How the Republican Tax Cuts Are Helping New Jersey
New York is benefiting greatly from the Tax Cuts and Jobs Act enacted by Republicans in 2017:
New Jersey Families See Increased Tax Simplification and Tax Reduction. Americans at every income level have seen significant tax reduction. 90 percent of families and individuals are seeing increased take-home pay across the country. There are numerous reforms in the bill that benefit taxpayers in New Jersey and across the country:
- The Tax Cuts and Jobs Act doubled the child tax credit from $1,000 to $2,000 per child. 563,170 New Jersey families took the Child Tax Credit in 2015.
- The Tax Cuts and Jobs Act doubled the standard deduction for an individual from $6,000 to $12,000 and for a family from $12,000 to $24,000. 2,574,770 New Jersey families and individuals took the standard deduction in 2015.
- The Tax Cuts and Jobs Act raised the threshold of the Alternative Minimum Tax so fewer taxpayers are forced to comply with the provision. 279,740 New Jersey families paid the Alternative Minimum Tax in 2015.
New Jersey Middle Class Families See Increased Take-Home Pay. In 2018, New Jersey taxpayers will see average tax reduction of $1,490 and around 6 in 10 New Jersey taxpayers see an average federal tax cut of $2,740.
- 90 percent of New Jersey taxpayers with annual income of between $48,300 and $77,300 will see an average federal tax cut of $930 in 2018.
- 84 percent of New Jersey taxpayers with annual income between $77,300 and $135,800 will see an average federal tax cut of $1,390 in 2018.
- 80 percent of New Jersey taxpayers with annual income between $135,800 and $314,500 will see an average federal tax cut of $3,070 in 2018.
New Jersey Families See Relief From the Individual Mandate Tax Penalty. Obamacare imposed a tax penalty of $695 for an individual and $2,085 for a family of four for failing to buy “qualifying” health insurance as defined by the federal government. The Tax Cuts and Jobs Act repeals this unfair tax.
The individual mandate tax penalty is one of the most regressive taxes in the code as it disproportionately impacts low and middle-income families:
- 188,570 New Jersey individuals and families paid a total of $93,342,000 in individual mandate tax penalties in 2015.
- 37.56 percent of New Jersey taxpayers (70,830 households) that paid the individual mandate made less than $25,000 in annual income.
- 77.91 percent of New Jersey taxpayers (146,910 households) that paid the individual mandate made less than $50,000 in annual income.
Tax Reform Benefits Businesses and Workers in New Jersey. The Tax Cuts and Jobs Act reduced the federal corporate tax rate to 21 percent and established a 20 percent small business deduction. Businesses across the state have responded by announcing pay raises, bonuses, 401(k) match increases, and expansions. For example:
- Tingley Rubber Corporation – based in Piscataway, New Jersey - announced one-time bonuses of $1,000 because of the recent tax reform passed by Congress.
- Quest Diagnostics Incorporated – based in Secaucus, New Jersey – has announced bonuses of up to $500 for 40,000 employees.
- Amicus Therapeutics – based in Cranbury, New Jersey – will build a $200 million facility in the U.S. instead of Europe because of tax reform. The factory will produce a new drug designed to treat Pompe, a rare, fatal disease. The facility will employ at least 200 people with an average salary of $100,000.
- Lowe’s – (5,000 employees at 39 stores and two distribution centers in New Jersey). Employees will receive bonuses of up to $1,000 based on length of service, expanded benefits and maternity/parental leave, and $5,000 of adoption assistance.
- Amboy Bank – based in Old Bridge, New Jersey – is increasing its employee base wage to $15 per hour and giving $1,000 bonuses for non-executive employees.
New Jersey companies of all sizes give powerful testimonials to the power of tax reform:
Metallix (Shrewsbury, New Jersey) - Employee bonuses, investing in business growth:
First order of business? Giving each of Metallix’s 98 workers a $1,000 bonus, an unexpected surprise that came just days after tax reform took effect.
“From the outset, the company wanted to share the benefits of tax reform with our employees,” said Maria Piastre, president of Metallix. “On February 14, every employee received a net $1,000 after-tax bonus in response to tax reform. Coming so soon after our usual end-of-year bonuses, it was completely unexpected by Metallix employees, and we were all very happy to receive it.”
Metallix wasn’t shy about tying these bonuses directly to tax reform. Each employee also received a letter from Metallix owner Eric Leiner, who explained that tax reform was going to mean a big boost to the company—and that he wanted to make sure employees were receiving their share of the good fortune. Metallix employees clearly took this sentiment to heart.
Piastre said that, months after the bonuses were given out, many employees still had Leiner’s letter hung proudly at their desks.
Piastre also explained that Metallix was using some of the benefits of tax reform to grow their business—and that significant investments were now more feasible because the company’s taxes had been so substantially lowered. - August 2, 2018, National Association of Manufacturers article excerpt
Atlantic City Electric (Atlantic City, New Jersey) - The utility will pass along tax cut savings to customers:
Atlantic City Electric will provide $23 million in annual tax savings to its customers. The company made a filing this month with the New Jersey Board of Public Utilities, which was approved on March 26, 2018. Customers will begin to see reductions on their bills around April 1, 2018. - April 3, 2018, Exelon Utilities press release excerpt
Honeywell (Morris Plains, New Jersey) – increased 401(k) match:
“I am confident in Honeywell’s future, and our ability to continue to deliver for our shareowners and our employees. Our strong performance in 2017, together with the enactment of new U.S. tax legislation, has enabled us to increase our 401(k) match in the U.S. This is a sustained, annual benefit that will provide a more secure retirement for our employees. We believe that enhancing this benefit is extremely valuable and important to our employees over the long term,” Adamczyk concluded.—Jan. 26 2018, Honeywell press release
Flemington Car & Truck Family of Brands (Flemington, New Jersey) -- $500 employee bonuses:
The new tax reform law is giving some benefits to New Jerseyans. The Flemington Car and Truck Country Family of Brands, a new and used car dealership in Flemington, is awarding each of its full-time employees a $500 bonus because of the recently passed federal Tax Cuts and Jobs Act.
As a result of the corporate tax rate cut under the new law to 21 percent from 35 percent, the company will also look to upgrade its facility and hire additional workers. The dealership is 41 years old and has 17 brands in eight different locations.
“We believe this is the right thing to do,” said company chairman Steve Kalafer, in a written statement. “Reinvesting tax savings in our employees and our businesses will make our communities and America stronger. We call on all of the auto manufacturers we work with to help drive economic growth by giving back to the communities where they employ and invest with appropriate employee bonuses and by creating new jobs with their new capacity for additional capital expenditures.” – Jan. 8, 2018 NJ Biz article excerpt
Quest Diagnostics Incorporated (Secaucus, New Jersey) -- Bonuses of up to $500 for 40,000 employees:
Tax Reform Benefit
In 2018 the company expects to realize approximately $180 million in tax savings on an adjusted basis. Of this amount, the company plans to reinvest roughly $75 million before tax back into the business and its employees, resulting in a benefit of approximately $120 million to net earnings. Investment initiatives include:
-Advanced diagnostics innovation through new tests and high-touch concierge services;
-Investments to deliver a consistently excellent consumer experience both online through the MyQuest mobile patient application and patient service centers; and
-A bonus of up to $500 for nearly 40,000 employees to be paid based on the company's performance in 2018. -- Feb. 1 2018, Quest Diagnostics Incorporated press release
New Jersey American Water (Swedesboro, New Jersey) – The utility will pass along tax cut savings to customers:
New Jersey American Water customers also recently had a rate decrease as a result of the Tax Cuts and Jobs Act. On April 1, 2018, most customer water rates were reduced by 5.9 percent (and 2.3 percent for former Shorelands Water Company customers). The water bill for the average residential customer using 6,000 gallons a month decreased approximately $3.36 per month ($1.00 per month for former Shorelands customers), and the average residential wastewater bill decreased between $1.49 and $5.81 per month, depending on service area.
