TPC: Biden's Corporate Tax Hike Would Harm “Millions of Middle-Class People”
President Joe Biden ran on a pledge not to increase taxes on any American earning less than $400,000 per year. However, his corporate tax hike would harm middle-class Americans earning below this threshold as the left-of-center Tax Policy Center’s Len Burman notes in a recent post.
In his post, Burman asks and answers the question of whether middle class families would be harmed by the Biden corporate tax hike:
“Does a corporate tax increase or a financial transaction tax raise taxes on shareholders, including the millions of middle-class people who own 401(k) plans? (Answer: yes.)”
President Joe Biden is planning to increase the corporate tax rate from 21 percent to 28 percent in order to pay for trillions of dollars in new spending. This would impose a higher corporate tax rate than Communist China’s 25%.
Biden is trying to convince the American people that his trillions of dollars in tax hikes will not harm them.
However, this is not true. A corporate tax hike would harm middle class workers and savers. For instance:
- Raising the corporate tax rate would reduce the value of stocks, and therefore 401(k)s. According to recent data, 80 to 100 million Americans have a 401(k), while 46.4 million households have an individual retirement account. A majority of the assets in retirement accounts are invested in stocks. 401(k)s hold $6.2 trillion in assets and almost 70 percent of these assets (or $4.3T) are in stocks. Similarly, 53 percent of the more than $11 trillion in IRA savings are held directly in stocks while another 18 percent of savings are invested in funds that comprise stocks.
- A corporate tax rate hike would hurt anyone who has invested in the stock market, including a significant amount of young people. Half of Gen-Zers and Millennials have begun trading in stocks as a way to increase their life savings, according to recent reports.
- Raising the corporate tax rate would harm workers. The American worker is disproportionately harmed by a corporate tax hike. While capitol is mobile, labor is not. As a result, American workers see significant losses in jobs and wages because capital is flowing out of the U.S. Numerous studies have found that between 50 percent and 70 percent of the corporate tax is borne by workers with the remaining being borne by shareholders.
Biden’s corporate tax hikes harm American families and workers making less than $400,000 or less, a fact that even the left-of-center Tax Policy Center admits. As the TPC notes, this will harm millions of middle class Americans that own a 401(k) or are invested in the stock market, but will also harm American workers in the form of fewer jobs and lower wages.
Photo Credit: Matt Johnson
Massachusetts’ Flavor Ban Fiasco is Costing the State Millions in Tax Revenue
On June 1, 2020, a law signed by Massachusetts Governor Charlie Baker went into effect, prohibiting all flavored tobacco products from being sold in Massachusetts. Since then, cigarette sales in the commonwealth have plummeted as Massachusetts retailers sold 17.7 million fewer cigarette tax stamps between June and November of 2020 than they did in that same time period the previous year.
While a quick glance at this policy makes it appear successful, Massachusetts’ flavor ban has been a monumental disaster for the state. Neighboring states have more than made up for the decrease in sales in Massachusetts, clear evidence that the flavor ban has done nothing to decrease smoking rates. Rather, Massachusetts has lost tens of millions of dollars in tax revenue while surrounding states like New Hampshire and Rhode Island have seen massive spikes in revenue as a result of Massachusetts’ failed policy.
A report from the New England Convenience Store & Energy Marketers Association provides concrete data on the topic. Here are some of their findings.
Key Findings:
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Between June 1, 2020, and September 30, 2020, New England states (Massachusetts, Maine, New Hampshire, Vermont, Rhode Island and Connecticut) have sold over 230 million tax stamps for cigarettes. In that same period in 2019, the same states sold 225 million tax stamps. This increase in cigarette tax stamp sales shows that even with Massachusetts’ tobacco flavor ban, cigarette sales have increased in a year where they were expected to decrease by 2% nationally.
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Excise tax revenues on cigarettes in Massachusetts are down significantly with estimates showing that “excise tax losses for Massachusetts are over 10 million dollars a month”.
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As Massachusetts revenues decrease, New Hampshire’s cigarette excise tax revenues have increased $28 million in 2020 compared to the same period the previous year.
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New Hampshire isn’t the only beneficiary of Massachusetts’ flavor ban. Rhode Island’s cigarette excise tax revenue increased by over $12 million in 2020 compared to the same period the previous year with an additional $2 million in sales tax revenue.
