How the Trump Republican Tax Cuts Are Helping Vermont

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Posted by John Kartch on Thursday, July 2nd, 2020, 12:00 PM PERMALINK

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

41,570 Vermont households are benefiting from the TCJA’s doubling of the child tax credit.

Every income group in every Vermont 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.

236,900 Vermont 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.

10,920 Vermont 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, Vermont residents are saving money on utility bills. Lower electric, water, and gas bills help households and small businesses operating on tight margins. For example, Green Mountain Power and Vermont Gas Systems, Inc. both passed along tax reform savings to their customers in the form of lower rates. 

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

Mack Molding (Arlington, Vermont) - Major facility upgrades:

Mack Molding, an injection molder and contract manufacturer based in Vermont, announced this week that it is investing $5.4 million to upgrade two existing facilities in response to “favorable tax changes” and a surging economy. - July 16, 2018 National Association of Manufacturers article excerpt

Green Mountain Power (Colchester, Vermont) – The utility will pass along tax savings to customers:

In a filing today with the Vermont Public Utility Commission, Green Mountain Power is seeking to lower bills for customers by $6 million. The benefit comes from federal tax law changes that reduce GMP's corporate tax rate from 35 percent to 21 percent. This change will be retroactive and take effect January 1, 2018 at the start of GMP’s new rate year. The reduction will be applied starting in the February bill cycle and will be returned monthly throughout 2018 as a bill credit.

"After the federal tax plan passed, GMP pledged to return 100% of the tax benefit to customers, and today's letter sets in motion our plan to reduce rates to provide those savings to our customers immediately," said President and CEO Mary Powell. “Keeping energy costs low and stable is a key focus at GMP and this decrease will help offset increased cost pressures in other areas outside of our control such as regional transmission costs.”

This rate reduction will help offset the recent rate increase that took effect in January. GMP customers will continue to see the benefits of the new, lower tax rate for as long as these rates are in effect because they will be reflected in future proposed energy rates. GMP is set to file its next rate case in April. – Jan. 23, 2018 Green Mountain Power press release

DJ's Tree Service (Colchester, Vermont) -- Used provisions in the tax cut to buy new equipment:

"One truck, a chainsaw and a few hand tools is all Jim Myers and his former business partner had when they started their tree service business.

"Our first customer said he wouldn't hire us unless we were insured. We told him 'of course, we're insured, but we need a deposit before we get started.' We took the deposit and bought insurance," said Myers smiling as he retold the story.

......

"A recently added service from the company is creating and selling mulch. When removing a client's tree, they would run into the challenge of proper disposal. So as a solution to the problem, the Myers purchased a Bandit Beast recycler. The recycler is capable of processing large unusable waste wood, to create high-quality mulch, which is then sold to residential or commercial clients. This machine can process tree/land clearing debris right down to the stump as well as processing construction debris. To assist in the operation of the recycler and sell the mulch, DJ's Tree Service hired a few new employees. The purchase of the recycler allowed the company to take advantage of the Tax Cuts and Jobs Act of 2017. Part of the act made changes to Section 179 of the IRS Code, which allows small businesses to deduct the entire price of new machinery and equipment during the year of the purchase. Prior to the Tax Cuts and Jobs Act, businesses could only deduct a portion of the price of the equipment each year." -- July 4, 2019 Vermontbiz.com

Vermont Gas Systems, Inc. (South Burlington, Vermont) – The utility will pass savings from tax reform to customers:

Vermont Gas announced today that it will reduce 2018 customer costs by $2.4 million, the full benefit of December's federal tax law changes.

Vermont Gas has filed a notice with the Vermont Public Utility Commission to give customers a monthly credit on 2018 bills, starting February 1st and continuing through October 2018. Each of Vermont Gas’ 51,000 customers will receive a credit on their heating bill, based on usage, over the next eight months. For families, this bill credit will total almost $40 over the year; businesses could see even more.

