How the Tax Cuts & Jobs Act is Helping West Virginia
West Virginia is benefiting greatly from the Tax Cuts and Jobs Act enacted by congressional Republicans and President Donald Trump:
116,480 West Virginia households are benefiting from the TCJA’s doubling of the child tax credit.
Every income group in every West Virginia 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.
633,120 West Virginia 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.
22,820 West Virginia households are benefiting from the TCJA’s elimination of the Obamacare individual mandate tax. Most households hit with this tax made less than $50,000 per year.
Lower utility bills: As a direct result of the TCJA’s corporate tax rate cut, West Virginia residents are saving money on utility bills. Lower electric, water, and gas bills help households and small businesses operating on tight margins. For example, West Virginia American Water, Appalachian Power Co., and Potomac Edison (see below) all passed their tax savings on to their customers.
Thanks to the tax cuts, West Virginia businesses of all sizes are hiring, expanding, raising pay and increasing employee benefits:
Eagle Manufacturing (Wellsburg, West Virginia) – Creating new jobs and purchasing new equipment:
The company traditionally has sought to buy used equipment at low prices when replacement of machinery was necessary, according to Trimmer.
“Because of that tax break, we can invest and buy our next machines,” he said. “My department is now looking to buy a $2 million machine, rather than a 1990 classic. It will pay for itself in a short manner of time.”
Trimmer said the company is about to sign some government contracts that will put Eagle cabinets and metal products on the next generation of U.S. naval destroyers.
This could result in as many as 25 jobs being created, he said. – May 3, 2018, The Intelligencer article excerpt
Doss Enterprises (Jane Lew, West Virginia) – Hiring new employees and purchasing new equipment:
The benefits of the Tax Cuts and Jobs Act are evident just from looking around the Doss facility, Capito said.
“When I saw their board of (new) hires, there must have been 20 or 30 names on there, just April and May,” she said.
The company has chosen to reinvest its tax savings in its employees and into new equipment, Capito said.
“All of the employees are seeing (it) in their paychecks,” she said. “(Doss) has also bought some new equipment with his money, which is a great investment. He’s going to be hiring at least another 30 people.” – May 2, 2018, WVNews.com article excerpt
Warwood Tool (Wheeling, West Virginia) – Creating a new line of products:
The tax cuts have given the company and its customers enough optimism for the future that Warwood Tool is developing a new line of products. – May 3, 2018, The Intelligencer article excerpt
West Virginia American Water (Charleston, West Virginia) – The utility will pass tax savings on to customers:
West Virginia American Water Company announced a settlement plan last week which — if approved by the PSC — would result in an average savings of $3.77 a month for water and sewer customers in the state.
Panhandle Cleaning and Restoration (Wheeling, West Virginia) – Purchasing new trucks and equipment:
While Panhandle is often called upon for clean-up services after national disasters, Contraguerro told Jenkins the company relies on its day-to-day operations. Their employees, trucks and equipment are called to local homes and businesses each day following water-line breaks or other incidents, and Panhandle doesn’t wait for hurricanes to hit, he said.
The company plans to invest the money it receives from the tax cuts into more trucks and equipment.
“We will be reinvesting in the business,” he told Jenkins. “There is a huge benefit to reinvesting.” -- May 3, 2018, The Intelligencer article excerpt
Potomac Edison (Martinsburg, West Virginia) - The utility is passing on tax savings to customers:
‘More than 85,000 Potomac Edison customers in the Eastern Panhandle should see lower bills in the coming weeks thanks to federal tax reforms adopted in December.
The West Virginia Public Service Commission announced Friday that it approved rate reduction settlements for utility companies totaling almost $85 million annually, starting next month.
"Bottom line: starting Sept. 1, the tax reduction will lower bills for typical ... residential customers by nearly $2 per month," FirstEnergy spokesman Todd Meyers wrote in an email on Friday. FirstEnergy is the parent company of Potomac Edison.
"That means our average residential customer using 1,000 kilowatt-hours per month will see their monthly (bill) fall to $108.25 from $110.22," - August 24, 2018, Herald Mail Media
Davis Trust Company (Elkins, West Virginia) - 3% across the board pay raises (on top of existing compensation structure.)
Appalachian Power Co. (Milton, West Virginia) – the utility will pass along tax reform savings to customers.
Appalachian Power Company saved $235 million dollars from the federal tax cuts and the company is proposing passing the money back to its customers in a variety of ways.
