John Kartch

Pennsylvania Can't Afford Biden's Tax Increases

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Posted by John Kartch on Saturday, May 18th, 2019, 1:03 AM PERMALINK

 

Today at 1:00 p.m. Joe Biden will host a major rally in Philadelphia, where he will repeat his vow to repeal the Tax Cuts and Jobs Act.

“First thing I’d do is repeal those Trump tax cuts,” said Biden on May 4 in South Carolina.

"When I'm president, if God willing I am, we're going to reverse those Trump tax cuts," Biden said this week in New Hampshire.

Biden's promise to repeal the tax cuts is a threat to raise taxes. Repeal of the tax cuts would hit Pennsylvania hard:

  • Pennsylvania households would lose their tax cut -- a 24.5 percent tax cut on average, according to data reported by H&R Block.
     
  • Pennsylvania residents would again be forced to pay the highly regressive Obamacare individual mandate tax. 166,680 Pennsylvanians paid the tax totaling $108,842,000 according to the most recent IRS annual statistics ((2016). 81 percent of people hit with the tax made less than $50,000 a year, and 40 percent made less than $25,000 a year. This tax was one of the many violations by Biden of his pledge against any and all middle class taxes.
     
  • 840,000 Pennsylvania households who claim the Child Tax Credit would see the credit slashed in half from $2,000 to $1,000.
     
  • 4.4 million Pennsylvania households who claim the standard deduction would see it slashed in half. (TCJA nearly doubled the standard deduction from $6,300 to $12,200 for an individual and from $12,600 to $24,000 for a family.)
     

The tax cuts are helping a long list of Pennsylvania businesses give pay increases, benefit increases, and bonuses. For example:

  • Uncle Charley's Sausage (Vandergrift, PA) hired new employees, purchased new equipment including a new sausage stuffer, and added a new production line.
     
  • Hudson Facades (Linwood, PA) increased base pay and put $3,000 into every factor worker's 401(k) account.
     
  • Almo Corporation, the Philadelphia-based appliance distributor, is investing in a new distribution center and an ongoing headquarters renovation that can accommodate 65 additional employees.
     
  • Guy Chemical Company (Somerset, PA) increased wages, bonuses, and investment in new equipment including a new forklift, new laboratory furnishings, updated computer equipment, and a new software system.
     
  • Dollar Bank (Pittsburgh, PA) gave $2,000 permanent raises for employees making $60,000 or below.
     

If Biden repealed the tax cuts, Pennsylvanians would also be stuck paying higher utility bills because the corporate tax rate would revert back to 35 percent. Thanks to the Tax Cuts and Jobs Act, the corporate rate was reduced to 21 percent, and as a direct result PA utility companies passed on these savings to customers in the form of lower electric, water, and gas bills.

Examples include Pike County Light & Power Company, PPL Electric Utilities Corporation, Wellsboro Electric Company, West Penn Power Company, PECO Energy Company, Peoples Gas Company, UGI Central Penn Gas Inc., Pennsylvania American Water Company, and Citizens Electric Company of Lewisburg.

From a nationwide perspective, if Biden repeals the Tax Cuts and Jobs Act, the following would happen:

  •  A family of four earning the median income of $73,000 would see a $2,000 tax increase.
     
  • A single parent (with one child) making $41,000 would see a $1,300 tax increase.
     
  • Millions of low and middle income households would be stuck paying the Obamacare individual mandate tax.
     
  • Utility bills would go up in all 50 states as a direct result of the corporate income tax increase.
     
  • Small employers will face a tax increase due to the repeal of the 20% deduction for small business income.
     
  • The USA would have the highest corporate income tax rate in the developed world.
     
  • Taxes would rise in every state and every congressional district.
     
  • The Death Tax would ensnare more families and businesses.
     
  • The AMT would snap back to hit millions of households.
     
  • Millions of households would see their child tax credit cut in half.
     
  • Millions of households would see their standard deduction cut in half, adding to their tax complexity as they are forced to itemize their deductions and deal with the shoebox full of receipts on top of the refrigerator.
     

As noted by the New York Times, thanks to the GOP tax cuts, “Most people got a tax cut.”

The NYT also stated: “To a large degree, the gap between perception and reality on the tax cuts appears to flow from a sustained — and misleading — effort by liberal opponents of the law to brand it as a broad middle-class tax increase.”

