Illinois Lawmakers' Push To Restrict E-Cigarette Access Would Have Devastating Impact
Earlier this week, Americans for Tax Reform's Director of Consumer Issues, Tim Andrews, wrote to members of the Illinois House and Senate, urging them to vote against legislative proposals that would harm public health throughout Illinois as well as damage Illinois' economy. The full letter can be read below.
To: Members of the Illinois Legislature
From: Americans for Tax Reform
Dear Legislator,
On behalf of Americans for Tax Reform (ATR) and our supporters across Illinois, I urge you to reject SB 3699, SB 2275, SB 0540, SB 0699, SB 2282, HB 4050, HB 2579, HB 3887, and HB 3883. Each of these bills will decrease adult access to lifesaving reduced risk tobacco alternatives like e-cigarettes and vapor products. If passed, these acts of legislation would lead to a clear increase in tobacco-related mortality in the state of Illinois by forcing more adults to keep smoking – and dying from – dangerous traditional combustible cigarettes.
About E-Cigarettes and Vapor Products:
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Traditional combustible tobacco remains one of the leading preventable causes of death in Illinois. The negative health effects of combustible tobacco come from the chemicals produced in the combustion process, not the nicotine. While highly addictive, nicotine is a relatively benign substance like caffeine and nicotine use “does not result in clinically significant short- or long-term harms”.
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Nicotine replacement therapies such as nicotine patches and gums have helped smokers quit for decades. In recent years, advancements in technology have created a more effective alternative: vapor products and e-cigarettes. These products deliver nicotine through water vapor, mimicking the habitual nature of smoking while removing the deadly carcinogens that exist in traditional cigarettes.
Benefits of E-Cigarettes and Vapor Products:
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Vapor products have been proven to be 95% safer than combustible cigarettes and twice as effective at helping smokers quit than traditional nicotine replacement therapies. Vaping has been endorsed by over 30 of the world’s leading public health organizations as safer than smoking and an effective way to help smokers quit.
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Just last month, a new analysis by Public Health England demonstrated just how effective vaping is in helping people quit smoking, noting that in just one year, over 50,000 British smokers, who would have continued smoking otherwise, quit smoking with vaping.
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Studies have repeatedly shown that flavors are critical to helping adult smokers make the switch to vaping. Adults who use flavored vapor products are 43% more likely to quit smoking than an adult who uses un-flavored products, according to a recent study from ten of the world’s top experts in cancer prevention and public health. Flavors would be prohibited under HB 3883, HB 3887, SB 2275, HB 4050, SB 0699, and SB 2282,
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Evidence demonstrates that flavors also play no role in youth uptake of vaping. Academic studies have found that teenage non-smokers “willingness to try plain versus flavored varieties did not differ” and National Youth Tobacco Survey results have shown no increase in nicotine dependency among youths since flavored products entered the market.
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A University of Glasgow study showed that e-cigarettes particularly help disadvantaged persons quit smoking. Another new study demonstrated that high-strength electronic nicotine products are particularly helpful for smokers with mental health issues quit smoking, like people with schizophrenia who smoke at rates more than three times the national average. Passing any of the aforementioned bills would fail to decrease inequalities in health and would widen further the socioeconomic disparities that disadvantaged communities face.
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Vapor products would save over 255,000 lives if a majority of Illinois smokers made the switch to vaping, extrapolating from a large-scale analysis performed by leading cancer researchers and coordinated by Georgetown University Medical Centre.
SB 0699, SB 2282, HB 4050, HB 3887, HB 3883, and SB 2275 would each prohibit flavors in vapor products, a proposal that would keep adults smoking deadly combustible cigarettes and would do nothing to prevent youth use of e-cigarettes and vapor products. Flavors have been proven time and again to be critical to the process of smoking cessation among adults and do not appeal to kids any more than unflavored vapor products do. While many proponents of flavor bans believe it would decrease youth use of nicotine products, real world evidence from San Francisco proves otherwise. San Francisco’s ban on flavored vaping products and e-cigarettes had no impact on usage among youths. To the contrary, after nearly a decade of steady decline in youth use of combustible cigarettes, there has been an increase in cigarette smoking among youths in San Francisco since the flavor ban was enacted.
HB 3883, HB 3887, SB 2275, and SB 0699 would also extend the prohibition on flavors to traditional tobacco products like cigarettes and cigars. These flavor bans would come with significant negative consequences to the state, with no evidence whatsoever that they have any effect on decreasing smoking rates. To the contrary, real-world evidence from Massachusetts demonstrates that flavor bans are counterproductive, and come at a substantial cost.
