How the Trump Republican Tax Cuts Are Helping Massachusetts
Massachusetts is benefiting greatly from the Tax Cuts and Jobs Act enacted by congressional Republicans and President Trump:
397,860 Massachusetts households are benefiting from the TCJA’s doubling of the child tax credit.
Every income group in every Massachusetts 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.
2,150,760 Massachusetts 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.
89,050 Massachusetts 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, Massachusetts residents are saving money on utility bills. Lower electric, water, and gas bills help households and small businesses operating on tight margins. For example, at least seven Massachusetts utilities reduced their customers' bills (see below).
Thanks to the tax cuts, Massachusetts businesses of all sizes are hiring, expanding, raising pay and increasing employee benefits:
Pan Am Systems, Inc. (North Billerica, Massachusetts) -- $1,100 tax reform bonuses for 719 employees.
Pan Am Systems, Inc. is a diversified holding company. Its subsidiaries include Pan Am Railways – the nation’s largest regional rail carrier by mileage operating in five states; Perma Treat Corporation – a wood products manufacturer, including railroad ties, and Pan Am Brands, a trademark licensing company.
In an effort to highlight the benefits of the landmark Tax Cuts and Jobs Act (“TCJA”), Pan Am Systems, Inc. is pleased to announce that it will be issuing a one-time bonus of $1,100.00 to each employee of the company and its subsidiaries, effective today. This bonus is intended to; (a) acknowledge the importance of our employees; and (b) provide those employees with additional compensation to use as they elect.
As noted by the President, the TCJA is intended to make resources available for investment by businesses that will have downstream effects of expanding and creating wealth among all citizens. Pan Am shares this goal and is committed to future capital investment to foster growth of the company. Pan Am strongly believes that programs such as the TCJA and the 45G tax credit, supported by continued reduction in overly burdensome regulations, provide substantial incentives for investment in America’s growth. – May 23, 2018 Pan Am Systems, Inc. press release
Pentucket Bank (Haverhill, Massachusetts) – $500 bonuses, increased base wages, increased additional educational opportunities through a University of Pentucket Bank program.
Suffolk Construction (Boston, Massachusetts) - Investing in new technology and data analytics:
Boston’s Suffolk Construction Co. will take much of the savings from the tax cuts and invest it in the company’s technology and data analytics, a growing area of focus for the $3.5 billion business, CEO John Fish said. The firm is one of the largest privately owned companies in Massachusetts. As of last year, it had nearly 1,000 employees in the state. On the topic of one-time bonuses for employees, Fish told the Business Journal that “to give a $1,000 bonus, that’s a traditional response to a nontraditional opportunity. We have an opportunity now to invest in our future.” - January 22, 2018, Boston Business Journal article excerpt
1A Auto, Inc. (Westford, Massachusetts) -- Bonuses for all full-time employees:
Massachusetts based online auto parts retailer 1A Auto announced across the board cash bonuses for all full-time employees. CEO Rick Green says that the decision was based on recent changes to tax policy. In a company meeting Wednesday, Green told employees, "Ultimately the tax savings will be passed to our customers in the form of lower prices, but we want to also share some of the savings with you, our hard-working employees." -- Jan. 25, 2018 1A Auto, Inc. press release
Thermo Fisher Scientific (Waltham, Massachusetts) -- $500 bonuses for 68,000 non-executive employees; increased charitable donations:
Thermo Fisher Scientific Inc. (NYSE: TMO), the world leader in serving science, will make additional investments totaling $50 million as a result of the benefit of recently enacted Federal tax reform legislation in the U.S. This investment includes:
$34 million for a one-time bonus of $500 to be paid to each of the company's approximately 68,000 eligible non-executive employees globally.
$16 million to accelerate key breakthrough R&D programs and also to increase the impact of the company's sustainability initiatives and philanthropic activities in support of STEM (Science, Technology, Engineering and Math) education.
"Thermo Fisher will benefit from tax reform, so we chose to use this unique opportunity to recognize the commitment of our colleagues who work hard every day to fulfill our Mission – to enable our customers to make the world healthier, cleaner and safer," said Marc N. Casper, president and chief executive officer, Thermo Fisher Scientific. "We also plan to use the benefit to fuel important programs that will strengthen our ability to serve our customers and the communities where we live and work." -- Jan. 31, 2018 Thermo Fisher Scientific press release
Cooperstown Environmental (Andover, Massachusetts) - Doubled the company-paid retirement contribution for all employees.
Pilgrim Bank (Cohasset, Massachusetts) - Base wage raised to $15 per hour; additional 401(k) contribution; increased charitable donations.
State Street (Boston, Massachusetts) – Enhanced employee retirement benefits and investment in training and community grant programs:
State Street will use this year's proceeds from the US tax overhaul measure to improve employees' retirement benefits and training and community grant programs, the company's chairman and chief executive said. – Jan. 23 Dow Jones Newswires report
Sinatra & Co. (Amherst, Massachusetts) -- The company is building apartments and new retail space in an Opportunity Zone created by the Tax Cuts and Jobs Act:
Nick Sinatra said he plans to retain much of the Boulevard Mall as he and his partners redevelop the 64-acre site they agreed to buy on Wednesday for $24 million.
The founder of Sinatra & Co. Real Estate said the mall will continue to operate as normal as they focus initially on construction of apartments and new retail and restaurant space on land along the street, beginning with the corner of Niagara Falls Boulevard and Maple Road.
Sinatra said he's been talking to Town of Amherst officials for a year or so about reusing the region's oldest enclosed shopping center. The site's inclusion in a federal Opportunity Zone program that promises tax credits to investors solidified his interest.
“We're going to turn the mall inside out," he said Thursday. “You want to create a walkable village for people."