The Washington Post also stated: “Most Americans received a tax cut.”

More evidence of the benefits flowing from the tax cuts can be found in a recent H&R Block report, which stated, “overall tax liability is down 24.9 percent on average.”

In Biden's home state of Delaware, the report found that residents received a 24.6% reduction in their taxes, on average.

Biden and the rest of the 2020 Democrats have thoroughly convinced themselves the tax issue is dead, but Americans will have their own say at the ballot box.

"Joe Biden is not Methuselah. He is Walter Mondale part deux," said Grover Norquist, president of Americans for Tax Reform. In 1984 Mondale famously promised to raise taxes if elected. He lost to Ronald Reagan in the electoral college 525-13, winning only his home state of Minnesota and the District of Columbia.

See also:

Biden: “First thing I’d do is repeal those Trump tax cuts.”

Joe Biden broke his middle class tax pledge

Kamala Harris Vows Repeal of Tax Cuts “on Day One”

“Mayor Pete” Calls for Steep Tax Hike on Homes and Businesses

Biden: “When I’m President, if God willing I am, we’re going to reverse those Trump tax cuts.”

 

 

Photo Credit: Marc Nozell/Flickr

More from Americans for Tax Reform


Pennsylvanians Will Get Stuck with Higher Utility Bills Due to Biden Corporate Tax Rate Hike

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Posted by John Kartch on Friday, April 9th, 2021, 10:04 AM PERMALINK

If Casey votes for Biden's corporate income tax rate increase, he will have to explain why he just increased your utility bills

If President Biden and Sen. Bob Casey raise the corporate tax rate, Pennsylvania households and businesses will get stuck with higher utility bills. Democrats plan to impose a corporate income tax rate increase to 28%, even higher than communist China's 25%.

Customers bear the cost of corporate income taxes imposed on utility companies. Corporate income tax cuts drive utility rates down, corporate income tax hikes drive utility rates up.

Electric, gas, and water companies must get their billing rates approved by the respective state utility commissions. When the 2017 Tax Cuts and Jobs Act cut the corporate income tax rate from 35% to 21%, utility companies worked with officials to pass along the tax savings to customers, including at least 17 Pennsylvania utilities:

  • Citizens’ Electric Company of Lewisburg
  • Metropolitan Edison Company
  • Pennsylvania Electric Company
  • Pennsylvania Power Company
  • Pike County Light & Power Company
  • PPL Electric Utilities Corporation
  • Wellsboro Electric Company
  • West Penn Power Company
  • PECO Energy Company (Gas Division)
  • National Fuel Gas Distribution Corporation
  • Peoples Gas Company LLC
  • Peoples Natural Gas Company LLC -- Equitable Division
  • UGI Central Penn Gas Inc.
  • UGI Penn Natural Gas Inc.
  • UGI Utilities, Inc.--Gas Division
  • Pennsylvania-American Water Company
  • Pennsylvania-American Water Company—Wastewater
     

As noted by the Pennsylvania Public Utility Commission:

The Pennsylvania Public Utility Commission (PUC) today issued an Order, requiring a “negative surcharge” or monthly credit on customer bills for 17 major electric, natural gas, and water and wastewater utilities, totaling more than $320-million per year. The refunds to consumers are the result of the substantial decrease in federal corporate tax rates and other tax changes under the Tax Cuts and Jobs Act (TCJA) of 2017, which impacted the tax liability of many utilities.

 

“As economic regulators, it is the Commission’s responsibility to ensure that utility rates are just and reasonable. Further, it is necessary for utility rates to reflect relevant tax expenses,” noted PUC Chairman Gladys M Brown in a statement at today’s public meeting. “I believe this work (by PUC staff) has resulted in an innovative answer by this Commission to effectively flow-through the benefits of the TCJA back to customers.

Public utilities required to begin returning federal tax savings to consumers include Citizens’ Electric Company of Lewisburg, Metropolitan Edison Company, Pennsylvania Electric Company, Pennsylvania Power Company, Pike County Light & Power Company, PPL Electric Utilities Corporation, Wellsboro Electric Company, West Penn Power Company, PECO Energy Company (Gas Division), National Fuel Gas Distribution Corporation, Peoples Gas Company LLC, Peoples Natural Gas Company LLC—Equitable Division, UGI Central Penn Gas Inc., UGI Penn Natural Gas Inc., UGI Utilities, Inc.--Gas Division, Pennsylvania-American Water Company and Pennsylvania-American Water Company—Wastewater.  -- May 17, 2018 Pennsylvania Public Utilities Commission Press Release

Conversely, a vote for a corporate income tax rate hike is a vote for higher utility bills right as the USA is trying to recover from the pandemic.