Since Massachusetts implemented a ban on all flavored tobacco products in the middle of 2020, border purchases and a booming black market have more than made up a decline in sales in the commonwealth. In the first few months since the ban was enacted, Massachusetts retailers have sold 17.7 million fewer cigarette packets compared to the same period last year, while neighboring Rhode Island and New Hampshire have combined to sell 18.9 million more as Massachusetts residents stock up across state lines. This has cost the state a staggering $73,000,000 in revenue.
Rhode Island and New Hampshire are not the only beneficiaries of Massachusetts’s ban; criminal syndicates have also greatly benefited. Contrary to popular belief that tobacco smuggling is a victimless crime consisting of someone purchasing extra cartons across state lines, most tobacco smuggling, in reality, is run by multi-million-dollar organized crime syndicates. These networks also engage in human trafficking, money laundering, and funnel funds to terrorists. This is why the US State Department has explicitly called tobacco smuggling a “threat to national security”.
Paradoxically, these bans will likely increase youth access to tobacco products in Illinois as, by definition, criminals and smugglers do not obey laws and would not follow the rigorous age-verification requirements mandated at reputable outlets.
In addition to lost revenue, financing of criminal activities, and a potential uptick in youth tobacco use, another adverse effect of banning flavors is the disproportionate harm it will inflict on minority populations. Approximately 80% of African-Americans and 35% of Hispanics who smoke prefer menthol cigarettes and black adults consume 60% of all cigarillos and non-premium cigars, products that are often flavored. For this reason, the American Civil Liberties Union (ACLU) opposes flavor bans as they “disproportionately impact people and communities of color”. Specifically criminalizing these products would directly lead to significant setbacks to the pursuit of racial equality and criminal justice reform.
SB 3699 would place an arbitrary limit on the number of e-cigarettes that can be purchased in one transaction, limiting customers to two e-cigarettes or 100mL of e-liquid. This measure would severely decrease revenue for countless small businesses across your state and greatly inconvenience consumers in remote communities who may need to travel long distances to purchase their preferred product.
HB 2579 would set a maximum nicotine concentration of 25 mg/mL in vaping products. There is no existing evidence that an arbitrary limit on the strength of nicotine vapor products would benefit public health, however, evidence does exist that demonstrates it would cause harm. Imposing a nicotine cap would limit the effectiveness of vapor products for heavy smokers who require high-strength nicotine products to quit smoking. Limiting their ability to purchase these products would further disincentivize smokers from making the switch.
In April of 2020, Nova Scotia instituted a 20mg/mL nicotine cap, alongside a flavor ban, which caused the closure of 50% of all specialty vape stores in the province. Further, regulated cigarette sales increased by 25%, clear evidence that nicotine caps drive vapers back to higher risk, combustible cigarettes. Further, a recent study demonstrated that high-strength nicotine e-cigarettes, which would be banned under HB 2579, dramatically help smokers with mental health issues, like schizophrenia, quit the deadly habit of cigarettes. People who suffer from schizophrenia smoke at a rate more than three times the general population, further illustrating the importance of keeping high-strength nicotine products available to adult consumers.
SB 0540 would expose Illinois businesses and consumers to harmful taxes and regulations imposed by local governments on reduced risk tobacco alternatives. SB 0540 would also fail to retain regulatory consistency and uniformity throughout the state in terms of tobacco policy which will leave residents unprotected from poorly thought-out local restrictions, or tax grabs to raise further revenue from some of your most vulnerable constituents.
For the reasons above, in the interests of public health, preventing a sharp rise in criminal activity, defending minority populations, and protecting the Illinois economy, we urge you to reject SB 3699, SB 2275, SB 0540, SB 0699, SB 2282, HB 4050, HB 2579, HB 3887, and HB 3883. Hundreds of thousands of lives quite literally depend on it.
Sincerely,
Tim Andrews
Director of Consumer Issues
Americans for Tax Reform
Photo Credit: Carol Highsmith
More from Americans for Tax Reform
Poland’s Digital Advertising Tax is a Mistake
Poland is moving in the wrong direction on taxes. In February the government decided -- against longstanding principles of international taxation -- to impose new taxes on digital advertising. This new levy, from 5% to 10% on digital ads, will affect the private digital media market in favor of the state-run pro-government media. This is a clear anti-market policy that will affect foreign direct investment and increase bias public spending.
In Poland, substantially raising tax revenue from private digital media businesses will enable the government to spend more on state media. For example:
- Television, radio, and cinema companies whose annual advertising revenue is between PLN 1,000,000 ($262,692 USD) and PLN 50,000,000 ($13,134,585 USD) will pay a 7.5% tax. Companies with higher advertising revenue will pay 10%.
- Newspapers reporting advertising revenue between PLN 15,000,000 ($3,940,375 USD) and PLN 30,000,000 ($7,880,751 USD) will pay a 2% tax, while newspapers earning more will pay 6%.
