Over $175 Million has already been put back into the pockets of AZ taxpayers, with more to come…
Now that the dust has settled and Congress has completed the most comprehensive overhaul of the US tax code since 1986, many Arizona taxpayers and business owners are nervously awaiting to see how the Tax Cuts and Jobs Act (TCJA) will affect them.
This is understandable—the tax code is extremely complicated and fraught with uncertainty, making it easy to believe even the most provable lies about the tax plan. The media could have done a better job separating fact from fiction, but they seemed more interested in being cheerleaders for the opposition than challenging the absurd claims being made from the likes of Nancy Pelosi and Chuck Schumer.
The good news is that benefits of the TCJA will be determined not by hyperbole but by results, and Arizona taxpayers are already winning big.
Tax Cuts for Hardworking Families
One of the biggest lies told about the GOP tax reform package was that it would result in tax increases for middle income families. This fable was repeated endlessly, despite the fact that even left leaning think tanks acknowledged that over 80 percent of US taxpayers would receive a tax cut.
In Arizona, the number will be even higher. With a combination of rate cuts, an increase in the standard deduction, the rollback of the State and Local Deduction (that primarily benefited wealthy individuals in high tax states) and the expansion of the child tax credit, the number of people receiving a cut will likely exceed 90 percent.
And the reductions will be substantial. According to the Tax Foundation, the average tax cut for a middle-income family in Arizona will be $2,500. In fact, when calculating different scenarios under TCJA it is difficult to find examples of households making less than $100,000 paying more. A family of 4 with a household income of $70,000 will see their tax bill slashed by approximately $1,900. A single person with one child making $50,000 will see a reduction of $500. A married couple with no kids making $90,000 would get a cut around $1,000.
Bonuses, Pay Raises, Additional Benefits and Utility Rate Cuts
One of the most pleasant surprises following the passage of TCJA has been the flood of announcements by Arizona employers providing bonuses, pay raises and other benefits as a result of tax reform. As of January 11th, an estimated 80,000 Arizona employees have received bonuses, new benefits and utility rate reductions as a result of the GOP tax cuts, totaling $175 Million Dollars. Here are some of the companies that have rewarded their Arizona employees and customers due to the GOP tax plan:
- American and Southwest Airlines announced $1,000 bonuses for their nearly 15,000 employees in celebration of the GOP tax plan.
- CEO Bob Parsons handed out $1.3 million in bonuses to his 725 employees at YAM Worldwide.
- AT&T and Comcast provided $1,000 bonuses to hundreds of Arizonans in their workforce.
- Bank of America will be giving $1,000 bonuses to their 10,000 Arizona employees that earn up to $150,000 in total compensation.
- Boeing has committed to $300 million to charitable investments, workforce training and infrastructure improvements.
- Nationwide announced $1,000 bonuses and an increase of their 401(k)-matching contribution for their 1,800 Arizona employees.
- Wells Fargo, with over 15,000 Arizona employees, announced the establishment of a $15 minimum wage, $400 million in charitable donations and $100 million in additional capital investment.
- Wal-Mart has committed to providing their 35,000 Arizona employees a guaranteed minimum wage of $11/hour and bonuses up to $1,000.
- APS announced that they intend to slash $119 Million from their utility rates, which would save the average homeowner $56 each year.
These are not indirect benefits, this is cash going directly into the pockets of hardworking taxpayers and workers who need it most. Combined with the anticipated individual income tax rate reductions being calculated into paychecks beginning next month, the direct financial benefit for Arizona workers due to tax reform will be close to a billion dollars in 2018.
Expect the winning from tax reform to continue. Thanks to the corporate rate cuts, full expensing and repatriation, Arizona will experience billions more in new investment and job creation in the coming years.
So as the good news from TCJA continues to roll in, it will be interesting to watch opponents to tax reform try to explain to business owners and hardworking taxpayers why more jobs and money in their wallet is bad for them. Their efforts up to this point haven’t been too convincing.