The BPU is continuing their review of the overall impact of the new tax act, and further rate adjustments are anticipated in the coming months. – May 11, 2018, BusinessWire article excerpt
Merck (Kenilworth, New Jersey) -- Bonuses (details to be announced); increased charitable donations; increased capital expenditures:
“The recently enacted U.S. tax legislation improves Merck’s financial flexibility to invest in sustainable long-term value creating opportunities. In addition to the company’s ongoing investment in R&D, business development and continued support of the dividend, as well as share repurchases, the company also:
- Plans to invest approximately $12 billion over 5 years in capital projects including approximately $8 billion in the United States
- Made a contribution to the Merck Foundation in the fourth quarter of 2017
- Plans to provide a one-time, long-term incentive award for its eligible non-executive employees in the second quarter of 2018” – Feb. 2 2018, Merck press release
Tingley Rubber Company (Piscataway, New Jersey) -- $1,000 bonuses:
New Jersey based Tingley Rubber Corporation will be issuing all U.S. based employees one-time bonuses of $1,000 because of the recent tax reform passed by Congress.
Tingley’s ownership announced Thursday its plans to share some of the tax benefit directly with their employees to express the company's gratitude. The 122-year-old, fifth generation family owned business joins many businesses across the country in giving employee bonuses after Congress passed a sweeping tax cut for businesses and individuals.
President Donald Trump signed a bill on December 22nd overhauling the nation's tax code. One of the biggest changes included in the bill cuts the corporate tax rate from 35 percent to 21 percent for qualifying corporations. The bill also restructures and lowers the seven personal income tax brackets.
Based in Piscataway, NJ the privately held Tingley Rubber Corporation announced the bonuses during an employee luncheon held on March 22nd. The $1,000 bonuses will also be eligible for the company’s 401(k) plan deferral with the standard corporate match.
"The economic development that should come as a direct result of the new tax reform legislation and deregulations will positively affect Tingley’s ability to grow its business. The tax reform package will allow Tingley to invest more into our strategic initiatives, and better serve our customers, as well as our employees and shareholders," said Owner and Chairman of the Board, Bruce McCollum. Bruce’s son and owner JB McCollum said "We are excited for the opportunity to reward our dedicated and hard-working employees with this special bonus as a token of our gratitude."
President & COO, Mike Zedalis, expressed his gratitude to the McCollum family and sees the new tax plan as a major boost to Tingley: “Our company continues to grow, and enhanced investment into our operations will always bring benefits to our customers, employees and shareholders.”
Tingley Rubber Corporation is a leading supplier of protective footwear and clothing and has been protecting generations of workers since 1896. -- March 26, 2018 Tingley Rubber Corporation press release
Public Service Enterprise Group (Newark, New Jersey) – the utility will pass along tax reform savings to customers:
Public Service Electric and Gas Co. (PSE&G) today proposed to lower customer bills by approximately 2 percent on April 1 to pass on the benefits of the federal tax reform legislation enacted earlier this year.
In its filing with the NJ Board of Public Utilities, PSE&G will reduce rates by approximately $114 million on an annual basis effective April 1 to reflect lower federal taxes the utility will pay. The typical residential combined electric and gas customer will save nearly $41 per year. – March 2, 2018, PSE&G Press Release
Carneys Point Township (Carneys Point, New Jersey) -- The township is building a warehouse in an Opportunity Zone created by the Tax Cuts and Jobs Act:
A 1.284 million square foot warehouse complex is coming to Carneys Point Township. The deal, signed at the end of March, will be one of the many projects on tap for the Salem County town. Although the tenant utilizing the warehouse has not been finalized, the warehouse is expected to create as many as 500 jobs.
The rural town of 7,100 is located in the state's least populated county, which struggles with high unemployment figures (6.3% in February compared to the state's average of 4.7%) and low household income of about $52,800 on average.
The warehouse will be close to the McLane Distribution Center, a Wawa fulfillment center located on the westbound side of Route 40 that has already expanded multiple times. Plans include installing a traffic light at Courses Landing Road at Route 40, an intersection that's been a problem area for years, according to Carneys Point Township Mayor Ken Brown
"What really makes me happy is everybody in our government in our township worked together on this project," said Brown. "From our codes people to our committee people, to our office personnel, to
our attorneys, and everybody else with one focus: To get this job done and bring jobs to our town."
New Jersey-based Arbok Partners and Panattoni Development Company will build the warehouse. Both companies and the partnership specialize in industrial development.
Bo Farkas, who oversees all acquisition and development opportunities for Arbok Partners, said searching for potential areas for development is like trying to find "diamonds in the rough." Carneys Point fit the bill for the warehouse project. The area is minutes from the New Jersey Turnpike, close to the last exit before heading over the Delaware Memorial Bridge.
"One of the things that New Jersey has a shortage of are big box distribution buildings, especially those in the one million square feet size range. That was the main impetus for seeking out larger sites like the one in Carneys Point."
Carneys Point is one of two Salem County municipalities designated as an opportunity zone, an initiative the state says tries to bring more development and economic opportunities to urban and rural areas. -- April 7, 2019 South Jersey Times article
Amicus Therapeutics (Cranbury, New Jersey) – In order to find a cure for a rare disease, the company is building a $200 million facility in the United States instead of overseas. The facility will employ at least 200 people who will earn an average of over $100,000 per year:
Specialty drugmaker Amicus Therapeutics, Inc. has decided to spend as much as $200 million on a new production facility in the U.S. instead of Europe.
--
At Amicus Therapeutics, the new tax law solved a geographic dilemma. The Cranbury, N.J., company is developing an experimental drug to treat Pompe disease, a rare inherited disorder that causes muscle weakness and can be fatal.
After early results for a new drug proved promising, Amicus wanted to increase production for further clinical testing and potential commercial sales.
Amicus, which has been using Chinese contract manufacturer WuXi Biologics to supply the drug, decided in August to build its own facility. The U.S. was at a disadvantage to Europe, due to its 35% statutory federal income-tax rate for companies. Ireland’s corporate tax rate, by contrast, is 12.5%.
Those financial considerations threatened to overshadow other advantages that a U.S. plant would offer, including the ease with which company officials could visit it, and the availability of talented workers in some regions.
“Our strong assumption was that it would be very challenging to establish a new bio-manufacturing facility in the U.S.,” Chief Executive John Crowley said in an interview.
As the tax legislation advanced in Congress last fall, however, building in the U.S. began to look more attractive. On Dec. 21, a day after Congress passed the final measure, which lowered the statutory corporate rate to 21%, Mr. Crowley recommended to his board the company focus on finding a U.S. site. The company has narrowed its choice to three East Coast cities Mr. Crowley declined to identify, and expects to decide in the next month or two. It expects the plant to cost $150 million to $200 million, and to employ at least 200 people at an average pay of $100,000 a year.
“With the changes in the tax law, it now makes the U.S. competitive with these geographies we’re looking at,” he said. – Jan. 26, 2018 Wall Street Journal article excerpt
Somerset Savings Bank (Bound Brook, New Jersey) -- $750 bonuses for employees excluding senior management:
Somerset Savings Bank announced today that, following the enactment of the new federal tax reform legislation, it will distribute a special cash bonus to its employees. Every employee, excluding senior management, will receive a one-time $750 bonus. – Jan. 23, 2018 Somerset Savings Bank press release
OceanFirst Financial Corp. (Toms River, New Jersey) – base wage increase to $15 per hour:
OceanFirst Financial Corp. (NASDAQ:OCFC) the holding company for OceanFirst Bank, today announced a commitment to increase the Bank's minimum hourly pay rate to $15.00 within 30 days of the enactment of the Tax Cuts and Jobs Act which has been approved by Congress and is expected to be signed into law in the near future." -- Dec. 22, 2017 OceanFirst Financial Corp. press release
Invertase Brewing Co. (Phillipsburg, New Jersey) -- A brewery is being built in an Opportunity Zone created by the Tax Cuts and Jobs Act:
A piece of paper taped to the door blocks the view inside. "No peeking!!" it says. There are smiley faces inside the O and under the two exclamation points.
Inside is where Stephen and Karen Zolnay are hard at work turning a family hobby of 15 years into a business.
When finished, Invertase Brewing Co. will be one of just a handful of breweries in northwest New Jersey, and the only one in Phillipsburg. Breweries are more plentiful just across the Delaware River in Easton, a community from which the Zolnays hope to draw support.
...
