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How the Republican Tax Cuts Are Helping Colorado
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Posted by John Kartch on Friday, July 2nd, 2021, 5:00 PM PERMALINK Follow @johnkartch
Colorado is benefiting greatly from the Tax Cuts and Jobs Act enacted by Republicans in 2017:
393,740 Colorado households are benefiting from the TCJA's doubling of the child tax credit.
Every income group in every Colorado 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.
1,081,600 Colorado 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.
98,160 Colorado 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, Colorado. residents are saving money on utility bills. Lower electric, water, and gas bills help households and small businesses operating on tight margins. For example, at least six Colorado utilities reduced their customers' bills (see below).
Thanks to the tax cuts, Colorado businesses of all sizes are hiring, expanding, raising pay and increasing employee benefits:
King Scoopers ( Denver, Colorado) – raised 401(k) contributions, launched new tuition program for employees:
This year, King Soopers made two changes dedicated to supporting workers. Reinvesting the money it gained from the GOP tax reform bill, King Soopers raised its employee 401(k) match from 4 percent to 5 percent on June 1, Williamson said. In May it also launched its "Feed Your Future" program.
Thanks to tax reform, the grocery chain raised its employee 401(k) matches and offered workers a new tuition reimbursement program. – September 17, 2018 – Denver Post
SALUS (Manitou Springs, Colorado) - Hiring a new engineer, equipment deductions:
"For our business, pennies add up," Jerell Klaver, co-owner of SALUS, a 14-year old business that produces health and beauty products, said in a recent article on app.com. "If I can save a penny, it gets big really fast." Taking advantage of the future deduction on equipment purchases, Jerell and Elissa Klaver did the math and hired an engineer to help make new manufacturing equipment for their company. All told, the couple expects to save between $500,000 and $1 million annually under the new law. - April 18, 2018, Capital One blog post excerpt
Ball Corporation (Broomfield, Colorado) - Expanding operations, hiring new employees:
We have also heard from Ball Corporation Senior Vice President and CFO Scott Morrison, who told us that his company is looking to expand its presence in the United States and add 400 more workers to its payrolls. - January 9, 2018, National Association of Manufacturers Shopfloor blog excerpt
Greystar Real Estate Partners (Colorado Springs, Colorado) -- The company is building an apartment complex in an Opportunity Zone created by the Tax Cuts and Jobs Act:
Elan at Pikes Peak, as it would be called, would join several multifamily projects built or proposed in recent years or that are under construction by developers who say they're bullish on the Springs' downtown.
At the same time, developers say they want to meet the demands of growing numbers of renters seeking an urban lifestyle — the ability to walk and bike to nearby restaurants, bars and coffee shops.
"Greystar, being a leading developer of multifamily nationwide, there's not a better indicator for really a strong, healthy and attractive market," said Alex Armani-Munn, economic development specialist for the Downtown Partnership advocacy group in Colorado Springs. "We see this as a win, not just driving housing, but further establishing downtown as a great market for development."
The downtown site also is part of a federal opportunity zone, which offers tax breaks to investors who fund projects inside the zone's boundaries.
The addition of apartment projects such as Greystar's proposal gives downtown an even bigger boost, Armani-Munn said. The project will generate more property tax revenue than the current buildings on the site, while its renters will eat and shop downtown and drive sales tax collections in the area, he said.
At the same time, the location of Greystar's project will help enhance redevelopment efforts along Pikes Peak Avenue and on the eastern edge of downtown.
"It represents the exact type of redevelopment and infill development that we love," Armani-Munn said-- June 19, 2020 Colorado Springs Gazette article
Centennial Bolt (Denver, Colorado) – Tax reform bonuses, hiring new employees, updating facilitates, increasing paychecks, increasing community giving, and business expansion:
Mark Cordova, President of Centennial Bolt and a longtime champion of American manufacturing is part of the National Association of Manufacturers' Executive Committee, is hailing the recently signed legislation...
"I'm mapping out putting in a new plant in the Midwest," Cordova said. The new product line he plans to launce from that facility "is something right now that's being manufactured primarily in China. We're actually going to be at a competitive level to build it in the United States again."
Other advances Cordova attributed to tax reform include:
New hiring: To staff Centennial Bolt's new facility, Centennial Bolt plans to increase the size of its workforce between all its partner companies by 30 percent, growing overall from 50 employees to 65 employees.
New upgrades: The company plans to completely overhaul production at his existing facilities in Colorado and California.
New investments: Over the next two years, Cordova plans to "pour all of his profits back into the business," and setting Centennial Bolt up to be competitive as technology continues to advance. "In our industry, there are people using 1940s equipment because it still works," Cordova said. But the big savings from tax reform will "really allow companies that weren't willing to make those kind of capital investments to modernize their facilities."
New bonuses: Last year, soon after the tax reform was signed into law, Centennial Bolt gave its hourly workers an unexpected bonus as a "Christmas gift," totaling about 5 percent of their annual salary. Cordova stressed that the windfall for his employees was made possible solely because of the benefits of tax reform. Centennial Bolt intends to offer another similar-sized bonus sometime in mid-2018, also as a result of tax savings.
Increased paychecks: Because Centennial Bolt has generous profit-sharing with their employees, much of the increased profits from Centennial's expansion and capital investments will also go directly into the paychecks of their workforce.
"Tax savings aren't just for me," said Cordova. "It's so people can have a better life. It's always been a family motto: our goal is that people will do better for themselves so they can improve their lives and take care of their own." Centennial Bolt's new equipment will not just allow the firm to increase production and make work easier for employees—but Cordova said it'll give the men and women on his shop floor a new reason to be hopeful, rather than watch more and more of their manufacturing jobs go overseas.
In addition, Centennial Bolt is using some of its tax savings to give back to the community—namely, its efforts to combat homelessness in its native Denver. At the end of last year, Centennial Bolt supported the opening of a new, 150-bed women's shelter—helping an important group of people that have long been overlooked. Centennial Bolt also plans to expand its charitable giving to California, where it also has a sister facility, Cordova Bolt, Inc. where he is also the President of the family business. – April 24, 2018 National Association of Manufacturers article excerpt
Wibby Brewing (Longmont, Colorado) – Because of the Tax Cuts and Jobs Act, the brewing company was able to expand:
"We are so thankful that Congress has extended the current federal excise tax rates for another year," said Ryan Wibby, president and brewmaster, Wibby Brewing, Longmont, Colo. "When preparing the 2020 budget, I was struggling to find the capital needed for the expansion of our growing brewery. The extension of the FET rates will free up $20,000, which will allow us to purchase the production equipment necessary to meet our projections and achieve our goals." – Dec. 23, 2019, Wine Industry Advisor article.
Red Leg Brewing Company (Colorado Springs, Colorado) – The local brewery was able to use money saved because of the Tax Cuts And Jobs Act and put it towards hiring more people, health insurance for employees, 401(k) contributions for employees, and for production growth:
In a matter of days, Red Leg Brewing Company will tap into its next chapter.
The company announced this week it will break ground on an $8 million expansion project Friday along Garden of the Gods Road.
Todd Baldwin, president and founder of Red Leg, told News 5 the move will enable his company to increase its beer output from 2,500 barrels to 10,000.
"Our goal was always to be the craft beer of the military, to be on every military base in the world, and this new facility's going to allow us to do that," Baldwin said.
Red Leg's growth is not only tied to the product and innovative ideals. As a whole, craft brewers have also capitalized on an excise tax break included in President Trump's 2017 tax cuts, reducing what they pay the government for every barrel produced.
That relief allowed brewers to use the money elsewhere. At Red Leg, Baldwin said it paid for production growth, improvements in quality assurance and manpower.
"The last two years, we've invested more in now only our people here, but we were able to start health insurance and a 401(k) this year for our employees, which is super cool. And we were able to bring on more employees," Baldwin said. – Dec. 10, 2019, NBC Southern Colorado.
Black Hills Energy Electric Utility (Rapid City, South Dakota) – The utility will pass tax cut savings along to customers:
Black Hills Energy's Southern Colorado electric utility residential customers will see the benefits of a federal corporate tax rate reduction in the form of a $50.32 credit on February electric bills. The bill credit is part of a plan approved by the Colorado Public Utilities Commission to return funds to customers resulting from the 2017 Tax Cuts and Jobs Act (TCJA).
