How the Republican Tax Cuts Are Helping Georgia

Georgia is benefiting greatly from the Tax Cuts and Jobs Act enacted by Republicans in 2017:
142,930 Georgia 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.
688,320 Georgia households are benefiting from the TCJA’s doubling of the child tax credit.
Every income group in every Georgia 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.
3,001,180 Georgia 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.
Lower utility bills: As a direct result of the TCJA’s corporate tax rate cut, Georgia residents are saving money on utility bills. Lower electric, water, and gas bills help households and small businesses operating on tight margins. For example, Atlanta Gas Light Co. and Georgia Power (see below) both passed along tax cut savings to their customers.
Thanks to the tax cuts, Georgia businesses of all sizes are hiring, expanding, raising pay and increasing employee benefits:
Winton Machine (Suwanee, Georgia) - Capital investments; purchase of new equipment:
“Tax reform is enabling companies to make significant capital investments, and it’s creating more business for us and other small manufacturers,” said Ms. Winton.
Winton anticipates making her own capital investments. “We’ll be replacing two machines in our factory,” she said. - May 1, 2018, National Association of Manufacturers article excerpt
Evans Tool & Die (Conyers, Georgia) - new jobs, increased bonuses, and investment in new equipment:
“Generosity is one of our core values,” explained Dee Barnes, President and CEO of Evans Tool & Die. “We’ve always shared profit with our employees, and we have always given bonuses each year. With tax reform we will be able to increase those bonuses to our employees.
“We have a 40,000 square foot warehouse that’s ready to be used,” said Barnes. “We’re ready to grow, buy another stamping press, buy new equipment. In recent years, we haven’t been able to invest heavily into new equipment but now tax reform has definitely made it a good time to invest. Tax reform is causing new business to filter down to Evans, because we make small parts that go into bigger products. The supply chain has definitely been effected positively by tax reform.”
Evans is creating new jobs, but the labor pool for tool manufacturers is small. As a result, Evans is investing heavily in apprenticeship training for new employees and their existing employees.
“We’re raising up our own workers to ensure we have quality toolmakers,” said Barnes. “You can’t just go out and hire toolmakers anymore, because there aren’t any. We’ve partnered with tech schools to help them rebuild tool manufacturing programs. And we do everything we can to reward our employees, so they stay want to stay at Evans Tool & Die. Plus, we’re proud to help our workers provide for their families, with incredible healthcare and great benefits.” – September 13, 2018 – National Association of Manufacturers
Aflac (Columbus, Georgia) – increase 401(k) match from 50% to 100% on the first 4% of compensation plus one-time $500 contribution to every employee’s 401(k); $250 million increase in overall U.S. investment.
"We are pleased that these tax reforms provide Aflac with an opportunity to increase our investments in initiatives that reflect our company values; providing for our employees in the long and short term, ensuring future growth for our company and giving back to the community." -- Aflac Chairman and CEO Dan Amos
Wild Adventures (Valdosta, Georgia) – $500 bonus to employees, health benefits, free admission to park for family and friends:
As South Georgia residents find themselves on the other side of Tax Day, some Wild Adventures Theme Park team members are receiving a $500 bonus thanks to the recent federal corporate tax cuts.
“We work hard at Wild Adventures to ensure our park is a great place to play and a great place to work,” said Molly Deese, Wild Adventures Vice-President and General Manager. “The memorable experiences our guests have are thanks to the hard work of our team members, and this bonus is just one way for us to show appreciation for their dedication.”
The bonus will be distributed the week of May 14 and will be awarded to hourly and salaried full-time team members who worked at least 1,000 hours in 2017 and are currently employed at Wild Adventures. Approximately 125 team members are eligible.In addition to this one-time bonus, Wild Adventures employees receive a variety of unique benefits throughout the year, including incentives for employees who stay with the company, complimentary admission to Wild Adventures and Splash Island Waterpark for family and friends, as well as various community-wide incentives. A comprehensive health benefits package is also available for qualified, full-time employees and qualifying seasonal team members. – April 18, 2018, SOWEGAlive.com article excerpt
Ivey Development (Augusta, Georgia) -- The company is building an apartment complex in an Opportunity Zone created by the Tax Cuts and Jobs Act:
Ivey said the federal "Opportunity Zone" tax benefits, which were created by the Tax Cuts and Jobs Act of 2017 to spur investment in economically-distressed census tracts, helped make the project financially feasible. He said metro Augusta's multi-family development costs are as high as other Southeastern markets, while its rents are comparatively low.
"The Opportunity Zone credits really helped get this thing over the hump," he said. -- December 7, 2019 Augusta Chronicle article
Pratt Industries (Conyers, Georgia) - Investing $2 billion into the United States:
Anthony Pratt, the richest person in Australia, will be investing nearly $2 billion in the U.S. in hopes of creating new jobs and doubling American food production – and he credits it all to President Trump’s business-friendly Tax Cuts and Jobs Act of 2017.
The tax overhaul slashed the corporate tax rate to 21% from 35% in hopes of making the U.S. more competitive with foreign countries.
“It’s going to lead to a tsunami of investment in the United States,” he said during an interview with FOX Business’ Stuart Varney on Tuesday. “We make corrugated boxes, everything that's manufactured goes in a box. So we think we’re a barometer of the economy.”
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The billionaire cardboard king hopes to add 5,000 jobs more to the economy with his latest investment. - June 26, 2018 Fox Business Network article excerpt
Sanctuary Companies (Kennesaw, Georgia) -- The company is building a mixed-use building that will include residential units in an Opportunity Zone created by the Tax Cuts and Jobs Act:
The Cherokee Street corridor between McCollum Parkway and downtown Kennesaw is undergoing a major facelift due to the $280 million Eastpark Village mixed-use development.
The area was identified for redevelopment in 2008 and work began more than three years ago. This week, Chad Howie of Sanctuary Companies, the master developer, provided an update on the project to the City Council.
The development will sit on about 55 acres of land and will include 850 residential units with a mixture of apartments, townhomes and senior living. About 300,000 square feet will be put to commercial use, including retail, self-storage, office space and restaurants.