- A 5% tax on Internet advertising will be placed on any company exceeding EUR 5,000,000 ($5,955,250 USD) of advertising revenue.
When plans to impose a new tax were announced, almost all private media went on strike, suspending publication of any content. Although the strike lasted only one day, it was the first time since 1989 that the media in Poland––often of different ideological orientations––united in this way and on such a large scale.
An American bad example: Maryland
In the United States, starting on March 14, Maryland was the first state to impose a digital advertising tax. Republican Governor Larry Hogan vetoed this bill in May 2020. The bill violates the Internet Tax Freedom Act, but the Maryland Senate, run by Democrats, ignored the Governor’s decision, as well as fierce opposition from many legal scholars and overrode the veto. This bill imposes a tax on digital advertising with a tax rate span from 2.5% to 10% which is applied to a company’s global annual gross revenue from digital advertising services in Maryland. The cost of the digital advertising service tax will ultimately be borne by Maryland-based employers and consumers in the form of higher prices and fewer options for advertising services, as companies that utilize online platforms will pass the added costs on to consumers. This will not come as a surprise, as companies like Amazon and Google had to adjust prices in response to similar measures in France, Spain, and other countries. This tax will be paid by people and not by the companies the government is targeting. The Maryland DST will not only affect the economy in the state but also undermine the powerful opposition of the USA's global position against digital service taxes.
A European bad example: Austria
But much closer to Poland, in Europe, is the Austrian digital advertisement tax. Despite the initial commitment to wait for and find a solution during the ongoing OECD negotiations, Austria implemented a digital advertisement tax of 5% on digital advertising on revenue, effective on January 1st, 2020. This levy is applied to all companies that reach or exceed an annual global revenue of 750 million Euro and annual revenue of 25 million Euro or more on digital advertising services. By nature of the design of the scope of the tax, only American tech companies are subject to it. It is the most advanced unilateral attempt by a European government to target U.S. digital corporations such as Google, Amazon, Facebook, and Apple. As consequence, the United States Trade Representative (USTR) launched an investigation into Austria's digital advertisement tax and concluded it was discriminatory against American companies.
New taxes – new normal?
The imposition of a new tax on advertising is harmful. But at least in Poland’s case, there’s something more to this story. The Polish government has long moved away from a free-market economic model to a statist hybrid in which social spending, state-owned companies, and the national media are seen as parts of a single taxpayer-funded orchestra. And the demands of this orchestra are constantly increasing. The tax on advertising would already be the 35th tax raised, or imposed, by the current government. It is worth remembering that as far as new "big" taxes are concerned, in 2016 the so-called bank tax among other things, was introduced, bringing an additional 4 billion zlotys ( more than 1 million USD) a year to the budget. Those Poles, whose income exceeds one million zlotys (more than260,000.00 USD), pay the solidarity levy, enriching the government by another 1.2 billion zlotys (more than 315,000,000.00 USD). In turn, revenues from the sugar levy imposed this year on all drinks containing sugar, sweeteners, and caffeine, taurine, and guarana are expected to amount to around 3 billion zlotys in 2021 (more than 780,000,000.00 USD).
This year has also witnessed the introduction of the trade tax (i.e. tax on retail sales), which is expected to translate into an additional 1.5 billion zlotys (more than 390,000,000.00 USD) in the State coffers. The costs of new taxes are always passed on to the end customer. However, as far as manufacturers are concerned, they are not neutral either. Some new taxes are imposed on goods for which demand is highly elastic. Their producers raise prices, but at the same time are unable to maintain their former profitability. This translates into a reduction in the rate of investment in the economy, which is actually occurring in Poland, with the rate falling to 17.1 % in 2020 compared to 18.5 % in 2019. This is a rate 5 percent lower than the government's plan presented in 2016. (Strategy for Responsible Development).
Taxes are not the answer
The decline in private investment cannot be indefinitely replaced by the investments subsidized by state-owned companies and the creation of new such entities. Unfortunately, new taxes stifle investment not only because of a reduction in their expected profitability but also because of the complexity of the fiscal and regulatory system they cause. In fact, all taxes on products and services introduced in Poland are based on complex and not entirely clear (even for tax advisors) mechanisms of calculation and collection. Moreover, even the solutions meant to simplify tax settlements, in practice they work exactly in the opposite direction (Slim Vat, Estonian Cit, JPK). As a result, Poland occupies distant places in the rankings assessing the operation of the tax system. For example, in the International Tax Competitiveness Index, Poland is ranked 3rd from last among the OECD countries and penultimate in Europe (just behind Italy), and in the "Paying Taxes" category of the World Bank's "Doing Business" ranking, Poland is ranked as low as 77th - globally.