As part of the same agreement, Black Hills Energy will also provide residential customers with an additional annual bill credit of approximately $5 beginning in April 2021. The credit will appear on customer bills as a separate line item: "Tax Cuts and Jobs Act Adj." - January 27, 2021 Black Hills Energy news release
Public Service Company Gas Department (Denver, Colorado) – The utility will pass tax cut savings along to customers:
Effective March 1, 2018, the Company's gas rate case provisional rates will be reduced to reflect the Company's preliminary estimate of TCJA net impacts of $20 million, as set forth in Appendix A to this Settlement Agreement. The Settling Parties acknowledge that this preliminary estimate in Appendix A is based on high level early estimates using the limited information presently available. To this end, this preliminary estimate includes a contingency to account for uncertainty and avoid a surcharge to customers in the event the final determination of tax law reductions to rates is lower than the preliminary estimate of the reduction to provisional rates. - Public Utilities Commission of Colorado document
Public Service Company Electric Department (Denver, Colorado) – The utility will pass tax cut savings along to customers:
As set forth in more detail below, the Settling Parties agree that the following TCJA benefits be delivered to Public Service's electric customers beginning June 1, 2018:
$42.0 million – reduction of base rate revenue with a negative General Rate Schedule Adjustment ("GRSA") of 4.19 percent from June 1, 2018 to December 31, 2018;
Extension of the negative 4.19 percent GRSA from January 1, 2019 (annual $67.5 million rate reduction) until new rates take effect from the Company's next filed rate case;
Recovery of the Legacy Pre-Paid Pension Asset: $59.2 million during 2018; and for 2019, $33.7 million (annual) until new rates take effect from the Company's next filed rate case. - Public Utilities Commission of Colorado document
Black Hills Energy Gas Utility (Rapid City, South Dakota) – The utility will pass tax cut savings along to customers:
We filed for a reduction to the general rate schedule adjustment, or GRSA, to reflect the savings associated with the federal Tax Cuts and Jobs Act. These benefits first appeared on both gas and electric customers' July 2018 bills.
For Colorado gas customers, the GRSA decreased from 0.827% to -2.59%. For Colorado gas distribution customers, the GRSA decreased from 8.56% to 4.41%. - Black Hills Energy website
Colorado Natural Gas, Inc. (Black Hawk, Colorado) – The utility will pass tax cut savings along to customers:
At Colorado Natural Gas, our goal is to provide safe, reliable, clean burning and affordable natural gas to individuals, families and businesses in underserved areas of Colorado through exceptional customer service and a commitment to community.
To achieve that goal of providing safe and reliable natural gas to tens of thousands of Coloradans for home heating, hot water, cooking and more, we must maintain and invest in more than 1,200 miles of pipeline, while continuing to provide the quality customer service you've come to expect from your local natural gas utility.
All this costs money, which is why we filed a natural gas rate case in May of 2018 with the Colorado Public Utilities Commission (Commission). Until our 2018 rate case, we had not changed our rates since 2013, which meant the cost of providing safe and reliable natural gas exceeded what customers were paying.
After thorough review by the Commission and ample time for public input, the rate case settlement was approved on November 1, 2018. New rates went into effect on December 1, 2018.
New Rates:
Eastern Colorado District: The service and facility charge is now $14.00 for residential customers, $27.00 for commercial customers, and $40.00 for large volume customers. The new distribution rate is $0.4392 per therm.
Mountain District (Bailey, Pueblo West and Cripple Creek District): The service and facility charge is now $16.00 for residential customers and $50.82 for commercial customers. The new distribution charge is $1.1428 per therm.
You may have heard about the benefits of the federal income tax reform passed in 2017. We were happy to be able to pass on those benefits to our customers through this rate case. - Colorado Natural Gas statement
Xcel Energy (Denver, Colorado) – The utility will pass tax cut savings along to customers:
Xcel Energy will pass on $20 million in federal tax savings to its natural gas customers in Colorado, with more savings on the way for electric customers.
Federal tax obligations go into the calculation that Xcel Energy and other utilities use to determine their cost of service. The Tax Cut and Jobs Act, which Congress passed in December, cut the federal corporate tax rate from 35 percent to 21 percent at the start of the year. – March 1, 2018, Denver Post article excerpt
Parsonex Properties (Englewood, Colorado) -- The company is investing in new townhomes in an Opportunity Zone:
"A housing development that is adding 44 new townhomes to Grand Junction is receiving a boost on its last phase from an opportunity zone investment.
Parsonex Properties is a financial services company with about $300 million in assets under its management. It is based in Englewood on the Front Range.
This is the first opportunity zone investment for the company, but it has invested in other housing projects outside of the zones. Parsonex invested $2 million of its opportunity fund in this project.
"When the opportunity zone legislation came out, we saw it as a good opportunity to enter into the fund space," Parsonex Properties President Shane Phillips said." -- February 23, 2020 Grand Junction Sentinel article
Tom and Brooke Gordon (Denver, Colorado) -- A "husband and wife development team" are planning on building 700 homes located in a opportunity Zone:
The construction crews might not avoid Elyria-Swansea much longer.
On Monday night, the Denver City Council approved a rezoning that would allow one of the neighborhood's first major development proposals. A husband-and-wife development team wants to build about 700 homes and other features on a former call-center site at 2535 East 40th Ave.
Council members Debbie Ortega, Paul López, Paul Kashmann and Rafael Espinoza voted against the proposal. Councilman Wayne New was absent.
The 14-acre project has become a test case for the historically neglected neighborhood, with a community group and a local nonprofit pushing for more concessions from the developers amid fears of higher property taxes.
In an interview, developer Tom Gordon said he and his wife, Brooke, wanted to build a "diverse mixed-use community with some focus on the arts." The project would be a mix of existing and new buildings.
The three-floor project also would include:
* Seventy affordable units for people making less than 60 percent of the area median income, about $54,000 for a family of four. The median household income in the neighborhood is about $37,000, according to city records.
* A 500-seat performance space for the Wonderbound dance company, a current tenant.
* 2,000 square feet of rent-free space for local businesses.
* 25,000 square feet for restaurants and commercial space.
* Two-plus acres of publicly accessible open space, including a playground and a public garden.
* Eight live-work art spaces at about $1 per square foot.
About 120 of the homes would be condos, and the rest would be apartments. The affordable units and open space are cemented in agreements with the city. Other aspects are addressed in a community agreement signed by the Gordons but not the residents.
"We've taken the high road the whole way on this thing," said Bruce O'Donnell, a representative for the developers.
The council delayed its consideration of the project a month ago, following a five-hour meeting, to allow for negotiations between the developers and the Globeville, Elyria-Swansea Coalition Organizing for Health and Housing Justice.
"There has never been a large-scale market-rate development in Elyria and Swansea," said organizer Nola Miguel. "I think I was shocked by how fast this is all happening amidst a huge mess of construction."
Elyria-Swansea is one of the only parts of northeast Denver where houses still sell for less than $300,000. Its residents live in the shadow of Interstate 70 and industrial pollution.
GES Coalition and other neighborhood groups ultimately rejected the proposal because the developers didn't meet their "make or break" issue, Miguel said.
They wanted the developers to contribute $200 per unit -- about $140,000 in all -- to a "property tax fund" that could ease the effects of rising property values on low-income residents. Denver's low-income neighborhoods have seen their property value assessments jump in recent years. The city recently extended some tax refunds to low-income families.
"They didn't necessarily know what they were getting into as far as, 'What's equity and how do we do that?' " Miguel said.
Gordon said his company's plan went above and beyond to provide community amenities, but he was frustrated by the tax-fund proposal.
"Those things are things that we can do to engage the community, but what we can't do is a be a guinea pig or a target for an organization that is trying to create policy for the city," he said.
The development isn't getting direct city subsidies, but may create a special taxing district to pay for some development costs. The property is in a federal opportunity zone. -- May 6, 2019 Denver Post article
InSite Development and Midas Hospitality (Lancaster, California) -- The group is building a hotel in an Opportunity Zone created by the Tax Cuts and Jobs Act:
A project to erect the first hotel along Lancaster Boulevard holds the promise of upgrading the entire downtown section of the city.
Developed as a joint venture between InSite Development in Woodland Hills and St. Louis hotel firm Midas Hospitality, the project will create a $25 million, 107-key extended-stay Residence Inn by Marriott International at 857 W. Lancaster Blvd. on the Antelope Valley's busiest thoroughfare. Construction of the four-story, 80,000-square-foot building is scheduled to begin later this year, with the hotel's opening planned for early 2021.
Despite the impact this project will have, Eglash said, it almost didn't happen. It was only possible because the property falls inside an "Opportunity Zone." -- August 19, 2019 San Fernando Valley Business Journal
Hotel Equities (Colorado Springs, Colorado) -- The hotel developer is bringing two hotels to the city in an Opportunity Zone created by the Tax Cuts and Jobs Act:
An Atlanta hotel developer wants to build a Courtyard by Marriott and a Residence Inn in the Colorado Springs Airport's Peak Innovation Business Park, the first hotels on airport land, according to plans made public Tuesday.
Hotel Equities hopes to start construction in January on a Courtyard of 105 to 120 rooms that would open in 2021 as well as a similar-sized Residence Inn to open by 2023 on a 6-acre parcel just south of Milton E. Proby Parkway, which loops in front of the airport passenger terminal. The company would buy that site from the city for $1 million to $1.5 million, airport officials said.
Hotel Equities wants to buy the property by year's end to tap federal tax benefits because the site is in a federal Opportunity Zone that covers the airport property. The Opportunity Zone program allows investors in such projects to delay paying federal income tax on investment profits until 2026. To get the maximum tax benefit from zone projects, the investments must be made this year.