Here are highlights of Sinatra's interview with The Buffalo News less than 24 hours after he won the bidding for the Boulevard Mall property, and reaction from industry observers:
Ownership group: Sinatra said his partners on this project include investors he has worked with for years on developments throughout this region and outside Western New York, including the Pritzker family in Chicago. They will buy the property through an Opportunity Zone fund that pulls together contributions from investors seeking the tax benefits of the federal program, he said. -- April 5, 2019 Buffalo News article
The TJX Companies Inc. -- Holding company for TJ Maxx, Marshalls, HomeGoods, Sierra Trading Post, Homesense -- (Headquarters in Framingham, Massachusetts, with many retail locations across the state) – the companies gave tax reform bonuses to employees, increased retirement fund contributions, paid parental leave and increased charitable contributions:
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
The Stowaway (Mattapoisett); Speedwell Tavern (Plymouth); Gateway Tavern (Wareham); Sail Loft (Dartmouth) and Duck Inn Pub (Hyannis) -- $500 bonuses for full-time employees; $200 bonuses for part-time employees. Altogether at these affiliated restaurants, bonuses went to 93 employees:
All of the partners expressed the same reasoning for the bonuses, according to the release. They were happy to be able to share the tax savings by investing in their workforce. They recognize their people as their most important asset. They viewed the payouts as a way of giving back to their staffs, thanking them for everything they contribute to their organization’s success. The thought process was that the bonus checks will also benefit the local communities through employees spending more, boosting the area economically, according to the release. – Feb. 16, 2018 Wicked Marion Local article excerpt
STERIS Corporation (Northborough, Massachusetts) -- $1,000 bonuses:
Like many companies, the recent tax reform in the U.S. will result in significant additional earnings for STERIS to strategically grow our business and return value to Customers, employees and shareholders. One of our first actions on that front will be a one-time special discretionary bonus of $1,000 to all U.S. employees other than senior executives. -- Feb. 7, 2018 STERIS press release
Blue Hills Bancorp Inc. (Norwood, Massachusetts) – $1,000 employee bonuses; total bonuses $70,000:
In addition, and as a result of the Tax Act, the Company recorded an expense of $70,000 in the fourth quarter of 2017 related to awarding a $1,000 bonus to each employee with a functional title below the Assistant Vice President level. The Company also took action to raise the hourly pay rate to $15 for a small number of hourly employees not already at that pay level. – Jan. 29, 2018 Blue Hill BanCorp Inc. press release
Dyer Capital Management, Inc. (Marion, Massachusetts) – Base wage raised 3.5% to $22 per hour; hourly employees also received a special one-time bonus:
In keeping with the economic prospects of the Tax Cuts & Jobs Act of 2017, Dyer Capital Management Inc. (DCM) has announced a special one-time bonus payable this month to each of its hourly employees. Also, the company is increasing the minimum hourly rate 3.5% to $22 an hour. President Timothy H. Dyer said: “In the spirit of shared success, we are pleased to reward our hourly workers with this good news now, as we anticipate brighter, future conditions for our economy and our country.” – Dyer Capital Management, Inc. press release
Eversource Energy (Westwood, Massachusetts) – The utility is passing along tax savings to customers
To ensure Massachusetts ratepayers receive the benefit of recent federal tax cuts, the Department of Public Utilities (DPU) ordered NSTAR Electric Company (NSTAR) and Western Massachusetts Electric Company (WMECo), together doing business as Eversource Energy, to reduce rates due to the federal tax law in their base rates that will take effect on February 1, 2018. Additionally, in an effort to capture savings for ratepayers in the Commonwealth, DPU opened an investigation to analyze how the recently enacted federal tax reform may affect gas, electric, and water utility rates for Massachusetts utility customers.
As a result of the reduction in the tax expense and the rate consolidation of the companies, the DPU’s Order reduced the recently approved rates for Eversource Energy by approximately $56 million. Eversource customers will now see an approximately $20 million, or 1.8 percent, decrease in rates, instead of the approximately $36 million increase that was initially approved by the DPU. - February 5, 2018 Massachusetts Department of Public Utilities press release
National Grid (Waltham, Massachusetts) – The utility is passing along tax savings to customers:
The state is ordering more than a dozen electric, gas and water companies to fork over $116 million in tax savings to their customers.
A directive issued Friday by the state Department of Public Utilities requires 14 publicly regulated companies — including National Grid, Eversource and Unitil — to reduce their distribution rates, effective July 1, to reflect savings from a cut in the federal corporate tax rate.
The agency says residential customers can expect average annual savings from $9 to $40 — or a 1 to 8.5 percent reduction on their bills. - June 30, 2018 article from the Daily News of Newburyport
Unitil (Lunenburg, Massachusetts) – The utility is passing along tax savings to customers:
In the filing, Unitil sought to increase its rates to generate $7.3 million in additional base distribution revenues. This increase included the Company’s request to transfer the recovery of $3.4 million in Gas System Enhancement Plan (“GSEP”) investments from the Local Distribution Adjustment Factor (“LDAF”) to base distribution rates. Consequently, if approved, the proposed increase in base distribution revenues of $7.3 million would be offset by a revenue decrease of $3.4 million to the LDAF, which resulted in a $3.9 million, or11.1 percent, increase over current total gas operating revenues. The Company also statedthat its requested rate increase considered the reduction in the federal corporate income tax rate that results from the Tax Cuts and Jobs Act of 2017 (“Tax Act”), which became effective January 1, 2018 - February 28, 2020 Massachusetts Department of Public Utilities document
Berkshire Gas (Pittsfield, Massachusetts) – The utility is passing along tax savings to customers:
The agreement also incorporates tax savings Berkshire received as a result of the reduction of the federal corporate tax rate. That resulted from the AG’s petitioning the DPU last December to ensure that utility tax savings go to ratepayers, and not to gas, electricity, and water utility owners. - December 10, 2018 Daily Hampshire Gazette article
Columbia Gas of Massachusetts (Westborough, Massachusetts) – The utility is passing along tax savings to customers:
Columbia Gas of Massachusetts is filing a petition with the Massachusetts Department of Public Utilities (DPU) to increase annual revenues by $24.1 million, representing a 3.9 percent increase in current operating revenues.
The request addresses increases in operating and maintenance costs incurred to comply with increasingly stringent federal and state regulatory mandates and capital costs incurred to upgrade gas infrastructure since the last time Columbia Gas changed its rates in 2016.
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The Columbia Gas request is reduced by the impact of the federal Tax Cuts and Jobs Act, which became effective on January 1, 2018.
