The Republican tax break plan would give many Americans more money, but most cuts would end in early 2029

 Many lawmakers seek Medicaid cuts to pay for
the new tax legislation. (Adobe Stock photo)

The tax break plan currently being crafted by Republicans on Capitol Hill would put more cash in the hands of many Americans, but the strategy comes with a catch: Many of the cuts will end when President Trump's second term comes to a close. "Almost all of the cuts that Republicans hope to pass in the coming weeks will last only until President Trump is set to leave office," reports Andrew Duehren of The New York Times.

Despite the short-term gains, many Americans may see the cuts as a hard-earned respite from years of post-pandemic inflation. They include "a $500 increase to the child tax credit and a $1,000 bonus to the standard deduction, as well as Trump’s pledges to not tax tips or overtime pay," Duehren writes. "The effect would be to shower many Americans with hundreds of dollars per year, starting when they file taxes next year, a windfall that would dry up as Mr. Trump leaves office."

Not every tax break will be time-limited. "Much of the legislation is focused on preserving the architecture of the last Republican tax cut, passed during Trump’s first term," explains Duehren. For instance, the lower income rates for individual filers and the larger standard deduction would remain intact.

Tax policy experts do not see the new cuts substantially impacting the U.S. economy. Duehren reports, "The Tax Foundation, a think tank that is generally bullish on tax cuts’ ability to spur economic growth, estimated this week that the bill would increase gross domestic product by 0.6% in the long term."

Part of the money needed to pay for the tax cuts will come from Medicaid cuts. "More than eight million low-income Americans could lose their health insurance as a result of the Medicaid cuts that the G.O.P. has drafted," Duehren adds. "All while the biggest benefits of the tax cuts would flow to high-income Americans who owe the most in income tax . . . ."

Three trillion dollars in federal green-energy money has some towns digging in; others 'have been burned before'

Map by The Wall Street Journal; for a larger version, click on it.

"Go big or go without." It's a worry some rural communities are grappling with as they consider trusting a "made-in-Washington initiative that demands small communities around the country commit significant local resources to attract businesses, sometimes in unproven industries. Some have been burned before," report Phred Dvorak and Amrith Ramkumar of The Wall Street Journal. Federal offerings include "One trillion in federal tax incentives and loans for green energy. . . [It] is one of the biggest outlays of taxpayer-financed industrial stimulus since Franklin D. Roosevelt's New Deal. . . . If successful, it could transform the nation's economy by creating millions of jobs and driving up to $3 trillion in total clean-energy investments during the next decade."

Colleton County, South Carolina, is an example of a town that successfully went big. "It's a quiet rural district best known for hunting, fishing," Dvorak and Ramkumar write. "In December, Colleton snagged a $279 million investment from Kontrolmatik Technologies Energy and Engineering, a Turkish firm that is hoping to get nearly $1 billion in federal tax credits over the next decade by building a battery-making plant in the U.S. . . . Kontrolmatik wants to tap into the renewable-energy sector's need to store electricity for release onto the grid when the sun isn't shining or the wind isn't blowing. . . . It promises to employ 575 people at some of the highest wages around. In return, the state and county are offering land, grants and local tax breaks."

The Journal reports, "More investments will come after the Treasury Department clarifies the fine print of how the tax credits will work. SolarEdge Technologies Inc., which makes equipment that converts energy from the sun into electricity, will invest between $125 million and $250 million in its first factory in the U.S., depending on how Treasury characterizes its devices, chief financial officer Ronen Faier said. . . . Large swaths of the investment so far are flowing to southern, Republican-leaning states such as South Carolina, Georgia and Tennessee that generally have lower labor costs and taxes."

Not everyone agrees that federal incentives are a positive. "Skeptics warn the subsidies could stoke already high inflation and waste money without creating lasting economic benefits. Some of the proposed investments will flop or never materialize. . . . particularly for new technologies such as clean-hydrogen production," The Journal reports. " Some small communities, which have been through booms and busts caused by fickle federal incentives, aren’t betting the farm this time. In 2007, state and local leaders offered millions of dollars to attract TPI Composites, a wind-turbine blade maker, to Newton, Iowa, to make up for the closure of a big Maytag appliances plant. . . . . But by 2021, TPI’s Newton plant was struggling from the high costs of U.S. manufacturing and the looming expiration of a federal tax-credit program. That December, TPI closed the plant."