Hotel Equities also is a partner in a 259-room hotel being built downtown southwest of South Tejon and Costilla streets. It will operate under Marriott's Element and SpringHill Suites brands. That $75 million project, set to open in 2021, also will receive Opportunity Zone tax benefits. The company operates a Fairfield Inn & Suites near the Air Force Academy and more than 140 other hotels in 24 states and three Canadian provinces. -- August 21, 2019 Colorado Springs Gazette article
Proximity Space Inc. (Montrose, Colorado) -- The coworking company was provided funding to expand the company's network, which is located in various Opportunity Zones created by the Tax Cuts and Jobs Act:
Montrose's coworking space has been a first — now a second — when it comes to netting opportunity zone funding.
Proximity Space Inc. first won such funding last August, after the Colorado Office of Economic Development and International Trade (OEDIT) named it the first company to successfully place an opportunity zone investment.
The latest win came last week, when Proximity Space was given new funding from the CORI Innovation Fund to help the coworking business' network.
"It's a pretty neat step for Proximity to not only get their investment but their first investment," CEO Josh Freed said.
The CORI Innovation Fund initiative is a qualified opportunity zone fund that invests in high-growth technology companies supporting job creation and revenue generation in rural communities. The Center on Rural Innovation launched this initiative in September 2019.
These CORI funds will go toward the extension of Proximity's network.
The Proximity network has a national footprint and contains several coworking spaces located in rural areas in addition to recovering economies poised to support the growth of new businesses and entrepreneurs, Freed said.
Proximity's Montrose location is on one of three different board areas, or census tracts, in Montrose County. Those three were part of 126 tracts in Colorado that in April 2018 won the U.S. Department of Treasury certification as Colorado opportunity zones. -- January 19, 2020 Montrose Press article
Formativ (Denver, Colorado) -- The company is building a World Trade Center Denver office building in an Opportunity Zone created by the Tax Cuts and Jobs Act:
The new World Trade Center Denver office building, a catalytic project going up in the city's growing River North Art District, took a major step forward this week as the developer teams up with experienced national firms that own a portfolio of iconic buildings and high-end hotels, and those new partnerships close on the final parcels of land to officially start construction.
Denver-based Formativ, which co-developed the Industry office building in RiNo, told Denver Business Journal in an exclusive interview that it has named Chicago-based Golub & Co. as capital and co-development partner for the 350,000-square-foot office project. The partnership brings a firm to the table that manages some of Chicago's most notable buildings, including Tribune Tower and the John Hancock Building. It also manages Facebook's 750,000-square-foot office in San Francisco.
Sean Campbell, chief executive officer of Formativ, said his firm's progressive approach to development and local knowledge of Denver paired with a company that takes a more traditional approach to the business will create a milestone project in RiNo.
"It's definitely a nice match and we're looking forward to working long-term with [Golub]," Campbell said.
In addition to the office building, World Trade Center Denver includes a 240,000-square-foot, 240-plus-room hotel and conference center. Formativ officials said Monday that it signed a partnership deal with Memphis, Tennessee-based Kemmons Wilson Companies — the 71-year-old firm that created the Holiday Inn brand and now operates a number of luxury properties around the globe — to co-own and develop that hospitality tower. Kemmons Wilson's sister company, Valor Hospitality, will operate the hotel. A flag for the hotel hasn't been determined at this point. Valor's portfolio includes Hotel Indigo in the Williamsburg neighborhood of Brooklyn in New York and Central Station, a Curio by Hilton property going up in Memphis' old train station that's being redeveloped, similar to Denver's Union Station.
The most notable change to the project since it was announced in 2016 is that the project is now located in a qualified opportunity zone, allowing investors and the development team to reap unprecedented tax benefits. -- June 26, 2019 Denver Business Journal article
Chipotle Mexican Grill (Headquarters in Denver and many locations statewide) – Bonuses ranging from $250 to $1,000; increased employee benefits; $50 million investment in existing restaurants:
With regard to the impact of the Tax Cuts and Jobs Act, Jack Hartung, Chief Financial Officer, said, "We're pleased that the lower income tax rate from the tax law change will result in savings of approximately $40 to $50 million in 2018. We plan to invest more than one-third of these tax savings in our people, including by making all of our restaurant managers and crew eligible for a one-time cash bonus, awarding one-time stock bonuses to a broad group of staff employees, and enhancing a number of other benefits such as parental leave and short term disability, all to help position Chipotle as the employer of choice in the restaurant industry. We're excited to share further details about these programs in the coming days." – Feb. 6, 2018 Chipotle Mexican Grill statement excerpt
First Southwest Bank (Alamosa, Colorado) – Base wage raised to $14 per hour which will include full benefits:
While some long-standing businesses leave our rural Colorado towns, for more urban options, First Southwest Bank stands committed to growing and investing in the people of our Western communities.
As part of this commitment, starting team members at First Southwest Bank are immediately benefitting from the recent tax law changes, as the bank raises its starting wage to $14 an hour plus full benefits.
"We're excited to take advantage of the tax reform and give the positive impact it has on First Southwest Bank right back to our team members and the rural Colorado community," says Kent Curtis, First Southwest Bank CEO. "By being able to provide a higher living wage to our starting employees, and invest in our team, we can be a catalyst for economic growth, and reaffirm our commitment to a better quality of life in all of the rural Colorado communities our branches serve."
The increased starting wages are effective immediately across their six branches in rural Colorado. – Jan. 22, 2018 First Southwest Bank press release
Canary LLC (Denver, Colorado) – due to tax reform, the company will hire more employees and increase capital spending:
"There are two components. One is ordering more capital equipment, which is what the expensing provision of the new tax reform bill allows us to do. And the second leg of that is hiring more people which we are furiously working on right now."
"So what the tax reform package is allowing us to do is really dial up our capital spending even more, so we are going to try to achieve 50 percent revenue growth next year in 2018 over 2017."
"We've got a lot of aging equipment that needs to be replaced—that money is going to be spent locally. And as our activity picks up, we're also going to need to hire more people." – CEO Dan Eberhart
FirstBank (Longmont, Colorado) -- $1,000 bonuses for full-time employees; $500 for part-time employees; base wage raised, salary increases.
Waste Management Inc. -- multiple locations in Colorado, with a total of 1,243 employees statewide -- $2,000 bonuses:
In light of the meaningful contributions of its employees and the new U.S. corporate tax structure, the company will distribute US $2,000 in 2018 to every North American employee not on a bonus or sales incentive plan; that includes hourly and other employees.
"We are about to get a tax benefit as our U.S. corporate tax rate goes from 35 percent to 21 percent. In considering how to best spend that, we wanted to find a way to help grow our economy, which in turn, will help grow our business, and give some of the tax savings back to those hardworking employees who do not get the opportunity to participate in our salaried incentive plans," said Jim Fish, president and chief executive officer, Waste Management.
"So, we are offering each North American hourly full-time employee and salaried employee who does not participate in any sales incentive or bonus plan during 2018, a cash bonus of US $2,000 to show our appreciation to so many of our valued employees while growing our business and returning a good portion of the tax savings directly to the overall economy," he continued. – Jan. 10 2018, Waste Management Inc. press release excerpt
Apple (Apple stores in Boulder, Broomfield, Colorado Springs, Denver, Littleton, Lone Tree) - $2,500 employee bonuses in the form of restricted stock units; Nationwide, $30 billion in additional capital expenditures over five years; 20,000 new employees will be hired; increased support of coding education and science, technology, engineering, arts, and math; increased support for U.S. manufacturing:
Bonuses:
Apple Inc. told employees Wednesday that it's issuing a bonus of $2,500 worth of restricted stock units, following the introduction of the new U.S. tax law, according to people familiar with the matter.
The iPhone maker will begin issuing stock grants to most employees worldwide in the coming months, said the people, who asked not to be identified because they weren't authorized to speak publicly. The move comes on the same day Apple said it would bring back most of its cash from overseas and spend $30 billion in the U.S. over the next five years, funding an additional technical support campus, data centers and 20,000 new employees.
Apple confirmed the bonuses in response to a Bloomberg inquiry Wednesday. – Jan. 17, 2018 Bloomberg News article excerpt
Capital expenditures, etc:
Apple expects to invest over $30 billion in capital expenditures in the US over the next five years and create over 20,000 new jobs through hiring at existing campuses and opening a new one.
Building on the initial success of the Advanced Manufacturing Fund announced last spring, Apple is increasing the size of the fund from $1 billion to $5 billion. The fund was established to support innovation among American manufacturers and help others establish a presence in the US. It is already backing projects with leading manufacturers in Kentucky and rural Texas.
Apple works with over 9,000 American suppliers — large and small businesses in all 50 states — and each of Apple's core products relies on parts or materials made in the US or provided by US-based suppliers.
Apple, which has a 40-year history in education, also plans to accelerate its efforts across the US in support of coding education as well as programs focused on Science, Technology, Engineering, Arts and Math (STEAM). – Jan. 17, 2018 Apple press release excerpts
Bank of Colorado (Fort Collins, Colorado) -- $1,000 bonuses to all full time employees:
Bank of Colorado is paying a special bonus of $1,000 to each full-time associate to share the benefit of the tax cut passed earlier this month by Congress.
President of Bank of Colorado, Shawn Osthoff said, "We feel strongly that the message should be loud and clear that this is a tax cut that will benefit all Americans." Bank of Colorado has 641 associates in Colorado and New Mexico.