Sen. Casey would be wise to stay away from tax increases.

 


Montanans Will Get Stuck with Higher Utility Bills Due to Biden Corporate Tax Rate Hike

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Posted by John Kartch on Wednesday, April 7th, 2021, 3:03 PM PERMALINK

If Tester votes for a corporate income tax rate increase, he will have to explain why he just increased your utility bills

If President Biden and Sen. Jon Tester raise the corporate tax rate, Montana households and businesses will get stuck with higher utility bills. Democrats plan to impose a corporate income tax rate increase to 28%, even higher than communist China's 25%.

Customers bear the cost of corporate income taxes imposed on utility companies. Corporate income tax cuts drive utility rates down, corporate income tax hikes drive utility rates up.

Electric, gas, and water companies must get their billing rates approved by the respective state utility commissions. When the 2017 Tax Cuts and Jobs Act cut the corporate income tax rate from 35% to 21%, utility companies across the country worked with officials to pass along the tax savings to customers.

As noted in a 2018 Montana Public Service Commission Release

The Montana Public Service Commission voted unanimously to approve an agreement for Montana-Dakota Utilities’ electric business to refund to consumers the benefits they received from the Tax Cuts and Jobs Act. The agreement, or Stipulation, calls for a $1.5 million consumer refund as a result of the TCJA.

NorthWestern Energy passed along their savings to Montana customers as well:

The tax savings stem from the Republican Tax Cuts and Jobs Act, which Congress passed in December and was signed into law by President Donald Trump. Federal corporate tax rates fell from 35 percent to 21 percent.

Regulated utilities like NorthWestern cannot pocket the savings, which must be shared with ratepayers, who also pay the utilities' taxes. NorthWestern has about 345,000 customers in Montana. 

NorthWestern is proposing that its natural gas customers receive direct refunds for the entire $3.154 million in tax breaks associated with the utility’s natural gas business. The company’s electric customers would receive half of the $10.8 million in tax breaks associated with NorthWestern’s electric business. Half the money would be spent removing hazard trees that pose a fire or outage risk.

“With what we proposed, for a natural gas customer, it would be about $1.18 a month. An electricity customer would be 67 cents per month,” said Butch Larcombe, NorthWestern spokesman. – April 3, 2018 Billings Gazette article excerpt

Conversely, a vote for a corporate income tax rate hike is a vote for higher utility bills right as the USA is trying to recover from the pandemic.

Sen. Tester would be wise to stay away from tax increases.


New Hampshire Residents Will Get Stuck with Higher Utility Bills Due to Biden Corporate Tax Rate Hike

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Posted by John Kartch on Tuesday, April 6th, 2021, 12:21 PM PERMALINK

If Hassan and Shaheen vote for Biden's corporate income tax rate increase, they will have to explain why they just increased your utility bills

If President Biden and Sens. Maggie Hassan and Jeanne Shaheen raise the corporate tax rate, New Hampshire households and businesses will get stuck with higher utility bills. Democrats plan to impose a corporate income tax rate increase to 28%, even higher than communist China's 25%.

Customers bear the cost of corporate income taxes imposed on utility companies. Corporate income tax cuts drive utility rates down, corporate income tax hikes drive utility rates up.

Electric, gas, and water companies must get their billing rates approved by the respective state utility commissions. When the 2017 Tax Cuts and Jobs Act cut the corporate income tax rate from 35% to 21%, utility companies worked with officials to pass along the tax savings to customers, including Liberty Utilities in New Hampshire.

As noted in a May 2018 New Hampshire Public Utilities Commission Order excerpt:

In this order, the Commission approves a distribution revenue decrease for Liberty Utilities, passing on to ratepayers the benefits of reduced corporate taxes resulting from recent changes to state and federal tax laws. This order also approves Liberty’s proposal to forego other distribution rate increases that were scheduled to take effect June 1, 2018, as a way to pass additional benefits of corporate tax reductions on to customers.