Southern states on track to be nation's 'battery belt' though their leaders don't fully acknowledge climate change

Gov. Brian Kemp (R) stands next to a Rivian truck.
(Photo by John Bazemore, The Associated Press)

Once a tranquil town, Commerce, Georgia, is now on track to become one of the nation's electronic battery-making hubs, reports Shannon Osaka of The Washington Post. "The battery plant just north of Commerce is hard to miss. It looms over Interstate 85 like a monolith: sheer gray walls many stories high, a vast parking lot that extends almost half a mile. . . . The factory, which opened in early 2022, employs over 2,600 people — about a third of the town’s population. . . . It's operated and owned by the U.S. wing of the South Korean company SK Group," which has partnered with Ford Motor Co. to build two electric-vehicle battery plants just south of Elizabethtown, Kentucky. 

Clean-energy incentives "are landing in congressional districts represented by Republicans," and the Commerce plant "is one of a bonanza of electric vehicle investments that are transforming rural Georgia into a bustling 'battery belt'," Osaka writes. "But even as Gov. Brian Kemp aims to make Georgia the 'electric mobility capital of America,' he and other Republicans are doing little to put more EVs on state roads — or to acknowledge the climate reasons behind the switch. . . . Last month, the state Senate passed a tax on public EV charging. Along with the governor, most state lawmakers rarely mention emissions reductions and environmental benefits of switching to electric vehicles. . . . The result is a strange moment in Georgia's shift toward making and selling EVs: A state with one foot in — and one foot out — of a massive transition."

Even with the political teeter-totter, EV manufacturers are capitalizing on political aspects of the South. "Almost all Southern states, including Georgia, Kentucky, Alabama and Tennessee, are what conservatives call 'right to work' states — meaning employees can't be required to join a union as a condition of employment," Osaka explains. "Such states have gotten the lion's share of clean energy and EV money. . . . One study by researchers at Georgia Tech that examined almost 20,000 collective bargaining agreements found that right-to-work laws are associated with lower wages among unionized employees."

Could the growth in EV jobs in the South reduce the polarization of views about climate change? "Thomas Oatley, a professor of political science at Tulane University, argues that part of the schism on climate change stems from an economic divide. Republican voters are more likely to live in areas where jobs are closely tied to carbon-emitting industries like auto manufacturing or coal-fired power generation; Democratic voters are more likely to live on the coasts and work at a desk in 'knowledge-based' jobs." Oakley told her, "If you get a growing number of people employed in the clean energy sector, that could increase support for climate policy in red and purple states."

"Georgia is far from that point today. But the tens of thousands of jobs coming to the state make it difficult for politicians to oppose the transition," Osaka adds. "Former GOP senator David Perdue, who ran for governor against Kemp in 2022, was a vocal critic of the Rivian plant. . . . But that anti-EV message failed to gain much support — Perdue was soundly defeated in the primary." Mike Carr, a partner at the consultancy Boundary Stone, told Osaka, "If Georgians start to think of themselves as the heart of clean energy manufacturing — I don't know how you run against that and win."

As solar projects become more feasible in states like Ky., battle lines are drawn between farmers and preservationists

For the past six years, renewable energy companies have been approaching Kentucky farmers about leasing their land for three solar-power projects in different stages of development. "Solar energy represents a change for a commonwealth whose economic prospects have long been tied to labor-intensive industries like coal and tobacco. But that change is coming, through tax credits, infrastructure deals and climate change incentives," Melina Walling reports for Louisville's Courier Journal.

But not everyone is on board with the prospect. "As the projects move forward and more people learn about them, questions tend to arise — questions that the solar companies, which do not have a permanent liaison in this rural area, are not always on hand to answer," Walling reports.

That often leaves farmers who have signed up for solar leasing to educate and convince their neighbors that such a venture is legitimate—sometimes a difficult job when the projects aren't yet live and bringing in profits for farmers. But it's more than a question of whether solar power is viable. Many farmers feel that leasing their land is tantamount to losing it, Walling reports. Others just don't know enough about the process and say they need more input.

Solar is a winning idea, arguies Jim Waters of free-market think tank Bluegrass Institute for Public Policy Solutions. In a Courier Journal op-ed, he writes: "By embracing such plentiful but inexpensive power, Kentucky would have a clean, renewable supply of energy, allowing it to continue – as it’s did with coal – boasting some of the nation’s cheapest energy rates, keeping utility costs low and rendering ineffective calls for economically harmful policies like raising gas taxes for needed revenues."

However, the notion brings iffy rewards and needs more study, writes Will Mayer, the executive director of Clark Coalition, a land-use advocacy organization. "While the developers are quick to paint a picture of struggling farmers needing the income (that supposedly only solar can provide) the truth is somewhat more complex. In fact, many of those under-contract for solar development are absentee landowners, not farmers. By contrast, many of the farmers who actually make their living from the land will invariably suffer from the loss of their farm leases," Mayer writes in an op-ed for the Lexington Herald-Leader. "The uneven consequences of large solar facilities are further brought to focus by their impact on adjoining property owners. Contrary to developers’ claims that their facilities do not negatively affect nearby properties, independent valuation studies demonstrate they cause a decline of up to 30%. Industrial solar proposals are neither uniformly bad nor good – rather they are complex and demand a transparent analysis to ensure that they are sited appropriately, and that the associated benefits do not disproportionately accrue to the developers and outside interests while the real financial and environmental costs are borne by Kentuckians."