A complicated tax system means that companies have to spend more and more money on legal services and consulting, which consumes resources away from productive activity. The smaller the company, the less capital it can devote to dealing with regulatory complexity, which translates into fewer innovative ideas: they are simply nipped in the bud. Another effect of growing fiscalization and the associated bureaucratization is the room for tax optimization, or tax avoidance. The more regulations there are, the more space there is for various lobbying organizations to seek 'exemptions' from such taxes, with translates into stifling market competition.
Poland has enjoyed years of prosperity and in order to maintain the right policy course that contributed to the country’s success, the time of the pandemic should be a time devoted to reviewing the State’s economic policy, aimed at reducing fiscalism and reducing the regulatory burden.
*President of the Warsaw Enterprise Institute (Poland)
Photo Credit: Giuseppe Milo
Pipeline Worker Three Months After Biden Killed Keystone: “We’re hurting and we need jobs.”
"He's not helping us and I don't know of any unions that he's helped so far in other trades."
Fox Business Network's Carley Shimkus visited Bald Knob, Arkansas to interview workers affected by President Biden's harmful executive order to halt the KeystoneXL pipeline. Nearly three months after Biden's decision, workers and their families are hurting.
Here are some onsite quotes from the report:
"It's hard to make plans when you've got an administration that's trying to crush your future."
"I've looked for them green jobs and they are not there."
"I lost probably $60,000 - $80,000 not being able to go on that job. That's my livelihood. If I'm not working, I'm barely scraping by. I've got two kids to support, what am I supposed to do there?"
"My whole family is unemployed."
"The middle class is standing right here and looking at him [Biden] and telling him, 'we're hurting, and we need jobs.'"
"He's not helping us and I don't know of any unions that he's helped so far in other trades."
Americans for Tax Reform is collecting personal testimonials of Americans hit by President Biden's energy restrictions. (If you would like to submit a short video, please send it to Mike Mirsky at mmirsky@atr.org). Please see the examples below:
Pipeline Worker: "I've got my whole life invested in this."
“This is our livelihood. We don’t consider it a temporary job. We consider it as our career.”
Democrats Threaten to Oppose Biden Spending Plan if SALT Deduction Cap is not Repealed
Several Democrats from high-tax states have threatened to vote against Biden’s infrastructure plan if it does not include a full repeal of the State and Local Tax (SALT) deduction cap. This repeal would disproportionately benefit wealthy Americans.
As reported by Politico, dozens of Democrats have made this threat. On Tuesday, a powerful group of House Democrats — all but two members of the New York delegation — sent a letter demanding that the repeal of the SALT deduction cap be a part of any tax-related bills Congress takes up. Notably, Rep. Alexandria Ocasio-Cortez was one of the New York Democrats who refused to sign onto this letter. She had also voted against repealing the SALT deduction cap in 2019.
Several New Jersey Democrats like Rep. Josh Gottheimer and Rep. Bill Pascrell have also called for the repeal's inclusion in President Biden’s next legislative package.
In a press release by Senators Chuck Schumer and Kirsten Gillibrand, Sen. Gillibrand said, “I am proud to join my colleagues to introduce legislation to repeal the cap on the State and Local Tax deduction, a cynical policy passed by Republicans as a way to repay wealthy donors and lobbyists with big corporate tax cuts,” said Senator Gillibrand. This statement is especially ironic considering that lifting the SALT cap would be much more favorable to the rich than the Tax Cuts and Jobs Act was—with almost three times as much of the benefit going to the top one percent.
All of this begs the question: what is more important to these Democrats? A multi-trillion infrastructure bill, which they claim the country desperately needs, or tax cuts for their rich constituents?
Many progressives have noted that the SALT deduction disproportionately benefits the wealthy. The New York Times described the SALT deduction as “The Tax Cut for the Rich That Democrats Love.” The Center for American Progress has stated that repeal of the SALT cap “should not be a top priority” as it would “overwhelmingly benefit the wealthy, not the middle class.”
The left-of-center Tax Policy Center found that the top 1 percent of households would receive 56 percent of the benefit of repealing the SALT cap, and the top 5 percent of households would receive over 80 percent of the benefit. The bottom 80 percent of households would receive just 4 percent.
Similarly, the Brookings Institution explained that almost all (96 percent) of the benefits of SALT cap repeal would go to the top quintile, 57 percent would benefit the top one percent (a cut of $33,100), and 25 percent would benefit the top 0.1 percent (for an average tax cut of nearly $145,000). Whether or not this is a tax cut for the wealthy is not up for debate—the evidence is clear.