What's more, they said, the site is at a crucial intersection for Route 22 motorists getting to and from the free bridge and falls within an federal opportunity zone, giving them some economic incentive as well. -- July 21, 2019 Hunterdon County Democrat article
JLL Capital Markets (Jersey City, New Jersey) -- The company is investing in a brand new apartment complex, which will create new jobs:
"JLL Capital Markets has arranged a $20.5 million loan for an investment fund that’s buying a Jersey City apartment complex, NJBIZ reported. Borrower Normandy Opportunity Zone Fund, which is managed by Columbia Property Trust, plans to use the financing to purchase the 93-unit, six-story building known as The Ashton, which is in an opportunity zone. The building houses 62 parking spots, according to the outlet. Rialto Capital Management provided the two-year, floating rate loan. " -- February 26, 2020 The Real Deal article
JLL Capital (Jersey City, New Jersey) -- The company announced it is building an apartment community located in an Opportunity Zone created by the Tax Cuts and Jobs Act:
JLL Capital Markets announced today that it has arranged $41 million in acquisition financing for BELA, a newly developed, 104-unit, luxury apartment community located within a qualified opportunity zone in Jersey City’s rapidly expanding Bergen-Lafayette neighborhood.
JLL worked on behalf of the borrower, Golden Glades Capital Management, to arrange the two-year, floating-rate loan that was provided by Ares Commercial Real Estate Corporation (NYSE: ACRE). -- April 2, 2020 MultifamilyBiz article
Advanced Sciences and Technologies, LLC (Berlin, New Jersey) – increased 401(k) match for employees.
Unity Bank (Clinton, New Jersey) – all 200 non-executive employees will receive a $750 bonus:
In response to Congressional approval of tax reform legislation, Unity Bancorp, Inc. (NASDAQ:UNTY), parent company of Unity Bank, announced today that its Board of Directors has elected to provide all employees excluding executive management with a one-time $750 bonus.
“The bank’s Board and executive management felt strongly that the anticipated benefit of the corporate tax rate reduction should be shared with our employees,” said Unity Bank President & CEO James A. Hughes. “Unity’s employees constantly demonstrate their commitment to our customers and the community, not only in their work responsibilities, but by donating their personal time and resources to benefit those in need. We foster an entrepreneurial culture at Unity where the employees and bank can grow together and this decision fits perfectly with that philosophy.”
The corporate tax rate in the recently passed legislation will drop from 35% to 21%. Unity Bank intends to pay the bonuses to its approximately 200 employees in January. – Dec. 26, 2017 Unity Bancorp Inc. press release
Amboy Bank (Old Bridge, New Jersey) – Base wage raised to $15 per hour; $1,000 bonuses for non-executive employees:
The New Jersey Bankers Association said Amboy Bank was "sharing the benefits of the recent tax reform."
"They are joining the growing group of banks across New Jersey and the country that are rewarding employees with increased wages, special bonuses and enhanced benefits programs as well as increased funding for charitable giving," president and CEO John E. McWeeney, Jr. said in a statement. – Feb. 8, 2018 NJ Advance Media article excerpt
Apple (There are 12 Apple stores in New Jersey: Atlantic City, Bridgewater, Cherry Hill, Edison, Freehold, Lawrence Township, Marlton, Paramus, Rockaway, Short Hills, Wayne, Woodcliff Lake) -- $2,500 employee bonuses in the form of restricted stock units; nationally, $30 billion in additional capital expenditures.
Johnson & Johnson (New Brunswick, New Jersey) – New investments due to tax reform – details will be released in April.
“Now regarding tax reform, what we said from the very beginning is that one of the major reasons, in addition to lowering the rate, is just frankly the flexibility that it provides us, and we think it actually helps make us more competitive, particularly on an international level if we happen to be in a competitive situation with other companies because now we have greater flexibility on how we can access that cash. So we think net-net, it's a positive for us. As you heard Dominic [J&J CFO] mention earlier, regarding the more immediate tax reform impact, we think that the -- the wise thing to do is to invest a good portion of that back into R&D. If you look over the past several years, the output, the productivity, particularly in our pharmaceutical pipeline, but also in others of our investments in R&D, we think, have been at the high end. And we think ultimately doing that, we'll have the greatest impact on our business, will help us get out to better serve underserved needs around the globe, and that's where we're heading in that direction.” – CEO Alex Gorsky
"We are pleased by the final passage of the U.S. tax cuts and jobs act.” – CFO Dominic Caruso
Bank of America (Multiple locations in New Jersey) -- New Jersey-based employees of Bank of America will receive $1,000 bonuses.
Cintas Corporation (Multiple locations in New Jersey) -- $1,000 bonuses for employees of at least a year, $500 bonuses for employees of less than a year.
Chipotle Mexican Grill (Multiple locations in New Jersey) – Bonuses ranging from $250 to $1,000; increased employee benefits; nationally, $50 million investment in existing restaurants.
Comcast (Multiple locations in New Jersey) -- $1,000 bonuses; nationally, at least $50 billion investment in infrastructure in next five years.
Home Depot -- 72 locations in New Jersey, bonuses for all hourly employees, up to $1,000
Lowe's -- 5,000 employees at 39 stores and two distribution centers in New Jersey. 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 (13 locations in New Jersey) – Tax reform bonuses for employees.
Starbucks Coffee Company (Multiple locations in New Jersey) – $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 – 39 stores in New Jersey – tax reform bonuses, retirement plan contributions, parental leave, enhanced vacation benefits, and 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 New Jersey) – $1,200 bonuses for full-time employees, $500 for part-time employees.
Wal-Mart – 63 locations in New Jersey -- Base wage increase for all hourly employees to $11; bonuses of up to $1,000; expanded maternity and parental leave; $5,000 for adoption expenses.
Wells Fargo – 279 locations in New Jersey; 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 New Jersey examples, please email John Kartch at jkartch@atr.org
The running nationwide list of companies can be found at www.atr.org/list
More from Americans for Tax Reform
DC's Flavor Ban Would Harm Public Health, Criminal Justice, Businesses, & District Economy
Earlier today, Americans for Tax Reform (ATR) wrote to members of the Council of the District of Columbia, urging them to oppose B24-002, “The Flavored Tobacco Product Prohibition Amendment of 2021” which would introduce a prohibition on flavored cigarettes as well as reduced risk tobacco alternatives. No public hearings have been held on B24-002.
ATR Director of Consumer Issues Tim Andrews stated: “Policy must be driven by science and evidence, not by ideology. The evidence clearly demonstrates that if enacted, this bill would have a disastrous impact on public health, lead to an increase in smoking rates particularly among high schoolers, cause conflict between minorities and law enforcement with potentially tragic consequences, harm businesses, and reduce District Council Revenue by significantly more than the $3 million annually claimed.”
Andrews continued: “Reduced risk tobacco alternatives such as e-cigarettes are proven 95% safer than deadly combustible cigarettes, between two and four times more effective than any other form of nicotine replacement therapy, are endorsed by over 50 of the world’s leading medical authorities, and according to Georgetown University Medical Centre have the capacity to save 6.6 million American lives. Studies have repeatedly shown that flavored e-cigarettes are critical to helping adult smokers make the switch to vaping but have no impact on youth initiation. It is beyond belief that DC Council is considering a science-denial bill that will lead to more people smoking and dying as a result."
Andrews also commented on how B24-002 extends flavor prohibition to conventional tobacco, including menthol cigarettes, something strongly opposed by groups such as the ACLU and civil rights leaders like Rev Al Sharpton. “Banning menthol cigarettes will also significantly increase the policing of minority communities and lead to a rise in negative interactions between law enforcement and minorities, as was seen earlier this week in Ocean City.”
Andrews concluded, “DC has the experience of other states to learn from. The evidence is incontrovertible: When San Francisco imposed a flavor ban in 2018, the only impact was that youth smoking doubled. When Massachusetts banned menthols, the only result was sales moved interstate or to the black market, with no decrease in the smoking rate, but a loss to the state of $72 million in just the first 7 months. DC Councilors must put science above ideology and reject this truly dangerous bill.”
The full letter can be read here.
Photo Credit: Ted Eytan
More from Americans for Tax Reform
25+ Conservative Groups and Activists Urge Congress to Reject Democrat Antitrust Power Grab
A coalition of 26 conservative groups and grassroots activists at both the state and federal level released a letter today urging Congress to reject the Democrat antitrust power-grab spearheaded by Rep. David Cicilline (D-R.I.) and organized by far-left Members like Rep. Pramila Jayapal (D-Wash.).
The coalition's message is clear – Democrat lawmakers are attempting to harness legitimate conservative anger at Big Tech to give unelected Biden bureaucrats sweeping new power to regulate the economy. Democrats are dealing in bad faith, and this Trojan horse package does absolutely nothing to address conservative concerns with Big Tech. If implemented, these bills increase the likelihood of political abuse.
Republicans need to hold firm against this clear attempt by Democrats to weaponize antitrust law for their own political gain.
