses; increased 401(k) match; etc.
Western Alliance, which has $20 billion in assets, plans to increase the base pay of the lowest-paid 50% of employees by 7.5% once the bill becomes law, the bank’s chief executive Robert Sarver said in an interview Wednesday. Bonuses will also go up, bringing the total pay increase for this group of employees to around 10%. These employees generally make $75,000 or less.
Western Alliance, which operates units including Bank of Nevada and Torrey Pines Bank, also plans to increase its 401(k) match from 50% of an employee’s contribution up to 6% of pay to 75% of an employee’s contribution up to that same level. The bank, which has about 1,700 total employees, also plans to improve maternity leave benefits, though Mr. Sarver declined to detail those changes. – Wall Street Journal article excerpt
Bank of America (66 locations in Nevada) -- $1,000 bonuses for non-executive employees.
Wynn Resorts (Las Vegas, Nevada) -- Employee bonuses.
Wells Fargo – 181 bank locations in Nevada; raised base wage from $13.50 to $15.00 per hour; nationally, $400 million in charitable donations for 2018; $100 million increased capital investment over the next three years.
Note: If you know of other Nevada examples, please email John Kartch at jkartch@atr.org
The running nationwide list of companies can be found at www.atr.org/list
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California Democrats Seek to Introduce Yet Another Tax on California Gun Buyers
Despite current federal excise taxes on firearms and California’s already onerous gun laws, California lawmakers are eager to add another tax on guns and ammunition sales.
California Assemblyman Marc Levine (D) introduced legislation that would add an excise tax on gun retailers for firearm and ammunition sales. This bill would add a 25-dollar tax on the sale of every new gun purchased in California as well as a new tax on ammunition sales at a yet undetermined amount. The money raised by the tax would be used to fund violence prevention programs like California’s CalVIP program.
Assemblyman Levine explained his support for the bill arguing that “Gun violence will not end on its own” and that it is critical to “take responsible action to end the public health crisis that is gun violence in California and in our country.”
While stopping violence using guns is a worthwhile goal, the legislation proposed by Assemblymember Levine wholly misses its mark.
First, the legislation would do little to curb violence using guns. Citing multiple studies, RAND Cooperation in 2018 concluded that “moderate tax increases on guns or ammunition would do little to disrupt hunting or recreational gun use”
Similarly, the legislation would do little in discouraging legal and illegal gun purchases. According to a 2018 UC Davis Health survey, despite some of the nation’s strictest gun laws, “roughly 25 percent of those who purchased their most recent firearm in California reported that they did not undergo a background check.” Even with strict gun laws, increasing the price of guns has little to no effect on someone’s decision to obtain a firearm.
Finally, Levin’s legislation would only add another tax to the litany of other taxes and fees on Californians. According to the nonpartisan Tax Policy Center, “The federal government already imposes about $750 million in excise taxes on the import and retail sale of guns and ammunition. Handguns are taxed at 10 percent, and other guns and ammunition are taxed at 11 percent.” Even in California, the state annually collects $6 million in gun fees and requires fees like a $31 Dealer Record of Sale Fee and a $5 Safety and Enforcement Fee. Moreover, the violence prevention programs the bill would fund already received $30 million in state funding.
Levine’s bill does little to curb violence using guns. It is clear that this new bill is nothing more than a new tax and a cash grab by desperate California Democrats looking to take even more from Californian taxpayers’ wallets and to further infringe on their 2nd Amendment rights.
Photo Credit: Sacramento Press Media
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New Study Finds Biden Tax Hikes Would Eliminate 1 Million Jobs in First 2 Years
Joe Biden’s tax hikes would eliminate one million jobs in the first two years, according to a new study by economists John W. Diamond and George R. Zodrow. The study, which was commissioned by the National Association of Manufacturers also found that the tax hikes would eliminate 600,000 jobs per year over the first decade and reduce GDP by $117 billion in the first two years.
The study assumed several Biden tax hikes would go into effect include raising the corporate tax rate to 28 percent, reinstating the corporate alternative minimum tax, eliminating most expensing of depreciable assets, repealing the 20% deduction for pass-through businesses, doubling the tax rate on capital gains and dividends, taxing unrealized capital gains at death, and increasing the top individual tax rate to 39.6 percent.
Biden’s tax hikes will reduce new investment and decrease capital in both the short and long term. As the study notes:
Investment in ordinary capital declines initially (two years after enactment) by 1.9 percent, by 1.3 percent ten years after enactment, and by 1.6 percent in the long run; this effect is only modestly affected by imports of ordinary capital into the United States, which increase in the long run by 0.2 percent.