The request includes a proposal for a refund to customers of $9.1 million, beginning on the effective date of the revised rates, related to the benefit of the tax cut as of January 1, 2018. - April 14, 2018 Western Mass News excerpt
Liberty Utilities (Avondale, Arizona) – The utility is passing along tax savings to customers:
On May 1, 2018, Liberty Utilities (New England Natural Gas Company) Corp. d/b/a Liberty Utilities (“Company”) filed its compliance filing in D.P.U. 18-15. The Department docketed the Company’s filing as D.P.U. 18-15-7. The Company proposes to incorporate the current corporate income tax rate in its base distribution rates beginning on July 1, 2018. The Company expects that this change will reduce its revenue requirement by approximately $929,000. The Company proposes to return any excess tax collected from January 2018 through June 2018 only if the Company’s actual return on equity (“ROE”) exceeds its allowed ROE for 2018. Finally, the Company proposes to return approximately at $2.3 million in excess ADIT over yet to be determined amortization periods, through a credit to its Local Distribution Adjustment Clause starting in November 2018. - May 23, 2018 Massachusetts Department of Public Utilities notice of filing and public hearing
Aquarion Water Company of Massachusetts, Inc. (Oxford, Massachusetts) – The utility is passing along tax savings to customers:
Specifically, with this Motion, the Company is requesting to amend its initial filing submitted to the Department on April 13, 2017 to incorporate certain changes to the request for a base-rate change (the “Amendment”). Collectively, the changes to the Company’s initial filing proposed in this Amendment reduce the Company’s requested rate relief from $2.347 million to $2.121 million, or by $226,000. The reduction of the proposed requested increase is enabled by the federal “Tax Cuts and Jobs Act,” enacted December 22, 2017 (“2017 Tax Act”), along with other circumstances. - Aquarion Water Company of Massachusetts, Inc. filing
AT&T -- $1,000 bonuses for 874 Massachusetts-based employees; Nationwide, $1,000 bonuses for 200,000 employees, and a $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
Fidelity Bank (Leominster, Massachusetts) – Base wage raised to $14.25 and to $15 by 2020; increased community contributions through LifeDesign Community Dividend, hiring of new employees, investment in new technology tools and equipment, and new facility projects:
Fidelity Bank headquartered in Leominster with 10 full-service offices in central Massachusetts, is sharing the benefits it receives from the corporate rate going from 35 percent to 21 percent with its employees, clients, and community. In doing so, Fidelity Bank is leading the way for smaller, local community banks in Central Massachusetts to use tax savings in positive ways.
“We see tax reform as an opportunity to show our deep commitment to our three key constituencies –our valued employees, our community, and our clients” says Edward F. Manzi, Jr. Chairman and CEO of Fidelity Bank.
The local community bank will give all staff below the Vice President level a bonus of $500. Officials have decided to increase the minimum wage at Fidelity Bank to $14.25 per hour with a commitment to reach $15 per hour by 2020. Fidelity Bank is also allocating additional funds to its annual LifeDesign Community Dividend, investing the additional money in specific causes that support their community and the markets in which they operate. Examples include mental and physical health care; affordable housing; children’s education and support; and cultural organizations. Further, the bank’s 2018 plan includes investing in the hiring of new employees, new technology tools and equipment, and several facility projects including new LifeDesign Banking locations in downtown Worcester and Gardner – all to bring the value of the LifeDesign promise more effectively to more current and future clients.” – Feb. 14, 2018 Fidelity Bank press release excerpt
HarborOne Bank (Brockton, Massachusetts) – $500 bonuses to 600 bank employees; base wage raised to $15 per hour:
“The immediate outcome of this legislation will be tax savings for HarborOne, which has a direct impact on our bottom line,” CEO James Blake said. “It’s only fitting that this financial gain be shared with our employees.” – Dec. 28, 2017 Boston Herald article excerpt
Meridian Bancorp, Inc. (Boston, Massachusetts) – Base wage raised to $15 per hour; additional 20% will be added to existing bonuses; increased capital spending including building six new branch locations; additional charitable contributions:
Meridian Bancorp, Inc. (the "Company" or "Meridian") (NASDAQ:EBSB), the holding company for East Boston Savings Bank (the "Bank"), following the new tax law being passed by Congress and signed by the President on December 22, 2017, announced the following enhanced commitments to the Bank's employees, infrastructure investment and charitable giving which will benefit its customers and the communities it serves:
- The minimum wage for all employees will increase to $15 per hour
- An additional 20% will be added to the 2017 bonus as part of the Bank's Incentive Compensation Plan that will be paid to the Bank's 500+ employees in January 2018
- An increase to the Capital Spending Budget as a result of plans to build six new branch locations in 2018
- An increase in charitable giving by targeting $1 million in donations to community and non-profit organizations in 2018 – Jan. 3, 2018 Meridian Bancorp, Inc. press release excerpt
Apple (Apple store locations in Boston, Braintree, Burlington, Cambridge, Chestnut Hill, Dedham, Hingham, Holyoke, Lynnfield, Marlborough, Natick) - $2,500 employee bonuses in the form of restricted stock units; Nationwide, $30 billion in additional capital expenditures over five years; 20,000 new employees will be hired; increased support of coding education and science, technology, engineering, arts, and math; increased support for U.S. manufacturing.
Berkshire Hills Bancorp Inc. (Pittsfield, Massachusetts) – Base wage raised to $15 per hour; $1,000 bonuses to over 1,000 employees; investments in employee development and training; $2 million in additional charitable giving:
Berkshire Hills Bancorp, Inc. (NYSE: BHLB), the parent of Berkshire Bank, today announced additional investments in its employees and communities following the recent passage of federal tax reform legislation.
These investments include:
- Raising Berkshire's minimum wage to $15 per hour.
- Providing a special, one-time bonus of $1000 to over 1000 employees. This grant benefits all full-time employees below a certain compensation threshold, covering over 70% of the Bank's workforce, and augments the special $500 holiday bonus these colleagues received in the fourth quarter.
- Enhancing Berkshire's investment in employee development and training programs to benefit our employees and bolster our current offering at AMEBU – American's Most Exciting Bank University.
- Contributing $2 million to the Berkshire Bank Charitable Foundation which supports charitable organizations, scholarships, and volunteerism across Berkshire's local communities. This will bolster the foundation's endowment and allow for increased local giving. Last year we provided over $2 million to our local communities, complementing our employee volunteer program which helps our employees contribute over 40,000 hours of volunteer service each year. -- Jan. 4, 2018 Berkshire Hills Bancorp Inc. press release
Adams Community Bank (Adams, Massachusetts) -- $1,000 bonuses for full-time employees; $500 bonuses for part-time employees; base wage raised to $13.25 per hour; other wage increases; increased charitable contributions, increased capital expenditures, and more:
Adams Community Bank today announced investments in its employees, customers, and the Berkshire community following the recent passage of federal tax reform legislation.
These investments include:
- Paying a special one-time bonus of $1,000 to full time employees, and $500 to part time employees. This initiative is focused on those employees making below a certain compensation threshold.
- Increasing base pay by $1 per hour for regular non-officer employees making below a certain compensation threshold.
- Raising our minimum wage to $13.25.
- Reducing the employee’s share of medical and dental insurance premiums from 30% to 20%, for all bank employees who are not officers.
- Increasing interest rates on customer deposit products beginning in January.
In addition, during 2018 Adams Community Bank will be upgrading our website, ATM’s and streamlining account-opening processes.
Finally, the Bank anticipates having more money to use for our long-standing goal of donating 10% of net income each year to local charitable and non-profit initiatives.
“The recent change to the Federal tax law offered a unique opportunity to assess how we can use this savings to improve our community,” said Charles O’Brien, President and CEO. “The bank will benefit from the lowering of corporate tax rates and as a true community bank headquartered in the Berkshires we would like to pass along these savings right here at home by investing in our staff, our customers, and the local community. These initiatives will put more money into the pockets of our employees, our customers, and the local non-profit community which will serve to benefit the Berkshire economy. We are thrilled that more than 80% of our staff will be positively impacted by these changes. In addition we are planning to add to our staff during 2018 by hiring several employees to better serve our growing customer base.”
