If President Biden and Sen. Bob Casey raise the corporate tax rate, Pennsylvania households and businesses will get stuck with higher utility bills. Democrats plan to impose a corporate income tax rate increase to 28 percent, even higher than communist China’s 25 percent.

Customers bear the cost of corporate income taxes imposed on utility companies. Corporate income tax cuts drive utility rates down, corporate income tax hikes drive utility rates up.

Electric, gas, and water companies must get their billing rates approved by the respective state utility commissions. When the 2017 Tax Cuts and Jobs Act cut the corporate income tax rate from 35 percent to 21 percent, utility companies worked with officials to pass along the tax savings to customers, including at least 17 Pennsylvania utilities:

  • Citizens’ Electric Company of Lewisburg
  • Metropolitan Edison Company
  • Pennsylvania Electric Company
  • Pennsylvania Power Company
  • Pike County Light & Power Company
  • PPL Electric Utilities Corporation
  • Wellsboro Electric Company
  • West Penn Power Company
  • PECO Energy Company (Gas Division)
  • National Fuel Gas Distribution Corporation
  • Peoples Gas Company LLC
  • Peoples Natural Gas Company LLC — Equitable Division
  • UGI Central Penn Gas Inc.
  • UGI Penn Natural Gas Inc.
  • UGI Utilities, Inc.–Gas Division
  • Pennsylvania-American Water Company
  • Pennsylvania-American Water Company—Wastewater

As noted by the Pennsylvania Public Utility Commission:

The Pennsylvania Public Utility Commission (PUC) today issued an Order, requiring a “negative surcharge” or monthly credit on customer bills for 17 major electric, natural gas, and water and wastewater utilities, totaling more than $320-million per year. The refunds to consumers are the result of the substantial decrease in federal corporate tax rates and other tax changes under the Tax Cuts and Jobs Act (TCJA) of 2017, which impacted the tax liability of many utilities.
“As economic regulators, it is the Commission’s responsibility to ensure that utility rates are just and reasonable. Further, it is necessary for utility rates to reflect relevant tax expenses,” noted PUC Chairman Gladys M Brown in a statement at today’s public meeting. “I believe this work (by PUC staff) has resulted in an innovative answer by this Commission to effectively flow-through the benefits of the TCJA back to customers.  — May 17, 2018 Pennsylvania Public Utilities Commission Press Release

Conversely, a vote for a corporate income tax rate hike is a vote for higher utility bills right as the USA is trying to recover from the pandemic.

Sen. Casey would be wise to stay away from tax increases.

 

John Kartch, is Vice President of Communications at Americans for Tax Reform. This article originally appeared on their website.