The increase in the statutory corporate income tax rate results in a reallocation abroad of FSK, which declines initially by 2.7 percent, by 3.5 percent 10 years after enactment, and by 2.9 percent in the long run.
This reduction in investment and capital will not only have detrimental effects on the U.S. economy, it will also harm workers due to a decrease in household wages. As the study notes:
The decline in the stocks of ordinary capital and FSK gradually reduce the productivity of labor over time and thus real wages, which fall by 0.6 percent in the long run, while labor compensation falls by 0.6 percent initially, by 0.3 percent ten years after enactment, and by 0.6 percent in the long run…
These effects translate into a reduction of $638 in wage income per household…
The study also notes that Biden’s tax hikes will cost jobs each and every year after enactment:
The declines in hours worked would be equivalent to declines in employment of approximately just over 1.0 million FTE jobs two years and five years after enactment, and a decline of 0.1 million FTE jobs ten years after enactment.
In terms of the duration of the reduction in employment over the first ten years after enactment, the average annual reduction in employment would be equivalent to a loss of roughly 600,000 jobs, or 5.7 million total “job years” lost over the ten-year interval.
Other studies, on average, show that labor (or workers) bear an estimated 70 percent of the corporate income tax in the form of wages and employment, as ATR notes here.
At a time when American workers are still trying to regain employment and lost wages, it is hard to imagine a more harmful set of policies to enact. To have a strong economic recovery, it is imperative that we incentivize job creation, investment, and wage growth. Biden’s tax hikes do precisely the opposite.
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Joe Biden’s “Infrastructure” Plan is Packed Full of Wasteful Spending
The Biden administration has outlined the “American Jobs Plan,” a $2 trillion spending plan. While the proposal is purportedly for infrastructure, much of the plan is a liberal wishlist of policies that have little, or nothing to do with roads and bridges.
As noted by Republicans on the House Budget Committee, less than 13 percent of this spending plan is spent on repairing or creating roads, bridges, waterways, locks, dams, ports, airports, and broadband.
Some of the non-infrastructure provisions in Biden’s plan includes:
- 20 percent of the entire cost of the bill is for an expansion of Medicaid—approximately $400 billion.
- $213 billion for housing and to increase federal control of local housing markets
- $100 billion of additional funding for schools without requiring them to reopen
- $50 billion for a new office at the U.S. Department of Commerce
- $35 billion for climate science, innovation, and R&D
This plan would spend $10 billion in taxpayer dollars on a uniformed “Civilian Climate Corps” tasked with the vague mission of “advancing environmental justice.” This funding would be enough to hire 200,000 professional, progressive environmental activists. These Green New Deal hall monitors would be entitled to taxpayer-funded housing, clothing, feeding, allowance, and medical expenses.
Biden also wants to include the PRO Act in his “infrastructure” proposal. This would ban right-to-work laws, which 27 states have in place, allowing employers to force their employees to join a union as a condition of employment. The PRO Act would also force a mass reclassification of independent contractors, threatening the livelihoods of millions of contractors across the nation. When California implemented AB5, which established the same independent contractor reclassification as the PRO Act, countless people lost their jobs, had to flee the state, or saw a significant decline in income.
ATR has compiled 655 personal testimonials from independent contractors who detail the ways that AB5 has hurt them, which you can view here.
As it stands, the United States is on track to spend $5.8 trillion in 2021. Now, Biden wants to spend trillions of dollars more, including the second part of his infrastructure plan which is likely to cost an addition $2 trillion. With both parts of this spending package combined at about $4 trillion, this plan would be, in dollars, the largest spending increase in U.S. history.
The so-called “American Jobs Plan” seems eerily similar to the “American Rescue Plan,” which used coronavirus pandemic relief as a Trojan horse for leftist policy goals like a $350 billion state bailout, burdensome tax paperwork mandates, a state tax cut ban, and more.
Now, Joe Biden is attempting to implement a liberal wishlist under the guise of infrastructure, a historically popular government initiative.
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Pennsylvanians Will Get Stuck with Higher Utility Bills Due to Biden Corporate Tax Rate Hike
If Casey votes for Biden's corporate income tax rate increase, he will have to explain why he just increased your utility bills
If President Biden and Sen. Bob Casey raise the corporate tax rate, Pennsylvania households and businesses will get stuck with higher utility bills. Democrats plan to impose a corporate income tax rate increase to 28%, even higher than communist China's 25%.