Customers will also benefit from the tax cut as Bank of Colorado has raised interest rates on its Money Market accounts. – Dec. 27, 2017 Journal Advocate article excerpt
Scheels All Sports (Colorado location in Johnstown) -- $1,000 and $500 bonuses; investment in new stores, increased charitable donations:
SCHEELS is about our PEOPLE and the communities in which we live and work. As we enter 2018, the new tax reform bill offers a huge opportunity for American business and notably our employee-owned company. This new bill allows SCHEELS to:
- Invest in new stores
- Create jobs in new and existing markets
- Increase our charitable impact in our communities
- $1,000 bonus for Scheels associates working >1000 hours
- $500 bonus for Scheels associates working 500 hours
It's opportunities like this that give our employee-owned company the ability to create a vision for steady and healthy growth in our communities. – Dec. 28, 2017 Scheels statement
Right after the tax reform bill became law in December, leaders of Fargo-based Scheels All Sports decided employees would get some extra money, a company official said during Vice President Mike Pence's campaign-style rally here Tuesday, March 27.
"We knew we wanted to do something intentional right away," said Chief Financial Officer Michelle Killoran. "So we decided to give a tax-reform bonus to our associates."
After hearing from employees, it became clear many didn't know what tax reform was or that it had happened, she said. Company leadership responded by holding meetings to explain to employees the "positive impacts" of the reforms to them and their employer, she said. – March 27, 2018 Fargo Forum article excerpt
STERIS Corp. (Colorado location in Denver -- Synergy Health) -- $1,000 bonuses totaling $7 million for non-executive U.S. -based employees:
"Like many companies, the recent tax reform in the U.S. will result in significant additional earnings for STERIS to strategically grow our business and return value to Customers, employees and shareholders. One of our first actions on that front will be a one-time special discretionary bonus of $1,000 to all U.S. employees other than senior executives." -- Feb. 7, 2018 STERIS plc press release
AT&T -- $1,000 bonuses to 2,675 Colorado 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
FMS Bank (Fort Morgan, Colorado) – Increased 401(k) contributions.
T.J. Maxx – 17 stores in Colorado – Bonuses, increased retirement plan contributions, parental leave, enhanced vacation benefits, and charitable donations:
The 2017 Tax Act benefited the Company in the fourth quarter and full year Fiscal 2018. The Company expects to continue to benefit from the 2017 Tax Act going forward, primarily due to the lower U.S. corporate income tax rate. As a result of the estimated cash benefit related to the 2017 Tax Act, the Company is taking the following actions:
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
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
Best Buy -- 26 stores in Colorado -- $1,000 bonuses for full-time employees; $500 bonuses for part-time employees. Over 100,000 employees will receive bonuses:
Best Buy is the latest major corporation to hand out bonuses to its employees as a result of the recently passed corporate tax reform.
In a letter sent to employees Friday afternoon, CEO Hubert Joly said full-time employees will receive a one-time bonus of $1,000 and part-time employees $500.
All permanent employees who are not on an existing bonus plan will receive the additional funds. The bonuses are expected to show up in their paychecks this month.
In all, more than 100,000 of Best Buy's 125,000 employees in the U.S., Mexico and Canada are slated to receive the extra payouts.
In addition, Best Buy is making a one-time contribution of $20 million to the Best Buy Foundation to help further expand its teen tech centers and Geek Squad Academies across the U.S.
"Our goal was simple: to say 'thank you' to more than 100,000 of our employees and help accelerate our work to bring much needed technology training to 1 million underserved teens a year," said Jeff Shelman, a Best Buy spokesman. — Feb. 2 2018, Minneapolis Star Tribune
National Bank Holdings Corporation (Greenwood Village, Colorado) – $1,000 bonuses for employees making less than $50,000 (exact number receiving bonus unknown at this time):
"This move is in part a response to the recently enacted tax legislation, which is anticipated to have a positive impact on the U.S. economy." – Dec. 27, 2017 National Bank Holdings Corporation press release
Home Depot -- 46 locations in Colorado -- Bonuses for all hourly employees, up to $1,000.
Lowe's -- 3,000+ employees at 29 stores and one distribution facility in Colorado: Employees will receive bonuses of up to $1,000 based on length of service, for 260,000 employees; expanded benefits and maternity/parental leave; $5,000 of adoption assistance.
Ryder (Eight locations in Colorado) – Tax reform bonuses:
Ryder System is the latest company to give its employees a bonus as result of the new tax law.
The Miami-based fleet management company (NYSE: R) will give a one-time cash bonus to all non-incentive bonus-eligible employees of the company employed on Dec. 31, according to a Securities and Exchange Commission filing.
The bonuses, totaling about $23 million, stem from a huge tax benefit that Ryder will receive as a result of changes in the recently passed Tax Cuts and Jobs Act, which reduces federal corporate tax rates to 21 percent from 35 percent.
Ryder said it will get a one-time tax benefit of about $586 million, or $11.04 a share, for the quarter ended Dec. 31. It said the net benefit is due to the estimated impact of reduced future tax rates on the company's deferred tax liabilities.
The Fortune 500 company had 34,500 employees at the end of 2016, and reported $1.8 billion in revenue and $11.3 billion in assets in its most recent quarter. -- Jan. 30, 2018 South Florida Business Journal article excerpt
CarMax (Locations in Colorado Springs and Boulder) – $250-$1,500 bonuses depending on length of service:
"The nation's largest retailer of used cars, announced plans to provide one-time bonuses to most hourly and commissioned full-time and part-time associates as a result of the recently passed Tax Cuts and Jobs Act of 2017. Bonus amounts will vary from $200 up to $1,500 based on length of service with the company." – Feb 23. 2018, EPR Retail News article excerpt
Walmart - Colorado employees at 89 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.
Cintas (Multiple locations in Colorado) -- $1,000 bonuses for employees of at least a year $500 for employees of less than a year.
U-Haul (Multiple locations in Colorado) – $1,200 bonuses for full-time employees, $500 for part-time employees.
Taco John's (18 Colorado locations): All full-time and part-time crew members received a $200 after-tax bonus:
Taco John's International, Inc. announced today that in response to the 2018 Tax Cut and Jobs Act, the company gave part of its projected tax savings to its restaurant crews, general managers, corporate staff and CORE (Children of Restaurant Employees).
On Friday, Feb. 23, Taco John's International, Inc.'s employees received a one-time bonus, as follows:
Every restaurant crew member - full-time and part-time - received $200 (after taxes);
General managers and employees at the Taco John's Franchisee Support Center in Cheyenne received $1,000 each; and,
The Executive Council of Taco John's International, Inc. (Vice Presidents and above) donated their $1,000 bonuses (a total of $10,000) to CORE, a national not-for-profit organization that grants support to children of food and beverage service employees who are navigating life-altering circumstances.
"At Taco John's International, our team is our family, so sharing the financial benefits that were a result of the recent tax reform legislation only makes sense," said Jim Creel, CEO of Taco John's International, Inc. "We encourage other restaurant brands to follow our example and give a portion of their savings to the people that are at the heart of what we do and to great organizations like CORE that support our crew. One hundred percent of CORE's funds directly benefit children of restaurant employees who have been afflicted with life-threating conditions."
"We are so grateful to the Taco John's team for their generous donation to our CORE family members," said Lauren LaViola, executive director of CORE. "Donations like theirs help us provide for our food and beverage service families experiencing loss, illness and other life-changing circumstances, and help us get closer to our goal of helping even more families across all 50 states in 2018."
The total amount that Taco John's International, Inc. gave exceeded $150,000.00. – Feb. 28, 2018 Taco John's International, Inc. press release
Starbucks Coffee Company (Multiple locations in Colorado) – $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.
McDonald's (230+ locations in Colorado) – 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
FedEx (Multiple locations in Colorado) – 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
Comcast (Multiple locations in Colorado) -- $1,000 bonuses; nationwide, at least $50 billion investment in infrastructure in next five years.
Wells Fargo – 144 locations in Texas -- Raised base wage from $13.50 to $15.00 per hour; $400 million in charitable donations for 2018; $100 million increased capital investment over the next three years.
Note: If you know of other Colorado examples, please email John Kartch at jkartch@atr.org
The running nationwide list of companies can be found at www.atr.org/lis
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Chaotic Markup Shows Klobuchar Antitrust Bill Is Nowhere Near Ready for Senate Floor
Posted by Tom Hebert on Thursday, January 20th, 2022, 5:15 PM PERMALINK Follow @tomhebertdc
In a 16-6 vote Thursday, the Senate Judiciary Committee advanced S. 2992, the "American Choice and Innovation Online Act."
While Democrats and the media are painting this as a major step forward for the legislation, in reality the markup showed that S. 2992 is nowhere close to being ready for a floor vote. Lawmakers proposed a staggering 117 amendments to the legislation - clear evidence that a lot of work on the bill remains to be done.
Just like its House companion, S. 2992 was rushed to a full committee markup without a legislative hearing. Members had no public opportunity to debate or discuss the ramifications of the legislation before today's markup.