The multi-pronged proposal is in a filing with the state Public Service Commission due Wednesday. The PSC is requiring all utilities to tell it their tax cut savings and what they plan to do with it.
West Virginia Consumer Advocate Jackie Roberts told MetroNews the money clearly belongs to the customers.
“They (the utilities) had taxes in their rates and now the taxes in their rates have significantly decreased—so they shouldn’t be able to keep collecting and keeping those higher taxes in their rates,” Roberts said.
Appalachian Power Company Communications Director Jeri Matheney agrees–the $235 million Appalachian Power will save belongs to its customers.
“It is customer money. What we propose to do is provide a method to keep rates as stable as possible over the longterm and as much as possible eliminate the need for rate increases,” Matheney said.
The Appalachian Power distribution proposal for West Virginia customers includes:
–$131 million to completely offset the company’s fuel and vegetation control program funding request that was part of an April filing with the PSC
–$19 million reduction in the company’s base rate case filed earlier this month (taking the $115 million request down to $96 million)
–$51 million to reduce next year’s fuel recovery cost rate case
–$1 million for a pilot economic development grant program
–$30.1 million to return to customers over the next three years – May 30, 2018, MetroNews article excerpt
U-Haul (81 locations in West Virginia) – $1,200 bonuses for full-time employees, $500 for part-time employees.
Citizens Bank of West Virginia (Elkins, West Virginia) -- $1,000 bonuses for all 66 employees:
Citizens Bank of West Virginia issued a bonus of $1,000 to each of their 66 employees, joining a number of U.S. companies to pass along savings from the federal tax reform to its staff. The announcement was made in a surprise staff meeting by the bank’s president & chief executive officer.
“One of the best investments we can make is in our employees who are dedicated to making sure our customers have great banking experiences at Citizens,” said President & CEO Nathaniel S. Bonnell. “This $66,000 investment demonstrates our thanks and appreciation to our team for their tireless efforts and commitment to the bank.”
The bank’s board of directors said it was an easy decision to reward the dedicated and hard-working employees of Citizens Bank. “There are several ways we will put the tax savings to work for Citizens,” stated Board Chairman Max L. Armentrout. “However, we are most excited about paying this bonus to the great employees we have working at our bank, serving our customers and shareholders.”
Employee reaction was overwhelming as they were excited to have $1000 checks arrive the same day as the announcement.
“This was totally unexpected!” said Assistant Trust Officer Crystal Kimbleton as she choked back tears. “This check will definitely help with upcoming high school graduation and college expenses.”
“It’s the best day ever!” exclaimed Alec Rader, Deposit Operations Administrative Assistant. “One thousand dollars, a pizza luncheon – this is not how I was expecting this day to go; what a great surprise!”
Head Teller Amanda Riffle stated she was totally speechless and shocked. “This money is going to go a long way in helping me pay down my college loan. It’s greatly appreciated!”
“I’m so grateful and it’s so amazing!” stated teary-eyed Mortgage Loan Processor Anita Jones. “I am going home to Indonesia this summer and this money will help tremendously with the cost of that trip!” Anita has not been home in nine years.
Lisa Plum, Deposit Operations Administrative Assistant II, says the employees of Citizens couldn’t ask to work for a better organization. “This was just wonderful news. I’m now going to be able to take a vacation this year that was not going to happen. We are so fortunate to work for a bank that cares so much for their employees.”
The overall sentiment of the employees throughout the bank was shock and gratitude. – Feb. 2018 Citizens Bank of West Virginia statement
Walmart – West Virginians employed at 43 Walmart stores received tax reform bonuses, wage increases, and expanded maternity and parental leave. Walmart employees who adopt children will be given $5,000 to help cover expenses.
AT&T -- $1,000 bonuses to 880 West Virginia employees; Nationwide, $1 billion increase in capital expenditures:
Today, Congress approved legislation representing the first comprehensive tax reform in a generation. The President is expected to sign the bill in the coming days.
Once tax reform is signed into law, AT&T* plans to invest an additional $1 billion in the United States in 2018 and pay a special $1,000 bonus to more than 200,000 AT&T U.S. employees — all union-represented, non-management and front-line managers. If the President signs the bill before Christmas, employees will receive the bonus over the holidays.
“Congress, working closely with the President, took a monumental step to bring taxes paid by U.S. businesses in line with the rest of the industrialized world,” said Randall Stephenson, AT&T chairman and CEO. “This tax reform will drive economic growth and create good-paying jobs. In fact, we will increase our U.S. investment and pay a special bonus to our U.S. employees.”