Repealing the SALT cap would be a costly addition to Biden's spending plan. Fully repealing the SALT deduction cap would cost $80 billion per year, or $400 billion in total, as the cap sunsets in 2026 along with several other tax provisions. This $400 billion proposal would tie Medicaid expansion for the single largest category in Joe Biden’s infrastructure plan. Because Democrats are attempting to fund this bill through tax hikes, the repeal of the SALT deduction cap could result in Democrats raising taxes elsewhere, including taxes directly or indirectly on low- and middle-income Americans.
Democrats falsely claim that when the unlimited SALT Cap was repealed, Americans in blue states like New Jersey and New York saw a massive tax hike and were hit with double taxation, as they now pay federal taxes on income that was already subject to state and local taxes.
In reality, a majority of Americans do not claim the SALT deduction, or any deduction. Instead, they claim the standard deduction. In 2018, 133 million American taxpayers (or 87% of filers) claimed the standard deduction. These taxpayers deduct zero state and local taxes, so they have no protection against double taxation.
Democrats from high-tax states are desperate to repeal the SALT deduction cap because their constituents do not like the true burden of high taxes if they cannot deduct it. Quantitative evidence shows that the SALT deduction does make high-income Americans more tolerant of high state taxes.
The high costs of living in states like New York, New Jersey, and California has resulted in a mass exodus. In New York, 66.4 percent of total moves were outbound. Similarly, 60.6 percent of New Jersey’s total moves were outbound.
Because their state legislatures refuse to provide relief for their constituents, Democrats are attempting to curb the sting of high taxes from the U.S. Congress.
At the same time President Biden and others on the left are pushing for the wealthy to "pay their fair share" in higher taxes, Blue State Democrats are pushing for tax cuts for their own wealthy constituents.
Photo Credit: The Leadership Conference on Civil and Human Rights
By Any Metric, Biden Spending Plan Spends Little on Infrastructure
President Joe Biden has proposed $2 trillion on “infrastructure” and is expected to soon propose another $2 trillion on “care infrastructure."
While infrastructure like roads and bridges is broadly popular with the American people, there is not much true infrastructure in this plan. Instead, it is the Left’s attempt to expand the federal government and provide a down-payments on socialist policies.
The first $2 trillion of Biden’s infrastructure plan contains little in true infrastructure spending. Instead, the proposal, which has been dubbed the “American Jobs Plan,” is a liberal wishlist of policies that have little, or nothing to do with roads and bridges.
Depending on which metrics you use, the Biden plan spends as little as 6 percent of the $2 trillion on true infrastructure or as much as 25 percent. Either way, a significant portion of the plan is on policies that have little, or nothing to do with infrastructure:
- According to some estimates, less than 13 percent of the spending plan is spent on traditional infrastructure including less than 6 percent on roads and bridges, less than 2 percent on waterways, locks, dams, ports, and airports, and less than 5 percent on broadband.
- A fact check by the Washington Post argued that this analysis was misleading. They instead calculated that only about one-quarter (25%) of the Biden plan is spent on traditional infrastructure like “roads, bridges and airports to railways, ports, water systems, the electric grid and high-speed broadband.”
Either way, a vast majority of this spending will go to other projects.
Some of the non-infrastructure provisions in Biden’s plan include:
- $400 billion (20 percent) of the entire cost of the bill is for an expansion of Medicaid. This is the biggest single category of spending
- $213 billion for housing and to increase federal control of local housing markets
- $100 billion of additional funding for schools without requiring them to reopen
- $50 billion for a new office at the U.S. Department of Commerce
- $35 billion for climate science, innovation, and R&D
- $10 billion on a uniformed “Civilian Climate Corps”
- $174 billion toward consumer rebates for purchasing electric vehicles and funds for the government to buy electric vehicles
- Implementation of the PRO Act, which would ban Right to Work laws and reclassify millions of independent contractors as employees
The plan also includes spending on job training and small-business incubators, various types of research funding, public housing, upgrades to child-care centers, community colleges, VA hospitals, and other items.
There are a lot of ways you can group these spending initiatives: healthcare spending, education spending, entitlement spending, etc. This may be the first time, however, that they’re being categorized as “infrastructure spending.” Clearly, this is a misleading way to describe these initiatives.
The second part of Biden’s plan is a thinly veiled attempt to invoke “infrastructure” in the name of spending trillions of dollars on progressive priorities, which the Left dubs “human infrastructure” or “care infrastructure.” As the New York Times explains, this proposal would “spend heavily on education and programs meant to increase the participation of women in the labor force by helping them balance work and caregiving.”
While this proposal has not been released, it could include the following:
- Extending or making permanent expanded subsidies for low- and middle-income Americans to buy health insurance
- Extending or making permanent refundable tax credits aimed at cutting poverty
- Universal childcare
- Universal pre-K
- Federal paid family leave program
- Federal paid medical leave program
- A permanent expansion of the earned income tax credit (EITC)
Progressives see this bill as an opportunity to further their agenda. Senate Budget Committee Chairman Bernie Sanders (I-VT) urged President Biden to run with the idea of “human infrastructure,” citing that, “many of us see a crisis in human infrastructure.” Rep. Alexandria Ocasio-Cortez (D-NY) said that the existing plan “is not nearly enough,” and that it “needs to be way bigger.”