According to Howie, several real estate brokers, two private detectives and city staff worked to identify the sellers and the developer ultimately acquired 68 properties. He said the company worked with homeowners, tenants and business owners on relocation, and the properties were rezoned T4O and T4L in December 2017.
Earlier this year, the council approved the creation of an entertainment district in downtown Kennesaw, allowing patrons to purchase and walk around with alcoholic beverages. Once the first business to obtain a liquor license is operational, Eastpark Village will also have an entertainment district extending from McCollum Parkway to Poplar Drive, between Cherokee Street and Grant Drive.
"I am very excited about the progress being made," said Darryl Simmons, Kennesaw's zoning administrator. "This development serves as a positive example of partnerships between local government and the development community."
There are also plans to widen Cherokee Street to five lanes, as well as incorporate multi-use trails and make the downtown area accessible to pedestrians.
Howie showed the council photos of the recently completed demolition of much of the area, including Ashton Commons Business Park and residential areas along Smith, Maple, Pine and Rock Springs drives. Big Shanty Smokehouse, a popular barbecue restaurant, is relocating two houses up to the corner of Smith Drive and Cherokee Street since the street widening will negatively affect their current parking situation.
The city applied to the Department of Community Affairs to designate the retail district as an opportunity zone, a tax credit program through the state. Any new businesses creating jobs that meet specified criteria in the zone are eligible for income tax credits per job for a prescribed period of time, according to Robert Fox, economic development director for Kennesaw. DCA denied the application, but the city intends to try and make a case for reconsideration. -- July 31, 2019 Cherokee Tribune article
Yancey Bros. (Cobb County, Georgia) -- $500 bonuses for 1,200 employees.
Mincey Marble (Gainesville, Georgia) – Bonuses of up to $1,000 based on length of service:
“As the owner of a family business, I want to share how tax reform is benefitting Americans at every level. Companies big and small are passing along tax savings to the workers who help build our economy. I hope that the bonuses Mincey Marble is providing encourage other businesses in our great state to pay it forward, because the Tax Cuts and Jobs Act is the kind of meaningful change that can help transform communities by bringing relief to American workers and families,” said [Mincey Marble President and CEO Donna] Mincey.
Employees at Mincey Marble will receive bonuses of up to $1,000 depending on their length of service with the company. Even employees hired this year will see a bonus, and the checks are scheduled to arrive during the week of Valentine’s Day as a sign of the company’s appreciation for its associates. – Jan. 31 2018, press release
Total System Services Inc. (Columbus, Georgia) $1,000 bonuses:
Total System Services Inc. (NYSE: TSS) is crediting tax reform for cash bonuses going to their team members worldwide.
A spokesperson for the Columbus, Ga.-based credit card processor best known as TSYS told Atlanta Business Chronicle that it made an internal announcement Tuesday that team members would receive a "special one-time cash bonus of $1,000" as "a result of the company’s continued success and the recently passed U.S. tax reform legislation." – Jan. 2, 2018 Atlanta Business Chronicle article excerpt
Quarry Yard (Atlanta, Georgia) – The Opportunity Zone led to the creation of a 74-acre, mixed-use project:
This mixed-use project could blend thousands of residential units with office, retail and even hotel space. “An area developer filed plans with the state in August for a 74-acre, mixed-use project in an Opportunity Zone near the Westside Park at Bellwood Quarry. And in early September, an Atlanta-based film company announced it will build recording studios, sound stages and a technology center on 30 acres of its Opportunity Zone property on Continental Colony Pkwy SW.” – August 26th, 2019, Atlanta Business Chronicle
Cox Enterprises (Atlanta, Georgia) -- $2,000 bonuses to be paid on Tax Day:
Georgia's largest privately owned company is reportedly joining the tax reform bonus parade.
Fox Business reported that Cox Enterprises said earlier this week that the most of the company's nearly 60,000 employees will receive bonuses of $1,000-$2,000 because of the $1.5 trillion tax bill. Cox employs more than 8,700 workers in Atlanta.
The bonuses will be distributed on Tax Day to employees who have worked at Cox Enterprises for at least a year and are not part of an executive incentive plan, according to Fox.
Phoenix Business Journal reports the bonuses will go to all Cox Enterprise employees, which includes Cox Automotive, Ready Transport, AutoTrader, Kelly Blue Book and Cox Media Group, which has reportedly been taking bids to sell some of its biggest remaining newspapers.
“Cox Communications continues to invest in new businesses such as telecom infrastructure and health care, in building its own infrastructure to better power the smart homes, smart businesses and smart cities of the future — $10 billion in capex the next five years — in the communities it serves via corporate giving — approximately $70 million per year — and in its greatest resource, our employees," said John Wolfe, senior vice president and regional manager for Cox in Arizona. -- March 9, 2018 Atlanta Business Chronicle article excerpt
Rockefeller Foundation (Atlanta, Georgia) – The city is seeing big economic growth because of the TCJA Opportunity Zone legislation:
“The federal Qualified Opportunity Zones program, created as part of the Tax Cuts and Jobs Act of 2017, draws investors to struggling areas by offering them a chance to defer tax on eligible capital gains if they make an appropriate investment in a fund associated with a designated zone and meet other requirements.
“Atlanta is home to 26 of Georgia’s Opportunity Zones, which have seen a lot of activity. Since November 2017, 52 commercial and industrial properties have sold in Atlanta Opportunity Zones, funneling a total of $78 million in new capital to those areas, according to the real estate data service, Reonomy…” – September 25th, 2019, Atlanta Business Chronicle
T.J. Maxx – 50 stores in Georgia – tax reform bonuses, retirement plan contributions, parental leave, enhanced vacation benefits, and charitable donations:
The 2017 Tax Act benefited the Company in the fourth quarter and full year Fiscal 2018. The Company expects to continue to benefit from the 2017 Tax Act going forward, primarily due to the lower U.S. corporate income tax rate. As a result of the estimated cash benefit related to the 2017 Tax Act, the Company is taking the following actions:
Associates
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A one-time, discretionary bonus to eligible, non-bonus-plan Associates, globally
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An incremental contribution to the Company’s defined contribution retirement plans for eligible Associates in the U.S. and internationally
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Instituting paid parental leave for eligible Associates in the U.S.