Conversely, a vote for a corporate income tax rate hike is a vote for higher utility bills right as the USA is trying to recover from the pandemic.

Sens. Hassan and Shaheen would be wise to stay away from tax increases.


Manchin's Corporate Tax Hike Will Stick West Virginians with Higher Utility Bills

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Posted by John Kartch on Monday, April 5th, 2021, 10:23 AM PERMALINK

If Manchin votes for a corporate income tax rate increase, he will have to explain why he just increased your utility bills

If President Biden and Senator Joe Manchin raise the corporate tax rate, West Virginia households and businesses will get stuck with higher utility bills. Manchin today said he was eyeing a tax rate increase to 25%, which would stick West Virginia with a combined federal-state corporate tax rate around 30%, a higher rate than communist China.

But regardless of the tax rate Manchin settles on, 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. So Manchin will have some explaining to do.

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 three West Virginia utilities.

As Noted in a 2018 MetroNews article excerpt:

Appalachian Power Company saved $235 million dollars from the federal tax cuts and the company is proposing passing the money back to its customers in a variety of ways.

The multi-pronged proposal is in a filing with the state Public Service Commission due Wednesday. The PSC is requiring all utilities to tell it their tax cut savings and what they plan to do with it.

West Virginia Consumer Advocate Jackie Roberts told MetroNews the money clearly belongs to the customers.

“They (the utilities) had taxes in their rates and now the taxes in their rates have significantly decreased—so they shouldn’t be able to keep collecting and keeping those higher taxes in their rates,” Roberts said.

Appalachian Power Company Communications Director Jeri Matheney agrees–the $235 million Appalachian Power will save belongs to its customers.

“It is customer money. What we propose to do is provide a method to keep rates as stable as possible over the longterm and as much as possible eliminate the need for rate increases,” Matheney said.

The Appalachian Power distribution proposal for West Virginia customers includes:

–$131 million to completely offset the company’s fuel and vegetation control program funding request that was part of an April filing with the PSC

–$19 million reduction in the company’s base rate case filed earlier this month (taking the $115 million request down to $96 million)

–$51 million to reduce next year’s fuel recovery cost rate case

–$1 million for a pilot economic development grant program – May 30, 2018, MetroNews article excerpt

Potomac Edison passed along their savings to customers as well:

‘More than 85,000 Potomac Edison customers in the Eastern Panhandle should see lower bills in the coming weeks thanks to federal tax reforms adopted in December.

The West Virginia Public Service Commission announced Friday that it approved rate reduction settlements for utility companies totaling almost $85 million annually, starting next month.

West Virginia American Water passed along their savings to customers as well:

West Virginia American Water Company announced a settlement plan last week which — if approved by the PSC — would result in an average savings of $3.77 a month for water and sewer customers in the state.

“The recent federal tax reform will save our customers an estimated $4.6 million annually, so we are passing these savings on to our customers beginning next month,” Brian Bruce, president of West Virginia American Water.

Conversely, a vote for a corporate income tax rate hike is a vote for higher utility bills right as the USA is trying to recover from the pandemic.

Senator Manchin would be wise to stay away from tax increases.

See also: Manchin flip-flops on taxes

 


Biden Says Tax Hikes "Will not slow the economy at all."

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Posted by John Kartch on Friday, April 2nd, 2021, 3:50 PM PERMALINK

Today at a press briefing President Joe Biden said:

"Raising taxes, the studies show, will not slow the economy at all. It will make the economy function better and will create more energy."

Huh?

WATCH:


Arizonans Will Get Stuck with Higher Utility Bills Due to Biden Corporate Tax Rate Hike

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Posted by John Kartch on Friday, April 2nd, 2021, 12:05 PM PERMALINK

If Sinema and Kelly vote for Biden's corporate income tax rate increase, they will have to explain why they just increased your utility bills

If President Biden and Sens. Kyrsten Sinema and Mark Kelly raise the corporate tax rate, Arizona households and businesses will get stuck with higher utility bills. Democrats plan to impose a corporate income tax rate increase to 28%, even higher than communist China's 25%.

Customers bear the cost of corporate income taxes imposed on utility companies. Corporate income tax cuts drive utility rates down, corporate income tax hikes drive utility rates up.