This data clearly illustrates that instituting a flavor ban on tobacco has been a complete and utter disaster for Massachusetts. 89% of legal cigarette sales occur in convenience stores and over 54,000 Massachusetts residents are convenience store employees. The total economic cost of this policy has been massive.
Not only has the flavor ban harmed businesses, but it will also have unintended consequences on children as well. Massachusetts’ excise tax revenue from cigarettes funds tobacco prevention programs. With tax revenue losses over $10 million a month, there will be considerably less resources available to teach school children in the Bay State the dangers of combustible cigarettes. The flavor ban was aimed at decreasing youth use of tobacco products. Unfortunately, it may very well have a paradoxical effect and lead to an increase in youth smoking.
Politicians in at least thirteen states are considering flavor bans, many identical to Massachusetts’. In the interests of public health, protecting state tax revenue, and defending small businesses, these lawmakers must drop these senseless initiatives.
Photo Credit: Kyle Klein Photography
More from Americans for Tax Reform
Biden’s Proposed Capital Gains Tax is More than Double China, OECD Average
President Biden has proposed doubling the capital gains tax rate as part of his $4 trillion spending plan. Under Biden, the top capital gains rate will be 48.8 percent after state taxes. This is more double China’s 20 percent capital gains tax rate.
The U.S. currently has a combined capital gains rate of over 29 percent inclusive of the 3.8 percent Obamacare tax and the 5.4 percent state average capital gains rate. Under Biden, this rate would approach 50 percent. This would give the U.S. a capital gains tax that is significantly higher than foreign competitors:
OECD Simple Average: 18.4%
OECD Weighted Average: 23.2%
China's Capital Gains Rate: 20%
United States Now: 29.2% (20% + 3.8% Obamacare tax + 5.4% state average)
United States Under Joe Biden: 48.8% (39.6% + 3.8% Obamacare tax + 5.4% state average)
Under Biden’s plan, taxpayers in California will pay a top capital gains tax rate of 56.7 percent (39.6% + 3.8% + 13.3% California state rate = 56.7%). New Yorkers will pay a top capital gains rate of 52.2%, while New Jersey taxpayers will pay a top capital gains tax rate of 54.14%.
Not only will Biden’s capital gains tax hike make us uncompetitive, it will also harm the economy, threaten the life savings of Americans, and could even reduce short term revenues.
Capital gains taxes act as a barrier to job creation, wage growth, and economic growth. This tax imposes double taxation on corporate income – first, businesses pay the corporate income tax on their earnings. Second, the investor pays the capital gains tax on dividends received or stocks when they are sold. This double taxation discourages savings, suppresses productivity, and discourages investment. Ultimately, this tax hike will threaten business creation, business expansion, entrepreneurship, and jobs and wages.
Biden’s capital gains tax hike could also reduce retirement savings. As part of his tax hike, Biden would double the tax rate on carried interest capital gains. This will harm private equity investors including the 165 public pension funds representing 20 million public sector workers.
Biden’s tax hikes could even reduce federal revenues in the short term. Because the tax only applies when a taxpayer sells the asset, a high capital gains rate discourages individuals from selling in order to delay having to pay the tax. Historically, when the capital gains tax was cut, revenue increased. When the capital gains tax is low, investment increases, stock prices increase, and revenue goes up. The inverse is of course true.
Democrats used to oppose a high capital gains tax. As recently as 2012, Senator Chuck Schumer (D-NY) rejected doubling the capital gains tax rate to 39.6 percent. As Schumer noted:
“Now, if you are returning the top income rate to Clinton-era levels, as I have proposed, I do think it is too much to treat capital gains the same as ordinary income,” Mr. Schumer said. “We don’t need a 39.6% rate on capital gains.”
Photo Credit: Gage Skidmore
Biden Wants the IRS to Snoop on Your Venmo Account
In yet another move to increase the federal government's presence in your life, the Biden administration wants to sic the IRS on your Venmo account.
Biden has proposed $80 billion in funding for additional IRS enforcement. As part of this proposal, banks and third-party payment providers, like Venmo and CashApp would be required to report account holders’ aggregate account outflows and inflows.
"The proposal would require banks to report annual account inflows and outflows to the Internal Revenue Service. The requirement would also extend to peer-to-peer payment services such as Venmo," notes the Wall Street Journal.