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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
Atlanta Gas Light Co. (Atlanta, Georgia) – The utility will pass along tax cut savings to customers:
Atlanta Gas Light Co. received approval from the Georgia Public Service Commission for a stipulation that allows for $82 million in customer benefits as a result of the federal tax reform law. – May 16, 2018, SNL Daily Gas Report Excerpt
Expanded Technologies, Inc. (Marietta, Georgia) – Minimum bonuses of $500 for each employee, additional cash depending on the length of service:
Expanded Technologies, Inc. (ETI) is a privately held corporation based in Marietta, GA which specializes in the manufacture of light gage expanded metal used in the support of HVAC filtration.
As a result of the Tax Cut and Job Act recently enacted by the Trump Administration, we are pleased to announce that ETI will give each of its 77 employees a bonus of $500 cash along with an additional sum for each year of service." -- Statement by Jean-Luc Liverato of Expanded Technologies, Inc.
American Proteins Inc. (Cumming, Georgia)— $1,000 bonuses:
“American Proteins Inc. based in Cumming has 700 employees at its operations in Georgia and Alabama. It announced it would give employees $1,000 bonuses "in response to the tax reform package signed into law earlier this year."
"President Donald Trump and the Republican Congress have reduced taxes for businesses and individuals and I'm excited what this means for our company and its employees," American Proteins Inc. Chairman Tommy Bagwell said in a statement Feb. 5.” – Feb. 26 2018, Atlanta Business Chronicle article excerpt
Carl Black Automotive Group (Kennesaw, Georgia) -- Bonuses to over 500 employees.
Carter’s, Inc. (Atlanta, Georgia) – Bonuses for non-executive employees: Full-time employees will receive a bonus of approx. 5% of base salary and part-time employees will receive a bonus of approx. $100 per year of service to the company; increased retirement fund match:
“The Tax Cuts and Jobs Act of 2017 is expected to have a significant and positive impact on our Company’s future earnings, cash flow, and ability to invest in its growth strategies. In 2018, we plan to reinvest approximately half of the $40 million benefit from the lower corporate tax rate in brand marketing and improved eCommerce capabilities.
“Given the significant and unexpected benefit in 2017 of the historic tax reform legislation, we are also announcing today that our Board of Directors has approved $20 million in special compensation awards to all of our Company’s eligible full-time and part-time employees provided through enhanced retirement plan contributions and bonuses.
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The Company’s provision for income taxes in the fourth quarter of fiscal 2017 includes a net tax benefit of $40.0 million related to the enactment of the Tax Cuts and Jobs Act of 2017. This net tax benefit consists of a $50.4 million benefit related to revaluation of the Company’s deferred tax assets and liabilities and a $10.4 million provisional estimate for additional tax expense related to accumulated earnings outside of the United States.
Fourth quarter fiscal 2017 results also include pretax expense of $21.2 million for special compensation and related payroll taxes awarded as a result of this tax reform legislation. The nature of the special compensation includes:
Cash bonuses to full-time and part-time global employees with one year of service, with full-time employees receiving a bonus of approximately 5% of base salary and part-time employees receiving approximately $100 per year of service with the Company. The Company’s leadership team will not receive these special bonuses.
A 100% match of employee voluntary contributions to Company-sponsored retirement programs, subject to certain statutory thresholds and limits. -- Feb. 27, 2018 Carter’s, Inc. statement excerpts
Fifth Third Bancorp – 33 locations in Georgia, $1,000 bonuses for Georgia employees; base wage will rise to $15.
Newly passed tax legislation includes a reduction in corporate tax rates designed to spur economic growth. Carmichael said the tax cut allowed the Bank the opportunity to reevaluate its compensation structure and share some of those benefits with its talented and dedicated workforce.
Carmichael said the higher wage is an important step to help support individuals, their families and the communities in which we operate. Fifth Third has a history of investing in its 18,000 employees.
Once the legislation is signed into law, nearly 3,000 hourly employees will see their pay increase to $15 an hour. The one-time $1,000 bonus is expected to be distributed by the end of the year, assuming the president signs the bill before Christmas. Senior managers and executive leadership are excluded from this compensation.
“It is good for our communities, employees and Fifth Third Bank,” [President and CEO Greg] Carmichael said. – Fifth Third press release
Home Depot (headquarters in Atlanta, plus 90 Georgia retail locations) – Bonuses for all hourly employees, up to $1,000:
Today, The Home Depot® announced plans to provide a new one-time cash bonus for U.S. hourly associates of up to $1,000 in the fourth quarter of fiscal 2017. The bonus will be paid in addition to the Company's longstanding Success Sharing bonuses for hourly associates.
"We are pleased to be able to provide this additional reward to our associates for continuing to deliver outstanding customer service," said Craig Menear, Chairman, CEO and President. "This incremental investment in our associates was made possible by the new tax reform bill." -- Jan. 25, 2018 Home Depot press release
Georgia Power (Atlanta, Georgia) – Thanks to the tax cuts the utility will provide $1.2 billion in benefits for customers:
Georgia Power has completed an assessment of the impact of the Tax Cuts and Jobs Act for the company – including approximately $1.2 billion in benefits for customers. The benefits were confirmed as part of an agreement with Georgia Public Service Commission (PSC) Staff and include approximately $130 million in reduced taxes on financing costs for the Vogtle nuclear expansion; $330 million in direct credits to customers as a result of lower federal income tax rates over the next two years and approximately $700 million in future benefits to be addressed in the company's next base rate case in 2019, which also includes the benefits of last week's reduction in state of Georgia income tax rates. If approved by the Georgia PSC, the typical residential customer using an average of 1,000 kilowatt-hours per month could receive approximately $70 in refunds over the two-year period.
"We are committed to offering the highest customer value with rates below the national average, and we're pleased to be able to continue to pass the benefits of the new tax laws on to our customers," said Paul Bowers, chairman, president and CEO of Georgia Power. "We appreciate the collaborative effort with Georgia PSC Staff to evaluate the new tax laws and reach a joint agreement, which we hope the Commission will review and approve as the best way to deliver benefits to customers as quickly as possible."