Electric, gas, and water companies must get their billing rates approved by the respective state utility commissions. When the 2017 Tax Cuts and Jobs Act cut the corporate income tax rate from 35% to 21%, utility companies worked with officials to pass along the tax savings to customers, including at least 10 Arizona utilities.

As noted in a June 2018 statement from EPCOR:

More than 57,000 EPCOR wastewater customers will receive more than $1.1 million in federal corporate tax cut savings, reducing the amount of their monthly wastewater bill starting with the July 2018 billing cycle.

Today, the Arizona Corporation Commission (ACC) approved EPCOR’s request to refund $1,106,392 in tax reform savings to all of the company’s residential and commercial wastewater customers.

“We are extremely pleased to help our wastewater customers save more than $1 million each year, and it’s important to us that we put this into effect as soon as possible,” commented Joe Gysel, President of EPCOR USA, Arizona’s largest regulated water utility. “All our customers deserve to share in the savings generated by federal tax reform. It's positive for them, for their communities and for our state.” - June 12, 2018 EPCOR press release

Arizona Public Service passed along their savings to customers as well:

APS has requested the Arizona Corporation Commission approve a $119 million bill reduction for customers, based on federal corporate tax cuts, effective February 1, 2018.

If approved, the $119 million decrease will offset the $95 million revenue increase that resulted from APS’s last rate review. The savings of $0.004258/kWh will be passed directly to customers through the Tax Expense Adjustor Mechanism (TEAM), a new adjustor mechanism that was included in the company’s rate review, and customer savings will vary with actual energy usage. APS customers would receive the credit on their monthly bill.

Bermuda Water Company passed along savings to their customers:

The Arizona Corporation Commission is following through on its promise to pass savings created by the Tax Cuts and Jobs Act to Arizona utility ratepayers. As of August, the effort has totaled $189,088,437.

At the August Open Meeting, the Commission addressed tax adjustments for both the Quail Creek and Bermuda Water Companies. The largest tax adjustment occurred earlier this year when the Commission approved a $119 million dollar reduction to benefit APS customers.

Liberty Utilities also passed along savings to their customers:

The Arizona Corporation Commission is following through on its promise to pass savings created by the Tax Cuts and Jobs Act to Arizona utility ratepayers. As of August, the effort has totaled $189,088,437.

The Commission has been working on rate adjustments every month since February. At the July Open Meeting, the Commission addressed federal tax adjustments for both Southwest Gas and Liberty Utilities with adjustments made to their revenue requirements of $20 million and $1.9 million respectively.

Quail Creek passed along savings to their customers:

The Arizona Corporation Commission is following through on its promise to pass savings created by the Tax Cuts and Jobs Act to Arizona utility ratepayers. As of August, the effort has totaled $189,088,437.

At the August Open Meeting, the Commission addressed tax adjustments for both the Quail Creek and Bermuda Water Companies. The largest tax adjustment occurred earlier this year when the Commission approved a $119 million dollar reduction to benefit APS customers.

Tucson Electric Power Company passed along savings to their customers:

EP and its sister utilities “believe it is in the public interest to share a substantial portion of the expected income tax savings with their respective customers on an expedited basis,” the companies said.

TEP says its proposals may include a fast-tracked regulatory approval process to implement a billing credit as soon as possible; a higher seasonal credit that would help offset customer bills during higher usage months; or bill credits that would decline over time while still smoothing the bill impacts of future rate requests.

Alliant Gas passed along savings to their customers:

The Arizona Corporation Commission ordered Alliant Gas to file a rate case for its Page and Payson Divisions as part of the company’s action to refund customers the income tax reductions resulting from The Tax Cuts and Jobs Act of 2017.

Southwest Gas Corporation passed along savings to their customers: 

The Tax Cuts and Jobs Act of 2017 reduced the federal income tax rate for corporations like Southwest Gas, and we’re passing the savings on to you. 

Arizona Water Company passed along savings to their customers:

Arizona Water Company presented a plan to the Arizona Corporation Commission Tuesday to reduce customer rates in its western group, which includes Casa Grande, Coolidge and Stanfield.

Commissioners want to assure federal tax reform law directly benefits utility customers by passing federal tax savings on to the ratepayers, according to a press release. Commissioners have voted to award federal tax reform money directly to utility customers.

Going forward, commissioners voted to ensure a 3.6-percent rate reduction in monthly rates for the western group and a 4-percent reduction in monthly rates for the northern group.