Even supporters acknowledged that the bill was a work in progress. Sen. Alex Padilla (D-Calif.) raised doubts that self-preferencing was even a problem that Congress needed to solve, saying that he was "...not yet convinced that this bill as currently drafted will actually provide the net benefit to consumers that we're seeking." Sen. John Kennedy (R-La.) said that he anticipates sweeping changes to the bill before a full Senate vote, and if he's not involved in making those changes, told lawmakers that "[he'll] be off the bill faster than you can say Big Tech."
Lawmakers across the spectrum expressed confusion over which companies the bill will actually cover. The original version targeted companies with a market capitalization of $550 billion and 50 million monthly users. Sen. Amy Klobuchar's (D-Minn.) manager's amendment expanded this definition to include privately-held companies with $30 billion in annual revenue and companies with over a billion monthly users. This new covered platform designation goes far beyond Big Tech and includes companies in the grocery, professional services, and agriculture sectors.
In defense of the consumer welfare standard and a consumer-based approach to antitrust regulation, six Senators voted against moving S. 2992 out of committee: Sens. Thom Tillis (R-N.C.), Marsha Blackburn (R-Tenn.), Tom Cotton (R-Ark.) John Cornyn (R-Texas), Ben Sasse (R-Neb.), and Sen. Mike Lee (R-Utah).
While antitrust crusaders may tout today's markup as a victory, any fair observer would conclude that S. 2992 is an incredibly flawed piece of legislation that is nowhere near ready for the Senate floor.
Photo Credit: Fortune Live Media
Report: IRS Fails to Provide Adequate Taxpayer Services
Posted by Isabelle Morales on Thursday, January 20th, 2022, 5:05 PM PERMALINK Follow @IsabelleAliciaa
The IRS fails miserably at providing adequate taxpayer services, according to the National Taxpayer Advocate's 2022's Annual Report to Congress. NTA's report details numerous problems with the IRS's taxpayer services including that taxpayers face significant challenges reaching the IRS and that the IRS's digital communications tools are too limited.
Importantly, these problems pre-dated the coronavirus pandemic.
As the report notes, taxpayers face significant challenges reaching IRS employees. The NTA notes that only 11 percent of calls were answered by a real person. In March of 2020, only 4 percent of calls were answered:
"During fiscal year (FY) 2021, the IRS received a record 282 million calls. Of those calls, 32 million, or 11 percent, were answered by CSRs…
The Level of Service (LOS) for the Accounts Management (AM) phone lines fell as low as four percent in March when Congress enacted sweeping legislation favorably impacting taxpayers' 2020 taxes. Calls were not answered, leaving taxpayers wondering how the new legislation impacted their tax returns. In 2021, taxpayers experienced significant challenges while LOS fell to an all-time low."
The IRS has been incapable of keeping up with phone calls for decades.
In 2013, NTA's Nina Olson said that IRS customer service had not improved since 1998. "No, we don't have improved customer service," she said. Olsen was a community tax law project organizer during the IRS reform efforts, and was even invited to testify before the House Ways and Means Oversight Subcommittee in 1997 and before the Finance Committee in 1998.
In 2015, the IRS "courtesy disconnected" 8.8 million taxpayers, according to the National Taxpayer Advocate. "Courtesy disconnects," is a term used by the IRS itself, a practice in which the agency hangs up on taxpayers when wait times are long.
The report also notes that IRS digital tools are limited, making communication with the agency unnecessarily difficult. As report notes:
"Despite its progress, the IRS has yet to develop and adopt a one-stop solution for online and digital offerings that combines communications and interactions with individual and business taxpayers as well as with tax professionals who represent these taxpayers... Imagine what the IRS can accomplish and how much time and effort it could save if taxpayers could easily access their tax information online. The National Taxpayer Advocate wants to stop imagining this; the IRS needs to have robust online accounts available for all taxpayers and their representatives."
Advancement in digital tools, the report suggests, could be done with the IRS's existing resources:
"The IRS needs to balance budget restrictions, use of existing resources, and taxpayer needs for each implementation."
Again, these are not new issues. In past years, the IRS failed to improve communication issues. Congress passed the IRS Restructuring and Reform Act of 1998 (RRA 98), which sought to solve these issues. As the 2021 NTA report notes, "However, more than 20 years later, the IRS still has not meaningfully implemented this provision regarding its correspondence audit programs."
Unfortunately, the agency has little regard for improving taxpayers' experience working with the IRS. In fact, many IRS employees prefer to be hard to reach. One 2012 NTA blog outlines how Tax Examiners can simply disregard taxpayer cases because they know taxpayers may not be able to follow up on promised actions:
"No one employee must follow up on his or her actions or decisions with respect to a case or speak with the taxpayer about those decisions. Thus, it becomes easier for Tax Examiners to reduce taxpayers to mere paper to be processed or calls to be answered. In turn, it is easier to be careless or to succumb to the pressure to move on to the next case because Tax Examiners know the taxpayers will not be able to reach them again to follow up on promised actions."
While the IRS insists all these problems are a result of a lack of funding, it is evident that each problem existed well-before any IRS budget cuts or COVID complications. The problem is not funding, but the way the agency is organized and run.
In the Democrats socialist spending bill, $44.9 billion would have gone directly towards enforcement. The agency would have received a comparatively meager $1.93 billion in funding for taxpayer services, which would be spread thin between pre-filing assistance and education, filing and account services, and taxpayer advocacy services.
The NTA's Annual Report to Congress reiterates what most Americans already know: the IRS is woefully inadequate at doing its job, even when it has all the resources it needs.
Photo Credit: "A frustrated man sitting at a desk." by LaurMG is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license.
New IRS Reporting Requirements Set to Hit Small Businesses, Gig Workers
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Posted by Jack Baum on Thursday, January 20th, 2022, 2:47 PM PERMALINK Follow @Jack__Baum
In 2022, freelancers, small businesses, and independent contractors will experience a more burdensome and complex tax season due to new reporting requirements that came into effect through legislation passed by Democrats last year.
These changes were snuck into President Biden's $1.9 trillion stimulus bill passed on a party-line basis and signed into law last March. The legislation expanded 1099-K reporting requirements by lowering the reporting threshold from $20,000 to $600 and eliminating the threshold requirement that taxpayers must have more than 200 transactions in one year to file.
These new requirements will significantly increase tax complexity for millions of independent contractors, small businesses, and freelancers by increasing what they have to report to the federal government. In essence, this creates new paperwork burdens that will disproportionately harm low and middle-class taxpayers that have been decimated by the coronavirus pandemic over the last two years.
The legislation also extends the 1099-K reporting to "specified electronic payment processors" and will harm gig economy workers who are compensated via online services such as Venmo, PayPal, Etsy sellers, Uber and Lyft drivers, and even food delivery workers. These workers typically work in these job fields due to the flexibility that they can provide.
This is not the first time Democrats have enacted burdensome new reporting requirements. In 2010, lawmakers included new 1099 reporting requirements in Obamacare. This law required small businesses to send 1099 forms for all purchases of goods and services over $600 annually. Soon after this provision was signed into law, the National Taxpayer Advocate raised concerns that these reporting requirements would cause "disproportionate" harm to small businesses and do little to improve tax compliance.
This provision was so unpopular with the American public that it was quickly repealed in 2011 with a bipartisan vote of 87 to 12 in the Senate and 314 to 112 in the House. The Obama administration even hailed repeal of the provision a "big win" for small businesses in a press release.
These new reporting requirements should be swiftly repealed as proposed by Congresswoman Carol Miller (R-W.Va.) who has introduced H.R.3425, the Saving Gig Economy Taxpayers Act. Senator Rick Scott (R-Fla.), has introduced similar legislation in the Senate.
After two years of economic unpredictability, we should be looking to support gig economy workers and small businesses who have struggled and persevered throughout the pandemic. The new 1099-K reporting requirements do the exact opposite, and will create unneeded complexity for millions of taxpayers this year.
Photo Credit: "Home of the Internal Revenue Service" by Joshua Doubek is licensed under CC-BY-SA-3.0
Posted by Isabelle Morales on Thursday, January 20th, 2022, 11:50 AM PERMALINK Follow @IsabelleAliciaa
President Biden's first year in office has been disastrous.
He has been responsible for severe inflation and the demise of American energy independence, but has also pushed harmful policies such as supersizing of the IRS, the largest tax hike since 1968, and socialized healthcare.
Below are five things you should know about Biden's first year in office:
1) Inflation Surged to Its Highest Levels in 40 Years
Inflation has surged across the country due to out-of-control government spending, the administration's policy of paying Americans not to work, and supply chain issues. In December, the consumer price index increased by 7 percent on an annualized basis, a 40-year high. This marked a steep increase from January 2021 when annual inflation was at a stable 1.4 percent.
Rampant inflation is harming Americans across the country. The average U.S. household spent $3,500 more in 2021 due to inflation, according to a Penn Wharton University of Pennsylvania Budget Model analysis.
Low-income households were disproportionately harmed. In the past year, the bottom 20 percent spent $309 more on food, $761 more on energy, $476 more on shelter, $390 on other commodities, and $224 on other services.
Not only is inflation increasing household costs for consumers, but it could also have long lasting economic damage by eroding purchasing power. This is especially alarming given that wages are decreasing - real average hourly earnings dropped by 2.4 percent on an annualized basis in December.