“Our commitment to our customers is to maintain affordable and competitive rates, while offering top-rate customer service. We are so pleased to return the full benefit of this new federal tax reduction to every family and business this year,” said Don Rendall, President and CEO of Vermont Gas. “Our customers will start to see a reduction in their heating bills next month and with the recent bitterly cold weather we’ve been experiencing, this money will be a welcomed relief.”

While each customer’s total savings will vary depending on their actual usage, the average residential customer’s annual bill will be almost $40 lower because of this change. Businesses could receive hundreds, or thousands of dollars credited over the course of the year, depending on usage.

“As a Vermont Gas customer at my home and for my downtown hair salon, I’m always looking for ways to save money,” said Glenn Brown, Burlington resident and owner of Chop Shop Hair Design. “I’m excited that Vermont Gas is passing along the tax credit to customers – every little bit helps this time of year.”

 “We’re pleased to return this money to customers because we know how important it is for everyone to keep costs in check, especially during the winter months,” Rendall continued. “Natural gas is already the cleanest and most affordable heating choice for over 51,000 families and businesses and we know these savings will help.” – Jan. 23 2018, Vermont Gas Systems, Inc. press release excerpt

Brattleboro Development Credit Corp (Brattleboro, Vermont) -- Opportunity Zones helped encourage investment in Brattleboro:

The EDA said the grant will be going to "a designated Opportunity Zone, created by President Donald J. Trump's Tax Cuts and Jobs Act of 2017 to spur economic development by giving tax incentives to investors in economically-distressed communities nationwide."

"Congratulations to the town of Brattleboro on its recent award from the EDA to make infrastructure improvements at the Exit One Industrial Park and Delta Business Campus," Gov. Phil Scott said in a statement. "I'm pleased to see the town and the Brattleboro Development Credit Corp. working together to make economic expansion a reality in southern Vermont. These partners have set the table for economic growth by positioning prime developable land to anchor industrial sites that host more jobs in both traditional and new or expanding industries. I also want to thank our federal partners and Vermont's congressional delegation for supporting funding for the EDA. I hope this region's Opportunity Zone designation continues to drive interest in public and private investment in the coming years." -- August 12, 2019 Brattleboro Reformer

 

Voi Inc. (Springfield, Vermont) -- The artificial intelligence company was able to open a location because of a grant that was made possible by the TCJA Opportunity Zones:

SPRINGFIELD, Vt. — The Black River Innovation Campus (BRIC) will be getting a new manufacturing neighbor dedicated to artificial intelligence behavioral technology inside the former Park Street School.

With the help of a grant from the Center on Rural Innovation, Voi Incorporated will be located adjacent to the Black River Innovation Campus.

..

"According to Calvelli, the Center on Rural Innovation Fund seeks to fund economic growth in rural communities while making connections with technology based companies to provide jobs for economically depressed areas.

"The Center on Rural Innovation Fund invests in growth businesses located in qualified Opportunity Zones in the United States to enhance economic growth and job creation in small communities. The fund seeks to find attractive technology-enabled operating businesses in rural geographies, which are under-served by traditional venture capital institutions," Calvelli said. "The Center on Rural Innovation Fund identifies, funds, and supports the best tech entrepreneurs American small towns have to offer." -- February 28, 2020 Argus-Champion.

 

Opportunity Zone in Springfield, Vermont: Two residential properties were purchased because of tax savings through the Opportunity Zone program, bringing jobs and business to the town:

SPRINGFIELD, Vt. — The town of Springfield became a center of machine tool manufacturing in the 20th century. But as the industry began to wane, this industrial town on the Connecticut River, once an economic powerhouse, fell on hard times and has struggled to reinvent itself.

Local boosters say a new federal program that gives wealthy people incentives to invest in low-income communities could be the key to reviving Springfield's economy.

The so-called “Opportunity Zone" program has brought new investors to this storied factory town.