President Biden claims that this proposal is designed to “crack down on millionaires and billionaires who cheat on their taxes.” However, it is unclear how monitoring Venmo accounts – many of which are held by younger Americans – contributes to this goal.
The average Venmo transfer amount is $60 and is popular among young people, with over 7 million Venmo users belong in the 18-34 age group. For users who have undergone identity verification, the weekly spending limit is $7,000. These trends exist for most third-party payment providers.
It is hard to see how millionaires and billionaires are using Venmo or CashApp to launder mass amounts of money.
This is just another effort to expand the power of the IRS. Rest assured, the IRS will use these powers against Americans of all income levels.
At a time when Americans are already struggling, these new reporting rules would create unnecessary burdens. As noted in this excerpt from Forbes:
It may create problems, however, that should be considered and addressed as this plan works its way through Congress. For example, consider a young couple saving up to buy a home. All savings are put into the “dream home” savings account. Then, when it comes time to make the down payment, the $50,000 dream home savings goes into the regular checking account, which is then wired to the seller’s escrow account. Buying a home is not a taxable event (at least for federal income tax), selling one is. Will the IRS receive information from the financial institutions that leads to an audit?
Paul Merski, vice president of congressional relations at Independent Community Bankers of America, voiced his criticism of the proposal:
Banks already report millions of transactions a day to the Financial Crimes Enforcement Network in the form of currency transaction reports, in addition to suspicious activity reports, which are required when potential illicit activity is detected by a bank. Banks are required to submit currency transaction reports when a deposit or withdrawal is $10,000 or more, a threshold that’s already very low, Merski said.
Merski said the proposal, as written, is akin to “sending your bank statement to the IRS every month,” which would be opposed by the banking industry because of the reporting burdens already required by federal regulators.
“The federal government can’t track all of that—any more requirements would be adding more hay to that haystack,” he said.
As also noted by the Wall Street Journal, the bank account snooping will give the IRS an "enormous" quantity of new data:
It would also create an enormous flow of information that the IRS would have to learn how to manage and use.
--
Congress will have to weigh the potential burdens and privacy concerns against the revenue gains as it considers the plan.
Observers are rightly skeptical that this plan will be able to generate anywhere near the $780 billion promised by the Biden administration. As noted in this excerpt from Yahoo News:
Previous government estimates put the benefits of increased IRS funding much lower. Last year, the Congressional Budget Office estimated that an additional $40 billion of funding over 10 years would increase government revenues by $103 billion.
Even Obama-era IRS chief John Koskinen questioned the Biden $80 billion funding request. "I'm not sure you'd be able to efficiently use that much money," he said.
Congress should refrain from passing a proposal that would give the federal government unprecedented access to your private information.
Photo Credit: jlhervas
Minnesotans Will Get Stuck with Higher Utility Bills Due to Biden Corporate Tax Rate Hike
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.
Virginians Will Get Stuck with Higher Utility Bills Due to Biden Corporate Tax Rate Hike
If Kaine and Warner vote for a corporate income tax rate increase, they will have to explain why they just increased your utility bills
If President Biden and Sens. Tim Kaine and Mark Warner hike the corporate income tax rate, Virginia 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 twelve Virginia utilities.
Working with the Virginia State Corporation Commission, Appalachian Natural Gas, Aqua Virginia Inc., Columbia Gas of Virginia, Roanoke Gas, Virginia American Water Company, Virginia Electric and Power Company, Virginia Natural Gas, Appalachian Power, Washington Gas Light, Southwestern Virginia Gas, Atmos Energy and Dominion Energy Virginia passed along tax savings to customers.
As noted in this January 8, 2018 SCC News Release:
The legislation cuts the federal corporate income tax rate from 35% to 21% effective January 1, 2018. This tax cut, in turn, reduces the cost of service for many of Virginia’s major electric, gas and water utilities. Utility rates paid by customers are based on the cost of service.
To preserve the savings from this tax cut for customers, the Commission ordered all applicable Virginia utilities to account for the tax savings by accruing a regulatory liability on the utility’s books. The tax savings will thus be quantified and available to be passed on to customers in subsequent rate proceedings.