Since 2012, AT&T has invested more in the United States than any other public company. Every $1 billion in capital invested in the telecom industry creates about 7,000 jobs for American workers, research shows. -- Dec. 20, 2017 AT&T Inc. press release
Home Depot - Six locations in West Virginia, bonuses for all hourly employees, up to $1,000.
Lowe's -- 2,000 employees at 18 stores in West Virginia. Employees will receive bonuses of up to $1,000 based on length of service; expanded benefits and maternity/paternal leave; $5,000 of adoption assistance.
Ryder (Three locations in West Virginia) -- Tax reform bonuses for employees.
Starbucks Coffee Company (25 locations in West Virginia) – $500 stock grants for all retail employees, $2,000 stock grants for store managers, and varying plan and support center employee stock grants. Nationally, 8,000 new retail jobs; an additional wage increase this year, totaling approximately $120 million in wage increases, increased sick time benefits and parental leave.
T.J. Maxx – Four stores in West Virginia – Tax reform bonuses, retirement plan contributions, parental leave, enhanced vacation benefits, and increased 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
- A one-time, discretionary bonus to eligible, non-bonus-plan Associates, globally
- An incremental contribution to the Company’s defined contribution retirement plans for eligible Associates in the U.S. and internationally
- Instituting paid parental leave for eligible Associates in the U.S.
- Enhancing vacation benefits for certain U.S. Associates
Communities
Made meaningful contributions to TJX’s charitable foundations around the world to further support TJX’s charitable giving – Feb. 28, 2018 The TJX Companies Inc. press release excerpt
Cintas (Multiple locations in West Virginia) -- $1,000 bonuses for employees of at least a year, $500 for employees of less than a year.
Chipotle Mexican Grill (Multiple locations in West Virginia) - Bonuses ranging from $250 to $1,000; increased employee benefits; nationally, $50 million investment in existing restaurants.
Comcast (Multiple locations in West Virginia) -- $1,000 bonuses; nationally, at least $50 billion investment in infrastructure in next five years.
FedEx (Multiple locations in West Virginia) – Accelerated and increased compensation; pension plan contributions:
“FedEx Corporation is announcing three major programs today following the recently enacted U.S. Tax Cuts and Jobs Act:
- Over $200 million in increased compensation, about two-thirds of which will go to hourly team members by advancing 2018 annual pay increases by six months to April 1st from the normal October date. The remainder will fund increases in performance- based incentive plans for salaried personnel.
- A voluntary contribution of $1.5 billion to the FedEx pension plan to ensure it remains one of the best funded retirement programs in the country.
- Investing $1.5 billion to significantly expand the FedEx Express Indianapolis hub over the next seven years. The Memphis SuperHub will also be modernized and enlarged in a major program the details of which will be announced later this spring.
FedEx believes the Tax Cuts and Jobs Act will likely increase GDP and investment in the United States. – Jan. 26 2018, FedEx press release
McDonald’s (101 locations in West Virginia) – Increased tuition investments which will provide educational program access for 400,000 U.S. employees. $2,500 per year (up from $700) for crew working 15 hours a week, $3,000 (up from $1,050) for managers, and more:
McDonald’s Corporation today announced it will allocate $150 million over five years to its global Archways to Opportunity education program. This investment will provide almost 400,000 U.S. restaurant employees with accessibility to the program as the company will also lower eligibility requirements from nine months to 90 days of employment and drop weekly shift minimums from 20 hours to 15 hours. Additionally, McDonald’s will also extend some education benefits to restaurant employees’ family members. These enhancements underscore McDonald’s and its independent franchisees’ commitment to providing jobs that fit around the lives of restaurant employees so they may pursue their education and career ambitions.
The Archways to Opportunity program provides eligible U.S. employees an opportunity to earn a high school diploma, receive upfront college tuition assistance, access free education advising services and learn English as a second language.
“Our commitment to education reinforces our ongoing support of the people who play a crucial role in our journey to build a better McDonald’s,” said Steve Easterbrook, McDonald’s President and CEO. “By offering restaurant employees more opportunities to further their education and pursue their career aspirations, we are helping them find their full potential, whether that’s at McDonald’s or elsewhere.”
Accelerated by changes in the U.S. tax law, McDonald’s increased investment in the Archways to Opportunity Program includes:
- Increased Tuition Investment:
- Crew: Eligible crew will have access to $2,500/year, up from $700/year.