You can view the full letter here or below.
Dear Member of Congress:
We urge you to reject the package of European-style over-regulation in the antitrust bills spearheaded by Rep. David Cicilline (D-R.I.) and co-sponsored by Members from the far left like Rep. Pramila Jayapal (D-Wash.).
These bills are a deceitful attempt by Democrat lawmakers to exploit legitimate conservative anger over Big Tech in order to give the Biden administration sweeping new power to regulate the economy. But make no mistake about it – Democrats are dealing in bad faith, and this Trojan horse package does absolutely nothing to address conservative concerns with Big Tech censorship – and could increase those concerns.
If implemented, bureaucrats in the Biden administration would wield vast new powers at the expense of American business and households. This heavy-handed approach should offer no comfort for those worried that the platforms are biased against them, as it actually increases the likelihood of political abuse.
Republicans and free-market Democrats should hold firm and vote No.
One bill would give bureaucrats power to determine if “covered” platforms with over fifty million users and a market cap of $600 billion might operate businesses that present a “conflict of interest.” If so, “any person” who fails to sell off these alleged conflicts of interest within two years of the bill’s enactment faces steep civil penalties of up to 30 percent of revenue in a given year.
At the same time, another bill effectively bans covered platforms from selling or providing private-label goods that consumers value in their marketplaces, which makes about as much sense as banning grocery stores from selling generic cereal.
Another bill outlaws new acquisitions for covered platforms, a key driver of economic growth and innovation. The legislation inverts the burden of proof in certain antitrust cases that would presume that American companies are guilty of anticompetitive conduct until proven innocent. This would massively stack the deck in favor of government enforcers and litigious trial lawyers looking to score a quick buck by gaming the legal system. U.S. economic growth would be dealt a crippling blow just as we emerge from the pandemic.
Another bill would force covered platforms to share their data with competitors via a government-mandated “interface” – giving government agents and malicious hackers the ability to access sensitive consumer information all in one place. The final bill will give more resources to the Federal Trade Commission at a time when the agency, controlled by liberal activists like Commissioner Rebecca Slaughter and newly-installed Chair Lina Khan, seems likely to use rulemaking authority to effectively create new antitrust law. Once this power is claimed, they plan to deploy it in service of their social agenda
As a whole, this European antitrust approach would deliver Europe’s low levels of innovation and deprive Americans of choice and access to convenient services and products that we use each and every day. Apple would no longer be able to operate the App Store or Apple Music. Google would not be able to display YouTube links or Google Maps directions when searched. Amazon would lose the ability to offer free Prime shipping or AmazonBasics products.
And that’s just the beginning.
Meanwhile, these bills do absolutely nothing to address conservative concerns with Big Tech. This package is just a test run for Democrats to regulate entire sectors of the economy, and there is no reason to believe they will stop with technology companies. Sen. Amy Klobuchar has been crystal clear that she believes antitrust law is a tool for unelected bureaucrats to “rejuvenate capitalism.”
A vote for this package is a vote to give bureaucrats even more power to pick economic winners and losers. This is neither a conservative nor free-market approach, and would stifle the robust competition that guarantees the best products and lowest prices for every American.
Republicans need to hold the line and vote no against weaponizing antitrust law for Democrat political gains.
Sincerely,
Grover Norquist
President, Americans for Tax Reform
James L. Martin
Founder/Chairman, 60 Plus Association
Saulius “Saul” Anuzis
President, 60 Plus Association
Marty Connors
Alabama Center Right Coalition
Brent Wm. Gardner
Chief Government Affairs Officer, Americans for Prosperity
Kevin Waterman
Chair, Annapolis Center Right Coalition Meeting (Maryland)
Iain Murray
Vice President for Strategy, Competitive Enterprise Institute
Ashley Baker
Director of Public Policy, Committee for Justice
Chuck Muth
President, Citizen Outreach (Nevada)
Katie McAuliffe
Executive Director, Digital Liberty
Heather R. Higgins
CEO, Independent Women’s Voice
Dave Trabert
Chief Executive Officer, Kansas Policy Institute
Rodolfo Milani
Chairman, Miami Freedom Forum (Florida)
Brian McClung
Chair, Minnesota Center Right Coalition
Pete Sepp
President, National Taxpayers Union
William O’Brien
Former Speaker, NH House of Representatives
Co-chair, New Hampshire Center Right Coalition
Doug Kellogg
Executive Director, Ohioans for Tax Reform
Tom Hebert
Executive Director, Open Competition Center
Lorenzo Montanari
Executive Director, Property Rights Alliance
Wayne Brough
Director of Technology & Innovation, R Street Institute
Mike Stenhouse
CEO, Rhode Island Center for Freedom & Prosperity
Karen Kerrigan
President & CEO, Small Business & Entrepreneurship Council
Kerri (Houston) Toloczko
Meeting Chair, SWFL Center-Right Coalition
Senior Policy Fellow, Institute for Liberty
Patrick Hedger
Vice President of Policy, Taxpayers Protection Alliance
Ralph Benko
Chairman, The Capitalist League
Rusty Cannon
President, Utah Taxpayers Association
Photo Credit: Brookings Institution
Nevada Rams Tax Hike & Anti-Property Rights Bills Through Over Holiday Weekend
Tax hikes are not popular. So what to do if you are a state legislator trying to shove through costly tax increases? For Nevada legislators, the answer was to avoid public scrutiny with a total lack of transparency, shoving bills through with little review over Memorial Day weekend.
The state’s legislative session ended with unnecessary mining tax increases, along with a bill that would permit local governments to collect lodging taxes from short-term rental businesses like Airbnb.
A few Republicans in the Democrat-controlled Nevada Legislature went along with inflicting new taxes on gold and silver mining operations by passing Assembly Bill 495. Democrats needed a two-thirds majority to push these levies, per the Nevada constitution. Assemblyman Tom Roberts, R-Las Vegas, and Assemblywoman Jill Tolles, R-Reno, voted with the Democratic majority, moving the bill on to the Senate.
Silver and gold mines that report gross revenue of $20 million to $150 million will be charged 0.75% excise tax, while a 1.1% tax will be charged on mines that report any higher. The plan is expected to cost $88 million a year in new tax burdens, with the revenue marked for education. Gov. Steve Sisolak called the tax hike “one of the most significant steps our state could take on our road to recovery.” Yet, most advocates in the state say that almost $1 billion is needed to adequately address public school funding, which indicates more tax hikes may be coming. These tax hikes are completely unnecessary even from a big spending perspective. Nevada came out of the pandemic flush with billions in federal bailout cash. For context, Nevada’s entire budget is $4.5 billion. So a tax increase to yield $88 million in just a year seems like an unnecessary initiative by Democrats in the Mining State.
Another bad bill that passed will impose damaging restrictions on short-term rental properties. Assembly Bill 363 will apply to the most populous counties and cities in Nevada and will add restrictions to how short-term rentals operate.
As ATR wrote in a letter to legislators:
“AB 363 is the opposite of free market policy, it instead places onerous rules on short-term rentals that make a mockery of property rights, and make it difficult for many to operate.
“In particular, rules requiring a 500 ft. minimum distance between units, and rules requiring a 2500 ft. distance from existing hotels, would clearly force many hosts to stop offering their properties. This would have a harsh effect on these hosts’ income, and take away options for travelers, ultimately this would also hurt tourism activity in the state.”
Higher taxes, and absurd regulations that ignore property rights, not the way for Nevada to close out their bi-annual session. Families and businesses are watching the state go in the wrong direction by increasing burdens and following the lead of states like California, rather than sticking with the pro-taxpayer policies that have helped the state grow.
Photo Credit: Jimmy Everson DVM, Flickr
More from Americans for Tax Reform
Heat-Not-Burn Tobacco Products are Saving Lives in Japan
Cigarette sales in Japan have decreased by 43% over the past five years, the greatest decrease in recorded history. This drastic reduction in cigarette use is a direct result of heat-not-burn products, a recent innovation that is already saving lives.
Switching to a heat-not-burn (HNB) product reduces a cigarette smokers' exposure to harmful chemicals. HNBs produce a vapor by heating the tobacco rather than burning it, like in cigarettes, to create smoke. As there is no combustion, and therefore no smoke, thousands of toxic chemicals found in traditional cigarettes are eliminated, and HNBs are proven to contain significantly less chemicals than combustible tobacco, a claim supported by the U.S. Food and Drug Administration.