The utilities subject to the Commission’s order serve millions of Virginia residential and business customers. They include Virginia-American Water Company; Aqua Virginia, Inc.; Washington Gas Light; Columbia Gas of Virginia; Virginia Natural Gas; Roanoke Gas; Atmos Energy; Southwestern Virginia Gas; Appalachian Natural Gas Distribution; Kentucky Utilities; Appalachian Power Company; and Virginia Electric and Power Company.
As noted in this January 8, 2018 Washington Gas Light press release:
Washington Gas, a WGL Holdings, Inc. company (NYSE: WGL), announced plans today to file with state regulatory commissions in all three of its service territories, including the District of Columbia, Maryland, and Virginia, to pass through annual tax savings to the more than 1.1 million customers that the company serves across the region.
If the recommendations are approved, Washington Gas has committed to providing a reduction in customer rates that would lower annual customer bills by approximately $34 million, beginning in the first quarter of 2018.
The federal tax savings are driven by the Tax Cuts and Jobs Act of 2017, a new law passed on December 22, 2017, that went into effect on January 1, 2018. Reducing the corporate income tax rate from 35 percent to 21 percent lowers the amount that Washington Gas will have to pay in federal income tax.
As noted in this March 8, 2019 SCC statement:
The State Corporation Commission (SCC) has ordered a reduction in the rates of Dominion Energy Virginia and Appalachian Power Company on April 1. The reduction and forthcoming rate credits continues a directive of the Commission issued in January 2018 that ensures customers receive the benefits of the corporate tax cut contained in federal tax legislation passed by Congress in December 2017.
The federal corporate income tax rate was reduced from 35% to 21% effective January 1, 2018. A week later, on January 8, the SCC ordered the companies to preserve the savings from this tax cut for the benefit of their customers.
As noted in this WSLS 10 News Article:
The State Corporation Commission wants you to receive some of the benefits of the recent federal corporate tax cut.
The law cuts the federal corporate income tax rate from 35 percent to 21 percent.
As a result, the service cost for many of Virginia's major electric, gas and water utilities will be reduced. Those utilities include AEP, Roanoke Gas and Southwestern Virginia Gas.
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. Kaine and Warner would be wise to stay away from tax increases.
36 Organizations Sign Coalition Letter Condemning Menthol Prohibition Proposal
Earlier today, Americans for Tax Reform released a letter signed by 36 leading national and state-based organizations representing millions of taxpayers and consumers throughout the United States urging the Food and Drug Administration to reject a proposed ban on menthol cigarettes. This letter adds to a similar letter signed by 27 civil liberty and racial justice organizations organized by the American Civil Liberties Union (ACLU), and demonstrates overwhelming bipartisan opposition to this proposal.
The letter noted the devastating social impact of criminalizing an activity undertaken by over 18 million Americans, primarily from minority communities, asserting “If this proposal were to be enacted, it is inevitable that it would lead to further confrontations between individuals and law enforcement and break down trust even further. In addition, by diverting law enforcement resources to preventing the sale of menthol cigarettes, this policy will reduce the resources available for the prevention and solving of property and violent crimes.”
The letter continued, “We further draw your attention to the fact that any comprehensive analysis of the data from jurisdictions where menthol products have been banned demonstrates that, while the majority of users switch to non-menthol cigarettes, over 20% of menthol smokers moved to purchasing illicit products through the black market. Not only does this put all parties involved at risk of police involvement, the illicit tobacco market is increasingly been run by sophisticated international criminal syndicates, often with links to sex trafficking, money laundering and even, increasingly, terrorism.”
For these reasons, as the letter noted, the U.S. State Department has explicitly called tobacco smuggling, “a threat to national security”.
The letter also recognized the importance of promoting harm reduction over prohibition, writing, “If the FDA wishes to reduce smoking rates, the best way of doing this is not through bans, but rather embracing life-saving new technologies to help smokers quit. The science is now overwhelming that the most effective way for smokers to quit is through the use of non-combustible reduced risk tobacco alternatives, ranging from vapor and “heat not burn” devices, to oral nicotine delivery systems or moist loose tobacco (which the FDA already allows to be marketed as reducing the cancer risk for persons who make the switch).”
The letter concluded by urging the FDA to “engage in evidence-based policy making and embrace new technologies and alternative nicotine delivery systems that have been proven will be able to save millions of American lives.”
