First quarter data from the Bureau of Economic Analysis shows that over $300 billion has been repatriated to the United States, thanks to President Donald Trump’s tax reform passed in December of last year.
The $1.5 trillion tax bill reduces the corporate tax rate from 35 to 21 percent and changes the way the U.S. government taxes companies that also operate internationally.
The tax windfall for the federal government on that amount adds up to an estimated $46 billion in revenue. For comparison, the amount repatriated during the same period a year ago was just $38 billion.
In response, many companies are giving bonuses to employees. Cox Enterprises, for example, doled out up to $2,000 to a majority of its employees. Anthem Inc. invested $58 million into employees’ 401(k) accounts. And Apple, the California-based tech giant, gave bonuses worth $2,500 to employees below the “director” level. Telecom giant AT&T followed up by handing out $1,000 bonuses to 200,000 employees.
The list of companies handing out bonuses and raising employee wages and benefits goes on and on, from Boeing to Walt Disney. In fact, consumer confidence is at its highest since 2004, according to a University of Michigan survey, with all of the gains coming from low-income households.
These results plainly show that broad tax reform packages contain the secret to encouraging economic growth, not just for the nation, but particularly in the state economy.
James Quintero of the Texas Public Policy Foundation notes that Texas is facing down the challenge of reforming a state property tax that is forcing people out of their homes. Quintero points out that in the past 10 years, statewide property tax levies have increased 60 percent, while population only grew 19 percent.
His solution is similar to Gov. Greg Abbott’s proposed property tax reform: a trigger requiring voter approval for property tax increases. Such a mechanism would empower voters to decide if significant local property tax hikes are justified.
Abbott is hoping his version of property tax reform fares better than past legislation, after similar measures died on the vine or were watered down into irrelevance in the Texas House.
Meanwhile, Lt. Gov. Dan Patrick quickly endorsed Abbott’s proposal, calling it “a real, bolder, bigger reform plan,” and promising “the Senate will deliver on property tax relief.”
The prospects for property tax reform hang in the balance. At least, that is, until the direction of House leadership becomes clearer following the selection of a new speaker in January. Until then, Texans will be relying on the economic benefits they’re reaping from federal reform, hoping their state representatives can see the roadmap to a more prosperous Texas future.