New Year, New Laws | Citizens Against Government Waste

New Year, New Laws

The WasteWatcher

When the calendar turned from 2021 to 2022, states across the nation implemented a variety of new laws with significant impacts on taxpayers.  Harmful laws that took effect include increases to the minimum wage and plastic bag taxes.  Taxpayer-friendly changes include tax reform and the permanent authorization of cocktails-to-go.

Beginning with New York on December 31, 2021, 21 states raised the hourly minimum wage.  The increases ranged from 50 cents in South Dakota to $1.50 in Virginia.  The minimum wage increases in California, Delaware, Illinois, Maryland, Massachusetts, New Jersey, New York, and Rhode Island are part of scheduled future increases intended to reach a $15 minimum wage, which will be harmful to low-income workers and small businesses.  According to a study of Seattle’s efforts to gradually increase the minimum wage to $15 an hour in 2015, employers reduced their payrolls, delayed new hirings, reduced hours, and released employees because they “have not been able to afford the increased minimums.”  On average, the study concluded, low-wage workers lost $125 per month due to the increase.  Rather than empowering workers, these efforts reduced opportunities and cut jobs.  Seattle’s experience apparently was not a lesson learned for the eight states aiming to gradually reach a $15 an hour minimum wage.  

Another ineffective and harmful policy that took effect on January 1, 2022 is forcing residents of Virginia to pay a 5-cent tax on each plastic bag provided to them by convenience stores, drug stores, and grocery stores if the city or country chooses to impose the tax.  Among the first jurisdictions to impose the new tax are the northern Virginia counties of Arlington and Fairfax and the city of Alexandria.  The idea behind the tax is to reduce the “negative environmental impacts of single-use plastic bags,” and use the revenue “to fund environmental cleanup programs and pollution and litter mitigation programs.”  These taxes, the Mackinac Center for Public Policy observed in 2017, “are regressive, meaning consumers with lower incomes will feel the pinch for non-compliance more than their affluent neighbors.”  The increase on bag taxes comes as the cost of living in Arlington County is 44 percent higher than the national average and grocery bills are 14 percent higher than the national average before factoring in the new bag tax.  As grocery prices continue to skyrocket, shoppers will be hit even harder by plastic bag taxes.

However, not all new laws will hurt taxpayers and workers.  In Oklahoma, tax reforms will reduce the state’s top individual income tax rate from 5 percent to 4.75 percent.  The corporate income tax rate will drop from 6 percent to 4 percent.  House Speaker Charles McCall (R-Atoka) highlighted the need for tax cuts, “especially in light of the inflation we’re now seeing.”  These reforms promise to bring greater opportunity for economic growth to Oklahoma by leaving more money in the pockets of the taxpayers.

Meanwhile, Oregon lawmakers made a popular pandemic policy permanent.  In December 2020, the Oregon legislature passed a law to temporarily allow businesses to sell cocktails-to-go.  In June 2021, lawmakers chose to make the law permanent and removed conditions of a declared emergency.  As CAGW has previously written, making this policy permanent will “improve the economy more rapidly and help get restaurant and bar employees back to work.”  More states should follow the lead of Oregon and other states that have removed restrictions on allowing restaurants and bars to provide cocktails-to-go for their customers by making the policy permanent.

The new laws that took effect on January 1, 2022, contain both peril and promise for taxpayers.  While some businesses will have to find a way to navigate minimum wage increases and residents of Virginia counties and cities will have to pay the costs for a plastic bag ban, residents of Oklahoma and Oregon start of the year on the right foot with taxpayer-friendly reforms and reduced regulations.  Altogether, these changes provide a guide for policies to watch at the state and local level when legislative sessions begin this month.

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