The full letter can be read below.
Americans for Tax Reform Coalition Letter FDA Menthol Prohibition by Karl Abramson on Scribd
Photo Credit: Houston Forward Times
More from Americans for Tax Reform
Massachusetts Residents Will Get Stuck with Higher Utility Bills Due to Biden Corporate Tax Rate Hike
If Biden and the Democrats enact a corporate income tax rate increase, they will have to explain why they just increased your utility bills
If President Biden and congressional Democrats hike the corporate income tax rate, Massachusetts 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%. This does not even include state corporate income taxes, which average 4 - 5% nationwide.
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 seven Massachusetts utilities.
Working with the Massachusetts Department of Public Utilities, Eversource Energy, National Grid, Unitil, Berkshire Gas, Columbia Gas of Massachusetts, Liberty Utilities and Aquarion Water Company of Massachusetts, Inc. passed along tax savings to their customers.
Eversource Energy: As noted in this February 5, 2018 Massachusetts Department of Public Utilities Press Release:
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.
National Grid: As noted in this June 30, 2018 article from The Daily News:
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.
Unitil: As noted in this February 28, 2020 Massachusetts Department of Public Utilities document:
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
Berkshire Gas: As noted in this December 10, 2018 Daily Hampshire Gazette article:
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.
Columbia Gas of Massachusetts: As noted in this April 13, 2018 NiSource article:
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. This $9.1 million refund will partially offset the $24.1 million increase in the first year the revised rates are in effect.
Liberty Utilities: As noted in this May 23, 2018 Massachusetts Department of Public Utilities Notice of Filing and Public Hearing:
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.
Aquarion Water Company of Massachusetts, Inc.: As noted in this February 9, 2018 Aquarion Water Company of Massachusetts, Inc. filing:
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.
Conversely, a vote for a corporate income tax rate hike is a vote for higher utility bills as households recover from the pandemic.
Many small businesses operate on tight margins and can't afford higher heating, cooling, gas, and refrigeration costs. President Biden should withdraw his tax increases.
Biden Wants IRS to Snoop on Your Bank Accounts
In yet another move to increase the federal government's presence in your life, the Biden administration wants to sic the IRS on your bank account.
Biden has proposed $80 billion to fatten up the IRS to deploy legions of new agents who will hoover up massive quantities of personal information.
As noted in this WSJ excerpt:
Under the plan, banks and other payment providers would be required to tell the IRS how much money came into and out of individuals’ and businesses’ accounts each year, going far beyond the existing reporting of interest income.
At a time when Americans are already struggling, these new reporting rules would create unnecessary burdens. As noted in this excerpt from Forbes:
It may create problems, however, that should be considered and addressed as this plan works its way through Congress. For example, consider a young couple saving up to buy a home. All savings are put into the “dream home” savings account. Then, when it comes time to make the down payment, the $50,000 dream home savings goes into the regular checking account, which is then wired to the seller’s escrow account. Buying a home is not a taxable event (at least for federal income tax), selling one is. Will the IRS receive information from the financial institutions that leads to an audit?
Paul Merski, vice president of congressional relations at Independent Community Bankers of America, voiced his criticism of the proposal:
Banks already report millions of transactions a day to the Financial Crimes Enforcement Network in the form of currency transaction reports, in addition to suspicious activity reports, which are required when potential illicit activity is detected by a bank. Banks are required to submit currency transaction reports when a deposit or withdrawal is $10,000 or more, a threshold that’s already very low, Merski said.
Merski said the proposal, as written, is akin to “sending your bank statement to the IRS every month,” which would be opposed by the banking industry because of the reporting burdens already required by federal regulators.
“The federal government can’t track all of that—any more requirements would be adding more hay to that haystack,” he said.
As also noted by the Wall Street Journal, the bank account snooping will give the IRS an "enormous" quantity of new data:
It would also create an enormous flow of information that the IRS would have to learn how to manage and use.
--
Congress will have to weigh the potential burdens and privacy concerns against the revenue gains as it considers the plan.
Observers are rightly skeptical that this plan will be able to generate anywhere near the $780 billion promised by the Biden administration. As noted in this excerpt from Yahoo News:
Previous government estimates put the benefits of increased IRS funding much lower. Last year, the Congressional Budget Office estimated that an additional $40 billion of funding over 10 years would increase government revenues by $103 billion.