According to a Gallup poll, 71 percent of low-income households have reported experiencing financial hardship due to rising prices. Of the 71 percent, 28 percent of low-income households say they have experienced "severe hardship" due to rising prices, and 42 percent say they have experienced "moderate hardship."
Since July, the Biden administration has been insisting this problem would go away. Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen described this inflation as "transitory." Clearly, those claims have not held up.
2) $3.5 Trillion Tax Hike, The Largest Tax Increase Since 1968
President Biden called for $3.5 trillion in tax increases in his 2022 budget proposal, the largest tax increase since 1968.
In nominal dollars, Biden's $3.5 trillion tax increase would have been the largest in history. But even when comparing this tax as a percentage of the economy, this tax hike would be the largest in more than 50 years. While Democrats claimed this tax increase would fall on "the rich," the proposal would have raised taxes on small businesses and working families at a time when they were most vulnerable.
Biden's proposal included the following harmful tax increases:
Raising the Federal Corporate Income Tax to 28 Percent. After accounting for state corporate taxes, Biden would give the U.S. a 32 percent corporate rate, a tax rate significantly higher than communist China's 25 percent tax rate. This tax increase would harm working families, as a significant portion of this tax, about 70 percent, is borne by workers in the form of lower wages and lost jobs. Additionally, the tax would be felt by consumers, as 31 percent of the corporate tax falls on consumers through higher prices.
Retroactive Tax Increases on Capital Gains and Dividends. President Biden proposed doubling the capital gains tax rate. Under Biden, the average top capital gains rate will be 48.8 percent after state taxes. The retroactive nature of this proposed tax would cause anxiety and uncertainty, ultimately leading to substantial economic damage. This tax hike would result in severe double taxation, would reduce retirement savings, would suppress investment, and could even reduce federal tax revenue.
Creating a Second Death Tax by Repealing Step-Up in Basis. Biden proposed the creation of a second Death Tax by repealing step-up in basis. This would impose the capital gains tax (which Biden has proposed raising to 43.4 percent) on the unrealized gains of every asset owned by a taxpayer when they die and will be imposed in addition to the existing 40 percent Death Tax. This would create new complexity for many taxpayers, forcing predominantly family-owned businesses to downsize and liquidate assets, leading to fewer jobs, lower wages, and reduced GDP.
Increasing the Top Income Tax Rate to 39.6 Percent. This tax increase would have hit small business that are organized as sole proprietorships, LLCs, partnerships, and S-corporations. These "pass-through" entities pay taxes through the individual side of the tax code. Of the 26 million businesses in 2014, 95 percent were pass-throughs. Pass-through businesses also account for 55.2 percent, or 65.7 million of all private sector workers. More than half of all pass-through income would have been taxed at this new, higher rate.
Imposing a 15 Percent Minimum Tax on "Book Income." This tax increase would create a new minimum tax on American businesses and disallow important, bipartisan credits and deductions that help promote job creation and economic growth.
Imposing Global Tax Hikes That Will Make American Business Uncompetitive. Biden proposed modifying the Global Intangible Low-Taxed Income (GILTI) regime and imposing a global minimum tax on American businesses of up to 26.25 percent. This proposal was significantly higher than the 15 percent global minimum tax rate that Biden Treasury Secretary Janet Yellen is pushing to get adopted by the G-20 and the OECD. This would impose double taxation on American businesses and make it difficult for them to compete against foreign companies.
3) Proposed Doubling the Size of the IRS, Enabling IRS to Snoop on Americans' Bank Accounts
Biden proposed $80 billion in additional funding to the IRS, adding a whopping 87,000 new IRS agents – enough to fill Nationals Park twice. Biden's proposal also included a provision enabling the IRS to track any bank account, credit union account, or third-party payment account (like Venmo, PayPal, and CashApp) exceeding gross inflows and outflows of $600.
In the Democrats' latest, house-passed version of the reconciliation bill, funding for audits, investigations, and other tax enforcement was 23 times greater than funding for taxpayer education and assistance. Out of nearly $80 billion in new IRS funding, $44.9 billion, more than half, would go directly towards enforcement. The agency would receive a comparatively meager $1.93 billion in funding for taxpayer services, which include things like pre-filing assistance and education, filing and account services, and taxpayer advocacy services.
The bill would result in 1.2 million more annual IRS audits; about half will hit households making less than $75k. This is because, despite the Left's claims that heightened enforcement would be directed solely towards "the rich," the wealthy and large corporations already have armies of lawyers and accountants that ensure they are compliant with the tax code.
Instead, the IRS will go after easier targets to find additional tax revenue: small businesses and low- and middle-income individuals.
The agency has a long history of harassing taxpayers, discriminating against political adversaries, violating taxpayer privacy, and incompetence.
The administration's proposed reporting regime would be a radical violation of privacy, would unleash the IRS's harassment on virtually every American, and would disproportionately hurt low- and middle-income Americans.
4) Assault on American Energy Development
In the past year, President Biden president signed an executive order banning new drilling leases on federal lands, pursued more than $20 billion in new energy taxes on oil and natural gas production, and vetoed permitting for the Keystone XL pipeline here at home. At the same time, his administration lobbied Congress to oppose sanctions on the Russian Nord Stream 2 pipeline.
After one year of President Biden's failed presidency, Americans now face the highest gas prices since 2014, surging home-electricity prices, and increased reliance on oil from adversarial nations.
President Biden's decision to cancel the Keystone XL pipeline had several negative impacts on jobs, energy, and geopolitics. For starters, stopping the project killed about 11,000 jobs in 2021, including the thousands of construction jobs for rural and Indigenous communities the pipeline was on track to create. Additionally, canceling the pipeline ultimately damaged a more efficient, environmentally friendly way to transporting oil. In fact, Keystone XL had committed to the pipeline being fully powered by renewable energy. Importantly, Biden's policy also cheated Americans out of cheaper, more accessible energy. If completed, the Keystone XL Pipeline would carry 830,000 barrels of oil from Canada through multiple states, where it would eventually reach Texas oil refineries, delivering savings to American families. Finally, killing the pipeline wasted billions of dollars in investments. TC Energy Corporation estimated an investment of more than $1.7 billion into communities, including $100 million in new property tax revenue and thousands of new middle-class jobs for both low and high-skilled workers.
In addition to killing the pipeline, the Biden administration also attempted to issue a ban on new leases to drill for oil and gas on public lands – an effective fracking ban on federal lands. Thankfully, a federal judge blocked this order from going into effect. If it had, it would have empowered foreign adversaries, like Russia, dwindled Americans' access to energy, and increased energy costs at a time when gasoline prices have already skyrocketed by 49.6 percent.
The Democrats' multi-trillion-dollar tax and spend bill, which Biden spent the year championing, included an $8 billion energy tax on methane from natural gas production and a $13 billion tax on crude oil, taxes that would be paid by American households in the form of higher energy bills.
Under the Biden Administration, Russia is now supplying more oil to the U.S. than any other foreign producer besides Canada. The Biden Administration went as far as lobbying Congress to vote against sanctions on Russia's Nord Stream 2 pipeline, sanctions that were supported by 55 Senators including 6 Democrats.
President Biden's blows to the American energy sector hurts our energy independence and empowers foreign adversaries like Russia. These policies threaten Americans' access to affordable energy, the U.S. economy, and national security.
5) Pushed for Socialized Healthcare
Biden's proposal would have imposed drastic price controls on American medical innovation. Specifically, his proposal would have created a 95 percent excise tax on manufacturers who did not agree to socialist price controls. This means that a manufacturer selling a medicine for $100 would owe $95 in tax for every product sold with no allowance for the costs incurred. No deductions would be allowed, and it would be imposed on manufacturers in addition to federal and state income taxes they must pay.
This proposal would have led to 167 to 324 fewer new drugs, according to an issue brief by Tomas J. Philipson and Troy Durie at the University of Chicago. These results are severe, but not surprising. After all, this proposal would arbitrarily set the price of medicines similar to the way other countries with socialized health systems have.
Countries that utilize socialist price controls have lower access to care. For instance, Canadian patients wait an average of 19.8 weeks from referral to treatment. In the UK, at any one time, 4.5 million patients were waiting to see a doctor or receive care. By comparison, 77 percent of Americans are treated within four weeks of referral, while just 6 percent wait more than two months.
Further, Americans have access to far more medicines than other countries. According to research by the Galen Institute, 290 new medical substances were launched worldwide between 2011 and 2018. The U.S. had access to 90 percent of these cures. By comparison, the United Kingdom had access to 60 percent of medicines, Japan had 50 percent, and Canada had just 44 percent.
Additionally, this proposal would have threatened high-paying manufacturing jobs across the country at a time when we were just emerging from the economic wreckage from the pandemic. According to a 2017 study by TEConomy Partners, pharmaceutical manufacturers invest $100 billion in the U.S. economy every year, directly supporting 800,000 jobs including jobs in every state. These jobs are high-paying – the average compensation is $126,000 – more than double the average wage in the U.S. When accounting for indirect and induced jobs, medical innovation supports more than four million jobs.
In trying to be more like foreign countries with socialist policies, Biden was willing to restrict Americans' access to life-improving and life-saving medicines and threaten much-needed, high-paying American jobs.