- Managers: Eligible Managers will have access to $3,000/year, up from $1,050.
- Participants have a choice for how they apply this funding – whether it be to a community college, four year university or trade school. There is no lifetime cap on tuition assistance – restaurant employees will be able to pursue their education and career passions at their own pace. The new tuition assistance is effective May 1, 2018 and retroactive to January 1, 2018.
- Lowered Eligibility Requirements: Increase access to the program by lowering eligibility requirements from nine months to 90 days of employment. In addition, dropping from 20 hours minimum to 15 hours minimum (roughly two full time shifts) per week to enable restaurant employees more time to focus on studies.
- Extended Services to Families: Extension of Career Online High School and College Advisory services to restaurant employees’ family members through existing educational partners Cengage and Council for Adult and Experiential Learning (CAEL).
- Additional Resources: Career exploration resources for eligible restaurant employees to be available later this year.
- Creation of an International Education Fund: Grants to provide local initiatives and incentives in global markets to further education advancement programs.
“Since its inception, Archways to Opportunity was meant to match the ambition and drive of restaurant crew with the means and network to help them find success on their own terms,” said David Fairhurst, McDonald’s Chief People Officer. “By tripling tuition assistance, adding education benefits for family members and lowering eligibility requirements to the equivalent of a summer job, we are sending a signal that if you come work at your local McDonald’s, we’ll invest in your future.”
After launching in the U.S. in 2015, Archways to Opportunity has increased access to education for over 24,000 people and awarded over $21 million in high school and college tuition assistance. Graduates have received college degrees in Business Administration, Human Resources, Communications, Accounting, Microbiology and more. – March 29, 2018 McDonald’s Corporation press release excerpt
Note: If you know of other West Virginia 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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California Democrats Seek to Introduce Yet Another Tax on California Gun Buyers
Despite current federal excise taxes on firearms and California’s already onerous gun laws, California lawmakers are eager to add another tax on guns and ammunition sales.
California Assemblyman Marc Levine (D) introduced legislation that would add an excise tax on gun retailers for firearm and ammunition sales. This bill would add a 25-dollar tax on the sale of every new gun purchased in California as well as a new tax on ammunition sales at a yet undetermined amount. The money raised by the tax would be used to fund violence prevention programs like California’s CalVIP program.
Assemblyman Levine explained his support for the bill arguing that “Gun violence will not end on its own” and that it is critical to “take responsible action to end the public health crisis that is gun violence in California and in our country.”
While stopping violence using guns is a worthwhile goal, the legislation proposed by Assemblymember Levine wholly misses its mark.
First, the legislation would do little to curb violence using guns. Citing multiple studies, RAND Cooperation in 2018 concluded that “moderate tax increases on guns or ammunition would do little to disrupt hunting or recreational gun use”
Similarly, the legislation would do little in discouraging legal and illegal gun purchases. According to a 2018 UC Davis Health survey, despite some of the nation’s strictest gun laws, “roughly 25 percent of those who purchased their most recent firearm in California reported that they did not undergo a background check.” Even with strict gun laws, increasing the price of guns has little to no effect on someone’s decision to obtain a firearm.
Finally, Levin’s legislation would only add another tax to the litany of other taxes and fees on Californians. According to the nonpartisan Tax Policy Center, “The federal government already imposes about $750 million in excise taxes on the import and retail sale of guns and ammunition. Handguns are taxed at 10 percent, and other guns and ammunition are taxed at 11 percent.” Even in California, the state annually collects $6 million in gun fees and requires fees like a $31 Dealer Record of Sale Fee and a $5 Safety and Enforcement Fee. Moreover, the violence prevention programs the bill would fund already received $30 million in state funding.
Levine’s bill does little to curb violence using guns. It is clear that this new bill is nothing more than a new tax and a cash grab by desperate California Democrats looking to take even more from Californian taxpayers’ wallets and to further infringe on their 2nd Amendment rights.
Photo Credit: Sacramento Press Media
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New Study Finds Biden Tax Hikes Would Eliminate 1 Million Jobs in First 2 Years
Joe Biden’s tax hikes would eliminate one million jobs in the first two years, according to a new study by economists John W. Diamond and George R. Zodrow. The study, which was commissioned by the National Association of Manufacturers also found that the tax hikes would eliminate 600,000 jobs per year over the first decade and reduce GDP by $117 billion in the first two years.