In July 2020, the FDA authorized the marketing of the IQOS Tobacco Heating System with “reduced exposure” information, meaning the product contains a reduced level of a substance. In their authorization, they noted that the heating process “significantly reduces the production of harmful and potentially harmful chemicals compared to cigarette smoke”. Further, the FDA stated that the product “significantly reduces the body’s exposure to 15 specific harmful and potentially harmful chemicals” as well as “potential carcinogens and toxic chemicals”.
A study from January 2021 tested the chemical composition of cigarettes, e-cigarettes, and heat-not-burn products, referred to in the study as heated tobacco products, in addition to their toxicological impacts on respiratory cells. Published in the Journal of Hazardous Materials, the researchers made sure to test each product at the levels a consumer would. As they noted in their article, studies that have claimed to show high levels of chemicals in e-cigarettes and other reduced harm products are often the result of “unrealistic or extreme conditions”, such as extreme levels of consumption, unnaturally high e-cigarette power and temperature, and even the use of broken vapes.
The key findings from the study can be read below. The full study can be accessed here.
Key Findings:
-
Heated Tobacco Products (HTP) emitted 87.4% less carbonyl compounds than a conventional cigarette. Carbonyl compounds include formaldehyde, acetaldehyde and acrolein which are incredibly harmful.
-
Amazingly, the levels of carbonyl compounds found in e-cigarette vapor were “at least 98.5% weaker than in HTP aerosols”.
-
PAH (Polycyclic aromatic hydrocarbons) levels were also significantly lower in HTPs and e-cigarettes. A puff of a HTP produced 96.2% less PAHs than a conventional cigarette puff.
-
E-cigarettes emitted between 64.9-78.2% less PAHs than HTPs depending on the e-cigarette.
-
While PAHs “generally have a low degree of toxicity”, continued exposure to them, like long-term cigarette smoking, can cause lung, skin, and bladder cancer.
This study is clear evidence that HNB products are significantly less harmful than traditional cigarettes. Further, it adds to the ever-growing body of evidence in support of electronic nicotine delivery systems as a reduced harm alternative to tobacco.
While e-cigarettes are growing in popularity in the United States, the UK, and other countries, they are still prohibited in Japan. Therefore, HNBs provide Japanese smokers with an opportunity to continue to use nicotine, which does not cause cancer and is simply addictive, while decreasing the harm they are subject to. Incredibly, the 43% decrease in cigarette sales in Japan has come without any sort of educational campaign from the government. Rather, Japan’s government has largely avoided interfering in the HNB market, allowing the industry to flourish, improving public health.
South Korea is following Japan’s lead and is seeing similar results. Increases in HNB sales in South Korea has coincided with decreases in cigarette smoking, demonstrating that Japan's success can be replicated in other nations.
This should serve as an example for the United States, where lawmakers and government agencies are constantly waging war on e-cigarettes. This has resulted in an increase in cigarette sales after decades of steady decrease. If Japan and South Korea are any indication, serious improvements in public health are possible when government stays out of the way and allows reduced harm alternatives to be marketed as safer than cigarettes.
Photo Credit: Abdulla Binmassam
More from Americans for Tax Reform
Fact or Fiction? Debunking Claims About Vaping
Misconceptions about vaping are incredibly common, particularly among the people who vaping would benefit most. For adult smokers, switching from cigarettes to vape products can save their life. In fact, if a majority of American smokers made the switch to vaping, 6.6 million lives would be saved. In the interests of public health, it is critical that myths about vaping are debunked so people can better understand these products. This fact check confronts several of the most widely-spread misconceptions about vaping.
Myth: Vaping is just as harmful as cigarette smoking.
Fact: Vaping is estimated to be at least 95% less harmful than cigarette smoking. More than 50 public health organizations and medical bodies have publicly endorsed vaping as safer than smoking.
Myth: Nicotine causes cancer.
Fact: No, nicotine does not cause cancer. Nicotine, while addictive, is not classified as a carcinogen and is relatively benign, like caffeine. Cigarette harm comes, not from nicotine, but from tar and thousands of chemicals produced by the combustion process - the "smoke". E-cigarettes do not have a combustion process and produce vapor, not smoke, so these harmful chemicals are absent.
Myth: Vaping causes “popcorn lung”.
Fact: No, vaping does not cause bronchiolitis, known as “popcorn lung”. Multiple scientific studies have found no indication that e-liquids cause it and there has never been a recorded case of a vaper developing this condition.
Myth: E-cigarettes and vaping caused the 2019 outbreak of EVALI (severe lung injury).
Fact: Nicotine vaping did not cause severe lung disease. The outbreak of EVALI that occurred a few years ago was tied directly to a chemical present in black-market THC vapes, Vitamin E Acetate, that has never been found in nicotine-containing vapes or e-cigarettes.
Myth: There is a youth vaping “epidemic”.
Fact: Claims of a youth vaping epidemic lack supporting evidence. Surveys showing high usage among teens have artificially high response rates because they routinely classify someone as a vaper if that person has tried even one puff in a 30-day period. Academic analysis found that National Tobacco Youth Survey data did not support claims of a new epidemic of nicotine addiction.
Myth: Vaping, like combustible cigarettes, disproportionately harms vulnerable populations.
Fact: Vaping has tremendously positive effects on disadvantaged populations and helps to reverse the damage that big tobacco companies caused by targeting the impoverished, racial minorities, LGBTQ persons, and those suffering from mental illness and substance abuse. Vaping is critical to helping these vulnerable people quit the deadly habit of smoking and has been found to be more effective than any other nicotine replacement therapy.
Myth: The reason teenagers vape is the available flavors.
Fact: Flavors have no effect on youth use. A mere 5% of young vapers reported it was the flavors that attracted them to e-cigarettes and academic studies have found that teenage non-smokers willingness to try plain versus flavored e-cigarettes does not differ. However, flavors are essential for smoking cessation which is why adult access must be preserved.
Photo Credit: Massachusetts General Hospital
More from Americans for Tax Reform
California Residents Will Get Stuck with Even Higher Utility Bills Due to Biden Corporate Tax Rate Hike
If Feinstein and Padilla enact a corporate income tax rate increase, they will have to explain why they just increased your utility bills
If President Biden and Sens. Dianne Feinstein and Alex Padilla hike the corporate income tax rate, California households and businesses will get stuck with higher utility bills as the country tries to recover from the pandemic.
Democrats plan to impose a corporate income tax rate increase to 28%, even higher than communist China's 25%. This does not even include state corporate income taxes, which average 4 - 5% nationwide.
Customers bear the cost of corporate income taxes imposed on utility companies. Corporate income tax cuts drive utility rates down, corporate income tax hikes drive utility rates up.
Electric, gas, and water companies must get their billing rates approved by the respective state utility commissions. When the 2017 Tax Cuts and Jobs Act cut the corporate income tax rate from 35% to 21%, utility companies worked with state officials to pass along the tax savings to customers, including at least twelve California utilities.
The savings typically come in the form of a rate reduction, a bill credit, or a reduction to an existing or planned rate increase.
According to a report published in the trade publication Utility Dive, customers nationwide were to receive a $90 billion utility benefit from the Tax Cuts and Jobs Act:
Estimates derived from 2017 annual SEC 10-K filings indicate that the 14-percentage-point reduction in the corporate tax rate enacted under the 2017 Tax Cuts and Jobs Act (TCJA) resulted in investor-owned utilities establishing significant regulatory liability balances, totaling approximately $90 billion to be refunded back to customers.
Americans for Tax Reform has compiled a 90-second nationwide utility savings video from local news reports which may be viewed here.
If Democrats now impose a corporate income tax rate increase, they will have to reckon with local news coverage noting utility bills are going up. A vote for a corporate income tax hike is a vote for higher utility bills as households try to recover from the pandemic.
Tax Cuts and Jobs Act Impact: Working with the California Public Utilities Commission, California Water Service, Pacific Gas and Electric Company, Golden State Water Company, Suburban Water Systems, San Jose Water Company, California American Water Company, California-Oregon Telephone Company, Southern California Gas Company, Southern California Edison, San Diego Gas & Electric, Calaveras Telephone Company and Sierra Telephone Company passed along tax savings to their customers.
Southern California Gas Company: As noted in this January 2020 Energy Division document:
SoCalGas tax savings from the TCJA to be refunded to ratepayers is $75 million.