Even Obama-era IRS chief John Koskinen questioned the Biden $80 billion funding request. "I'm not sure you'd be able to efficiently use that much money," he said.
Congress should refrain from passing a proposal that would give the federal government unprecedented access to your private information.
Biden Economic Adviser Dodges "Highest corporate tax rate in the world" Question
A key White House adviser today dodged a question as to whether President Biden's corporate tax rate hike proposal -- imposing the highest rate in the developed world -- would make the U.S. less competitive.
Cecilia Rouse, Chair of the White House Council of Economic Advisers, dodged the question during an interview with Fox News Sunday host Chris Wallace:
Chris Wallace: "Ms. Rouse, don't you think that we are going to be less competitive if we have the highest corporate tax rate in the world, as opposed to in the middle of the industrial world? Doesn't that just necessarily say we've become less competitive?"
Ms. Rouse: [Awkward Pause] followed by [blah blah blah dodge]
Click here or below to view:
Indiana Residents Will Get Stuck with Higher Utility Bills Due to Biden Corporate Tax Rate Hike
If Biden and the Democrats enact a corporate income tax rate increase, they will have to explain why they just increased your utility bills
If President Biden and congressional Democrats hike the corporate income tax rate, Indiana 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%. This does not even include state corporate income taxes, which average 4 - 5% nationwide.
Customers bear the cost of corporate income taxes imposed on utility companies. Corporate income tax cuts drive utility rates down, corporate income tax hikes drive utility rates up.
Electric, gas, and water companies must get their billing rates approved by the respective state utility commissions. When the 2017 Tax Cuts and Jobs Act cut the corporate income tax rate from 35% to 21%, utility companies worked with officials to pass along the tax savings to customers, including at least 17 Indiana utilities.
Working with the Indiana Utility Regulatory Commission, Duke Energy Indiana, Indiana-Michigan Power, Northern Indiana Public Service Company, Vectren Energy Delivery of Indiana, Inc., Midwest Natural Gas Corporation, Fountaintown Gas Company, Inc., South Eastern Indiana Natural Gas Company, Inc., American Suburban Utilities, Inc., Indiana American Water, Ohio Valley Gas Corporation, Indianapolis Power & Light, Aqua Indiana, Inc., Boonville Natural Gas Corporation, Community Natural Gas Company, L.M.H. Utilities Corporation, Indiana Natural Gas Corporation, and Indiana Utilities Corporation passed along tax savings to their customers.
Aqua Indiana, Inc.: As noted in this May 16, 2018 Indiana Utility Regulatory Commission order:
The tax rate embedded in the utility's recurring rates is 35%. The utility requests to reduce its recurring rates to reflect the new 21 % tax rate per the Tax Cuts and Jobs Act of 2017.
Duke Energy Indiana: As noted in this June 28, 2018, Inside Indiana article excerpt:
Plainfield-based Duke Energy Indiana has reached a settlement with the Indiana Office of Utility Consumer Counselor and other parties regarding the disbursement of savings to customers from the passage of the Tax Cuts and Jobs Act. The utility says customers will receive approximately $142 million in annual savings.
The OUCC says when the legislation went into effect in January, the federal tax rate for most investor-owned utilities fell from 35 percent to 21 percent. As a result, the average residential customer will see their monthly bill reduced by about 5 percent, or $7.33, in 2018.
"The federal tax act is an opportunity for us to lower customer bills and help offset future rising costs," said Duke Energy Indiana President Melody Birmingham-Byrd. "We’ve reached an agreement to pass along tax savings embedded in our electric rates over the next two years. It’s a constructive agreement that reduces rates while still preserving our credit quality, which is important for keeping customer bills low."
Indiana-Michigan Power: As noted in this May 31, 2018, AP article excerpt:
The Indiana Utility Regulatory Commission approved an order Wednesday allowing the Fort Wayne-based company to boost its Indiana customers’ rates about 7.3 percent, allowing it to raise $96.8 million in new revenue.
The Journal Gazette reports Indiana Michigan Power had initially sought a 20 percent rate increase to generate $263 million in new revenue.
That was reduced under a settlement between the company, Indiana’s state consumer advocate and several cities, companies and advocacy groups.
Some of the decrease was also attributed to the recent federal tax cuts.