Today's announcement marks the second substantial, positive impact for Georgia Power customers tied to the new tax laws. In January, Georgia Power announced that customers would pay $139 million less than expected in 2018 for the Vogtle nuclear expansion currently under construction due to changes in federal tax laws and full receipt of the Toshiba parent guarantee payments. Beginning in April, the typical residential customer using 1,000 kilowatt-hours per month will pay $2.70 less than expected per month in financing costs for the Vogtle project. Additionally, Georgia Power bill credits totaling $188 million were approved by the Georgia PSC as part of its order to continue construction of Vogtle 3 & 4 as a direct result of the Toshiba parent guarantee payments for the Vogtle project. The credits, amounting to $75 per individual customer, will be distributed across three separate Georgia Power bills in 2018, with the first $25 credit appearing in the coming months. – March 6, 2018 Georgia Power article excerpt
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Georgia Power announced it will issue credits to customers on their February bills totaling out to $106 million, due to the third of three bill credits related to the 2017 Tax Cuts and Jobs Act.
The credits come from the reduction of Georgia Power’s federal corporate tax rate, which dropped from 35 percent to 21 percent. According to Georgia Power, they have given $330 million in direct credits to customers over the past two years.
The credit customers will see on their accounts comes from how much power they used between May to December of 2019.
As an example, residential customers who used an average of 1,000 kilowatt-hours per month could receive a $22 credit on their February bills, according to the power company.
“Over the past two years Georgia Power has passed on the benefits from the Tax Cuts and Jobs Act through direct credits on customers’ bills, and this final bill credit fulfills that commitment,” said Kevin Kastner, vice president of customer services for Georgia Power. “These bill credits are just one way we work to provide the best value to our customers, while continuing to provide the clean, safe, reliable and affordable energy they expect and deserve at rates below the national average.”
The credit coming in February will be the third and final credit issued to customers, wit hthe credits first approved in March 2018 as part of an agreement wit the Georgia Public Service Commission, according to Georgia Power. The first two credits were issued in October 2018 and June 2019. -- Feb. 4, 2020 WRBL article
Starbucks Coffee Company -- (326 locations in Georgia) 500 new manufacturing jobs in its Augusta, Georgia coffee plant. $500 stock grants for all Starbucks retail employees, $2,000 stock grants for store managers, and varying plan and support center employee stock grants, totaling more than $100 million in stock grants; 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.
SunTrust Banks, Inc. (Atlanta, Georgia) – base wage raise to $15 per hour; $50 million in additional community grants; merit pay raise; additional 401(k) contributions; etc:
SunTrust Banks, Inc. (NYSE: STI) is taking a series of actions to invest savings from tax reform in supporting the financial wellness of its workforce and communities.
"The anticipated benefits from tax reform allow us to build upon our purpose of Lighting the Way to Financial Well-Being in a sustainable way by implementing actions that will have a multi-year impact for many of the constituents that count on us," said Bill Rogers, SunTrust chairman and CEO. "We believe tax reform will improve the competitiveness of American business and promote economic growth, and this gives us confidence to invest more in our company, our teammates and the communities we serve." – Dec. 28 2017, SunTrust Banks, Inc. press release
Shred-X (Griffin, Georgia) – New truck purchase and the potential hire of a new employee:
In Griffin, Shred-X, a small business providing paper shredding and recycling services to over 3,000 clients throughout Atlanta and central Georgia, plans to use the additional savings from tax reform to buy a new truck and potentially hire a new employee. For a company of ten people, that makes a huge difference.
As Shred-X owner Cade Joiner said, “This is just one practical example of how tax reform is helping us here on Main Street.” — Feb. 4 2018, The LeGrange Daily News article excerpt
Synovus Financial Corporation (Columbus, Georgia) – $1,000 bonuses to all non-executive employees.
AR-15 Gun Owners of America (Warner Robins, Georgia) – tax reform bonuses; increased salaries for all employees.
Best Buy -- 37 locations in Georgia; $1,000 bonuses for full-time employees; $500 bonuses for part-time employees.
Lowes – 63 stores and four distribution centers in Georgia; bonuses of up to $1,000 based on length of service; expanded benefits and maternity/parental leave; $5,000 of adoption assistance.
Apple (There are six Apple retail stores in Georgia: Alpharetta, Augusta, Buford, and three in Atlanta) -- $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.
AT&T -- 17,366 AT&T employees in Georgia received $1,000 bonuses. Nationwide, the company will increase capital expenditures by $1 billion.
Bank of America (Multiple locations in Georgia) -- $1,000 bonuses.
BB&T (Multiple locations in Georgia) – $1,200 bonuses; base wage will rise from $12 to $15 per hour; Nationally, $100 million in charitable donations
Chipotle Mexican Grill (Multiple locations in Georgia) – Bonuses ranging from $250 to $1,000; increased employee benefits; Nationally, $50 million investment in existing restaurants.
Cintas Corporation (Multiple locations in Georgia) -- $1,000 bonuses for employees of at least a year, $500 bonuses for employees of less than a year.
CVS Health (Multiple locations in Georgia) -- Base wage raised to $11 per hour, and other pay ranges adjusted accordingly; the company will absorb increased costs of health insurance premiums; creation of new parental leave program.
Comcast (Multiple locations in Georgia) -- $1,000 bonuses; at least $50 billion investment in infrastructure in next five years.
Ryder (31 locations in Georgia) – Tax reform bonuses for all non-incentive bonus eligible employees, totaling $23 million nationwide.
U-Haul (Multiple locations in Georgia) – $1,200 bonuses for full-time employees, $500 for part-time employees.
Walmart – 189 locations in Georgia; Base wage increase for all hourly employees to $11; bonuses of up to $1,000; expanded maternity and parental leave; $5,000 for adoption expenses.
Waste Management, Inc. (Multiple locations in Georgia) -- $2,000 bonuses.
Wells Fargo – 259 bank locations in Georgia -- Base wage raised from $13.50 to $15.00 per hour; Nationwide, $400 million in charitable donations for 2018, and $100 million increased capital investment over next three years.
McDonald’s (500+ locations in Georgia) – 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:
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- 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.
- Increased Tuition Investment:
“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
Anthem (Multiple locations in Georgia) -- $1,000 in extra 401(k) contributions.
Note: If you know of other Georgia 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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Indiana House Republicans Push Second Tax Hike in Four Years

The Indiana State Senate will have to stop the latest tax hike scheme to come out of the Indiana House of Representatives in the past four years.