O’Brien also noted “these compensation changes are in addition to the full complement of benefits the bank offers including an existing incentive plan for all staff, our pension and 401(K) plans, life insurance, tuition reimbursement, employee wellness, and more. Some banks have eliminated or scaled back on some of these benefits but we strive to attract the most talented staff. Our entire salary and benefit package is the most competitive offered by any community bank within Berkshire County.” -- Jan. 25, 2018 Adams Community Bank press release
Waste Management, Inc. (Multiple locations in Massachusetts) – $2,000 bonuses:
Waste Management, Inc. (NYSE: WM) announced today that, in light of the meaningful contributions of its employees and the new U.S. corporate tax structure, the company will distribute US $2,000 in 2018 to every North American employee non on a bonus or sales incentive plan; that includes hourly and other employees.
"We are about to get a tax benefit as our U.S. corporate tax rate goes from 35 percent to 21 percent. In considering how to best spend that, we wanted to find a way to help grow our economy, which in turn, will help grow our business, and give some of the tax savings back to those hardworking employees who do not get the opportunity to participate in our salaried incentive plans," said Jim Fish, president and chief executive officer, Waste Management.
“So, we are offering each North American hourly full-time employee and salaried employee who does not participate in any sales incentive or bonus plan during 2018, a cash bonus of US $2,000 to show our appreciation to so many of our valued employees while growing our business and returning a good portion of the tax savings directly to the overall economy," he continued.
Approximately 34,000 qualified Waste Management employees could receive this special bonus. – Jan. 10, 2018 Waste Management, Inc. press release
Walmart – Massachusetts employees at 49 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.
T.J. Maxx – 52 stores in Massachusetts – Tax reform bonuses, retirement plan contributions, parental leave, enhanced vacation benefits, and increased charitable donations.
Home Depot -- 45 locations in Massachusetts, bonuses for all hourly employees, up to $1,000.
Lowe's --3,000+ employees at 27 stores and one distribution facility in Massachusets. 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.
CarMax (Four locations in Massachusetts) – $250-$1,500 bonuses depending on length of service:
The nation’s largest retailer of used cars, announced plans to provide one-time bonuses to most hourly and commissioned full-time and part-time associates as a result of the recently passed Tax Cuts and Jobs Act of 2017. Bonus amounts will vary from $200 up to $1,500 based on length of service with the company. – Feb. 23, 2018 EPR Retail News article excerpt
Rollstone Bank & Trust (Leominster, Massachusetts) -- Increased charitable contributions:
“As a bank invested in our communities, RBT takes great pride in supporting local organizations that make a positive impact on so many people. The United Way of North Central Massachusetts is one of those organizations,” said Martin F. Connors Jr., president and CEO of Rollstone Bank & Trust. “We are fortunate to have such great health care in our area, and are pleased we can help them continue their mission.”
Connors added that recently implemented reductions in the corporate tax rate will allow RBT to give back to an even greater extent than it has in the past.
“The tax cut provides us the opportunity to continue and even expand our investments in our region, customers, and employees,” he said. - May 17, 2018 Leominster Champion article excerpt
Ryder (15 locations in Massachusetts) – Tax reform bonuses for employees.
Cintas (Multiple locations in Massachusetts) -- $1,000 bonuses for employees of at least a year, $500 for employees of less than a year.
Chipotle Mexican Grill (Multiple locations in Massachusetts) – Bonuses ranging from $250 to $1,000; increased employee benefits; $50 million investment in existing restaurants.
Comcast (Multiple locations in Massachusetts) -- $1,000 bonuses; nationwide, at least $50 billion investment in infrastructure in next five years.
Starbucks Coffee Company (Multiple locations in Massachusetts) –$500 stock grants for all retail employees, $2,000 stock grants for store managers, and varying plan and support center employee stock grants. Nationally, 8,000 new retail jobs; an additional wage increase this year, totaling approximately $120 million in wage increases, increased sick time benefits and parental leave.
U-Haul (Multiple locations in Massachusetts) – $1,200 bonuses for full-time employees, $500 for part-time employees.
FedEx (Multiple locations in Massachusetts) – 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 (250+ locations in Massachusetts) – 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 Massachusetts 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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Instead, the Biden-Harris administration will resume a limited executive-level Trade and Investment Framework Agreement (TIFA) with Taiwanese officials. As an executive agreement, the TIFA will be nonbinding and avoid any reduction in tariffs or other commitment that would require implementation legislation.
The narrow scope means American workers will be missing out on the massive benefits that free trade with allies like Taiwan has to offer. A bipartisan group of senators say the TIFA talks don't go far enough and they're calling for U.S. Trade Representative Katherine Tai to pursue a real Free Trade Agreement with Taiwan instead.
In a letter to Ambassador Tai at the end of June, the group of 42 senators led by Senator Marco Rubio (R-Fla) and Senator Mark Warner (D-Va) requested that the administration "take steps to begin laying the groundwork for negotiation of a free trade agreement... with Taiwan." This letter follows a previous letter by 50 senators in late 2020 calling for a free trade agreement with Taiwan and a letter by 161 members of Congress in 2019 calling for the same. Taiwanese President Tsai Ing-wen also stated her own desire for a free trade agreement with the United States last year, and Taiwan's chief trade negotiator John Deng reiterated this desire to U.S. officials last month.
While the United States does not have formal diplomatic relations with Taiwan, it shares deep economic ties with the island nation. Taiwan is the U.S.'s ninth-largest trading partner in the world, and the U.S. exports more to the island than to France or Italy. The island is particularly important for American farmers as the seventh-largest destination for agricultural exports from the United States.
Taiwan is a strategic technology partner as well, home to companies like Taiwan Semiconductor Manufacturing Company (TSMC), the global leader in high-end chip production. A trade agreement would incentivize greater technological exchanges between countries and could seal in rules on how to deal with state-owned enterprises, like those found in the USMCA, that would prevent a Chinese takeover of the industry.
Previous free trade talks between the United States and Taiwan had stalled due to trade barriers from the island government, in particular those on U.S. meat exports. As of January 2021, however, Taiwan lifted its restrictions on American pork and beef, showing an open willingness to negotiate and make concessions in order to get a larger deal.