Ultimately, these policies are incremental steps towards the Green New Deal and Medicare for All. They would radically expand the welfare state and give the government more power and control over education and employment benefits.
The truth is, Biden’s spending plan has little to do with infrastructure. This plan is simply a way to push through leftist pipedreams under the guise of the popular term, “infrastructure.”
Photo Credit: Gage Skidmore
ATR, OCC Urges Congress To Reject The Misleadingly-Named “Paycheck Fairness Act”
The House of Representatives will soon vote on H.R. 7, the misleadingly-named “Paycheck Fairness Act,” legislation introduced by Rep. Rosa DeLauro (D-Conn.). If implemented, H.R. 7 would enact no new pay discrimination protections. Instead, the bill would give greedy trial lawyers unprecedented opportunity to target employers with frivolous lawsuits.
Americans for Tax Reform and the Open Competition Center oppose the Paycheck Fairness Act and urge all members of Congress to vote NO.
While the left claims H.R. 7 will close the “gender pay gap,” this legislation is not about equal pay for equal work. The Equal Pay Act of 1963 explicitly outlawed gender-based pay discrimination. And while men make slightly more on average than women, accurate estimates show that women make 95 to 98 cents per every dollar a man makes, a far narrower difference than the 22-cent pay gap the left constantly cites.
Under the Equal Pay Act, employees must provide evidence that their bosses are engaging in pay discrimination based on sex. Once they have provided the evidence, the burden of proof shifts to the employer to prove that the wage difference is based on “any factor other than sex.”
The Paycheck Fairness Act abolishes this decades-old standard and replaces it with a “bona fide factor other than sex” standard. This would require businesses to show that pay discrepancies between workers purportedly doing the same job are “consistent with business necessity.”
While these may seem like mild semantic differences, this change would erode crucial flexibility in the workplace. Currently, employers can negotiate employment and compensation arrangements with male and female workers that prefer more flexibility to a larger paycheck. Under the new “bona fide factor” standard, employers would likely be pressured to enact standardized compensation packages for employees to mitigate risk of litigation.
H.R. 7 would also lead to a dramatic decrease, or outright elimination, of performance-based pay in the American workplace. Under the new standard, employers could become liable for rewarding male and female employees with different bonuses based on performance, as a female worker could allege in court that these bonuses were not a “business necessity.” This risk would encourage businesses to adopt a uniform pay scale, reducing crucial incentives for employees to excel and suppressing pay across the board.
Additionally, H.R. 7 would automatically make workers part of class-action lawsuits unless they opt-out, encouraging greedy trial lawyers to reap a windfall by filing class-action suits against businesses. H.R. 7 also effectively removes the $300,000 cap for punitive damages for employment discrimination cases, putting employers at even greater risk of litigation.
Ultimately, the so-called Paycheck Fairness Act will only harm workers and expose employers to frivolous litigation. All members of Congress should vote NO.
Photo Credit: Dan Gaken
North Dakotans Will Get Stuck with 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, North Dakota 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 three North Dakota utilities.
Working with the Public Service Commission, MDU, Xcel Energy North Dakota and Otter Tail Power Company passed along tax savings to customers.
MDU: As noted in this Sept. 26, 2018 PSC statement:
In September 2017 the Commission approved a $4.6 million interim rate increase in accordance with state law. That interim rate was reduced to $2.7 million in March 2018 to reflect tax savings due to the Tax Cuts and Jobs Act. Because the agreement approved today includes a smaller increase than the interim rate, MDU natural gas customers will receive a refund for any excess revenue collected from September 2017 to present. The refund will be issued within 90 days of approval of a refund plan.
As part of the agreement, the fixed basic service charge will be $20.87 per month for residential customers. Because the rate approved today is less than the current interim rate, customers will actually see a decrease in their bills.
Otter Tail Power Company: Also as noted in the Sept. 26, 2018 PSC statement:
The PSC also today approved an approximately $4.6 million (3.09%) annual revenue increase for Otter Tail electric service. The company had originally asked for an increase of $13.1 million (8.72%). The company has not asked for a rate increase since 2008. Since then, Otter Tail Power has experienced increased operating expenses and costs driven by the company’s investments in generation, transmission, and distribution infrastructure.
In December 2017 the Commission approved a $12.8 million interim rate increase in accordance with state law. That interim rate was reduced to $8.3 million in February 2018 to reflect tax savings due to the Tax Cuts and Jobs Act. Because the agreement approved today includes a smaller increase than the interim rate, Otter Tail electric customers will receive a refund for any excess revenue collected from December 2017 to present. The refund will be issued within 90 days of implementation of the final rates.