Last week, the House approved a budget that increases taxes overall, on the back of a tax hike on vape and tobacco products.
Only two Republicans voted no, with a handful not voting. A dozen members who promised their constituents they would not vote to increase taxes, voted to do just that for a second time. Their constituents are likely thinking of the old saying, ‘Fool me once, shame on you. Fool me twice, shame on me’.
In 2017, the Indiana legislature approved a significant increase in the state gas tax. This year it is a dangerous tax on vaping, and misguided tax hike on cigarettes.
Increasing taxes on vape products simply means fewer people will switch to vaping from higher risk tobacco products, and small businesses like vape shops will suffer as they try to recover from a pandemic and keep people employed.
Budget lead Rep. Tim Brown said, “one of the most important things we can do in the state of Indiana to make us a healthier state is to decrease smoking.” In fact, his tax hikes will do the exact opposite.
Reduced-risk tobacco alternatives such as e-cigarettes that are proven 95% safer than combustible tobacco and twice as effective as more traditional nicotine replacement therapies. It is downright irresponsible to hurt people who are trying to quit smoking.
Cigarettes may look like a soft political target, but increasing taxes on them carries multiple downsides – and there is no upside for health.
Data from the National Adult Tobacco Surveys has consistently demonstrated that tobacco tax increases have no statistically significant impact on the prevalence of smoking among those with household incomes of less than $25,000. Seventy-two percent of smokers are from low-income communities.
They also lead to smuggling. According to the nonpartisan Tax Foundation, tobacco taxes in nearby Michigan and Illinois have resulted in 20% of the market consisting of illicit tobacco.
New revenues would be slated to go to Medicaid, but cigarette taxes are notorious for falling short of revenue promises. Missed revenue means gaps that government is loathe to address by cutting spending – meaning they’ll find other taxes to increase to keep spending levels up.
To be fair, a positive from this budget is the expansion of school choice, which empowers parents at a time when the importance of that choice is more clear than ever.
By pursuing these tax increases, Indiana House Republicans are making promises they can’t keep, while breaking the understanding voters have that Republicans will protect their wallets.
Indiana Senators can and should stop their House colleagues from harming themselves, and the taxpayers they represent. The more legislators get used to increasing taxes, the more Indiana will slip from the pro-taxpayer, business-friendly state it has been.
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ATR Supports the “Protecting Retirement Savers and Everyday Investors Act”

ATR President Grover Norquist today released a letter in support of the “Protecting Retirement Savers and Everyday Investors Act,” legislation that prohibits states from imposing financial transactions taxes (FTT) on American savers and investors across the country.
All members of Congress should support and co-sponsor this legislation.
You can read the full letter here or below:
March 3rd, 2021
Re: Support the “Protecting Retirement Savers and Everyday Investors Act"
Dear Representatives McHenry and Huizenga:
I write in support of the “Protecting Retirement Savers and Everyday Investors Act,” legislation that prohibits states from imposing financial transactions taxes (FTT) on American savers and investors across the country. All members of Congress should support and co-sponsor this legislation.
Most FTT proposals impose a 0.1 – 0.25 percent tax on any buying and selling of stocks, bonds, and other financial instruments.
In the wake of the Robinhood-GameStop controversy, several Democrats have called for FTTs to limit market volatility. FTTs would do nothing to limit volatility: rather, they would act as a Trojan Horse to pass new regulations and new taxes.
If implemented in any given state, an FTT would result in significant harm to investors. Because the tax would be imposed on transactions processed by the exchanges in a state, it would harm investors across the country, not just those in the state which implements it. Your legislation would protect against this by prohibiting a financial transactions tax on taxpayers outside a state’s borders.
FTTs represent another attempt by the left to create new and higher taxes on the American people and grow the size and scope of government. If implemented, this tax would have broad, negative economic effects. It would impose an additional layer of taxation on top of corporate income taxes, capital gains taxes, and individual income taxes. This would impose a barrier to trades, which could increase the cost of capital and reduce economic productivity.
This tax could even increase market volatility as investors would be less likely to buy and sell. It also punishes shareholders who have strategically invested, saved and planned for a prosperous future.
An FTT would especially impact 401(k)s, pensions, and index funds. These funds make frequent trades, so the tax would increase the costs of buying and selling, resulting in lower returns. A 0.1% surcharge would require average Americans to work another 2.5 years before retiring in order to make up for the shortfall in savings. A 2021 study conducted by the Modern Markets Initiative found a proposed financial transaction tax would cost $45,000 to $65,000 over the lifetime of a 401(k) account.
FTTs fail to raise significant revenue because they reduce trades and increase the cost of capital. In fact, an analysis by the Congressional Budget Office found that imposing a FTT would “decrease the volume of transactions and would make some types of trading activity” and “probably reduce output and employment.”
This is not hypothetical. FTTs have failed when they have been tried overseas. For instance, in 1984, Sweden imposed a financial transaction tax. However, this tax lasted just six years due to investors fleeing to foreign markets. Not only did the FTT raise little revenue, capital gains tax revenue dropped because of a reduction in sales. According to the Center for Capital Markets, this has also happened in Spain (1988), Netherlands (1990), Germany (1991), Norway (1993), Portugal (1996), Italy (1998), Denmark (1999), Japan (1999), Austria (2000), and France (2008). It was even repealed here in the United States in 1965 through a bipartisan vote, due to its failure. In the years following the repeal, trading volume in the United States increased substantially.
While many are motivated to support an FTT by their disdain for short-selling, the fact is that short selling is not responsible for market crashes and economic downturns. Instead, it is a function of the free market. Investors will short a stock when they think it is overvalued. In this way, it helps promote investor efficiency and provides information to markets, ultimately softening the blow of a downturn.
For instance, the 2008 market crash could have been far more widespread if short sellers hadn’t recognized the housing market was overvalued. Arbitrarily restricting this trading will likely lead to severe pain if we experience another crash. Rather than improving market volatility, an FTT could make this problem worse as there would be fewer buyers and sellers and therefore more price jumps.
The effort by blue states to impose FTTs should be rejected. These taxes have failed where they have been tried before, would harm economic growth and investment, and would fail to raise any significant revenue.