Northern Indiana Public Service Company: As noted in this wane.com article excerpt:
Merrillville-based Northern Indiana Public Service Co. announced Monday it was changing its request that was submitted in September to the state utility commission. The change reduces the rate increase NIPSCO is seeking from nearly 23 percent to about 19 percent.
The company says that would mean about $26 million less a year in increased billing charges to its some 820,000 gas customers.
Vectren Energy Delivery of Indiana, Inc.: As noted in this June 1, 2018 Indiana Utility Regulatory Commission filing:
Vectren North shall return the Tax Regulatory Liability to its retail customers through a separate component (the “Tax Refund Credit”) to be established in Cause No. 44430 TDSIC 9 to be initiated by October 2, 2018. The Tax Refund Credit shall be designed to return the Tax Regulatory Liability to customers over a six month period and be incorporated into Vectren North’s Compliance and System Improvement Adjustment (“CSIA”) mechanism. As the amounts recorded for the Tax Regulatory Liability are captured by Rate Schedule by taking the change in base rates multiplied by the actual throughput for this period, Vectren North will refund the Tax Regulatory Liability by Rate Schedule. Vectren North shall provide the other Settling Parties workpapers demonstrating the calculation of the Tax Refund Credit within the CSIA by August 2, 2018. Any over- or under-recovery associated with the Tax Refund Credit will be captured within subsequent CSIA filings as a CSIA variance
Midwest Natural Gas Corporation: As noted in this June 19, 2018 Indiana Utility Regulatory Commission filing:
Midwest is proposing a volumetric refund to customers that is class specific. We believe the refund should occur in the same four calendar months, of 2019, it was created in 2018. This gives us the best opportunity to refund the over collection back to the customers that created it, generally in proportion to their contribution. Spreading it over all 12 calendar months tends to favor industrial customers with a significant summer base load over the weather-sensitive customers that helped create the refund. The refund will be divided over the GCA estimated sales volumes, which are generally based upon the average of several years. At the end of April 2019, we would reconcile the refund dollars, with any differences being included in GCA variances at that time.
Fountaintown Gas Company, Inc.: As noted in this November 2, 2018 Indiana Utility Regulatory Commission filing:
Fountaintown has proposed to refund the over collection of tax funds from January 1, 2018 through April 30, 2018 by refunding $81,293. Fountaintown has proposed that such refund occur through a tracking mechanism that will begin in January 2019 and run through April 30, 2019 in order to refund the over collection as closely as possible to the customers by class who paid such over collection. The OUCC agrees to both the amount and the proposed tracker mechanism. Based on the evidence of record, we find that the over collection between January 1, 2018 and April 30, 2018 in the amount of $$81,293 should be refunded to the customer classes as proposed by Fountaintown. This refund of over collected tax dollars will begin in January 2019 and run through April 30, 2019 in order to more closely match the refund to the customer who provided such funds.
South Eastern Indiana Natural Gas Company, Inc.: As noted in this May 17, 2019 Indiana Utility Regulatory Commission memorandum:
South Eastern requests to revise portions of its IURC No. G-11 tariff to reflect the amortization of $176,222 in Excess Accumulated Deferred Income Taxes over 19.65 years as a result of the Commission’s investigation into the impacts of the Tax Cuts and Jobs Act of 2017 and the subsequent Order in Cause No. 45032 S13. The rate adjustment will result in $8,968 being amortized annually and will lead to a $12,324 annual reduction to South Eastern’s revenue requirement after being adjusted for taxes and fees.
American Suburban Utilities, Inc.: As noted in this December 10, 2018 Indiana Utility Regulatory Commission filing:
The rate reduction took effect for all bills that were rendered on July 1, 2018. Accordingly, there are five months for which service was billed after the tax cut at the prior rates, because ASU bills in arrears. He provided a total estimated deferred liability of $79,042.72. ASU proposed to divide this amount by 3 and for each of the first three months after the Phase 3 tariff in Cause No. 44676 is effective, to provide a bill credit equaling one-third of the deferred liability. In this way, the Phase 3 tariff will step in over four months rather than one. He testified that ASU expected to file the Phase 3 tariff before the end of 2018, but that if for some reason the tariff had not been submitted before March 31, 2019, ASU would file a tariff to reflect a one-time credit to exhaust all of the deferred liability in a single month.