Photo Credit: Screen Capture, "Biden Remarks on Kabul," C-SPAN
ATR Releases Letter to Senate Judiciary on Klobuchar Antitrust Bill
Posted by Tom Hebert on Wednesday, January 19th, 2022, 3:00 PM PERMALINK Follow @tomhebertdc
On Thursday, the Senate Judiciary Committee will markup S. 2992, the "American Innovation and Choice Online Act," legislation sponsored by Sen. Amy Klobuchar (D-Minn.) that upends decades of antitrust precedent and gives unelected bureaucrats new authority to pick winners and losers.
ATR President Grover Norquist released a letter to the Senate Judiciary Committee outlining several concerns with the bill, pointing out that it will increase the burden of inflation on American families and do nothing to stop conservatives from being censored by Big Tech.
Click here or below to read the letter in full:
Dear Members of the Senate Judiciary Committee:
I write to express concerns with S. 2992, the "American Innovation and Choice Online Act," legislation sponsored by Sen. Amy Klobuchar (D-Minn.) that upends decades of antitrust precedent and gives unelected bureaucrats new power to pick economic winners and losers. If implemented, S.2992 will raise prices on families already struggling with inflation and break services Americans use every day.
The original bill targeted companies with a market capitalization over $550 billion and 50 million monthly users. Sen. Klobuchar's manager's amendment broadens the criteria for a "covered platform" even further to include privately held companies with annual revenue of more than $30 billion, ensnaring companies in the grocery, agriculture, and professional services sectors.
Using market capitalization or annual revenue to dictate how a company should operate is a radical departure from how U.S. law is typically written. In a search of all current federal statutes, the phrase "market capitalization" comes up in only five, none of which is about determining how a business is run based on this paper valuation.
S. 2992 shifts antitrust law away from the long-held consumer welfare standard, which protects consumers from harm, toward a European-style approach that protects individual competitors in a given market. This legislation bans companies over a government-determined size from selling or providing private-label products on their own platforms, a practice beneficial to consumers but negatively branded as "self-preferencing."
While antitrust crusaders may paint self-preferencing in a bad light, it is not a business practice endemic to the companies this legislation targets. Brick-and-mortar retailers often promote their own generic products next to brand-name goods via preferable shelf space or promotional devices like coupons, end-caps, and window displays. This common business practice benefits shoppers through lower prices and more choices.
Banning self-preferencing would take away choice and access to generic products for American consumers, the vast majority of which are at a lower price point than name-brand goods. Families are already struggling with 7 percent inflation thanks to the reckless tax-and-spend policies of the Biden Administration. The last thing they need is reduced access to generic goods they are reaching for just to make ends meet.
This legislation would also interfere with goods and services Americans use every day, a classic case of needless government intervention in the private sector. Amazon would no longer be able to sell AmazonBasics products or provide free two-day Prime shipping. Google would no longer be able to display YouTube links, restaurant reviews, or Maps directions when searched. Apple could no longer preinstall apps on their devices, making your new iPhone virtually useless out of the box.
Conservatives should be wary of giving the Biden Administration any new antitrust authority, as this legislation does. If a company has been found to violate S.2992, it may be subject to a penalty of up to 15 percent of total revenues for a year. Depending on profit margins, this fine could easily be more than double the profit a given company makes in a year.
The left has not been shy about their plan to use antitrust law to push a progressive social agenda, and Sen. Klobuchar's manager's amendment shows that this legislation goes far beyond Big Tech. Sen. Klobuchar has repeatedly said that she wants to go after every industry "from cat food to caskets."
Ultimately, this bill does nothing to stop conservative censorship, will increase inflation concerns for American families, and gives the Biden Administration sweeping new power to reshape the economy in service of a progressive social agenda.
Onward,
Grover G. Norquist
President, Americans for Tax Reform
Photo Credit: Gage Skidmore
ATR Op-Ed in American Banker: "Regulators must provide relief during transition from Libor"
Posted by Americans for Tax Reform on Wednesday, January 19th, 2022, 1:53 PM PERMALINK
In an op-ed published in American Banker today, ATR Federal Affairs Manager Bryan Bashur highlights the importance of providing regulatory relief and flexibility for financial institutions as they transition away from using the London Interbank Offered Rate (LIBOR) as a gauge for how much interest to charge on certain financial products. Trillions of dollars in contracts for mortgages, credit cards, bonds, student loans, futures, swaps, and options, will all feel the effects of this transition. As Bashur explains:
It is imperative that the United States government implement regulatory relief, emphasize flexibility and develop concrete guidelines for financial institutions so they can easily adapt to the changing interest rate landscape. As banks and other financial institutions rewrite contracts for mortgages, credit cards, bonds, student loans and financial derivatives to adjust to fluctuating interest rates, the federal government needs to ensure that the tax burden is limited and litigation is mitigated.
According to the Congressional Research Service, as of the end of 2020 Libor was referenced in over $220 trillion financial instruments denominated in U.S. dollars, including mortgages, student loans, bonds, derivatives and more. PwC estimates that Libor is tied to as much as $350 trillion "in bonds, loans, derivatives and securitizations worldwide." The aggregate gross domestic product for all the economies in the world pales in comparison ($84.68 trillion in 2020) to the amount of financial products connected to Libor.
As LIBOR is phased out and new benchmark interest rates will be widely adopted, it is imperative that banks and other financial institutions are able to use reference rates that best suit their products and the customers they serve. As Bashur points out:
However, regulators should emphasize flexibility and allow financial institutions to use benchmark rates that best suit their customers. Benchmarks such as the American interbank offered rate (Ameribor) and the Bloomberg Short Term Bank Yield Index (BSBY) are credit-sensitive and "provide a more accurate reflection of lenders' funding costs."
Enabling lenders to choose among a host of different rates will lead to more innovative financial products and could increase capital disbursement to borrowers.
Some long-term financial contracts that use LIBOR do not include plans for how to adjust the terms when LIBOR is fully discontinued. However, Congress is working on legislation to provide a more concrete framework to ease the transition. Bashur states that:
Federal regulators also need to ensure that bonds or other contracts that extend beyond 2021 and do not include contingency plans for the Libor transition are able to avoid costly litigation, which would harm both lenders and borrowers.
Fortunately, Congress is working on a bill to provide a federal framework to allow these longer-term contracts to easily transition to new reference rates. Rep. Brad Sherman, D-Calif., introduced HR 4616, the Adjustable Interest Rate (Libor) Act of 2021, to provide a framework to ease financial institutions away from Libor for contracts that lack explicit language explaining how borrowers and lenders can transition their contract from Libor to a new reference rate. The federal framework would preempt any cumbersome patchwork of state laws that could inhibit a streamlined transition for financial contracts that cross state lines.
HR 4616 garnered strong bipartisan support and passed the House by a vote of 415-9. It is highly likely that the Senate will introduce a bipartisan bill identical or nearly identical to Rep. Sherman's bill and pass it with little consternation.
One example of regulatory relief during the LIBOR transition is a rulemaking the IRS published that exempts financial contracts from capital gains tax if the terms of the contract are amended to reflect the change in benchmark interest rates. Bashur elaborates that:
The IRS concludes in the draft rule that the exemption from capital gains tax applies "to both the issuer and holder of a debt instrument and to each party to a nondebt contract."
Accordingly, the final rulemaking would preserve the tax exemption and avoid the negative implications of imposing the burdensome capital gains tax on borrowers and lenders during the Libor transition. Application of a capital gains tax to mortgages and student loans in this scenario is unnecessary and erroneous.
Bashur urges Congress and federal regulators to continue the stream of regulatory relief "so that both lenders and borrowers can avoid costly litigation, burdensome taxation and illiquidity."
Click here to read the full op-ed.
Photo Credit: "interest rate" by Mike Cohen is licensed under CC BY 2.0
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Further Hearings on Sohn's FCC Nomination Are Required
Posted by Katie McAuliffe on Wednesday, January 19th, 2022, 9:13 AM PERMALINK Follow @DigitalLibrary
Senator Roger Wicker is correct to call for further hearings on Gigi Sohn's nomination to the Federal Communications Commission. There is still more information that needs to be discussed, such as the details of the Locast settlement and the conditions of recusal in FCC matters.
Sohn spearheaded an FCC proceeding that would have enabled tech platforms to effectively steal and monetize television content without paying for usage rights. Just as a-la-cart television didn't need direction from lawmakers. The set-top box regulations were clearly trounced by the market, as a myriad of streaming options for viewing content are currently available. However, this is just one instance where Sohn engaged in attempts to weaken intellectual property rights.
Perhaps even more egregious, Sohn served on the board of Locast, a "non-profit" that was determined to be illegally retransmitting broadcasters' content without their consent in violation of the Copyright Act. The case resulted in a permanent injunction that required Locast to pay $32 million in statutory damages. Sohn cannot be an impartial regulator of the broadcast industry after joining the Board of an organization that openly violated that industry's copyrights.
It is also interesting to note that her nomination was received in the Senate from the President that on the same day that the Locast settlement was announced, October 28, 2021.