The Protecting Retirement Savers and Everyday Investors Act would protect Americans from FTTs by ensuring that states could not impose them on taxpayers across state lines. All members of Congress should co-sponsor and support this important, pro-taxpayer legislation.
Onward,
Grover Norquist
President, Americans for Tax Reform
Photo Credit: S Chia
It’s Not Just Blue States Where Surprise Tax Bills Are A Threat This Spring

As in many state capitals, lawmakers in North Carolina are currently debating whether or not to fully conform with all of the tax relieving and liquidity enhancing provisions in the Coronavirus Aid, Relief, and Economic Security (CARES) Act relief package approved by Congress last April.
North Carolina legislators have already conformed to the CARES Act’s tax exemption for forgiven PPP loans, approving that state level tax exemption last Spring. This conformity, which most other states have followed suit in enacting, or are in the process of passing, ensures that businesses who have been able to remain open with the help of a PPP lifeline will not be hit with a surprise state income tax bill. Right now, 29 states, including neighboring South Carolina, will not tax forgiven PPP loans.
While North Carolina lawmakers have exempted forgiven PPP loans from state taxation, they have not permitted the same payroll deduction authorized federally, nor have they permitted the code to conform with the other liquidity enhancing provisions of the CARES Act. Americans for Tax Reform recently sent a letter to legislators in North Carolina urging them to pass legislation doing just that.
Legislation to accomplish this goal, Senate Bill 104, was introduced on February 27 by Senators Jim Perry, Chuck Edwards and David Craven. It’s ATR’s position that North Carolina legislators should not tax employers’ pandemic relief aid, nor do they even need to, as the state has a reported $4 billion budget surplus.
In addition to the PPP loans, the CARES Act increased business liquidity in a time of crisis by reducing existing limitations on business interest expenses subject to deduction in tax years 2019 and 2020; eliminating loss limitations for noncorporate taxpayers that were enacted as part of the 2017 Tax Cuts & Jobs Act (TCJA) for tax years 2018, 2019, and 2020; and relaxing the TCJA’s limitation of NOL deductions, permitting a five-year carryback of NOLs generated in tax years 2018, 2019, and 2020.
The last thing struggling small businesses need right now is a surprise tax bill brought on by acceptance of pandemic aid. Enactment of SB 104 will prevent that from happening in North Carolina. By passing SB 104, which would have North Carolina’s tax code conform to the other liquidity-increasing provisions of the CARES Act, North Carolina lawmakers will boost the job-creating and sustaining capacity of employers at a critical time for many businesses.
Photo Credit: Mr.TinDC
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"Canceling this Keystone Pipeline to make a group of people happy has had real life consequences. We got people who can't work now, can't provide for their families."

Americans for Tax Reform is collecting personal testimonials of Americans hit by President Biden's policies. (If you would like to submit a short video, please send it to Mike Mirsky at mmirsky@atr.org).
Please watch this video from Neal Crabtree:
"My name is Neal Crabtree. I was welding on the Keystone XL pipeline January the 20th and I was laid off that very same day, the same day that president Biden took office.
One of the biggest issues I have is how people don't seem to care. They say these are just temporary jobs. Well, if you think about it, a lot of jobs in this country are temporary. When a carpenter goes to build a house, he's not working on that same house his entire career. He starts that house and finishes it and moves on to another one.
The same way with a lawyer. When he signs up a client he takes that case to court, and he either wins or loses, and then he moves on to another one. In this case, that pipeline was our client and the government is taking our future away by not letting us work.
To me, leadership -- which, when I say leadership I'm referring to the president, leadership isn't thinking you're solving one problem when you're really creating another one.
Canceling this Keystone Pipeline to make a group of people happy has had real life consequences. We got people who can't work now, can't provide for their families."
ATR Leads Coalition Supporting Legislation to eliminate the Office of Financial Research

Today a group of free market groups released a letter supporting Sen. Ted Cruz (R-Texas) and Rep. Ted Budd's (R-N.C.) legislation to eliminate the Office of Financial Research.
Established under the Dodd-Frank Wall-Street Reform and Consumer Protection Act, the Office of Financial Research is a regulatory agency that collects data provided by financial institutions, such as bank holding companies. The data is used to examine financial market risks and supports the Financial Stability Oversight Council. This data is commonly volunteered by financial institutions. However, Dodd-Frank provides wide latitude for the Office’s Director to use their subpoena power to demand the data.
OFR receives funding outside the congressional appropriations process through fees the agency collects from the financial institutions that it regulates. As a result, the agency avoids direct congressional oversight, allowing OFR to determine what their budget should be almost unilaterally. For the fiscal year 2020, the OFR had a $62.7 million budget and about 100 full-time staffers.
The Office of Financial Research is redundant and duplicative. Its mission to research the stability of financial institutions has been conducted by roughly 20 other federal agencies, well before the enactment of Dodd-Frank, including the Department of Treasury’s Office of Economic Policy, the Federal Deposit Insurance Corporation’s Center for Financial Research, and the Federal Reserve’s Division of Financial stability
The previous Republican Administration took steps to shrink the Office and reduce its regulatory burden on the financial services industry. However, the current Director of the OFR, President Trump appointee Dino Falaschetti, has reversed his stance on agency cuts and called for more funding and increased staffing. Additionally, the newly appointed Secretary of Treasury Janet Yellen acknowledged in her written testimony before the Senate Finance Committee that she would reassess the Office’s cuts and expanding the agency’s footprint to research the economic effects of climate change.
Furthermore, a new Director under a Biden Administration could potentially weaponize the Office’s subpoena power to collect information from financial institutions lending activity to publicly shame institutions from servicing certain industries.
The organizations who joined this coalition letter are proud to support Senator Cruz’s efforts to curb further government overreach by unaccountable agency bureaucrats.
Click here or see below to view the letter.
Dear Senator Cruz & Congressman Budd:
On behalf of the undersigned organizations, we write to express our support for your legislation eliminating the unaccountable Office of Financial Research. This agency was established in 2010 by the Dodd-Frank Act and operates outside the Congressional appropriations process, receiving its funding from industry fees collected from financial institutions.