In addition, USTR has previously identified numerous trade barriers from Taiwan that remain today, such as those restricting imports of rice, ground beef, certain animal byproducts, and genetically modified foods. Additionally, Copyright Piracy was one of Taiwan's worst-performing subcategories on the 2020 International Property Rights Index. While Taiwan has made recent progress on combatting copyright infringement, US-Taiwan negotiations could result in robust enforcement for intellectual property belonging to American companies. Without TPA, the Biden Administration ensures these barriers stay intact.
The Biden Administration must shift its focus away from bloated international tax cartels that will harm American workers and toward Free Trade Agreements that will lower trade barriers to provide an economic boost for all countries involved. Taiwan would be a great place to start.
Photo Credit: Pixabay
Heads Up: Infrastructure Bill Paves the Way for a Miles-Traveled Tax
Bill sets up pilot program with the goal of imposing a permanent vehicle mileage tax, shovels money to states to push them to do the same, and spends taxpayer money for politicians to lobby the public to support the tax
The $1.2 trillion infrastructure bill would pave the way for a new miles-driven tax on drivers by creating various pilot programs for a "vehicle per-mile user fee.”
A vehicle miles-traveled tax (VMT) would charge motorists based on how many miles they have traveled and is often pitched by proponents as a means of capturing additional revenue from the American people.
Biden administration officials, including White House Press Secretary Jen Psaki and Transportation Secretary Pete Buttigieg, have repeatedly stated that a VMT would violate President Biden’s pledge that he will not raise any taxes on people making less than $400,000 a year.
In March, Secretary Buttigieg was even forced to make an embarrassing walk back of his previous support for a VMT. “No (a VMT) is not part of the conversation about this infrastructure bill,” Buttigieg told CNN’s Jake Tapper. “I just want to make sure that's really clear."
Despite these promises from the Biden administration, $125 million is included in the legislative text to fund the creation of VMT pilot programs. Below are details taken straight from the infrastructure bill:
Spends $75 million doling out grants to State, local and regional transportation departments to set up pilot programs
Section 13001 authorizes $15,000,000 for each of fiscal years 2022 through 2026 to be distributed as grants by the Secretary of Transportation with the purpose of establishing pilot projects at the State, local, and regional level “to test the feasibility of a road usage fee.”
Taxpayer dollars used to lobby the public for tax hikes
Sections 13001 states that an objective of the pilot programs that the Secretary of Transportation will be responsible for meeting will be “to conduct public education and outreach to increase public awareness regarding the need for user-based alternative revenue mechanisms for surface transportation programs.”
Translation: Taxpayer dollars used to lecture drivers on why they need to pay more taxes. Imagine a public service announce from Pete Buttigieg promoting a miles-traveled tax and paid for by taxpayers.
Spends $50 million creating a national VMT pilot program
Section 13002 authorizes $10,000,000 for each of fiscal years 2022 through 2026 to carry out the implementation of a national VMT pilot program. Program participants would volunteer to participate in the pilot program with the goal of testing “the design, acceptance, implementation, and financial sustainability of a national motor vehicle per-mile user-fee.” Volunteers would be solicited from all 50 states and include both commercial and passenger vehicles.
Creates an Advisory Board stacked with special interest groups, lobbyists and woke activists
Section 13002 sets up "Federal System Funding Alternative Advisory Board" to make recommendations on the structure, scope and methodology of the pilot program and to carry out a public awareness campaign for the program. The bill mandates that the board shall include representatives of the trucking industry, transportation focused non-profits, and “advocacy groups focused on equity.”
Outlines tools used to track driver’s miles driven
The bill lays out the various “vehicle-miles-traveled-collection tools” that would be used by the federal government to track drivers. These tools include third-party onboard diagnostic devices (GPS tracking devices), smart phone apps, data from automakers and data obtained by car insurance companies.
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Khan Promises FTC Bipartisanship, But Her Record Proves Otherwise
Last week, the House Energy and Commerce Committee had its first opportunity to ask newly-anointed FTC Chair Lina Khan questions regarding her plan for running the FTC. Congressman Gus Bilirakis (R-FL) questioned, if Khan would “commit to [run the FTC] in a bipartisan fashion where you will consult and coordinate with all commissioners and ensure that they have the resources of the commission available to them on all pending business.” Khan answered affirmatively, stating that she would be “happy to find shared areas of agreement” at the FTC.
What a wonderful sentiment, if only Khan meant it. So far, Khan has launched one of the most partisan crusades in the history of the FTC. She has taken advantage of her temporary 3-2 majority to steamroll consequential changes and smash long-held bipartisan norms. 71 percent of proposals during the Open Commission Meetings have been pushed through with this 3-2 majority. Some of these proposals overturned enforcement principles previously agreed to with bipartisan support. One example is the 2015 “Statement of Enforcement Principles Regarding ‘Unfair Methods of Competition Under Section 5 of the FTC Act,” which was written to limit the FTC’s “standalone” authority over unfair methods of competition when addressing anticompetitive conduct outside of the scope of the Sherman or Clayton Acts. Another example is the Policy Statement on Prior Approval and Prior Notice Provisions in Merger Cases, which essentially functions as imposing a decade-long merger tax on corporations.
Even though Khan said that “staff is always available to provide analysis and assessment and commissioners are routinely requested that analysis from staff and staff is providing it,” FTC commissioners from the Republican minority have disagreed with that description. Commissioner Christine Wilson has discussed that the loss of “full consultation with staff through oral briefings,” along with “comprehensive memoranda” and “a robust dialogue amongst the commissioners” has harmed her ability to make fully informed decisions, as they only give monologues that are “akin to theater.”
We may not know for a long time the perspective of staffers on the impacts of this half-fast procedural approach due to an agency-wide gag order. Jen Howard, Khan’s chief of staff, has put a “moratorium on public events and press outreach.” The internal and external silencing of FTC staffers under Khan is troubling. Thankfully, Khan has been unable to silence commissioners that have emphasized her careless changes to long-standing procedures.
House Republicans, including House Energy and Commerce Committee Republican Leader Rep. Cathy McMorris-Rodgers (R-Wash.), Rep. Jim Jordan [R-Ohio], and James Comer [R-Ky.], wrote a letter to the FTC denouncing these radical reforms. They noted that “reports suggest radical changes at the FTC may be damaging morale and having significant negative effects on experienced FTC staff.”
Khan reckless pursuit of “reforming” the FTC appears to be willingly ignoring the commissioners outside of the temporary Democrat majority and the perspectives of other scholars. Despite Khan’s words promising bipartisanship, her actions promote a partisan transformation of the agency.
Photo Credit: New America
Infrastructure Bill Contains $14.5 Billion Superfund Tax Hike, Hits Critical Minerals
The $1.2 trillion infrastructure bill making its way through the Senate contains a $14.55 billion tax hike on American chemical and mineral producers.
Section 80201 of the bill would revive long-expired Superfund excise taxes at twice their previous level. This direct tax hike on American producers would result in higher prices for consumers, threaten thousands of jobs, and undermine domestic critical mineral development.