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 17 Pennsylvania utilities:
- Citizens’ Electric Company of Lewisburg
- Metropolitan Edison Company
- Pennsylvania Electric Company
- Pennsylvania Power Company
- Pike County Light & Power Company
- PPL Electric Utilities Corporation
- Wellsboro Electric Company
- West Penn Power Company
- PECO Energy Company (Gas Division)
- National Fuel Gas Distribution Corporation
- Peoples Gas Company LLC
- Peoples Natural Gas Company LLC -- Equitable Division
- UGI Central Penn Gas Inc.
- UGI Penn Natural Gas Inc.
- UGI Utilities, Inc.--Gas Division
- Pennsylvania-American Water Company
- Pennsylvania-American Water Company—Wastewater
As noted by the Pennsylvania Public Utility Commission:
“As economic regulators, it is the Commission’s responsibility to ensure that utility rates are just and reasonable. Further, it is necessary for utility rates to reflect relevant tax expenses,” noted PUC Chairman Gladys M Brown in a statement at today’s public meeting. “I believe this work (by PUC staff) has resulted in an innovative answer by this Commission to effectively flow-through the benefits of the TCJA back to customers.
Public utilities required to begin returning federal tax savings to consumers include Citizens’ Electric Company of Lewisburg, Metropolitan Edison Company, Pennsylvania Electric Company, Pennsylvania Power Company, Pike County Light & Power Company, PPL Electric Utilities Corporation, Wellsboro Electric Company, West Penn Power Company, PECO Energy Company (Gas Division), National Fuel Gas Distribution Corporation, Peoples Gas Company LLC, Peoples Natural Gas Company LLC—Equitable Division, UGI Central Penn Gas Inc., UGI Penn Natural Gas Inc., UGI Utilities, Inc.--Gas Division, Pennsylvania-American Water Company and Pennsylvania-American Water Company—Wastewater. -- May 17, 2018 Pennsylvania Public Utilities Commission Press Release
Conversely, a vote for a corporate income tax rate hike is a vote for higher utility bills right as the USA is trying to recover from the pandemic.
Sen. Casey would be wise to stay away from tax increases.
ATR Signs Coalition Letter Urging Congress to Oppose Interest-Rate Caps
Americans for Tax Reform joined a group of free-market groups and signed a coalition letter encouraging Congress to oppose interest rate caps on consumer borrowing. By restricting interest rates on financial products, Congress will limit consumer choices among affordable lending services.
Installing a cap on interest rates will price consumers out of the market, particularly many of the unbanked and underbanked who need access to affordable financial products the most. An interest rate cap on lending products will not reduce borrower demand and instead will force lenders to increase borrower eligibility requirements. Increased eligibility requirements could adversely discriminate against borrowers who lack even a basic credit score.
Many low-income borrowers who may not have access to traditional banking services and or credit history will not get quick credit from any legal lender. This has been demonstrated by economists at the Mercatus Center that shows government interest rate caps exclude borrowers from obtaining affordable lending products and does little to diminish the customers need for these products. Those borrowers will continue to seek credit through alternative forms of credit, which could come from illegal lenders known as "loan sharks.” Loan sharks operate outside regulatory supervision and have been known to use tactics like blackmail, coercion, and violence when borrowers fail to meet their aggressive repayment plans.
Legislation at the federal and state level should be conscious of whose lead they are following. Many of these proposals may resemble the legislation put forth by Senator Bernie Sanders (I-Vt.) and Representative Alexandria Ocasio Cortez (D-N.Y.) in 2019.
Several states have tried an interest rate cap in the past with low-income households suffering the most. Arkansas, a state with a constitutionally mandated interest rate cap, has extremely low loan volume. Many of its residents drive out of state to acquire installment loans that offer increased lending options with interest rates appropriately tailored to service those borrowers. After Georgia and North Carolina implemented caps on interest rates, insufficient funds notifications and bounced check fees surged, harming lower-income consumers who may find it more challenging to afford these fees.
Illinois Governor J.B. Pritzker (D-IL) signed an interest rate cap into law last month even after lender organizations, including the Illinois Small Loan Association, warned that the interest rate ceiling effectively ends the short-term loan industry. Neighboring Indiana and Wisconsin have no interest rate cap and can expect to see an influx of new borrowers crossing state lines for loans as did the states like Oklahoma, Missouri, and Tennessee surrounding Arkansas.