As part of the agreement, the fixed basic service charge will be no higher than $14 a month for residential customers. Because the rate approved today is less than the current interim rate, customers will actually see a decrease in their bills.
Xcel Energy North Dakota: As noted in a Feb. 8, 2019 Fargo Forum article:
Utility companies across the country paid lower taxes after the federal Tax Cuts and Jobs Act of 2017 passed. Since then, states have been ordering those companies to pass on the savings to customers.
There was some discussion of using the money to improve energy equipment in North Dakota, or possibly holding down future rate increases.
But on Friday, Feb. 8, Xcel announced its North Dakota customers will receive a rebate. Xcel Energy will soon distribute nearly $10 million to all North Dakota electricity customers as a result of the federal tax cut. All Xcel Energy electricity customers in the state will receive a credit on their bills. The refund for a residential electricity customer will average about $46, but will vary based on each customer’s actual use.
The North Dakota Public Service Commission approved the refunds this week and customers should receive them as one-time bill credit beginning this spring.
As an additional part of the agreement, North Dakota customers will not see any increases in their base electric rates until at least Jan. 1, 2021, which is the earliest any future rate reviews could take effect. The agreement also allows Xcel Energy the ability to provide customers with additional refunds should the company achieve higher earnings than authorized by the commission.
Conversely, a vote for a corporate income tax rate hike is a vote for higher utility bills as households 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.
Republicans Should Continue To Reject Cicilline Antitrust Report
The House Judiciary Committee on Wednesday will markup the “Investigation of Competition in Digital Markets” report spearheaded by Antitrust Subcommittee Chairman David Cicilline (D-R.I.).
The report is nothing more than a Democrat attempt to reshape decades of antitrust law to the detriment of American competition and innovation.
Not a single Republican joined the report when it was initially released, and Republicans should remain opposed to the left’s attempts to weaponize antitrust law.
ATR stands in opposition to both the findings and recommendations of this report which recommends restricting tech companies from operating in multiple markets and altering how antitrust enforcement can be brought against suspected violators.
Alarmingly, the Cicilline report argues that Courts judging antitrust enforcement on the “narrow” basis of consumer welfare have significantly weakened antitrust laws over the past decades. One proposed solution is to rewrite existing laws to essentially nullify the consumer welfare standard, which would cripple American free enterprise and innovation.
Under the consumer welfare standard, business conduct is evaluated on whether or not it harms consumers through tangible factors such as higher prices or reduced quality or output. If consumers are not being harmed, antitrust enforcement action is not taken. The consumer welfare standard, which provides a rule-of-law approach to antitrust enforcement, has undergirded antitrust law for over four decades.
Before the consumer welfare standard was widely adopted, antitrust law was vague and unfocused, leading to inconsistent rulings and enforcement actions designed to punish political enemies or reward political allies. Abandoning the consumer welfare standard would only serve to politicize the antitrust enforcement process and empower faceless bureaucrats and trial lawyers to target companies they do not like with frivolous monopolization litigation.
After the report was first published in October, ATR President Grover Norquist said the following:
These recommendations pursue political prerogatives rather than consider what is truly best for all Americans. It is not good for all Americans if breaking up a firm means prices go up 20%. Nor is it good if those experiencing food insecurity are cut off from innovative food delivery services. Small business is not better off without a digital main street to compete with Big Box retailers physical and digital store fronts. Smart phone users could choose a fully open system, but most think they are better off when their devices and app stores secure their payment data. We were not better off when GPS systems led our car to a dead-end road or the edge of a lake.
Ahead of Wednesday’s markup, it is important to keep in mind the Cicilline report remains a tool to increase the power of government bureaucrats to gain power at the expense of American innovation and competition. Every Republican rightly stood against the Cicilline report when it was first published. No Republicans should support the report after the markup.
Photo Credit: Brookings Institution
ATR Leads Coalition Opposed to Sami's Law
Americans for Tax Reform has led a coalition of 17 groups and activists in opposition to H.R. 1082, also known as "Sami's Law." If implemented, H.R. 1082 would undermine independent contractors nationwide and open the door for crushing federal regulation of the ridesharing industry.
The coalition urges Congress to vote against H.R. 1082 and any of its provisions if proposed in separate bills.
You can view the letter here and below.
Dear Member of Congress,
We write in opposition to H.R. 1082, known as “Sami’s Law.”
This is not a safety bill. It is a bill to undermine independent contractors nationwide.
We urge you to vote against this legislation and any of its provisions if proposed in separate bills.