California Water Service: As noted in this May 30, 2018 California Water Service press release:
California Water Service (Cal Water) submitted a filing with the California Public Utilities Commission (CPUC) yesterday to decrease revenue needed in its service areas by almost $18 million, due to changes in federal tax laws and CPUC-authorized capital equity and debt financing costs. If approved as submitted, new rates reflecting the lower tax rates and financing costs will be effective July 1, 2018.
Pacific Gas and Electric Company: As noted in this March 30, 2018, PG&E press release:
PG&E is taking action to pass along approximately $450 million in annual tax savings to its customers. As a first step, today PG&E made three separate filings requesting to pass along approximately $325 million per year in federal tax savings from the federal Tax Cuts and Jobs Act for 2018 and 2019. PG&E has proposed to the CPUC that the benefits of the federal tax savings be used to offset expected rate increases.
Golden State Water Company: As noted in this June 13, 2018 CBS Sacramento news excerpt:
Golden State Water Company, which services Rancho Cordova, Gold River, and Arden Manor, wants to lower water rates for customers.
The water agency filed paperwork with the California Public Utilities Commission to decrease the rate by 2.88% for metered customers and 2.86% for flat-rate customers. The change, if approved, would take effect July 1, 2018.
Golden State Water made the decision to cut rates after the Tax Cuts and Jobs Act lowered its income tax rate from 35% to 21% on January 1, 2018. Golden State Water may retroactively credit customers if it determines there was a revenue surplus from January 1, 2018-June 30, 2018. It is also adjusting its rate proposal for 2019-2021, which it submitted in July 2017- before the Tax Cuts and Jobs Act was signed into law.
Suburban Water Systems: As noted in this September 24, 2020 California Public Service Commission document:
This Resolution grants Suburban Water Systems’ (Suburban) request in Advice Letter No. 348 the authority to amortize the 2019 amount of $289,879 or 0.34% of authorized revenues, recorded in the Tax Cuts and Jobs Act Memorandum Account (TCJAMA) related to the 2019 excess accumulated deferred federal income tax (ADFIT) not reflected in rates for the period January 1, 2019 through December 31, 2019. The 2019 balance of the TCJAMA will be amortized as a single monthly bill credit based on the customer’s meter size. The credit amount includes interest and is to refund the excess ADFIT related to 2019 revenue requirement not currently reflected in rates.
San Jose Water Company: As noted in this January 16, 2020 California Public Service Commission document:
This Resolution grants San Jose Water Company’ (SJWC) request in Advice Letter No. 537 & 537A, the authority to refund the over collected amount of $6,624,690 for the period January 1, 2018 through December 31, 2018, or 1.75% of authorized revenues,recorded in the 2018 Tax Accounting Memorandum Account (TAMA). The balance is associated with changes in tax expenses resulting fromTax Cut and Jobs Act signed into law December 22, 2017 that among other matters reduced the federal corporate tax rate from 35% to 21% effective January 1, 2018. The TAMA should be closed and the balance transferred to a 2018 Tax Accounting Balancing Account to amortize the refund. The 2018 balance in the TAMA will be refunded as a one-time bill credit based on the customer’s meter size. The bill credit is effective beginning on January 21, 2020 as shown below. Any over or under refunded balance in the 2018 Tax Accounting Balancing Account once the amortization period concludes should be addressed in the context of SJWC’s 2022 Test Year general rate case.
California American Water Company: As noted in this December 13, 2018 American Water press release:
The California Public Utilities Commission (CPUC) today approved a decision in the company’s general rate case for new water and wastewater rates for customers statewide.
The company’s rate request, which was filed in July 2016, will set rates through 2020. The decision approves approximately $103 million in capital investment in infrastructure replacements and improvements in 2018 and 2019.
“We are extremely proud of our significant level of system investment, combined with operational efficiency measures and innovative technologies, to ensure continued water quality, service reliability and fire protection for the more than 600,000 Californians who depend on us every day,” said Rich Svindland, President of California American Water. “This decision enables us to continue this important work on behalf of our customers, while balancing the cost impact for them.”
The decision approves a $10.3-million annual increase in authorized water and wastewater revenues for California American Water compared to previously authorized rates in the fall of 2016. The increase reflects savings generated by changes in federal tax law from the 2017 Tax Cuts and Jobs Act and the 2018 Cost of Capital decision.
California-Oregon Telephone Company: As noted in this August 9, 2018 California Public Service Commission document:
Staff has recalculated the tax impact of the TCJA to include the excess deferred tax impact. Prior to the enactment of the TCJA, Cal-Ore’s deferred income tax liability balance was $1,182,356. On January 1, 2018, the new tax rate of 21% resulted in deferred income tax of $730,279 causing an excess deferred tax reserve of $452,077. This $452,077 should be returned to ratepayers ratably over the remaining life of the assets that gave rise to the excess tax reserve balance. The TCJA provides guidance for the return of the excess deferred tax reserve under normalization rules. In summary, the TCJA rules say that if the excess deferred taxes are to be reduced, they should be reduced no faster than using the average rate assumption method (ARAM). But if the utility does not have the appropriate vintage data to use ARAM, an alternative method based on a composite rate is allowed.
As a result, Staff recommends the $452,077 excess deferred income tax reserve should be returned to ratepayers over the weighted average of the remaining useful life of Cal-Ore’s depreciable assets as of December 31, 2017. Appropriately, as the excess deferred tax reserve is returned to Cal-Ore’s ratepayers, rate base will be incrementally increased by $33,737 per year (as the $452,077 excess remaining in the deferred tax account will be incrementally decreased as it is returned to ratepayers).
Southern California Edison: As noted in this August 16, 2018 San Diego Union-Tribune article:
Representatives from Southern California Edison told the Union-Tribune the utility is reducing the total revenue it is requesting before the CPUC in its general rate case by about $139 million this year, about $185 million in 2019 and $235 million in 2020, largely due to the tax cut.
Without the legislation, Edison expected residential customers would see an average monthly increase of $1.51 a month this year, $5.01 in 2019 and $6.83 in 2020.
With the tax cut, the figures would drop to a 6-cents decrease per month in 2018, a $3.98 increase in 2019 and a $5.56 increase in 2020, based on average monthly usage of 550 kilowatt-hours.
San Diego Gas & Electric: As noted in this January 2020 Energy Division document:
Sempra GRC Gas Highlights:
- Disallowed SDG&E’s request to use 2018 tax savings from Tax Cuts & Job Act (TCJA) to offset expense for helicopter for fires and liability insurance, and to refund the $12 million tax savings to ratepayers over 2 years
Calaveras Telephone Company: As noted in this August 23, 2018 California Public Service document:
Staff recalculated the tax impact of the TCJA to include the excess deferred tax impact. Prior to the enactment of the TCJA, Calaveras’ deferred income tax liability balance was $145,643. On January 1, 2018, the new tax rate of 21% resulted in deferred income tax of $89,956 causing an excess deferred tax reserve of $55,687. This $55,687 should be returned to ratepayers ratably over the remaining life of the assets that gave rise to the excess tax reserve balance, The TCJA provides guidance for the return of the excess deferred tax reserve under normalization rules. In summary, the TCJA rules say that if the excess deferred taxes are to be reduced, they should be reduced no faster than using the average rate assumption method (ARAM).
Accordingly, Staff has adjusted the $55,687 excess deferred income tax reserve and returned it to ratepayers over the weighted average of the remaining useful life of Calaveras’ depreciable assets as of December 31, 2017. Appropriately, as the excess deferred tax reserve is returned to Calaveras’ ratepayers, rate base will be incrementally increased by $10,507 per year (as the $55,687 excess remaining in the deferred tax account will be incrementally decreased as it is returned to ratepayers).
Sierra Telephone Company: As noted in this August 9, 2018 California Public Service Commission document:
Staff has recalculated the tax impact of the TCJA to include the excess deferred tax impact. Prior to the enactment of the TCJA, Sierra’s deferred income tax liability balance was $5,131,347. On January 1, 2018, the new tax rate of 21% resulted in deferred income tax of $3,169,361 causing an excess deferred tax reserve of $1,961,986. This $1,961,986 should be returned to ratepayers ratably over the remaining life of the assets that gave rise to the excess tax reserve balance. The TCJA provides guidance for the return of the excess deferred tax reserve under normalization rules. In summary, the TCJA rules say that if the excess deferred taxes are to be reduced, they should be reduced no faster than using the average rate assumption method (ARAM). But if the utility does not have the appropriate vintage data to use ARAM, an alternative method based on a composite rate is allowed.