The study assumed several Biden tax hikes would go into effect include raising the corporate tax rate to 28 percent, reinstating the corporate alternative minimum tax, eliminating most expensing of depreciable assets, repealing the 20% deduction for pass-through businesses, doubling the tax rate on capital gains and dividends, taxing unrealized capital gains at death, and increasing the top individual tax rate to 39.6 percent.
Biden’s tax hikes will reduce new investment and decrease capital in both the short and long term. As the study notes:
Investment in ordinary capital declines initially (two years after enactment) by 1.9 percent, by 1.3 percent ten years after enactment, and by 1.6 percent in the long run; this effect is only modestly affected by imports of ordinary capital into the United States, which increase in the long run by 0.2 percent.
The increase in the statutory corporate income tax rate results in a reallocation abroad of FSK, which declines initially by 2.7 percent, by 3.5 percent 10 years after enactment, and by 2.9 percent in the long run.
This reduction in investment and capital will not only have detrimental effects on the U.S. economy, it will also harm workers due to a decrease in household wages. As the study notes:
The decline in the stocks of ordinary capital and FSK gradually reduce the productivity of labor over time and thus real wages, which fall by 0.6 percent in the long run, while labor compensation falls by 0.6 percent initially, by 0.3 percent ten years after enactment, and by 0.6 percent in the long run…
These effects translate into a reduction of $638 in wage income per household…
The study also notes that Biden’s tax hikes will cost jobs each and every year after enactment:
The declines in hours worked would be equivalent to declines in employment of approximately just over 1.0 million FTE jobs two years and five years after enactment, and a decline of 0.1 million FTE jobs ten years after enactment.
In terms of the duration of the reduction in employment over the first ten years after enactment, the average annual reduction in employment would be equivalent to a loss of roughly 600,000 jobs, or 5.7 million total “job years” lost over the ten-year interval.
Other studies, on average, show that labor (or workers) bear an estimated 70 percent of the corporate income tax in the form of wages and employment, as ATR notes here.
At a time when American workers are still trying to regain employment and lost wages, it is hard to imagine a more harmful set of policies to enact. To have a strong economic recovery, it is imperative that we incentivize job creation, investment, and wage growth. Biden’s tax hikes do precisely the opposite.
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Joe Biden’s “Infrastructure” Plan is Packed Full of Wasteful Spending
The Biden administration has outlined the “American Jobs Plan,” a $2 trillion spending plan. While the proposal is purportedly for infrastructure, much of the plan is a liberal wishlist of policies that have little, or nothing to do with roads and bridges.
As noted by Republicans on the House Budget Committee, less than 13 percent of this spending plan is spent on repairing or creating roads, bridges, waterways, locks, dams, ports, airports, and broadband.
Some of the non-infrastructure provisions in Biden’s plan includes:
- 20 percent of the entire cost of the bill is for an expansion of Medicaid—approximately $400 billion.
- $213 billion for housing and to increase federal control of local housing markets
- $100 billion of additional funding for schools without requiring them to reopen
- $50 billion for a new office at the U.S. Department of Commerce
- $35 billion for climate science, innovation, and R&D
This plan would spend $10 billion in taxpayer dollars on a uniformed “Civilian Climate Corps” tasked with the vague mission of “advancing environmental justice.” This funding would be enough to hire 200,000 professional, progressive environmental activists. These Green New Deal hall monitors would be entitled to taxpayer-funded housing, clothing, feeding, allowance, and medical expenses.
Biden also wants to include the PRO Act in his “infrastructure” proposal. This would ban right-to-work laws, which 27 states have in place, allowing employers to force their employees to join a union as a condition of employment. The PRO Act would also force a mass reclassification of independent contractors, threatening the livelihoods of millions of contractors across the nation. When California implemented AB5, which established the same independent contractor reclassification as the PRO Act, countless people lost their jobs, had to flee the state, or saw a significant decline in income.
ATR has compiled 655 personal testimonials from independent contractors who detail the ways that AB5 has hurt them, which you can view here.
As it stands, the United States is on track to spend $5.8 trillion in 2021. Now, Biden wants to spend trillions of dollars more, including the second part of his infrastructure plan which is likely to cost an addition $2 trillion. With both parts of this spending package combined at about $4 trillion, this plan would be, in dollars, the largest spending increase in U.S. history.
The so-called “American Jobs Plan” seems eerily similar to the “American Rescue Plan,” which used coronavirus pandemic relief as a Trojan horse for leftist policy goals like a $350 billion state bailout, burdensome tax paperwork mandates, a state tax cut ban, and more.