In response to the financial crisis of 2008, Congress quickly passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, expanding the federal government’s role in oversight of the financial marketplace and created several new regulators. The Office of Financial Research serves as a data collection agency that supports the Financial Stability Oversight Council, another regulator initiated by Dodd-Frank. While much of the data collected by OFR is voluntarily provided by private financial institutions, Congress granted the Office’s Director subpoena power to collect information from bank holding companies as he sees fit.
OFR receives its funding through fees collected predominantly from the bank holding companies it regulates, insulating itself from Congressional oversight. Congress has no authority to review OFR's operations and how it spends its fees, shielding the Office from Congressional accountability. For bank holding companies, there are limited options other than surrendering capital to fund their regulator.
The Office of Financial Research's mission to support the Financial Stability Oversight Council with financial research is duplicative in nature. Nearly 20 other agencies, departments, bureaus, and committees exist and already conducts similar research, including the Department of Treasury’s Office of Economic Policy, the Federal Deposit Insurance Corporation’s Center for Financial Research, and the Federal Reserve’s Division of Financial Stability. OFR is housed within the Treasury and operated on an annual budget of $62.7 million for the 2020 fiscal year. Furthermore, despite OFR's significant outlays, the bureau has a history of producing incomplete and analytically unsound research.
Concerningly, the current Director of the OFR, President Trump appointee Dino Falaschetti, is now calling for more funding and increased staffing to increase the agency's scope. The Trump administration took steps to shrink the Office and limit its intrusion among financial institutions. But, Secretary of the Treasury Janet Yellen discussed reassessing the Office's cuts and expanding the Office's scope to include climate research during her confirmation hearing before the Senate Financial Committee.
Under the Biden Administration, a Democrat-appointed Director could weaponize the Office and abuse its subpoena power to liberally collect information from financial institutions. Specifically, the Office could be used as a backdoor collection point for banks to surrender information regarding their lending activity in an attempt to publicly shame institutions and discourage them from lending to certain industries. For these reasons, we, the undersigned organizations, strongly support your legislation to eliminate the Office of Financial Research in its entirety.
Sincerely,
Grover Norquist
President, Americans for Tax Reform
Adam Brandon
President, FreedomWorks
Andrew F. Quinlan
President, Center for Freedom and Prosperity
Heather R. Higgins
CEO, Independent Women’s Voice
Pete Sepp
President, National Taxpayers Union
Maureen Blum
Executive Director, USA Workforce
Phil Kerpen
President, American Commitment
Matthew Kandrach
President, Consumer Action for a Strong Economy
Iain Murray
Vice President, Competitive Enterprise Institute
Tom Schatz
President, Council for Citizens Against Government Waste
Photo Credit: RoguePlanet
Nebraska's LB459 Would Increase Taxes on Life-Saving Products, Lead To Increase In Tobacco-Related Deaths

Americans for Tax Reform submitted testimony today in opposition to Nebraska’s Legislative Bill 459, which would increase taxes on life-saving reduced risk tobacco alternatives such as e-cigarettes and increase the highly regressive tax on tobacco.
ATR Director of Consumer Issues, Tim Andrews, wrote: "These anti-science provisions would have a disastrous impact upon not only businesses, but public health throughout the State, and lead to an increase in tobacco-related deaths. LB 459 also seeks to increase the highly regressive tax on tobacco, disproportionately harming the state’s most vulnerable populations at a time when they can least afford it, while doing nothing to reduce smoking rates."
Andrews noted the ever-growing body of research showing vapor products are an effective harm reduction tool for adults looking to quit smoking: "Extrapolating from a large-scale analysis by the US's leading cancer researchers and coordinated by Georgetown University Medical Centre, if a majority of smokers in the state of Nebraska made the switch to vaping, over 40,000 lives would be saved. In seeking to tax these life-saving products, this bill would place these in jeopardy.”
LB 459 fails to incentivize smokers to move away from deadly combustible cigarettes. Andrews noted that "As the price of a product increases, its use decreases. In previous instances, levying taxes on vaping products has been proven to increase smoking rates as people shift back to deadly combustible cigarettes. Minnesota is serving as a case study on this already. After the state imposed a tax on vaping products, it was determined that it prevented 32,400 additional adult smokers from quitting smoking. Small increases in projected revenue should never come at the expense of human lives.”
The full testimony can be found here.
Photo Credit: Jimmy Emerson
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Lawmakers Should Reject H.R. 1, the "For the People Act"

As soon as this week, the House of Representatives is set to vote on H.R. 1, the "For the People Act." In the coming weeks and months, the law is also expected to be taken up by the Senate. H.R. 1, a top priority for Congressional Democrats, is an 800-page bill filled with partisan policies to rig the system in favor of the Left.
This proposal would fundamentally transform how elections are conducted in the United States, would politicize the Federal Elections Commission, would create taxpayer-funded candidates, and would directly violate constitutional mandates like free speech and states’ freedom to determine their own election laws. Congress must reject this dangerous piece of legislation.
Instead of working within our institutions, Democrats have taken to attacking the institutions themselves when they do not produce the left's preferred outcome. When they didn't like the composition of the Supreme Court, they threatened to pack it. When they couldn't convince enough of the legislature of an idea, they fought to repeal the filibuster. Now, because they do not want to lose the presidency or their majorities in the House and Senate, they are working to pass H.R. 1.
See Also: Key Vote: ATR Urges NO Vote on H.R. 1, the "For the People Act"
H.R. 1 would unconstitutionally undermine state election oversight. Article I Section IV of the U.S. Constitution empowers states to determine the “Times, Places and Manner of holding elections…” By nullifying several state election laws, H.R. 1 would make significant strides in stripping states of this enumerated power.
It would force states to implement early voting, automatic voter registration, same-day registration, online voter registration, and no-fault absentee balloting.It eliminates any restrictions on vote-by-mail. Additionally, the bill would invalidate voter identification laws all across the country by allowing voters to simply sign a statement affirming their identity as they enter their polling place.
H.R. 1 would create taxpayer-funded candidates. Taxpayers would be on the hook for matching 600% of campaign contributions to subsidize candidates they may disagree with – a practice that has been ripe for corruption, despite having the intentions of reducing corruption.