House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Chuck Schumer (D-N.Y.) want to rush H.R. 1082 through Congress without hearings or scrutiny.
H.R. 1082 would set up a federal taxicab commission to regulate Americans who use or provide ridesharing services. Ridesharing is already heavily regulated by state and local governments, and federal regulation is completely unwarranted.
Biden Transportation Secretary Pete Buttigieg will stack the new 17-member federal regulatory commission with anti-independent contractor central planners. The Washington DC-based commission will work to saddle all 50 states with top-down federal regulations.
Ridesharing emerged in the first place because Americans were desperate to find an alternative to the corrupt taxi commissions and entrenched industry players who provided bad service at excessive cost.
Private sector ridesharing services have voluntarily and proactively developed a full slate of safety features for riders and drivers, including but not limited to the name and photo of the driver, the make, model, and color of the vehicle, the license plate number, as well as the ability for riders to share their real-time trip status with family and friends who can see their exact location and time of arrival.
By a 3-1 ratio, Americans rightly consider rideshare drivers to be independent contractors and not employees, according to a landmark Pew Research Center survey. The survey found that most Americans believe the government should use a light regulatory touch in this area of the economy. As noted by Pew, "the clear preference for a light regulatory approach among partisans in all camps is striking."
As noted above, ridesharing is already heavily regulated at the state and local level. This bill would make it more difficult for Americans to earn a living as independent contractors.
Sincerely,
Grover Norquist
President, Americans for Tax Reform
James L. Martin
Founder/Chairman, 60 Plus Association
Saulius “Saul” Anuzis
President, 60 Plus Association
Brent Wm. Gardner
Chief Government Affairs Officer, Americans for Prosperity
Ryan Ellis
President, Center for a Free Economy
Andrew F. Quinlan
President, Center for Freedom and Prosperity
Curt Levey
President, Committee for Justice
Ashley Baker
Director of Public Policy, Committee for Justice
Thomas Schatz
President, Council for Citizens Against Government Waste
Katie McAuliffe
Executive Director, Digital Liberty
Adam Brandon
President, FreedomWorks
Mike Hruby
President, Free Jobs for Massachusetts
Heather R. Higgins
CEO, Independent Women's Voice
Andrew Langer
President, Institute for Liberty
Seton Motley
President, Less Government
Tom Hebert
Executive Director, Open Competition Center
Roslyn Layton, PhD Aalborg University
Senior Contributor, Forbes
Photo Credit: kmf164
Psaki in Deep Denial on Impact of Corporate Tax Rate on Utility Bills
Following enactment of TCJA, utility companies across the country worked with state utility commissions to pass along corporate tax rate savings to customers. Americans for Tax Reform has documented over 140 examples. And here is a compilation of national and local television news coverage of same.
The burden of corporate taxes is borne by utility customers, a fact that White House press secretary Jen Psaki seemed to deny today during the press briefing.
It is uncomfortable for the White House and Democrats to acknowledge that a corporate tax rate hike will be borne by households and small businesses that typically operate on tight margins and have considerable heating, cooling, gas, and refrigeration costs. Just as Americans are digging out from the pandemic, Biden and the Democrats are there to whack them with higher costs.
Let's look at four citations post-TCJA:
Example 2:
The legislation cuts the federal corporate income tax rate from 35% to 21% effective January 1, 2018. This tax cut, in turn, reduces the cost of service for many of Virginia’s major electric, gas and water utilities. – January 8, 2018, Virginia SCC Press Release
Example 3:
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.- August 24, 2018 Arizona Corporation Commission press release
Click here to see 140 documented examples of utilities passing along savings from the corporate tax rate cut with the Tax Cuts & Jobs Act.
Norquist: Why is Biden Raising Taxes in a Pandemic?
ATR President Grover Norquist joined Jacqueline Alemany on Washington Post Live to discuss President Biden’s proposed tax increases and his more than $4 trillion infrastructure plan.
During this conversation, Norquist posed an important question: why would you raise taxes during a pandemic?
Grover Norquist:
"Well, you have to ask yourself, we're coming out of a pandemic; we're coming out at a time when many states closed much of their economies. We're beginning to come out of this and why would Biden think now is a good time to raise the American corporate income tax to the highest in the world, higher than communist China; higher than anything in Europe; and the most low-growth path by having such a high corporate income tax?
Why would you double the capital gains tax? Why would you set a second level of the death tax? Why would you add energy taxes? The United States is very competitive in its cost of energy, and he wants to subsidize uncompetitive, expensive energy and tax energy that's less expensive; and undo infrastructure, to tear down exactly the infrastructure that gets natural gas to people's jobs and stopping the pipelines in the Midwest?
So, why a list of things all of which we know slow economic growth and put us in a bad path in terms of jobs or GDP or competitiveness in the world?"
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