Now, Joe Biden is attempting to implement a liberal wishlist under the guise of infrastructure, a historically popular government initiative.
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Pennsylvanians Will Get Stuck with Higher Utility Bills Due to Biden Corporate Tax Rate Hike
If Casey votes for Biden's corporate income tax rate increase, he will have to explain why he just increased your utility bills
If President Biden and Sen. Bob Casey raise the corporate tax rate, Pennsylvania 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 17 Pennsylvania utilities:
- Citizens’ Electric Company of Lewisburg
- Metropolitan Edison Company
- Pennsylvania Electric Company
- Pennsylvania Power Company
- Pike County Light & Power Company
- PPL Electric Utilities Corporation
- Wellsboro Electric Company
- West Penn Power Company
- PECO Energy Company (Gas Division)
- National Fuel Gas Distribution Corporation
- Peoples Gas Company LLC
- Peoples Natural Gas Company LLC -- Equitable Division
- UGI Central Penn Gas Inc.
- UGI Penn Natural Gas Inc.
- UGI Utilities, Inc.--Gas Division
- Pennsylvania-American Water Company
- Pennsylvania-American Water Company—Wastewater
As noted by the Pennsylvania Public Utility Commission:
“As economic regulators, it is the Commission’s responsibility to ensure that utility rates are just and reasonable. Further, it is necessary for utility rates to reflect relevant tax expenses,” noted PUC Chairman Gladys M Brown in a statement at today’s public meeting. “I believe this work (by PUC staff) has resulted in an innovative answer by this Commission to effectively flow-through the benefits of the TCJA back to customers.
Public utilities required to begin returning federal tax savings to consumers include Citizens’ Electric Company of Lewisburg, Metropolitan Edison Company, Pennsylvania Electric Company, Pennsylvania Power Company, Pike County Light & Power Company, PPL Electric Utilities Corporation, Wellsboro Electric Company, West Penn Power Company, PECO Energy Company (Gas Division), National Fuel Gas Distribution Corporation, Peoples Gas Company LLC, Peoples Natural Gas Company LLC—Equitable Division, UGI Central Penn Gas Inc., UGI Penn Natural Gas Inc., UGI Utilities, Inc.--Gas Division, Pennsylvania-American Water Company and Pennsylvania-American Water Company—Wastewater. -- May 17, 2018 Pennsylvania Public Utilities Commission Press Release
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.
Sen. Casey would be wise to stay away from tax increases.
ATR Signs Coalition Letter Urging Congress to Oppose Interest-Rate Caps
Americans for Tax Reform joined a group of free-market groups and signed a coalition letter encouraging Congress to oppose interest rate caps on consumer borrowing. By restricting interest rates on financial products, Congress will limit consumer choices among affordable lending services.
Installing a cap on interest rates will price consumers out of the market, particularly many of the unbanked and underbanked who need access to affordable financial products the most. An interest rate cap on lending products will not reduce borrower demand and instead will force lenders to increase borrower eligibility requirements. Increased eligibility requirements could adversely discriminate against borrowers who lack even a basic credit score.
Many low-income borrowers who may not have access to traditional banking services and or credit history will not get quick credit from any legal lender. This has been demonstrated by economists at the Mercatus Center that shows government interest rate caps exclude borrowers from obtaining affordable lending products and does little to diminish the customers need for these products. Those borrowers will continue to seek credit through alternative forms of credit, which could come from illegal lenders known as "loan sharks.” Loan sharks operate outside regulatory supervision and have been known to use tactics like blackmail, coercion, and violence when borrowers fail to meet their aggressive repayment plans.
Legislation at the federal and state level should be conscious of whose lead they are following. Many of these proposals may resemble the legislation put forth by Senator Bernie Sanders (I-Vt.) and Representative Alexandria Ocasio Cortez (D-N.Y.) in 2019.
Several states have tried an interest rate cap in the past with low-income households suffering the most. Arkansas, a state with a constitutionally mandated interest rate cap, has extremely low loan volume. Many of its residents drive out of state to acquire installment loans that offer increased lending options with interest rates appropriately tailored to service those borrowers. After Georgia and North Carolina implemented caps on interest rates, insufficient funds notifications and bounced check fees surged, harming lower-income consumers who may find it more challenging to afford these fees.
Illinois Governor J.B. Pritzker (D-IL) signed an interest rate cap into law last month even after lender organizations, including the Illinois Small Loan Association, warned that the interest rate ceiling effectively ends the short-term loan industry. Neighboring Indiana and Wisconsin have no interest rate cap and can expect to see an influx of new borrowers crossing state lines for loans as did the states like Oklahoma, Missouri, and Tennessee surrounding Arkansas.