Texas' solar-power boom alters landscape, sows rural ire

Texas Farm Bureau photo shows construction of solar site.

Solar energy is the fastest growing source of electricity in Texas, with the state projected to become one of the nation's top solar-power producers by the end of next year. But the proliferation of solar panels in rural areas has sparked controversy among residents, Julie Tomascik reports for the Texas Farm Bureau's Texas Agriculture Daily.

Solar energy development companies are offering farmers, ranchers and other landowners "lucrative leases, around $450 to $1,200 per acre per year with incremental increases. The leases range from 20-40 years, with the option for additional long-term renewals," Tomascik reports. "The steady income can help smooth out the financial roller coaster of growing crops and raising livestock, and there’s no cost to the landowner for 'raising' solar panels."

Detractors say they're not necessarily against solar energy, but they don't want it taking up valuable farming and ranching land. Less farming and ranching means less money for area businesses that sell fertilizer, feed, tractors, and more, they say. Also, "critics say development of these projects stresses rural infrastructure," Tomascik writes. "Farm-to-market and county roads built for occasional heavy loads are subjected to an onslaught of heavy machines and loaded gravel trucks. Crop fields and pastures once lush with livestock and new growth are covered with rock and guarded by chain-link fences topped with razor wire."

One of those critics, a farmer named Robert Fleming, organized a successful grassroots effort to convince the local school district to reject a tax abatement program for solar projects. A bill to extend the statewide solar tax-abatement program past 2022 failed in the legislature earlier this year.

The controversy over solar panels comes months after extreme winter weather knocked out power to much of Texas. The state mostly depends on natural gas for power, but poorly insulated pipelines left the power grid vulnerable. Solar panels work fine in winter as long as there's sun or sufficient battery storage, a technology that is still developing.

Study finds that offering big tax breaks to lure businesses may not help broader economy, as local officials often say

Though state and local governments in the United States spend more than $30 billion every year to keep or attract businesses, a new study shows that the deals that offer the biggest incentives don't clearly help the broader regional economy, "The research calls into question the common practice of using narrow, firm-specific tax breaks to attract businesses and boost employment," Richard Rubin reports for The Wall Street Journal.

The researchers studied incentive deals from 2000 to 2017 that were worth at least $5 million. Counties that used incentives typically saw jobs in the targeted industry increase by about 1,500, but the researchers found no impact on countywide employment in other industries. That contradicts common rhetoric local officials often use to sell the public on the necessity of such incentives. "The motivation is often about the indirect jobs that are created," University of Texas government professor Nathan Jensen told Rubin. "You cannot make these decisions based on indirect jobs."

Moreover, the study found that "low-income areas often provide bigger incentives than more affluent areas, perhaps because they are seen as less attractive places to do business without such offers. Counties with average annual wages below $40,000 pay over $400,000 per job, while those with wages over $100,000 pay less than $100,000, according to the study," Rubin reports. "The researchers also found that larger, more profitable companies are more likely to get richer incentives."

The broad implications suggested by the research: "state and local governments should avoid tax breaks that pay out over many years and instead consider programs that invest more directly in job training and infrastructure that help businesses and have broader public benefits," Rubin reports.

Oregon weekly irks local officials with after-hours calls and emails; they seek a harassment investigation by police

UPDATE, Aug: 21: The Enterprise reports, "Malheur County Sheriff Brian Wolfe said an inquiry by his staff into allegations of possible criminal conduct by the Malheur Enterprise is over. His conclusion: No evidence of a crime."

The Malheur Enterprise spent months investigating a state lawmaker's business deals in Malheur County, Oregon, and now the county wants to investigate the paper for harassment. County Counsel Stephanie Williams confirmed last week that she asked Sheriff Brian Wolfe to investigate whether reporters' persistent phone calls and emails violated the law. Wolfe said he hasn't decided whether to open a criminal investigation. Pat Caldwell reports for the Enterprise.

The official complaint is that reporters made calls outside of business hours and emailed county Economic Development Department officials' personal email addresses. EDD director Greg Smith said he had asked reporters to limit requests to office hours and to a single county email address. Williams told the Enterprise that 'we are looking into whether or not there was a violation, especially when Mr. Smith previously asked it not be done and it was disregarded,'" Caldwell reports.