UNS Electric, Inc. passed savings along to their customers:

The purpose of the Tax Adjustment is to address changes in the Company’s federal income tax rate until such changes are reflected in the Company’s next general rate case. The savings will be returned through a combination of (i) a per kilowatt-hour (“kWh”) bill credit for all customer classes and (ii) a regulatory liability that reflects the deferral of the return of a portion of the savings (which will be returned to customers in the Company’s next rate case). 

For 2019 (and subsequent years), the tax savings to be returned to customers will be calculated as for 2018 and will reflect the effective federal income tax rate applicable for that tax year.

Conversely, a vote for a corporate income tax rate hike is a vote for higher utility bills right as the USA is trying to recover from the pandemic.

Sens. Sinema and Kelly would be wise to stay away from tax increases.

 


Georgia Residents Will Get Stuck with Higher Utility Bills Due to Biden Corporate Tax Rate Hike

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Posted by John Kartch on Thursday, April 1st, 2021, 12:35 PM PERMALINK

If Warnock and Ossoff increase the corporate income tax rate, they will have to explain why they just increased your utility bills

If President Biden and Senators Warnock and Ossoff raise the corporate tax rate, Georgians will get stuck with higher utility bills. The higher bills will hit households and businesses just as they are trying to dig out from the pandemic.

Utility customers bear the cost of taxes imposed on utility companies. Utility companies are subject to the corporate income tax. Corporate income tax cuts drive utility rates down, corporate income tax hikes drive utility rates up.

Utility companies -- electric, gas, water -- must get their billing rates approved by the respective state utility commissions. When the Tax Cuts and Jobs Act lowered the corporate income tax rate from 35% to 21%, utility companies worked with officials to pass along the tax savings to customers.

As noted in a March 2018 statement from Georgia Power:

Georgia Power has completed an assessment of the impact of the Tax Cuts and Jobs Act for the company – including approximately $1.2 billion in benefits for customers. The benefits were confirmed as part of an agreement with Georgia Public Service Commission (PSC) Staff and include approximately $130 million in reduced taxes on financing costs for the Vogtle nuclear expansion; $330 million in direct credits to customers as a result of lower federal income tax rates over the next two years and approximately $700 million in future benefits to be addressed in the company's next base rate case in 2019, which also includes the benefits of last week's reduction in state of Georgia income tax rates. If approved by the Georgia PSC, the typical residential customer using an average of 1,000 kilowatt-hours per month could receive approximately $70 in refunds over the two-year period.

"We are committed to offering the highest customer value with rates below the national average, and we're pleased to be able to continue to pass the benefits of the new tax laws on to our customers," said Paul Bowers, chairman, president and CEO of Georgia Power.

Atlanta Gas Light customers benefited as well:

The Georgia Public Service Commission (PSC) recently approved a stipulation between the Commission staff and the Atlanta Gas Light Company under which the company’s customers will receive 100 percent of the net benefits from the 2017 federal Tax Cuts and Jobs Act (TCJA).

These benefits include $16 million in direct credits to be distributed in two installments of 50 percent each. Customers will receive the first credit on their July bills and the second on their October bills. The credits will appear as separate line items on customers’ bills. The average residential customer will receive approximately $8.62 on each bill. -- May 2018 Daily Energy Insider article.

Conversely, a vote for a corporate income tax rate hike is a vote for higher utility bills right as the USA is trying to recover from the pandemic.

Biden wants to impose a corporate income tax increase to 28%, even higher than communist China's 25%.

Sens. Ossoff and Warnock would be wise to stay away from tax increases.


NYT in 1979: Elimination of Stepped Up Basis is "a nightmare of paperwork" and "impossibly unworkable"

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Posted by John Kartch on Monday, March 29th, 2021, 4:55 PM PERMALINK

Eliminating stepped-up basis was "a nightmare of paperwork" and "impossibly unworkable" -- so why is Biden doing it again?

President Biden and congressional Democrats want to impose a second Death Tax: They plan to eliminate step-up in basis, which would result in a mandatory capital gains tax at death -- separate from, and in addition to -- the current Death Tax.

But this has already been tried, and it failed: In 1976 congress eliminated stepped-up basis but it was so complicated and unworkable it was repealed before it took effect.