Consumers are best able to make appropriate financial choices that meet their needs when they have more choices in credit markets. Americans for Tax Reform and the undersigned organizations strongly urge Congress to oppose regulation limiting credit markets and installing a ceiling on interest rates.
Click here to review the letter.
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Watch: What's Next for Sports Betting in the States?
Baseball season is here, NCAA basketball champions have been crowned, and state legislatures are still in session. It's the perfect time to talk sports betting.
Americans for Tax Reform President Grover Norquist, FanDuel's Andrew Winchell, and Jessica Feil with American Gaming Association join a special webinar to talk about how states can win with low taxes and good regulatory policies for sports betting. Watch here.
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Montana Senate Passes Bill to Save Livelihoods – and Lives
Americans for Tax Reform today praised the Montana Senate for passing SB 398, a common sense, good governance reform that will save not only livelihoods – but also lives. SB 398 ensures appropriate transparency and accountability over decisions impacting public health while also safeguarding Montana’s state revenue base.
In response to the bill’s passage, Tim Andrews, Americans for Tax Reform’s Director of Consumer Issues, congratulated Montana legislators on this achievement and noted that: “It is the fundamental responsibility of state governments to protect their citizens. At times, these threats can come from local governments that act without any accountability or scrutiny and impose punitive taxes on the most vulnerable in their communities. SB 398 will put a stop to this.”
Montana state health officials testified during a hearing on SB 398 that, should the bill not be passed, laws will be enacted in twenty-six Montana localities that would outlaw stores selling e-cigarettes and vapor products. This would force the closure of over twenty establishments and cost more than one hundred jobs in the state. These local laws would also leave countless smokers looking to quit the deadly habit of cigarette use without access to scientifically proven reduced harm alternatives.
Andrews made sure to note the incredible public health benefits of SB 398, stating that “Not only will this bill stop businesses being closed by ill-informed, unaccountable bureaucrats, it will also save lives. According to the world’s leading cancer academics, E-cigarettes could save over 27,000 lives in Montana if a majority of the state’s cigarette smokers made the switch to vaping. SB 398 will preserve the ability of Montana residents to access these lifesaving products and will have a significant impact on decreasing socioeconomic disparities that exist in health.”
Andrews also recognized the leadership of Representative Ron Marshall noting that: "Rep. Marshall's tireless advocacy on behalf of consumers, taxpayers, and small businesses has been nothing short of remarkable and this achievement would not have been possible without his passion and dedication. Businesses across the state, as well as smokers desperately trying to quit their deadly habit, owe him and his team a great debt of thanks."
SB 398 will now be transmitted to the House, where Representatives will consider the bill in committee before it can be voted on by the full House. Americans for Tax Reform will continue our advocacy in support of SB 398 and encourages all Montana taxpayers, legislators, and consumers to voice their support for this legislation as well.
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Montanans Will Get Stuck with Higher Utility Bills Due to Biden Corporate Tax Rate Hike
If Tester votes for a corporate income tax rate increase, he will have to explain why he just increased your utility bills
If President Biden and Sen. Jon Tester raise the corporate tax rate, Montana 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 across the country worked with officials to pass along the tax savings to customers.
As noted in a 2018 Montana Public Service Commission Release:
The Montana Public Service Commission voted unanimously to approve an agreement for Montana-Dakota Utilities’ electric business to refund to consumers the benefits they received from the Tax Cuts and Jobs Act. The agreement, or Stipulation, calls for a $1.5 million consumer refund as a result of the TCJA.
NorthWestern Energy passed along their savings to Montana customers as well:
The tax savings stem from the Republican Tax Cuts and Jobs Act, which Congress passed in December and was signed into law by President Donald Trump. Federal corporate tax rates fell from 35 percent to 21 percent.
Regulated utilities like NorthWestern cannot pocket the savings, which must be shared with ratepayers, who also pay the utilities' taxes. NorthWestern has about 345,000 customers in Montana.
NorthWestern is proposing that its natural gas customers receive direct refunds for the entire $3.154 million in tax breaks associated with the utility’s natural gas business. The company’s electric customers would receive half of the $10.8 million in tax breaks associated with NorthWestern’s electric business. Half the money would be spent removing hazard trees that pose a fire or outage risk.
