Residents of President Biden’s home state of Delaware – whom he represented in the Senate for more than three decades – saw their utility bills drop by $ 15 in 2018, replacing the planned increase of 65 $.
The reason was the Tax Cut and Jobs Act, according to the Delaware Public Service Commission, announcing Delmarva’s rate cut. The tax reform package President Trump signed in late 2017, among others, reduced the corporate tax rate from 35% to 21%.
Delaware is one of at least 38 states to pass the lower corporate tax rate on to customers, according to data compiled by Americans for Tax Reform. This includes the current president’s birth state, where the Pennsylvania Public Utility Commission announced in 2018 a monthly credit on customer bills for 17 electric, natural gas, water and sanitation utilities, for a total of more than $ 320 million.
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Now, the Biden administration is proposing to increase corporate tax to 28%. That’s still lower than it was before Trump’s tax reform package – but some fear enough to force electricity bills to rise.
Investor-owned utility companies, such as electricity, gas and water companies, are regulated entities required by law to have their billing rates approved by the utility commissions of the State. Commissions should take into account how tax liability and other expenses are factored into the cost of operations. Utilities have much less flexibility to absorb these costs.
“These taxes are passed directly to utility customers,” Americans for Tax Reform president Grover Norquist told Fox News. “With the utilities, everyone agreed on the rate of return. … Regulated businesses cannot move money. “
Trump’s corporate tax cut in 2017 would have led more than 100 utilities across the country to return $ 90 billion to their customers, according to annual SEC 10-K statements. After the tax cut, utility commissions had to make deals with utility companies to determine what to do with excess accumulated deferred tax balances, or EADITs.
Biden has repeatedly promised that he will not raise taxes for anyone earning less than $ 400,000 a year. However, because of the way utility tariffs are determined, these corporate tax increases could turn into an indirect tax on taxpayers.
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White House press secretary Jen Psaki dismissed the concern when asked about it in April.
“Well, I would say there’s no reason whatsoever has to happen. We have evidence of what’s going on, ”Psaki said. “In 2017, when Republicans prioritized tax cuts for big companies over investing in workers, there were a lot of arguments made about the impact: the benefits would be passed on to consumers, they would invest. in R&D, there would be jobs created. None of this happened. … So I would say that’s not a concern we have right now. “
The utility rate cuts that accompanied corporate tax cuts have covered the country in red, blue and battlefield states. This included some of the more populous states, like Texas, where at least 10 companies have reduced their rates; New Jersey, where 14 utility companies passed it on to their customers; Virginia, where at least a dozen companies have lowered their rates; and nine Ohio companies and six Illinois companies passed on the savings. Residents of smaller states, like Utah and Vermont, have also benefited, as have taxpayers in the Carolinas, Dakotas, and the first two presidential candidate states of Iowa and New Hampshire.
As with any legislation, Biden will have to count on the support of Democrats Kyrsten Sinema of Arizona and Joe Manchin of West Virginia.
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In Arizona, at least 10 utility companies, including electricity, water and sanitation companies, have cut tariffs or given rebates in the hundreds of millions, attributed to corporate tax cuts . In West Virginia, at least three companies passed on the savings from lower corporate rates to their customers. These were the Appalachian Power Company, which reportedly saved $ 235 million; Potomac Edison which would have saved $ 85 million and the West Virginia American Water Company would have saved $ 4.6 million.
“Any increase in the corporate tax rate increases the bills you pay, especially with state-regulated companies,” Norquist said. “It’s going to affect public services in all 50 states. “