Senator Ted Cruz (R-Texas) has introduced an amendment (#2388) that would strike the inclusion of the Superfund Excise Tax from the bill. Americans for Tax Reform supports the Cruz amendment and urges lawmakers to vote in favor of the amendment.
The Superfund taxes were last in effect in the mid-1990s, when Congress allowed them to expire on the grounds that they were burdensome and unnecessary. Despite being sold as a "user-fee" to fund the Hazardous Substance Superfund, only $3.5 billion of $14.55 billion of new revenue projected by the Joint Committee on Taxation is authorized for the Superfund.
Critical Minerals are hit by the tax
The tax would apply to a list of 42 chemicals and minerals. Four of these substances—Arsenic, Antimony, Chromium, and Cobalt—are listed as “critical minerals” by the Department of Interior, which means they are “essential to the economic and national security of the United States” and have supply chains that are “vulnerable to disruption.”
Increasing taxes on critical minerals contradicts the stated goals of lawmakers seeking to ramp up our domestic critical mineral supply chain. It makes little sense to impose harsh tax hikes on these vital resources, especially at a time when policymakers are growing increasingly concerned about the potential for countries like China to cause problems for American supply chains.
Coalition of taxpayer groups opposes the Superfund Excise Tax
A coalition of taxpayer advocacy organizations, including Americans for Tax Reform, wrote a letter in July expressing concern about the implications of reimposing the Superfund excise taxes: “A tax increase on job creators, individuals, or consumers is always a precarious endeavor, but in the midst of a recovery from a downturn precipitated by the response to the pandemic could threaten our economic vitality in the years to come.”
Threatens 7,500 Jobs
An economic analysis by the American Chemistry Council found that nearly 7,500 jobs would be at risk if the tax increase were passed. Moreover, 44 plants that produce critical chemicals, minerals, and metals could potentially be forced to shut down.
The following chemicals and minerals would be subject to Superfund excise taxes:
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Lawmakers should put American consumers first and remove this tax increase from the bipartisan infrastructure package.
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Bring Home the Bacon? Not in California You Won’t
The Californian government has made many mistakes over the last several years. It overtaxed its people, allowed homelessness to overrun its cities, and crippled its economy with crushing lockdowns, but this time it’s gone too far:
It came for people’s bacon.
On January 1, California will begin enforcing an animal welfare law passed by voters in 2018 that requires more space for breeding pigs, along with egg-laying chickens and veal calves.
While veal and egg producers believe they can meet the new standards, only 4% of hog operations meet them. This means that unless the state allows non-compliant meat to be sold, California projects to lose almost half of its pork supply. A Hatmiya Group study estimated that it could make pork prices soar. In fact, “the price of bacon could rocket up by 60 percent.”
So much for “bringing home the bacon”.
This is yet another blow for many restaurants across the state recovering from lockdowns, since bacon is a very popular food item. “Our number one seller is bacon, eggs and hash browns,” said Jeannie Kim, who for 15 years has run SAMS American Eatery on San Francisco's busy Market Street. “It could be devastating for us.”
Even worse, many did not even realize this would be happening. “KPIX-5 called dozens of restaurants, stores and meat markets Monday and very few were aware of what may be coming. That included Concord caterer Rogie Purificacion, who said pork is a staple in Hispanic and Asian cooking.”
Another Californian, Jenny Flannagan, remembered the “chicken law” but didn’t realize it would affect bacon as well. “It’s kind of sad. It would be nice to know what we were voting for,” she said. “I don’t think anybody knows about this.”
With less than half a year left until the law takes effect, it is very unlikely that the pork industry will manage to adapt in time. California consumes around 15% of pork produced in the country. The pork industry has filed multiple lawsuits to stop this law, but so far, the Courts have favored California. The National Pork Producer Council, alongside restaurants and other business groups, has asked Governor Newsom to delay the requirements.
Over the last two years California has passed regulations that have crushed freelancers’ ability to operate, created diversity quotas for corporate boards, used taxpayer dollars to create a task force on reparations, and passed even more laws to limit its citizens’ ability to obtain a legal firearm.
Should this pork law take effect in January, the good people of California have the perfect chance to show us what they value more: Onerous, overbearing business regulations or their bacon.
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FTC Letters Put American Companies In "Mother-May-I" Relationship With Unelected Bureaucrats
The Federal Trade Commission has started sending letters warning certain companies engaged in mergers and acquisitions (M+A) to proceed “at their own risk” until the FTC weighs in, according to a blog post from Bureau of Competition Director Holly Vedova.
This is yet another part of FTC Chair Lina Khan’s plan to put every company in a “Mother-May-I” relationship with the government. These letters will only serve to dissuade companies from engaging in future M+A activity, a massive driver of innovation and economic growth.
The Hart Scott Rodino Act of 1976 requires companies engaging in M+A activity above a certain threshold to notify the FTC and Department of Justice, the two agencies that enforce antitrust law, before the transaction is consummated. After a company provides the FTC and DOJ with a detailed filing with information about the transaction, the agencies have 30 days to determine if the transaction is anticompetitive in nature.
If a bureaucrat determines that the M+A activity under review will negatively impact competition in a relevant market, the FTC or DOJ can request more information or materials from the filing parties, also known as a “second request.” Generally, the reviewing agency then has another 30 days to examine the new information once the company fulfills the second request.
If the reviewing agency believes that the transaction will harm competition, it can file an injunction in federal court to prevent the transaction from being consummated. If the reviewing agency does not challenge the transaction before the waiting period expires, the transaction goes ahead unimpeded.
In the letters, the FTC is warning companies against making deals even if the agency does not challenge the transaction before the waiting period expires. The letters threaten legal action and “aggressive enforcement” of antitrust law against companies that consummate a transaction after the waiting period expires and before the FTC weighs in. This could lead to deals being delayed for months or even years as companies wait for an FTC bureaucrat’s approval.
Not only will the FTC’s aggressive posture likely lead to companies abandoning current pending deals, it will dissuade firms from engaging in innovation-driving M+A activity in the future.
Mergers generally increase efficiency that reduces production costs, leading to lower prices and increased output for shoppers. Acquisitions allow larger firms to quickly deliver innovative new products to consumers because they have the scale and infrastructure to do so. More than half of all startups say that their most realistic long-term goal is to be acquired by a larger firm, providing a key incentive for entrepreneurs to assume the massive risk that comes with starting a new company. M+A activity ultimately benefits all Americans with lower prices and greater access to innovative products and services.
Ultimately, Khan’s tenure so far has created an enormous cloud of uncertainty for American companies, exactly the opposite of what the economy needs as we attempt to rebound from a pandemic-induced recession. These letters are just the latest example of Khan’s partisan weaponization of the FTC and will have a massive chilling effect on current and future M+A activity.