As noted in a July 3, 1979 New York Times article, it was "impossibly unworkable":

Almost immediately, however, the new law touched off a flood of complaints as unfair and impossibly unworkable. So many, in fact, that last year Congress retroactively delayed the law's effective date until 1980 while it struggled again with the issue.

As noted by the NYT, intense voter blowback ensued:

Not only were there protests from people who expected the tax to fall on them -- family businesses and farms, in particular -- bankers and estate lawyers also complained that the rule was a nightmare of paperwork.

So why is Biden trying to do this again? This will impose a steep tax increase and paperwork nightmare for small businesses, farms, and families. It may also violate his own pledge against raising any tax on any American making less than $400,000.

Washington Post reporter Jeff Stein tweeted recently that "the president is personally invested in addressing the stepped-up basis issue".

In a piece titled "This Biden Tax Hike Hike Will Hit Mom & Pop Hard" tax lawyer Robert W. Wood writes:

Under current tax law, assets that pass directly to your heirs get a step-up in basis for income tax purposes. It doesn’t matter if you pay estate tax when you die or not. For generations, assets held at death get a stepped-up basis—to market value—when you die. Small businesses count on this.

Wood notes:

Biden's proposal would tax an asset's unrealized appreciation at transfer. You mean Junior gets taxed whether or not he sells the business? Essentially, yes. The idea that you could build up your small business and escape death tax and income tax to pass it to your kids is on the chopping block. Biden would levy a tax on unrealized appreciation of assets passed on at death. By taxing the unrealized gain at death, heirs would get hit at the transfer, regardless of whether they sell the asset.

As reported previously by CNBC:

“When someone dies and the asset transfers to an heir, that transfer itself will be a taxable event, and the estate is required to pay taxes on the gains as if they sold the asset,” said Howard Gleckman, senior fellow in the Urban-Brookings Tax Policy Center. 

In its analysis of Biden's tax plan, Tax Policy Center says the step-up in basis proposal mirrors a proposal described in an Obama-Biden 2016 Treasury Department document. This document confirms that Biden will force a capital gains tax payment immediately upon transfer of an asset after death of a loved one:

Under the proposal, transfers of appreciated property generally would be treated as a sale of the property. The donor or deceased owner of an appreciated asset would realize a capital gain at the time the asset is given or bequeathed to another.

The amount of the gain realized would be the excess of the asset's fair market value on the date of the transfer over the donor's basis in that asset. That gain would be taxable income to the donor in the year the transfer was made, and to the decedent either on the final individual return or on a separate capital gains return.

On top of all that, Biden also vows to impose capital gains tax increases just as America digs out from the pandemic. He said "every single solitary person" will pay capital gains taxes at ordinary income tax rates. He will also double the top rate to 40 percent, highest since Jimmy Carter in 1977.

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Biden May Impose Vehicle Miles Traveled Tax in Violation of Tax Pledge

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Posted by John Kartch on Friday, March 26th, 2021, 1:08 PM PERMALINK

Norquist: "Biden must fire Buttigieg, repudiate his statement or admit that he was elected on a lie."

President Biden pledged to every American making less than $400,000 that he would not raise 'a single penny' of any of their taxes, or impose any 'new' taxes on them. But today his Transportation Secretary said the administration is eyeing a vehicle miles traveled tax. This tax would violate Biden's pledge.

CNBC asked him what he thought of the tax. Buttigieg said:

"I think that shows a lot of promise. If we believe in that so-called user pays principle, the idea that part of how we pay for roads is you pay based on how much you drive, the gas tax used to be the obvious way to do it, it's not anymore, so a so-called vehicle miles traveled tax or mileage tax, whatever you want to call it, could be a way to do it."

If Biden intends to keep his pledge, he must immediately and loudly disavow this tax. 

"Biden won the 2020 election promising that he would never raise taxes on anyone earning less than $400,000 a year and would never impose a new tax," said Grover Norquist, president of Americans for Tax Reform. "Now his Secretary of Transportation announced he wants to both tax Americans earning less than $400,000 and do so with a new tax. Biden must fire Buttigieg, repudiate his statement or admit that he was elected on a lie."

Biden and Vice President Harris made the pledge on at least 56 different occasions. The pledge also forbids the imposition of any 'new' taxes on Americans making less than $400,000. So the vehicle miles traveled tax would violate the Biden-Harris pledge both ways. 

Watch the Buttigieg video here or below:


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