As a result, Staff recommends the $1,961,986 excess deferred income tax reserve should be returned to ratepayers over the weighted average of the remaining useful life of Sierra’s depreciable assets as of December 31, 2017. Appropriately, as the excess deferred tax reserve is returned to Sierra’s ratepayers, rate base will be incrementally increased by $316,449 per year (as the $316,449 excess remaining in the deferred tax account will be incrementally decreased as it is returned to ratepayers).
Conversely, if Biden and Democrats raise the corporate tax rate, they will add to the burden faced by working families. And any small businesses operate on tight margins and can't afford higher heating, cooling, gas, and refrigeration costs.
President Biden should withdraw his tax increases.
Report: IRS Fails to Screen Contractors for Tax Delinquency
The IRS failed to screen two-thirds of agency contractors for tax delinquencies and other errors, according to a new TIGTA report. This serves as yet another example of the IRS’s inability to complete basic tasks, even when it is required of them.
This report comes at a time when the Biden administration has proposed $80 billion in more funding for the agency, along with new powers and responsibilities. This report is just another example of the agency’s incompetency and demonstrates that the IRS needs reform, not more power and responsibility.
TIGTA reviewed 71 randomly selected new awards and found that 66 percent had one or more deficiencies related to the contractor tax check process. Based on sample results, TIGTA estimated that 2,435 of the 3,679 new award contracts granted between October 1, 2018, and March 30, 2020, have one or more of these errors identified.
In the Consolidated and Further Continuing Appropriations Act of 2015, Congress specified that the Government “will not enter into a contract with any corporation that has any unpaid Federal tax liability that has been assessed, unless an agency has considered suspension or debarment of the corporation and made a determination that suspension or debarment is not necessary to protect the interests of the Government.”
In TIGTA’s words:
“… not completing tax checks within the required time frame increases the risk that an offeror’s recently incurred tax liability will not be identified during the tax check process… untimely or incomplete notification to the Treasury Suspension and Debarment official increases the chances that contractors with a tax deficiency will obtain a contract award with another Federal agency.”
This tax check is a multi-step process that the IRS simply did not complete for multiple contractors. In the sample TIGTA used, the IRS failed to complete checks on 25 percent of the contract awards selected. Further, 29 percent of contracts did not have a signed Tax Check Notice and Consent provision, and 37 percent did not have a Tax Check Notice and Consent provision attached to the contract.
While TIGTA did independently verify that the 71 contractors did not have any delinquent Federal taxes at the time the contracts were awarded, the IRS would still be required to assess these delinquencies and make determinations based on them. To be clear, this was just a review of 71 of the 3,679 new award contracts; it is untold how many contractors had delinquent federal taxes out of the 2,435 contracts TIGTA estimates had errors. Moreover, given that TIGTA was able to screen all these candidates, presumably, it should not be difficult for the IRS to do the same.
This is one of several audit reports that demonstrates the incompetence of the IRS:
- The agency has repeatedly failed to compile legally required tax complexity reports. These reports are supposed to contain the IRS's specific recommendations on how to make the tax code easier to comply with. Since 1998, the IRS has done so just twice – in 2000 and 2002.
- A TIGTA report on the 2021 Filing Season found that almost 40 percent of printers were not working at tax processing centers in Ogden, Utah and Kansas City, Missouri. However, in many cases the only thing wrong with the printers is that no employee had replaced the ink or emptied the waste cartridge container: “IRS employees stated that the only reason they could not use many of these devices is because they are out of ink or because the waste cartridge container is full.”
- This year, despite having funding for new hires, the IRS only achieved 37 percent of their hiring goal. They had trouble onboarding new hires as well, as it was “difficult to find working copiers (as noted previously) to be able to prepare training packages.”
- In 2016, the IRS has lost track of laptops containing sensitive taxpayer data. TIGTA estimates that the IRS had failed to properly document the return of 84.2 percent, or more than 1,000 computers due to be returned by contract employees.
- A TIGTA report in 2017 showed that the IRS rehired more than 200 employees who were previously employed by the agency, but fired for previous conduct or performance issues.
- Each year the IRS hangs up on millions of callers -- a practice they refer to as “Courtesy Disconnects.” Currently, if you call the IRS, you have a 1-in-50 chance of reaching a human being.
- According to the National Taxpayer Advocate’s 2014 Annual Report to Congress the IRS was unable to justify spending decisions. As the report stated: "The IRS lacks a principled basis for making the difficult resource allocation decisions necessitated by today’s tight budget environment.”
- The IRS has repeatedly failed to include required information on notices they send to taxpayers, thus eroding taxpayers’ ability to understand said notices, figure out the right office/number to correspond with, file appeals, etc.
- The IRS is required by law to assign a single employee to each taxpayer’s case for mutually generated correspondence, and, in more cases than not, fails to do so.
While the IRS continues to blame its poor performance on a lack of taxpayer funding, the real problem is the inability of the agency to competently complete basic tasks and spend taxpayer dollars in a responsible way. Biden’s plan to give the IRS $80 billion would do nothing to fix existing problems and would only exacerbate them.
Photo Credit: Jason Dirks
Republicans Should Reject Liberal Academic Lina Khan For FTC Commissioner
The Senate will vote this week to confirm Lina Khan to a seat on the Federal Trade Commission.
Khan is a radical left-wing academic that will remake the FTC as a super-regulator of the entire economy and turn the clock back decades on antitrust law.
Senate Republicans should vote NO on Khan’s nomination.
Khan is a leading scholar in the progressive “hipster antitrust” movement to abandon the long-held consumer welfare standard, under which business conduct is evaluated on whether or not it harms consumers. If consumers are not being harmed through tangible economic effects like higher prices or reduced quality products, antitrust enforcement action is not taken.
Instead of protecting consumers, Khan’s approach would turn antitrust law into a weapon wielded equally by inefficient companies and unelected Biden bureaucrats.
According to liberals leading the hipster antitrust movement, big companies are responsible for every social ill under the sun, including racism, poverty, and income inequality, among others. Liberals believe these companies abuse their bigness to stifle competition, cheat rivals, and harm workers. For these reasons and others, antitrust hipsters believe that government enforcers should step in and break these companies up, regardless of how it would impact consumers.
This “big-is-bad” approach is how antitrust law was enforced before the consumer welfare standard was adopted, and it was an abject disaster. Antitrust law’s vague and unfocused nature made all manner of routine business conduct presumptively unlawful. Philosopher-king judges handed down inconsistent rulings designed to punish political enemies or reward political allies. In Supreme Court Justice Potter Stewart’s dissent to United States v. Von’s Grocery, he remarks: “The sole consistency that I can find is that in litigation under [Section 7 of the Clayton Act], the government always wins.”
If confirmed, Khan would be instrumental in moving antitrust law back to this broken tradition. European-style antitrust legislation introduced last week by House Democrats would give the FTC sweeping new power and increased resources to regulate American companies.
If Khan makes it on the FTC, the liberal activist-controlled agency would likely use its rulemaking authority to create substantive new antitrust law, circumventing Congress in the process. In such a hostile regulatory environment, companies afraid of aggressive and predatory antitrust litigation would be less likely to engage in robust competition that delivers low prices and quality products for American shoppers. In this new regime, instead of focusing on what is good for consumers, Biden bureaucrats would focus on what is good for Democrat political gain.
For these reasons, Americans for Tax Reform urges all Senate Republicans to vote against Lina Khan’s confirmation.
Photo Credit: Norman Maddeaux
Florida Residents Will Get Stuck with Even Higher Utility Bills Due to Biden Corporate Tax Rate Hike
If Biden and the Democrats enact a corporate income tax rate increase, they will have to explain why they just increased your utility bills
If President Biden and congressional Democrats hike the corporate income tax rate, Florida households and businesses will get stuck with even higher utility bills.
Democrats plan to impose a corporate income tax rate increase to 28%, even higher than communist China's 25%. This does not even include state corporate income taxes, which average 4 - 5% nationwide.
Customers bear the cost of corporate income taxes imposed on utility companies. Corporate income tax cuts drive utility rates down, corporate income tax hikes drive utility rates up.
Electric, gas, and water companies must get their billing rates approved by the respective state utility commissions. When the 2017 Tax Cuts and Jobs Act cut the corporate income tax rate from 35% to 21%, utility companies worked with officials to pass along the tax savings to customers, including at least seven Florida utilities. The savings take the form of either a rate reduction, or, a reduction to an existing/planned rate increase.
