If Klobuchar and Smith vote for Biden's corporate income tax rate increase, they will have to explain why they just increased your utility bills
If President Biden and Sens. Amy Klobuchar and Tina Smith raise the corporate tax rate, Minnesota 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 four Minnesota utilities.
As noted in an August 9, 2018 Minnesota Public Utilities Commission Statement:
The Minnesota Public Utilities Commission (Commission) ordered Minnesota’s investor-owned utilities to return approximately $200 million in annual benefits reflecting lower corporate tax rates resulting from the federal 2017 Tax Cut and Jobs Act.
This $200 million in annual benefits includes the decisions made today in this current proceeding relating to accounting and taxes; the recent decisions made for CenterPoint Energy (approximately $21.3 million) and Minnesota Power (approximately $18.7 million) in their general rate cases; and a pending decision regarding Minnesota Energy Resources Corporation (currently estimated to be approximately $5.2 million) in its general rate case, which is scheduled to be taken up by the Commission in November of this year.
With respect to each regulated utility, the Commission acted to ensure that each utility’s rates reflect the new, lower federal income tax rates in the cost of providing service.
Xcel Energy passed along their savings to customers as well:
Xcel Energy’s $136 million windfall from last year’s federal tax act will be passed directly to its Minnesota customers through refunds, state utility regulators ruled Thursday.
Customers of Minnesota’s other investor-owned utilities will also receive refunds — or smaller rate increases — due to the 2017 tax law, which slashed the U.S. corporate income tax rate from 35 percent to 21 percent.
Xcel’s average residential electricity customer — someone who pays $85 to $90 per month — will get a refund of about $45 as a one-time bill credit. The company’s average residential gas customer — who pays around $48 a month — will get a one-time bill credit of about $8. Xcel said it expects the refunds will be made by year’s end. – August 11, 2018 Star Tribune article
Conversely, a vote for a corporate income tax rate hike is a vote for higher utility bills right as the USA is trying to recover from the pandemic.
Sens. Klobuchar and Smith would be wise to stay away from tax increases.