Cryptocurrency Missteps in the Infrastructure Bill
The 2,700-page bipartisan infrastructure package includes a cryptocurrency provision as a pay-for sparking intense activity to get this language corrected. The current language on cryptocurrency and digital asset reporting requirements would undermine the entire ecosystem and jeopardize the privacy of millions of Americans with its overly broad and vague reporting requirements on cryptocurrency and digital assets.
As written, cryptocurrency brokers and individuals involved in crypto transactions will be required to file tax returns if they receive more than $10,000 in a transaction. Such a threshold opens the door to fishing expeditions into taxpayers. Proponents argue this a way to generate more tax revenue. The Joint Committee on Taxation claims that this proposal will raise approximately $28 billion in revenue to offset some $550 billion in spending, but that figure is contrived. The extreme volatility of the of crypto markets raises skepticism of how they arrived at that figure.
While not generating any real revenue, the new requirement would impose a real cost on users from the time and labor it takes to collect and identify all the information needed to file tax returns to the IRS. Cryptocurrency brokers, much like stockbrokers, would have to notify cryptocurrency traders of their obligation to report personally identifiable information (PII) for a tax return on any digital asset. The broker will be required to collect the name, address, and phone number of the trader. Brokers will also be required to file returns identifying information on the individuals involved in the transactions.
But the overly broad language as to who is considered a “broker” for crypto and digital assets implicates far too many aspects of the blockchain ecosystem. Fortunately, Senators Pat Toomey (R-PA) and Ron Wyden (D-OR) have echoed the same criticisms, agreeing that the provision would pull in “non-financial intermediaries like miners, network validators, and other service providers,” calling it “unworkable” and saying they would offer an amendment.
IRS reporting requirements remain onerous no matter who has to comply. Least of all should Congress require those who have no insight in to financial aspects of individual or broker accounts to comply with IRS reporting obligations.
In the first half of 2021, the amount of global crypto users doubled to 200 million. This immense growth will be stunted in the face of rushed, ill-conceived regulation.
Congress should attempt to encourage the growth of privately developed and operated digital currencies instead of subjecting them to additional tax requirements, which is more than likely to alienate certain cryptocurrency users and encroach on the privacy of individual cryptocurrency holders.
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States Slash Corporate Taxes, Promote Growth as Biden Considers Higher Rates
As President Joe Biden and congressional Democrats push for a massive corporate tax hike, states across the country are moving in the opposite direction. This year, five states – Idaho, Nebraska, New Hampshire, Oklahoma, and Louisiana – cut their corporate tax rates, providing hundreds of millions in tax relief for employers and workers. These states will enjoy a more competitive business climate with their commitment to pro-growth tax reform.
Compared to other forms of taxation, corporate taxes are by far the most detrimental to economic growth, according to analysis by the Tax Foundation. Academic research reveals that workers bear the brunt of the corporate tax burden – at least half – through reduced wages. That applies in particular to “the low-skilled, women, and young workers.”
On the other hand, lowering corporate tax rates can spur investment in things like buildings, equipment, and research and development. The 2017 Tax Cuts and Jobs Act did just that: by lowering the corporate tax rate from 35% to 21%, corporate fixed investment jumped 9.0% in 2018 and an additional 4.4% the next year.
Take a look at how these five states, all Republican-led, are slashing corporate tax rates and promoting free enterprise:
Idaho
- H.B. 380 will reduce Idaho’s flat corporate tax rate from 6.925% to 6.5%.
- The tax cut is retroactive to January 1, 2021, giving businesses the opportunity to claim a tax refund.
Nebraska
- L.B. 432 not only reduces the top marginal corporate income tax rate – it also creates a framework for future tax reductions next year.
- The top marginal corporate income tax rate will be lowered from 7.81% to 7.5%, starting in January 2022. In January 2023, that rate will be further reduced to 7.25%.
- The other of Nebraska’s 2 corporate tax brackets will maintain the same rate of 5.58%. This rate applies to the first $100,000 of taxable corporate income.
- The law also expresses the intent of the legislature to further reduce the top corporate rate, down to 7% in 2024 and 6.84% in 2025.
- Total tax savings:
- $1.9 million in FY 2022
- $9.1 million in FY 2023
- Total tax savings if other reductions are enacted:
- $19.8 million in FY 2024
- $26 million in FY 2025
New Hampshire
- With the passage of H.B. 1 and 2, New Hampshire will slightly lower its two major business taxes.
- The Business Profits Tax (BPT) – the state’s corporate income tax – will be reduced from 7.7% to 7.6% starting in 2022.
- The Business Enterprise Tax (BET), which is similar to a value-added tax, will be reduced from 0.6% to 0.55%. The filing threshold is also increased from $200,000 to $250,000, providing relief to many small businesses.
- H.B. 2 removes revenue triggers from the BPT and the BET, creating a fixed rate that will no longer rise with low tax revenue.
Oklahoma
- With Governor Stitt’s signing of H.B. 2960, Oklahoma now ties Missouri for the 2nd lowest corporate income tax rate in the nation.
- Starting January 2022, Missouri’s flat corporate income tax will be lowered by more than a third, from 6.25% to 4%.
- The lower rate will also apply to pass-through companies like LLCs, partnerships, and sole proprietorships. That allows these small businesses to pay the lower corporate tax rate of 4%, rather than a personal income tax rate of 5.4% levied on profits over $8,424.
- Total tax savings:
- $110 million in Fiscal Year 2023
Louisiana
- Residents will vote on a constitutional amendment this November that will determine whether new tax cuts ultimately go into effect. If the amendment fails, none of these tax cuts will be enacted.
- Louisiana will consolidate its 5 corporate income tax brackets into 3 new, simplified brackets.
- Louisiana’s top corporate tax rate will come down from 8% to 7.5%.
- The law also permanently suspends part of the Corporation Franchise Tax by exempting the first $300,000 of taxable capital starting in January 2023, a major boon to small businesses.
- The rate on taxable capital in excess of $300,000 will also be reduced, from 3% to 2.75%.
- If tax revenue growth targets are met over the next several years, the franchise tax will go down even further.
- These cuts will bring Louisiana out of the bottom 10 rankings in the Tax Foundation’s State Business Tax Climate Index, moving the state from 42nd to 38th.
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With Green Light from Biden, New Traffic Tax Under Review in San Francisco
Small businesses in downtown San Francisco are still struggling to get back on their feet after the pandemic. But city transportation officials are barreling ahead with a congestion tax plan that will drive businesses, customers, and dollars out of the city center.