Working with the Florida Public Service Commission, Duke Energy Florida, Gulf Power Company, Tampa Electric, Florida Public Utilities Company, Peoples Gas System, Florida Power and Light and Florida City Gas passed along tax savings to their customers.
Florida Power and Light: As noted in this January 17, 2018 WPTV excerpt:
Florida Power and Light customers will not have to pay for Hurricane Irma.
The power company said Tuesday that savings from recent tax reform signed by President Trump will offset any planned costs.
FPL said it will apply its savings to the $1.3 billion in costs from Irma that it had intended to recoup from customers.
Thousands of customers lost power for days and weeks during September because of the hurricane.
The utility had previously announced that it would have to implement a surcharge in March to pay for Irma after a year-long surcharge for 2016's Hurricane Matthew ends in February.
Each of FPL's customers will save an average of $250.
Duke Energy Florida: As noted in this June 11, 2019 Florida Public Service Commission news release:
The Florida Public Service Commission (PSC) today approved Duke Energy Florida, LLC’s (DEF) agreement to apply federal tax savings to offset storm restoration costs for Hurricane Michael, thereby avoiding a surcharge to DEF customers.
DEF had originally requested approval to recover $223.5 million, equating to $6.95 on a monthly 1,000 kWh residential bill for 12 months, beginning in July 2019. This agreement avoids these charges and continues DEF’s use of 2017 Tax Cuts and Jobs Act savings to cover hurricane recovery costs for its customers.
Gulf Power Company: As noted in this October 30, 2018 Florida Public Service Commission news release:
The Florida Public Service Commission (PSC) today ordered Gulf Power Company (Gulf) to pass additional savings from the Tax Cuts and Jobs Act of 2017 to its customers. The Commission approved an additional $9.6 million in customer bill reductions.
As a result, Gulf’s base rates will be reduced by $9.6 million, allowing residential customers to see a monthly bill reduction of $1.11 per 1,000 kWh in January 2019. In addition, Gulf proposes to reduce its 2019 fuel cost recovery amount by $9.9 million. This proposal will be considered at the PSC’s annual cost recovery clause hearing in November.
Tampa Electric: As noted in this March 1, 2018, Tampa Electric press release:
Tampa Electric bills won’t rise to pay for Hurricane Irma restoration costs, thanks to new tax savings. The Florida Public Service Commission (PSC) unanimously approved the measure today.
Because of recent changes made to the federal tax law, customers will directly benefit. What Tampa Electric would have paid in corporate income taxes will instead be used to cover the cost of restoring power after Hurricane Irma and several other earlier named storms. Additionally, Tampa Electric bills will reflect the ongoing benefits from tax reform starting in 2019.
Florida Public Utilities Company: As noted in this January 24, 2019 Chesapeake Utilities Corporation press release:
The Florida Public Service Commission has approved the settlement agreement between Florida Public Utilities Company (FPU), a subsidiary of Chesapeake Utilities Corporation (NYSE: CPK), and the Office of Public Counsel (OPC). The settlement agreement, which was filed on October 17, 2018, reduces electric rates as a result of the federal Tax Cuts and Jobs Act.
“This decision provides an immediate benefit to FPU electric customers, and we are appreciative of the Public Service Commission’s decision to approve our agreement which passes financial savings to customers,” said Jeffry M. Householder, President and Chief Executive Officer of Chesapeake Utilities Corporation. “The federal tax credit combined with declining electricity commodity costs reduces the average FPU residential customer’s total bill, which has remained unchanged from nearly a decade ago.”
FPU residential electric customers will be receiving an average estimated $3.32 decrease on their monthly bills. Commercial electric customers will also receive monthly bill reductions. Reduced rates for FPU electric customers are reflected on their January bills. The terms of the settlement will further reduce the average residential electric bill by an additional estimated $0.45 beginning January 1, 2021.
Peoples Gas System: As noted in this September 12, 2018 Florida Public Service Commission document:
The Florida Public Service Commission (PSC) today approved a Settlement Agreement that will reduce monthly bills for TECO Peoples Gas System (Peoples) customers beginning in January 2019.
A result of the Tax Cuts and Jobs Act of 2017, the Agreement reduces Peoples revenue requirement by $11.6 million annually. The revenue decrease will affect the base rate portion of the bill for all customer classes. For example, a residential customer using a monthly average of 20 therms would see a $1.00 reduction in the base rate portion of the bill.
Florida City Gas: As noted in this December 11, 2018 State of Florida Public Service Commission news release:
The Florida Public Service Commission (PSC) today approved Settlement Agreements for Florida Public Utilities Company (FPUC) and for Florida City Gas (FCG) to implement savings from the Tax Cuts and Jobs Act of 2017.
---
In the Florida City Gas case, the company, OPC, and the Federal Executive Agencies agreed to a 2018 Stipulation and Settlement that will reduce the gas utility’s base rates by a total of $305,000 in January 2019 to reflect ongoing tax savings. Also starting in January 2019, the company’s revenues will be reduced by an additional $305,000 annually for five years to compensate customers for retroactive impacts of the tax law.
Conversely, a vote for a corporate income tax rate hike is a vote for higher utility bills as households try to recover from the pandemic.
Many small businesses operate on tight margins and can't afford higher heating, cooling, gas, and refrigeration costs. President Biden should withdraw his tax increases.
ATR Opposes Efforts to Undermine the Contact Lens Rule
In a letter to members of Congress, Americans for Tax Reform detailed its opposition to S.1784/ H.R. 3353, the “Contact Lens Prescription Verification Modernization Act” and all other efforts to undermine the Contact Lens Rule.
This bill would eliminate automated phone prescription verification, which guarantees that bad actors cannot refuse to verify prescriptions, thus preventing their patients from buying lenses from other retailers.
This kind of verification is one of the most effective ways to preserve competition. Reeling back this protection would hurt a market that has become more accessible, convenient, and affordable due to steps taken to ensure consumer freedom.
Click here or see below to view the letter.
June 14th, 2021
Dear Members of Congress:
I write in opposition to S.1784/ H.R. 3353, the “Contact Lens Prescription Verification Modernization Act” and all other efforts to undermine the Contact Lens Rule. If implemented, this legislation would undermine the Federal Trade Commission (FTC) Contact Lens Rule that ensures 45 million contact lens users have the choice and freedom to shop where they choose.
This legislation would make it more difficult and more costly for Americans to fill their prescriptions, creating unnecessary financial and healthcare burdens on the American people. All members of Congress should reject this legislation.
In 2003, President George W. Bush signed the Fairness to Contact Lens Consumers Act (FCLCA) into law. The legislation required that optometrists provide patients with a copy of their prescription.
The FTC’s Contact Lens Rule built on the FCLCA, ensuring that consumers have the freedom to purchase contact lenses from wherever they want, whether that is from their optometrists or from a third party. Specifically, the rule required optometrists to obtain signed acknowledgement from patients that they have received a copy of their prescription. It also continued to allow automated phone prescription verification, a feature of the FCLCA, which is one of the most effective ways to preserve competition and consumer freedom.
Rather than forcing a third-party retailer to wait indefinitely for a prescriber to verify the prescription, this requires the retailer to wait a full business day (eight hours) before fulfilling a consumer’s order.
S.1784/ H.R. 3353 seek to end this effective, efficient prescription verification option. This will open the door to bad actors who, before the FCLCA, would refuse to verify prescriptions in the hopes of preventing their patients from buying lenses from other retailers.
Contact lenses have become more accessible, convenient, and affordable because of these steps taken to ensure consumers have a multitude of choices. To reel back the protections which transformed the contact lens marketplace for the better would be a mistake.
While lawmakers should support proposals that lower the regulatory burden and reduce red tape, there should not be concerns that the FTC rule adds to an optometrist’s regulatory burden. The requirements set forth by the rule are modest and easy to comply with. Optometrists are already required to maintain detailed patient records so this new verification should require little if any increase in resources in order to comply with.
The Contact Lens Prescription Verification Act, and other efforts to undermine the Contact Lens Rule should be rejected. The legislation would undermine patient freedom by chipping away at their right to purchase contact lenses from optometrists or a third party. Passing this legislation now, while the economy is still recovering, would increase costs and reduce healthcare choice and access for Americans across the country.
Onward,
Grover G. Norquist President, Americans for Tax Reform
Photo Credit: Marco Verch Professional Photographer
State news
Top Stories