Indiana American Water: As noted in this June 26, 2020 Indiana American Water press release:
Indiana American Water announced today that its water customers across the state will soon start seeing lower monthly bills. The decrease, which amounts to approximately $1.04 per month (2.77 percent) for a residential customer using 4,000 gallons per month, is the result of the resolution of certain accounting issues related to the Tax Cuts and Jobs Act (TCJA) of 2017.
Ohio Valley Gas Corporation: As noted in this November 15, 2018 Indiana Utility Regulatory Commission filing:
The Parties have agreed that OVG should pay the excess accumulated deferred amount of $4,012, 142 to its customers over 34.25 years based on the average rate assumption method ("ARAM"). The first such refund payments will be reflected on customer bills starting January 1, 2019. Consistent with ARAM, the amount of the annual payment will vary each year and be implemented through a separate adjustment to OVG's volumetric rates for utility service ("EDIT Tracker") based on customer allocations and rate design approved in OVG's most recent base 2 rate case. The baseline EDIT Tracker for each of the next 35 calendar years is shown on the attached Exhibit A titled "EDIT Annual Amounts to be Returned." These baseline trackers will be further adjusted by February 15 of each year after 2019 to true-up the amounts returned the previous year in comparison to the target amount on which the EDIT Tracker for that previous year was based.
Indianapolis Power & Light: As noted in this October 31, 2018 Indiana Utility Regulatory Commission press release:
Today, the Indiana Utility Regulatory Commission (Commission) issued an Order in the Indianapolis Power & Light (IPL) rate case, Cause Number 45029. The Order included the Commission’s approval of a settlement agreement filed by most of the parties involved in the case. In the Order, the Commission authorized the utility to implement rates designed to produce additional annual revenue of approximately $43.877 million. The utility’s original request was for $124.491 million. In February 2018, IPL lowered its request from the original $124.491 million to $96.731 million following the passage of the federal Tax Cuts and Jobs Act of 2017 (TCJA). As stated in the approved settlement agreement, IPL will also provide an additional credit of $14.3 million to customers over two years to reflect the impact of the TCJA on IPL’s current rates for the period before new base rates go into effect. The Commission has previously approved a $9.51 million credit in the specific tax investigation case for this utility.
Boonville Natural Gas Corporation: As noted in this April 30, 2018 Indiana Utility Regulatory Commission order:
Boonville requests to revise portions of its IURC No. G-3 tariff reflecting the new tax rate applicable to Boonville as a result of the Tax Cuts and Jobs Act of 2017 for all affected rates and charges in its IURC No. G-3 tariffs.
Community Natural Gas Company: As noted in this April 30, 2018 Indiana Utility Regulatory Commission order:
Community requests to revise portions of its IURC No. G-4 tariff reflecting the new tax rate applicable to Community as a result of the Tax Cuts and Jobs Act of 2017 for all affected rates and charges in its IURC No. G-4 tariffs.
L.M.H. Utilities Corporation: As noted in this June 13, 2018 Indiana Utility Regulatory Commission order:
The tax rate embedded in the utility's recurring rates is 28.91 %. The utility requests to reduce its recurring rates to reflect the new 21 % tax rate per the Tax Cuts and Jobs Act of 2017.
Indiana Natural Gas Corporation: As noted in this April 30, 2018 Indiana Utility Regulatory Commission order:
Indiana Natural requests to revise portions of its IURC No. G-3 tariff reflecting the new tax rate applicable to Indiana Natural as a result of the Tax Cuts and Jobs Act of 2017 for all affected rates and charges in its IURC No. G-3 tariffs.
Indiana Utilities Corporation: As noted in this April 30, 2018 Indiana Utility Regulatory Commission order:
Indiana Utilities requests to revise portions of its IURC No. G-12 Tariff for Gas Service reflecting the new tax rate applicable to Indiana Utilities as a result of the Tax Cuts and Jobs Act of2017 for all affected rates and charges in its IURC No. G-12 Tariff for Gas Service.
Conversely, a vote for a corporate income tax rate hike is a vote for higher utility bills as households recover from the pandemic.
Many small businesses operate on tight margins and can't afford higher heating, cooling, gas, and refrigeration costs. President Biden should withdraw his tax increases.
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