It has been reported that she is negotiating a recusal deal, but none of these details have been made public or shared with other senators on the committee. Further, we simply have to take Sohn's word that she will recuse herself. These agreements have no force of law. It's very problematic that someone who signed a $32 million settlement agreement with broadcasters now wants to regulate them.
Further a recusal from ruling on broadcast licenses, retransmission or copyright relating to the parent companies of ABC, CBS, NBC and Fox, who filed suit against Locast, would severely limit her ability to do any of the primary work of the Commission.
Americans for Tax Reform joined a coalition letter opposing her nomination over legitimate concerns regarding her ability to be impartial, which include hyper-partisan attacks on Republicans, interest in revoking broadcast licenses over viewpoints, doomsday predictions for the internet without Title II regulations.
Photo Credit: "Gigi Sohn" by Joel Sage is licensed under CC BY-SA 2.0
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Indiana Bill Would Raise the Cost of Nonalcoholic Beverages
Posted on Tuesday, January 18th, 2022, 4:45 PM PERMALINK
The Indiana House Committee on Commerce, Small Business and Economic Development will be considering legislation that would impose a first in the nation price control on nonalcoholic beverages. House Bill 1109, if implemented, would prevent distributers of packaged nonalcoholic beverages with a weight volume of 8 ounces or more from offering seasonal promotions and other discounts to Indiana retailers unless they are extended to every store in the state.
Despite the good intentions behind this bill, it would inflict a great deal of harm on the state economy. "Allowing the government to meddle into negotiations between private businesses in order to impose price controls would actually result in fewer discounts being available, driving prices up and leaving families across Indiana to face higher costs at a time when they can least afford it," warned Grover Norquist, president of Americans for Tax Reform, in a letter to committee members. "Many of these households along state lines could decide to instead visit stores in Illinois, Kentucky, Michigan, or Ohio, hurting Indiana's small businesses and their employees."
To read the full letter, click here.
To: Members of the Indiana House Committee on Commerce, Small Business and Economic Development
From: Americans for Tax Reform
Re: Oppose House Bill 1109
Dear Representative,
On behalf of Americans for Tax Reform (ATR) and our supporters across Indiana, I urge you to oppose House Bill 1109, legislation that would jeopardize the right to private contract in order to impose price controls on certain nonalcoholic beverages. If implemented, this bill would inflict a great deal of harm on small businesses and consumers across the Hoosier State.
Under the status quo, all Indiana retailers, from small convenience stores to large chain grocery stores, can negotiate their preferred contract terms with the nonalcoholic beverage industry. This flexibility allows retailers to benefit from seasonal promotions and other price discounts that can be passed onto consumers, ultimately making their stores more competitive than those in surrounding states.
This free-market approach is not unique to Indiana, but is the standard practice used by all retailers and the nonalcoholic beverage industry nationwide. Unfortunately, HB 1109 seeks to disadvantage Indiana retailers by making it illegal for distributers of packaged nonalcoholic beverages with a weight volume of 8 ounces or more to offer special pricing deals in Indiana unless they are extended to every store in the state.
Despite the good intentions behind this bill, it would actually result in a number of negative consequences for the local economy. Allowing the government to meddle into negotiations between private businesses in order to impose price controls would actually result in fewer discounts being available, driving prices up and leaving families across Indiana to face higher costs at a time when they can least afford it. Many of these households along state lines could decide to instead visit stores in Illinois, Kentucky, Michigan, or Ohio, hurting Indiana's small businesses and their employees.
Adding insult to injury, HB 1109 would also drive new investment, jobs, and opportunities away from Indiana. Why would a CEO in any industry want to do business in a state that is known for undermining the right to private contract and has the unwelcome distinction of being the only state in the country to impose price controls on nonalcoholic beverages? There are plenty of other states with lower tax rates that are much less hostile to businesses.
ATR opposes HB 1109 and urges lawmakers to vote NO.
Photo Credit: "Capitol del Estado de Indiana, Indianápolis, Estados Unidos" by Diego Delso licensed under CC BY-SA 3.0
Top Tier GOP Candidates Budd and McCrory Sign the Taxpayer Protection Pledge in N.C. Senate Race
Posted by Adam L. Radman, Patrick Gleason on Tuesday, January 18th, 2022, 2:14 PM PERMALINK
Americans for Tax Reform (ATR) commends Rep. Ted Budd and Gov. Pat McCrory for signing the Taxpayer Protection Pledge in their race for North Carolina's U.S. Senate seat. The Pledge is a written commitment to North Carolina taxpayers that they will oppose and vote against all income tax hikes.
Candidates running for public office like to say they will not raise taxes, but often turn their backs on the taxpayer once elected. The idea of the Taxpayer Protection Pledge is simple enough: Make them put their no-new-taxes rhetoric in writing, so the promise is much harder to break.
"North Carolina voters are looking for solutions that get Americans back to work and grow the economy. I commend Budd and McCrory for signing the Taxpayer Protection Pledge and promising to hold the line on taxes," said Grover Norquist, President of Americans for Tax Reform. "It's the first step in jump-starting the economy."
There are currently 179 Pledge signers in the U.S. House and 44 Pledge signers in the U.S. Senate. 85% percent of all congressional Republicans have made the written commitment to oppose higher taxes. In contrast, ZERO congressional Democrats have made that promise.
"During his time as governor, Pat McCrory signed the Taxpayer Protection Pledge and kept his commitment to North Carolinians. Not only that, but Gov. McCrory also enacted a multi-billion-dollar income tax cut that remains a national model for pro-growth tax reform," Norquist said. "Congressman Budd, meanwhile, has maintained the Taxpayer Protection Pledge that he signed as a member of the U.S. House. In addition to keeping that commitment, he voted for the Tax, Cuts, and Jobs Act, the federal tax reform enacted in 2017 that provided a net tax cut to the vast majority of American households."
In President Biden's first year, he championed a multi-trillion tax and spend bill, which includes the largest tax increase since 1968. These tax hikes would disproportionately hurt workers, retirees, consumers, and small businesses. Taxpayers should expect more of the same for the remainder of his presidency.
"Voters have a right to know where candidates stand on taxes before heading to the voting booth," added Norquist. "The Taxpayer Protection Pledge is a simple litmus test that tells voters I'll work to protect your wallet. I encourage all candidates for elected office to make this commitment today."
New candidates sign the Taxpayer Protection Pledge regularly. For the most up-to-date information on this race or any other, please visit the ATR Pledge Database.
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California: If at first you don't succeed, tax, tax again!
Posted by Drew Carlson on Tuesday, January 18th, 2022, 12:38 PM PERMALINK
Californian progressives are looking to implement the nation's first single-payer health care system. To pay for it, they want to double their state's tax burden, which is the third worst in the nation (beaten only by New York and New Jersey).
California Assemblyman Ash Kalra has proposed an amendment to California's state constitution introducing several taxes to pay for this new system. According to the California Globe, "If enacted, it would impose an excise tax, payroll taxes, and a personal income tax to fund comprehensive, universal single-payer health care coverage, as well as a health care cost control system." According to the Tax Foundation, the amendment would "increase taxes by $12,250 per household, roughly doubling the state's already high tax collections."
Among the taxes is a payroll tax on employers with over 50 employees. These tax hikes would stunt the growth of small businesses by providing a hard taxing wall that most would avoid. The law also imposes several surtaxes for personal income with a top rate of 2.5%. When combined with the current 13.3% top income tax rate and the 2.25 payroll tax, you are left with a combined maximum marginal rate of 18.05%, more than seven percentage points higher than the state with the next-highest rates (Hawaii, 11 percent) according to the Tax Foundation.
Finally, the amendment enacts a 2.3% Gross Receipt Tax on businesses. Gross Receipt taxes charge on a company's gross sales, without deductions for a firm's business expenses. These tend to harm businesses with low-profit margins and are generally seen as inefficient and damaging to the economy. Only a few states use them instead of a corporate income tax. California takes this flawed taxing model and makes it even worse.
Instead of imposing a GRT to replace the income tax, this new amendment imposes it on top of the income tax. As a result, California is burning the candle at both ends, leaving the businesses trapped in the middle. Not only that but California's 2.3% Gross Receipts Tax is "a rate more than three times that of the country's highest current pure GRT," according to the Tax Foundation.
California progressives need a 2/3 supermajority in both houses to approve to pass this amendment. However, once the taxes have been approved, a simple majority can, and most likely will, raise them. However, before they can do that, they need to clear one last hurdle. For a constitutional amendment to become law, California requires the public to vote on it as a ballot measure. And the people of California are getting tired of high taxes.
According to a report by the non-partisan California Policy Lab, "Entrances to California from other states have dropped 38% since March of last year, while the number of residents leaving to other states has increased 12%." Californians are tired of the state's overregulation and sky-high taxes and are leaving in higher and higher numbers. Do lawmakers think they will agree to raise taxes even more?
If Californians approve this amendment, life for Californian taxpayers will become even more untenable. Californians taxes will be doubled while their healthcare is placed in the hands of the same ineffective bureaucrats who can barely run the state. But it doesn't have to be this way. The people have a choice. We hope they choose rightly.
Photo Credit: "California Capitol in Downtown Sacramento, California" by Tszeiler1 is licensed under CC BY-SA 4.0.
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