The tax break incentive has proved to be “an extremely attractive tool" for economic development, according to Bob Flint, the executive director of the Springfield Regional Development Corp.

“It's stimulated really interesting projects," Flint said.

Two multi-unit residential properties in Springfield have already been purchased through the Opportunity Zone program. -- September 8, 2019 Valley News Article.

Lakemont Retirement Community (Newport City, Vermont) -- A developer was able to build a new retirement community by taking advantage of the TCJA Opportunity Zone program:

NEWPORT CITY — Developer Heidi Eichenberger wants to build a $22 million housing development called Lakemont Retirement Community on Lakemont Road featuring nearly 200 apartments and a full range of services.

She hopes to tap into a newly created "opportunity zone" in Newport City that would allow people who sell property to invest and defer capital gains taxes into the future and also reduce the tax burden over time.

If all goes well with investments and permitting, construction could begin on Lakemont Retirement Community in the spring and be completed in October, said Eichenberger this week.

It's a unique development for Vermont that has support from Newport City Mayor Paul Monette, Jon Freeman, president of Northern Community Investment Corp., and others working in the accounting, construction and banking industries.

"I look at this as ideal," Monette said Thursday when some of the supporters and people working with Eichenberger on the project gathered at her office at the Hearing Center of Vermont on the Derby Road.

......

And it is the first large project to be proposed for one of Vermont's 25 "opportunity zones." There are thousands nationwide but the law that created these zones is new. There are two other zones in the Northeast Kingdom in Lyndonvile and St. Johnsbury.

Eichenberger said she initially looked at developing the project in Derby but switched to Newport City when she learned about the opportunity zone here. She created Lakemont Investment LLC to take advantage of this special zone.

The zone allows investors who sell property to invest their capital gains into the project and defer capital gains taxes for years and also see some tax breaks on the investment, according to Stephen Trenholm, certified public accountant with Gallagher, Flynn & Company. -- February 15, 2019 The Caledonian-Record article.

AT&T -- $1,000 bonuses for 73 Vermont 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

Walmart – Vermont employees at 6 Walmart stores received tax reform bonuses, wage increases, and expanded maternity and parental leave. Walmart employees who adopt children will be given $5,000 to help cover expenses.

Home Depot -- 3 locations in Vermont; Bennington, Williston, Rutland -- Bonuses for all hourly employees, up to $1,000.

Lowe's --200+ employees at two stores in Vermont; Burlington and Essex Junction-- Employees will receive bonuses of up to $1,000 based on length of service, for 260,000 employees; expanded benefits and maternity/parental leave; $5,000 of adoption assistance.

Ryder (Two locations in Vermont; White River Junction and Williston) – Tax reform bonuses for employees.

Starbucks Coffee Company (8 locations in Vermont) - $500 stock grants for all retail employees, $2,000 stock grants for store managers, and varying plant 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.

Best Buy -- (Williston, Vermont) -- $1,000 bonuses for full-time employees; $500 bonuses for part-time employees. 

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

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

Comcast (Three locations in Vermont: Newport, Rutland, South Burlington) -- $1,000 bonuses; nationwide, at least $50 billion investment in infrastructure in next five years.

T.J. Maxx – (Five locations in Vermont; Barre, Burlington, Middlebury, Rutland, St Albans) – Tax reform bonuses, retirement plan contributions, parental leave, enhanced vacation benefits, and increased charitable donations:

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

Associates

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

Communities

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

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

Dollar Tree, Inc. (Multiple locations in Vermont) -- Increased base wages, enhanced benefits including maternity leave for qualifying employees and employee training, totaling $100 million nationwide.

FedEx (Multiple locations in Vermont) – Accelerated and increased compensation; pension plan contributions:

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

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

FedEx believes the Tax Cuts and Jobs Act will likely increase GDP and investment in the United States-- Jan. 26 2018, FedEx press release

McDonald’s (25+ locations in Vermont) – 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 

Note: If you know of other Vermont 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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