Consumers are best able to make appropriate financial choices that meet their needs when they have more choices in credit markets. Americans for Tax Reform and the undersigned organizations strongly urge Congress to oppose regulation limiting credit markets and installing a ceiling on interest rates.
Click here to review the letter.
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Watch: What's Next for Sports Betting in the States?
Baseball season is here, NCAA basketball champions have been crowned, and state legislatures are still in session. It's the perfect time to talk sports betting.
Americans for Tax Reform President Grover Norquist, FanDuel's Andrew Winchell, and Jessica Feil with American Gaming Association join a special webinar to talk about how states can win with low taxes and good regulatory policies for sports betting. Watch here.
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Montana Senate Passes Bill to Save Livelihoods – and Lives
Americans for Tax Reform today praised the Montana Senate for passing SB 398, a common sense, good governance reform that will save not only livelihoods – but also lives. SB 398 ensures appropriate transparency and accountability over decisions impacting public health while also safeguarding Montana’s state revenue base.
In response to the bill’s passage, Tim Andrews, Americans for Tax Reform’s Director of Consumer Issues, congratulated Montana legislators on this achievement and noted that: “It is the fundamental responsibility of state governments to protect their citizens. At times, these threats can come from local governments that act without any accountability or scrutiny and impose punitive taxes on the most vulnerable in their communities. SB 398 will put a stop to this.”
Montana state health officials testified during a hearing on SB 398 that, should the bill not be passed, laws will be enacted in twenty-six Montana localities that would outlaw stores selling e-cigarettes and vapor products. This would force the closure of over twenty establishments and cost more than one hundred jobs in the state. These local laws would also leave countless smokers looking to quit the deadly habit of cigarette use without access to scientifically proven reduced harm alternatives.
Andrews made sure to note the incredible public health benefits of SB 398, stating that “Not only will this bill stop businesses being closed by ill-informed, unaccountable bureaucrats, it will also save lives. According to the world’s leading cancer academics, E-cigarettes could save over 27,000 lives in Montana if a majority of the state’s cigarette smokers made the switch to vaping. SB 398 will preserve the ability of Montana residents to access these lifesaving products and will have a significant impact on decreasing socioeconomic disparities that exist in health.”
Andrews also recognized the leadership of Representative Ron Marshall noting that: "Rep. Marshall's tireless advocacy on behalf of consumers, taxpayers, and small businesses has been nothing short of remarkable and this achievement would not have been possible without his passion and dedication. Businesses across the state, as well as smokers desperately trying to quit their deadly habit, owe him and his team a great debt of thanks."
SB 398 will now be transmitted to the House, where Representatives will consider the bill in committee before it can be voted on by the full House. Americans for Tax Reform will continue our advocacy in support of SB 398 and encourages all Montana taxpayers, legislators, and consumers to voice their support for this legislation as well.
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Montanans Will Get Stuck with Higher Utility Bills Due to Biden Corporate Tax Rate Hike
If Tester votes for a corporate income tax rate increase, he will have to explain why he just increased your utility bills
If President Biden and Sen. Jon Tester raise the corporate tax rate, Montana households and businesses will get stuck with higher utility bills. Democrats plan to impose a corporate income tax rate increase to 28%, even higher than communist China's 25%.
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 across the country worked with officials to pass along the tax savings to customers.
As noted in a 2018 Montana Public Service Commission Release:
The Montana Public Service Commission voted unanimously to approve an agreement for Montana-Dakota Utilities’ electric business to refund to consumers the benefits they received from the Tax Cuts and Jobs Act. The agreement, or Stipulation, calls for a $1.5 million consumer refund as a result of the TCJA.
NorthWestern Energy passed along their savings to Montana customers as well:
The tax savings stem from the Republican Tax Cuts and Jobs Act, which Congress passed in December and was signed into law by President Donald Trump. Federal corporate tax rates fell from 35 percent to 21 percent.
Regulated utilities like NorthWestern cannot pocket the savings, which must be shared with ratepayers, who also pay the utilities' taxes. NorthWestern has about 345,000 customers in Montana.
NorthWestern is proposing that its natural gas customers receive direct refunds for the entire $3.154 million in tax breaks associated with the utility’s natural gas business. The company’s electric customers would receive half of the $10.8 million in tax breaks associated with NorthWestern’s electric business. Half the money would be spent removing hazard trees that pose a fire or outage risk.
