Biden's Corporate Income Tax Rate Hike Will Crush Michigan Households and Businesses

Strategic Insights -

As President Biden and Senators Debbie Stabenow and Gary Peters push for a corporate income tax rate increase to 28%, Michigan households and businesses will bear the brunt of the burden. Utility companies will pass the cost of the tax hike on to customers, driving up electric, gas, and water bills. This is a stark contrast to the 2017 Tax Cuts and Jobs Act, which lowered corporate tax rates from 35% to 21% and resulted in significant savings for Michigan utility customers.

Key Takeaways:

  • 9 Michigan utilities, including Alpena Power Co., DTE Gas Co., and Consumers Energy, passed along tax savings to customers in 2018 after the 2017 Tax Cuts and Jobs Act reduced the corporate income tax rate from 35% to 21%.
  • A May 2018 Michigan Public Service Commission press release stated that at least 9 Michigan utilities would pass on their savings from the federal tax law rewrite to ratepayers, resulting in millions of dollars in refunds on utility bills.
  • DTE Energy announced that it would pass along tax savings to customers, reducing rates by 3% and resulting in a savings of nearly $190 million for 2.2 million electric and 1.3 million gas customers.
  • ITC Holdings Corporation reduced its customer rates by 8-to-10% as a result of the lower federal corporate income tax rate.
  • Upper Peninsula Power Company passed along savings to customers, resulting in a reduction of approximately $1.30 on their monthly bills.
  • A vote for a corporate income tax rate hike is a vote for higher utility bills, which will crush Michigan households and businesses during the pandemic recovery.

Statistics:

  • 9 Michigan utilities passed along tax savings to customers in 2018.
  • Michigan Public Service Commission estimates that ratepayers will benefit from millions of dollars in refunds on utility bills starting in July 2018.
  • DTE Energy's 2.2 million electric and 1.3 million gas customers will see a reduction in rates by 3% due to the tax law change.
  • ITC Holdings Corporation reduced its customer rates by 8-to-10% as a result of the lower federal corporate income tax rate.
  • Upper Peninsula Power Company's typical residential customer consuming 500 kilowatt hours per month will see a reduction of approximately $1.30 on their monthly bills.

Sources:

  • "State Urges Utilities to Pass on Savings from Tax Reform" - Michigan Public Service Commission press release (May 2018)
  • Consumers Energy press release (Jan. 19, 2018)
  • DTE Energy press release (Jan. 23, 2018)
  • ITC Holdings Corporation article excerpt (April 2, 2018)
  • WLUC News article excerpt (April 2, 2018)