Thomas Jefferson once said: “To compel a man to furnish funds for the propagation of ideas he disbelieves and abhors is sinful and tyrannical.” In this way, it could be described as compelled speech. Especially because it will almost certainly propagate one political party (the Democratic party) over the other upon implementation.
Taxpayers should not be forced to fund campaigns they find disagreeable. In fact, they shouldn’t be forced to fund campaigns they agree with. Americans’ ability to choose to or refuse to participate in politics has always been a foundational principle in the United States.
H.R. 1 suppresses free speech. First, it empowers federal regulators to categorize and regulate speech, including online speech. It does so by undoing the FEC’s “internet exemption” which excludes the internet from regulation of political speech. This exposes online communication to the same scrutiny as traditional advertisements.
The law also invents a new regulation called “PASO,” an overbroad standard that asks whether political speech “promotes,” “attacks,” “supports,” or “opposes” a federal candidate or official. Besides the blatant unconstitutionality of this regulation, it is also so unclear and broad that it can be used as a weapon by whichever political party is in power. As Rich Lowry explains, the current law “limits expenditures that expressly advocate for the election or defeat of a candidate, or refer to a candidate in public advertising shortly before an election.”
Any and all political, nonelectoral messages can be framed as something which promotes, attacks, supports, or opposes a candidate. Under this law, the party in power can frame their opponents’ political speech this way and subsequently limit their opponents’ speech.
Additionally, the bill transforms the “stand by your ad” disclaimer in video advertisements, forcing organizations to identify their top five donors at the end of advertisements. This represents a radical change in policy: currently, the “stand by your ad” provision simply requires a statement by the candidate or organization/corporation that they approve the communication. In addition, the bill mandates the disclosure of all the names and addresses of donors giving more than $10,000 to groups that engage in “campaign-related disbursements.” With the incredible rise in partisanship, cancel culture, and doxing, it is more important than ever to protect donor privacy.
Finally, H.R. 1 would politicize the FEC. Under current law, the FEC is comprised of a six-member bipartisan committee: three Republicans and three Democrats. In order to move forward with any prosecution of alleged campaign violations or investigations, the FEC needs four votes. This law would limit the member number to five, therefore including two Republicans, two Democrats, and one “independent” from a minor political party. Under this rule, a president could appoint a Bernie Sanders-style “independent” to serve as the fifth member of the FEC. To make matters worse, under this law, a president could also pick the Chairman of the FEC, all but ensuring total presidential control of the Commission.
H.R. 1 is a dangerous piece of legislation. This legislation would suppress free speech, invalidate state laws, create taxpayer-funded candidates, and do nothing to help the economy or fight the Coronavirus pandemic. This Democrat power grab should be rejected.
Photo Credit: Martin Deutsch
Pipeline Welder: "Biden's decisions to shut down the KeystoneXL pipeline and many others affects me and my family of five very much so."

Americans for Tax Reform is collecting personal testimonials of Americans hit by President Biden's policies. (If you would like to submit a short video, please send it to Mike Mirsky at mmirsky@atr.org).
Please watch this video from Nate Manor, a member of Pipeliners Local Union 798:
"Hi my name is Nate Manor. I am a proud 798 pipeline welder. President Biden's decisions to shut down the KeystoneXL pipeline and many others affects me and my family of five very much so. Having 16 years of pipeline experience -- and that being all I've really done or known most of my life and made a really good living and had great health insurance and everything else for my kids and family -- the starting over thing is going to be really hard, almost next to impossible for me."
ATR Signs Coalition Letter Urging Congress to Overhaul Fannie Mae and Freddie Mac

Americans for Tax Reform joined a group of free-market groups and signed a coalition letter encouraging legislators to prioritize reforming Fannie Mae and Freddie Mac this Congress. Reforming these Government Sponsored Enterprises and their conservatorship will help protect American taxpayers from continuing to remain on the hook and bailing them out again in the event of another financial market emergency.
Fannie Mae and Freddie Mac are America’s two largest home mortgage companies. While they do not originate any mortgages, both provide liquidity to the mortgage market by purchasing mortgages from lenders. Fannie and Freddie either hold the mortgages in their portfolio or securitize the loans into pools called mortgage-backed securities that are sold to investors.
The two GSEs wield an effective duopoly over the secondary mortgage market and currently guarantee almost $7 trillion in mortgage-related debt. Fannie Mae and Freddie Mac were congressionally chartered private companies established to encourage homeownership, but the actions taken in the wake of the housing crisis effectively put the companies under government control, known as conservatorship.
During the 2008 financial crisis, some of the mortgages bought by the GSE’s started to fail. Homebuyers were unable to meet their mortgage payments, jeopardizing the solvency of Fannie and Freddie’s mortgage portfolios. As a result, the Housing and Economic Recovery Act of 2008 placed both Fannie Mae and Freddie Mac into government conservatorship on September 6, 2008, under the newly created Federal Housing and Finance Agency. Because the conservatorship arrangement implies that the government now guarantees the loans, the American taxpayers have become the backstop of a multi-trillion-dollar loan portfolio. When Fannie and Freddie were nearing insolvency in 2008, they borrowed over $191.4 billion from the U.S. Treasury. If the housing market declines again, Fannie and Freddie can borrow the remaining amount from the $254 billion Treasury credit line left over from 2008.
Legislators and regulators did not intend for the conservatorship to be perpetual. It was supposed to be a short-term emergency measure to keep GSEs solvent and prevent further escalating the financial crisis. In 2008, FHFA Director James B. Lockhart stated that Fannie and Freddie would only be under conservatorship until they were stabilized. Similarly, the former Office of Management and Budget Director Jim Nussle considered the arrangement to be temporary.
However, Fannie Mae and Freddie Mac are entering their 13th year under federal government control. Fannie Mae and Freddie Mac have increased their loan portfolio to levels 33% higher than pre-crisis. After a decade of recovering home prices and economic expansion, the need for GSE’s to remain in conservatorship has long passed.
It is long overdue for Congress to prioritize ending the GSEs conservatorship and protect taxpayers from further remaining as a federal backstop. Americans for Tax Reform and the undersigned organizations strongly urge Congress to prioritize comprehensive housing finance reform in the 117th Congress.
Click here to review the letter.
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