“With what we proposed, for a natural gas customer, it would be about $1.18 a month. An electricity customer would be 67 cents per month,” said Butch Larcombe, NorthWestern spokesman. – April 3, 2018 Billings Gazette article excerpt
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.
Sen. Tester would be wise to stay away from tax increases.
Missouri's Chance To Protect Businesses & Consumers From Rapacious Local Governments
Americans for Tax Reform submitted written testimony today for a hearing on Missouri’s House Bill 517 in the House Committee on Downsizing State Government.
HB 517 is a pro-taxpayer reform that will protect Missouri’s businesses and consumers from damaging regulations imposed by local governments on reduced harm tobacco alternatives. ATR urged lawmakers to support the legislation in the interests of safeguarding Missouri’s public health and state economy.
Tim Andrews, ATR’s Director of Consumer Issues, wrote “It is simply good governance that matters of this magnitude be decided at the state level, due to both the level of increased scrutiny, transparency and accountability it provides, but also the direct impact it has on state tax revenue should a product be banned.”
Andrews also urged legislators to consider the impact that HB 517 would have on state revenues, noting “State budgets would also be negatively affected through the forgoing of tax revenue from state income taxes caused by a burgeoning black market, caused by the smuggling of illicit products between different jurisdictions and sold without appropriate state taxes being paid. As such, protecting citizens from these policies is not only the moral thing to do, but also in the direct interest of lawmakers in Jefferson City.”
Andrews noted the importance of protecting the freedom of Missourians, writing “It is important to note that, contrary to some arguments made by opponents of this bill, “local control” at its core is about safeguarding individual liberties and restricting the growth of government; it is not a free pass for cities to do whatever they want. Localities are just as capable of being conduits for heavy-handed laws that will harm citizens. When that is at stake, state action is not only appropriate to safeguard individual freedoms – it is essential.”
Andrews concluded by stressing the benefits that HB 517 will have on public heath, stating that “Vapor products would save nearly 125,000 lives if a majority of Missouri smokers made the switch to vaping, extrapolating from a large-scale analysis performed by leading cancer researchers and coordinated by Georgetown University Medical Centre. HB 517 will have a tremendous impact on public health and would decrease socioeconomic disparities significantly as it will prevent localities from prohibiting life-saving treatment.”
The full testimony can be read here.
Photo Credit: Daniel Schwen
More from Americans for Tax Reform
Workers Will Pay for Biden’s Corporate Tax Hike
President Joe Biden has proposed at least $2 trillion in tax increases as part of his new spending plan. Biden has vowed to raise the corporate income tax from 21 percent to 28 percent, impose a 21 percent global minimum tax, and a 15 percent minimum tax on book income.
American workers, including those making less than $400,000 a year will bear a significant portion of Biden’s tax increases.
There is a strong consensus among the left and the right that the corporate income tax is borne by American workers through lower wages and fewer job opportunities:
- According to the Stephen Entin of the Tax Foundation, labor (or workers) bear an estimated 70 percent of the corporate income tax in the form of wages and employment. As Entin notes, 50 percent, 70 percent, or even 100 percent of the corporate tax is borne by workers.
- A 2012 paper at the University of Warwick and University of Oxford found that a $1 increase in the corporate tax reduces wages by 92 cents in the long term. This study was conducted by Wiji Arulampalam, Michael P. Devereux, and Giorgia Maffini and studied over 55,000 businesses located in nine European countries over the period 1996-2003.
- A 2015 study by Kevin Hassett and Aparna Mathur found that a 1 percent increase in corporate tax rates leads to a 0.5 percent decrease in wage rates. The study analyses 66 countries over 25 years and concludes that workers could see a greater reduction in wages than the federal government raises in new revenue from a corporate income tax increase.
- A 2006 study by William Randolph of the Congressional Budget Office found that 74% of the corporate tax is borne by domestic labor.
- A 2007 study by Alison Felix estimated that a 1 percentage point increase in the marginal corporate tax rate decreases annual wages by 0.7 percent. She concluded that the wage reductions are over four times the amount of collected corporate tax revenue.
- Even the left-of-center Tax Policy Center estimates that 20 percent of the burden of the corporate income tax is borne by labor.
- The Congressional Budget Office has said that about 25 percent of the cost of a corporate tax would be borne by workers. Though, they assert that it may be complicated to calculate this, as "the larger the decline in saving or outflow of capital, the larger the share of the burden of the corporate income tax that is borne by workers."
Photo Credit: Gage Skidmore
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