“With what we proposed, for a natural gas customer, it would be about $1.18 a month. An electricity customer would be 67 cents per month,” said Butch Larcombe, NorthWestern spokesman. – April 3, 2018 Billings Gazette article excerpt
Conversely, a vote for a corporate income tax rate hike is a vote for higher utility bills right as the USA is trying to recover from the pandemic.
Sen. Tester would be wise to stay away from tax increases.
Missouri's Chance To Protect Businesses & Consumers From Rapacious Local Governments
Americans for Tax Reform submitted written testimony today for a hearing on Missouri’s House Bill 517 in the House Committee on Downsizing State Government.
HB 517 is a pro-taxpayer reform that will protect Missouri’s businesses and consumers from damaging regulations imposed by local governments on reduced harm tobacco alternatives. ATR urged lawmakers to support the legislation in the interests of safeguarding Missouri’s public health and state economy.
Tim Andrews, ATR’s Director of Consumer Issues, wrote “It is simply good governance that matters of this magnitude be decided at the state level, due to both the level of increased scrutiny, transparency and accountability it provides, but also the direct impact it has on state tax revenue should a product be banned.”
Andrews also urged legislators to consider the impact that HB 517 would have on state revenues, noting “State budgets would also be negatively affected through the forgoing of tax revenue from state income taxes caused by a burgeoning black market, caused by the smuggling of illicit products between different jurisdictions and sold without appropriate state taxes being paid. As such, protecting citizens from these policies is not only the moral thing to do, but also in the direct interest of lawmakers in Jefferson City.”
Andrews noted the importance of protecting the freedom of Missourians, writing “It is important to note that, contrary to some arguments made by opponents of this bill, “local control” at its core is about safeguarding individual liberties and restricting the growth of government; it is not a free pass for cities to do whatever they want. Localities are just as capable of being conduits for heavy-handed laws that will harm citizens. When that is at stake, state action is not only appropriate to safeguard individual freedoms – it is essential.”
Andrews concluded by stressing the benefits that HB 517 will have on public heath, stating that “Vapor products would save nearly 125,000 lives if a majority of Missouri smokers made the switch to vaping, extrapolating from a large-scale analysis performed by leading cancer researchers and coordinated by Georgetown University Medical Centre. HB 517 will have a tremendous impact on public health and would decrease socioeconomic disparities significantly as it will prevent localities from prohibiting life-saving treatment.”
The full testimony can be read here.
Photo Credit: Daniel Schwen
More from Americans for Tax Reform
Workers Will Pay for Biden’s Corporate Tax Hike
President Joe Biden has proposed at least $2 trillion in tax increases as part of his new spending plan. Biden has vowed to raise the corporate income tax from 21 percent to 28 percent, impose a 21 percent global minimum tax, and a 15 percent minimum tax on book income.
American workers, including those making less than $400,000 a year will bear a significant portion of Biden’s tax increases.
There is a strong consensus among the left and the right that the corporate income tax is borne by American workers through lower wages and fewer job opportunities:
- According to the Stephen Entin of the Tax Foundation, labor (or workers) bear an estimated 70 percent of the corporate income tax in the form of wages and employment. As Entin notes, 50 percent, 70 percent, or even 100 percent of the corporate tax is borne by workers.
- A 2012 paper at the University of Warwick and University of Oxford found that a $1 increase in the corporate tax reduces wages by 92 cents in the long term. This study was conducted by Wiji Arulampalam, Michael P. Devereux, and Giorgia Maffini and studied over 55,000 businesses located in nine European countries over the period 1996-2003.
- A 2015 study by Kevin Hassett and Aparna Mathur found that a 1 percent increase in corporate tax rates leads to a 0.5 percent decrease in wage rates. The study analyses 66 countries over 25 years and concludes that workers could see a greater reduction in wages than the federal government raises in new revenue from a corporate income tax increase.
- A 2006 study by William Randolph of the Congressional Budget Office found that 74% of the corporate tax is borne by domestic labor.
- A 2007 study by Alison Felix estimated that a 1 percentage point increase in the marginal corporate tax rate decreases annual wages by 0.7 percent. She concluded that the wage reductions are over four times the amount of collected corporate tax revenue.
- Even the left-of-center Tax Policy Center estimates that 20 percent of the burden of the corporate income tax is borne by labor.
- The Congressional Budget Office has said that about 25 percent of the cost of a corporate tax would be borne by workers. Though, they assert that it may be complicated to calculate this, as "the larger the decline in saving or outflow of capital, the larger the share of the burden of the corporate income tax that is borne by workers."
Photo Credit: Gage Skidmore
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