Since 2004, San Francisco has considered implementing a “congestion pricing” system to alleviate worsening traffic in the busiest parts of downtown. By charging a fee to drivers who enter the city during rush hour, officials say traffic could be reduced by up to 15% as drivers switch to public transit for their commute.
Multiple scenarios are under consideration, but each would tax drivers a fee of $6.50 to enter congested pricing zones during rush hours, from 6–9 am and 3:30–6:30 pm. To advance “equity,” the fee would only be levied on commuters making over $100,000 annually. Anyone making under $46,000 is exempt from the tax entirely, while those in the middle of that range pay a discounted rate. The physical boundaries for the tax are yet to be decided, but one zone would include the financial district and the immediate downtown area. At the same time, another proposal expands the zone north and south to include Fisherman’s Wharf and Mission Bay.
Regardless of where and how the tax is implemented, congestion pricing is sure to impact economic growth at a critical point in the city’s recovery. Remote workers and empty offices will likely stick around for years. But with a hefty new fee to enter the downtown area, executives and businesses will decide to hold off on bringing workers back to the office. After crippling small businesses with some of the harshest Covid lockdowns in the country, the local government now plans to use a new tax to hobble the ability of those businesses to bounce back.
A congestion tax would also price families out of the downtown area, essentially forcing those people to use a failing public transportation system. Many people in the suburbs who commute to the city center will find themselves unable to afford the added cost of driving to work every day.
Those people will have no choice but to use the San Francisco public transit system, which ranks pitifully low compared to peer cities like D.C. and Chicago. San Francisco is at the bottom of its peer group for the most problem-prone transportation. The city also ranked last or second to last in average speed for every category, reflecting above-average density and congestion on railways and buses. Despite this failing infrastructure, 34% of San Franciscans already use public transportation, compared to an average of 17%. But the proposed congestion tax to drive on city roads will coerce thousands of additional residents to hop on a train or take a bus, with no plans to make the troubled system more efficient.
Meanwhile, local businesses – primarily the tourism industry – will undoubtedly suffer. Fewer people visiting the downtown area, directly as a result of the new tax, means fewer dollars flowing into the city’s economy at a time when the city desperately needs that cash for economic recovery. Several families say the tax would discourage them from visiting downtown, including Ben Flores of Manteca: “As a visitor and as someone who regularly comes here to see the sights, and to eat at restaurants and just to walk around and have fun, knowing that I have to spend money on everything else… really would maybe kind of drive me away. And if not me, I’m sure other families.”
Though it will take at least three years to implement a congestion tax, things are moving faster with the Biden administration’s recent approval of a similar program in New York City. Now that the Trump administration is no longer an obstacle, New York is set to become the first city in the nation to tax drivers, specifically those who enter the busiest parts of Manhattan. Suppose the San Francisco Board of Supervisors gives the green light at the end of the year and the California legislature grants its blessing. In that case, the Golden City may soon have its own version of a congestion tax that will stymie growth and harm local businesses.
Rather than charge new fees on residents already beleaguered with high taxes, San Francisco should encourage the use of public transportation by improving the system itself. Funds for such a project can be pulled from one of the city’s many unnecessary social programs. For example, a ludicrous “safe sleeping” program costing tens of millions of dollars provided just 260 tents for the city’s homeless, adding up to $60,000 per tent. That money could have been well-spent improving the city’s metro system to reduce downtown congestion instead of wasting taxpayer dollars on tents that cost more than double the price of an average San Francisco apartment.
San Francisco is notorious for wasteful spending of this sort. City politicians often call for new investments in underfunded services like public transportation, roads, and city cleanup. Instead, however, many of those funds are ultimately directed toward unproductive new offices and initiatives. For example, the Office of Racial Equity, created in 2019, sucked more than half a million from the city budget last year. In San Francisco public schools, students are now required to take two full semesters of “ethnic studies” classes, costing taxpayers $2.3 million in 2020. Meanwhile, the “Instruction, Innovation, & Social Justice” section of the school district’s budget receives a comfortable $1.04 million each year.
These millions in city funds should have been directed toward the city’s woefully inept public transit system, but city officials prioritized their political agenda over solving real problems in the city. Indeed, hundreds of department heads and city commissioners are required to complete “Implicit Bias Training” at the cost of $250 per head – an expense that San Francisco reimburses in full. Moreover, a new tax on CEO pay approved by voters last November will raise between $60 and $140 million, but Supervisor Matt Haney wants to spend most of it on health services. The money to improve public transit and solve downtown congestion is there, with no need for an unproductive new tax.
Forcing residents to leave their keys at home by imposing a heavy tax does not create a long-term solution to congestion. Instead, officials should focus on incentivizing public transportation by ending silly programs and directing the money toward much-needed rail improvements and bus repair. New taxes will only burden the businesses, residents, and employees of San Francisco with a prolonged recovery and even shoddier public transportation in the long term.
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Ohio Special Election: Carey, Cooperrider, Edmonds, Hood, Hwang, Peterson Commit to Oppose Tax Hikes
Ohio voters deserve to know where a candidate stands on taxes and spending. The good news is five Republican candidates, in their bid to become the next Congressional Representative of the 15th District of Ohio, have done just that by signing the Taxpayer Protection Pledge: a written commitment to voters that, if elected, they will “oppose and veto any and all efforts to increase taxes.”
Mike Carey, Thad Cooperrider, Ron Hood, Ruth Edmonds, Thomas Hwang, and Senator Bob Peterson have all signed the Taxpayer Protection Pledge in their bids to replace former Representative Steve Stivers. In making this principled written commitment to Ohio voters, all five candidates recognize that the problem is not that hardworking Ohioans are taxed too little, it’s that the government spends too much.
“I commend Carey, Cooperrider, Hood, Edmonds, Hwang, and Peterson for making it crystal clear to voters that there will be no tax increases under their watch if elected,” said Grover Norquist, President of Americans for Tax Reform. “Ohio voters have been hit with several tax hikes in recent years. They deserve an ally in the legislative branch, now more than ever, who will not raid their bank accounts. Instead, these candidates have committed to focus on making government more efficient, so Ohio becomes a more attractive place to live, invest, and do business.”
Anyone can say they are against tax hikes, but only those who are firm in their beliefs will make that commitment in writing. Just ask the 223 members of the United States Congress, and 13 Governors—all of whom have joined approximately 1,000 state legislators across the country in signing the Taxpayer Protection Pledge.
Americans for Tax Reform asks all candidates for state and federal office to sign the Taxpayer Protection Pledge. Candidates for Congress can still make this important commitment to voters ahead of their primaries by visiting: www.atr.org/take-the-pledge.
New candidates sign the Taxpayer Protection Pledge regularly. For the most up-to-date information on this race or any other, please visit the ATR Pledge Database.
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