Enterprise reporters had contacted Smith's office several times in recent weeks while investigate a tip alleging that Smith had lured a new car wash to the area with promises of a tax exemption that was never delivered. Smith did not respond to any of the emails, including a draft of the story offered before publication so he could cite any errors, until after the story had been published, according to Enterprise editor and publisher Les Zaitz.

Further muddying the waters: Smith is a private contractor and a state legislator, but is not a county employee. Moreover, he gave out his cell phone number at a government meeting last fall, and told the audience he was available "24/7" for any questions or concerns. That same phone number is listed on Malheur County press releases and has been given out in his communications as a state legislator, Caldwell reports.

Zaitz said the newspaper was alarmed about a possible investigation, and said the staff has used "standard and professional methods" to seek information from officials about important public business. "At no time has anyone from the Enterprise abused any personal cell number of a government official," Zaitz told Caldwell. "Suggesting that professional journalists are behaving as criminals in gathering vital information for the community appears to be an effort to silence and intimidate the Enterprise."

Google got millions in tax breaks for new plants, but locals often didn't know until it was too late to do anything about it

Washington Post map by Aaron Steckelberg

Google got millions in tax incentives as it open new offices and data centers across the country — some of them rural — and often without the prior knowledge of communities' residents. That's because Google generally demanded secrecy from developers and city officials when negotiating contracts, Elizabeth Dwoskin reports for The Washington Post.

"Google — which has risen to become one of the world’s most valuable companies by transforming the public’s ability to access information — has vastly expanded its geographic footprint over the past decade, building more than 15 data centers on three continents and 70 offices worldwide," Dwoskin reports. "But that development spree has often been shrouded in secrecy, making it nearly impossible for some communities to know, let alone protest or debate, who is using their land, their resources and their tax dollars until after the fact."

In one example, officials in Midlothian, Tex., a community of about 18,000 near Dallas, approved more than $10 million in tax breaks to Google last May for a new data center. But locals didn't know until it was a done deal. Travis Smith, managing editor of the local paper, the Waxahachie Daily Light, told Dwoskin that "I’m confident that had the community known this project was under the direction of Google, people would have spoken out, but we were never given the chance to speak . . . We didn’t know that it was Google until after it passed."

Many rural residents would likely welcome a big new employer, but others are wary of the potential disruption to the community, increased traffic and home prices, environmental impact. And some don't want to offer such huge subsidies to companies that already have substantial financial clout, Dwoskin reports.

Google isn't the only big corporation to employ such tactics (or receive such a response). Amazon was widely criticized for requiring extremely restrictive confidentiality agreements when seeking a site for its second headquarters. "Some New York lawmakers were so outraged by the secrecy of Amazon’s process that they have introduced bills that would ban nondisclosure agreements for development projects in the city and state," Dwoskin reports.

Michelle Wilde Anderson, a Stanford Law School professor who specializes in state and local government law, told Dwoskin that it's important to keep the public informed about such negotiations. "Public transparency laws are designed to keep the public interest at the contract table, and the way you do that is with information."

New 'opportunity zones' can help rural areas, unless they get beaten to the investors by urban real-estate developers

When Forbes magazine said in July that 8,700 federal “opportunity zones” where investors can get a tax break, and used Montrose, Colo., as an example, "The phone started ringing off the hook," Mayor Roy Anderson told Stephanie Quinton of Stateline. But few rural places are getting such a head start, and similar programs in the past have helped urban areas more than rural. And when tax breaks are granted to rural places, experts warn, "it’s more likely to flow to real estate projects" such as a planned housing does flow to rural places, they warn, it’s more likely to flow to real-estate developers "rather than to local startups desperate for capital," Quinton writes.

“I’m worried that none of this money is going to flow where it’s really needed,” Paul Major, president and CEO of the Telluride Foundation, a Western Colorado philanthropy, told Quinton. “You can see 99 percent of the money going to urban-redevelopment projects and accelerating gentrification.”

The record offers reason for such concern. "Past tax incentives intended to spur growth in distressed areas, such as the New Markets Tax Credit program, have had mixed success," Quinton reports. "About 83 percent of New Markets money from 2001 to 2015 went to cities, according to research by Rebecca Lester," of the Stanford Graduate School of Business. "That may be because more people live in cities, because city projects are better-known, or because urban economies are stronger, Lester said. But she expects opportunity zone money to end up even more concentrated in cities than New Markets money, because there are fewer restrictions on how the money can be spent."

The Internal Revenue Service "has yet to clarify all the details of the tax break," so "many investors are holding off," Quinton reports. However, "In hot real estate markets such as the Denver area ... opportunity zones already have set off a fundraising frenzy. . . . Smaller towns west of Montrose haven’t gotten as much attention."