WHAT TO EXPECT FOR OUR INDUSTRY?
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When campaigning for president, President Biden proposed major changes to existing regulations to focus on combating climate change. New legislation and regulations focused on energy efficiency can help members sell premium products but will also impact current operations. Proposals such as requiring medium and light duty truck sales to include electric vehicles will cause changes to distributors' fleets.
NAED expects to see new environmental and energy efficiency regulations to begin coming out later this year and will follow developments as they happen. Congress will also work on climate change legislation. However, as long as the 60-vote threshold exists in the Senate, the legislation will need to be bipartisan to pass.
WHAT ARE WE ASKING MEMBERS OF CONGRESS TO DO?
Ask House and Senate members to support and cosponsor the Death Tax Repeal Act.
WHY IS THE ESTATE TAX BAD FOR OUR INDUSTRY?
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The estate tax is a 40 percent tax on the lifetime’s savings of a taxpayer over the current exemption. The Tax Cuts and Jobs Act doubled the estate exemption level from $5.6 to $11.58 million ($23.16 million with spousal portability) provided much needed relief to NAED members planning for succession. Unfortunately, like the small business deduction, these changes are slated to expire in December 2025. NAED continues to believe that the only permanent solution for the estate tax is permanent repeal.
While the estate tax may be devastating to family businesses, it is a drop in the bucket of the federal budget – typically amounting to around half of one percent of annual federal revenues. In addition, the estate tax is one of the costliest taxes to comply with and plan for. NAED members should be spending on investing in expanding their businesses rather than in life insurance policies, lawyers, and accountants to mitigate the harmful effects of the estate tax.
WHAT ARE WE ASKING MEMBERS OF CONGRESS TO DO?
Oppose legislation that increases the employer mandate, brings back the “Cadillac Tax” or creates new taxes on business to pay for the proposed “public option.”
WHAT TO EXPECT FOR OUR INDUSTRY?
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The Biden Administration wants to build on the work done during the Obama Administration to create the Affordable Care Act. This means continuation of the employer mandate, return of the individual mandate, and the creation of a public option. This public option would work as a government backed insurance plan similar to Medicare without the age requirement.
The administration proposal also plans to increase tax credits for insurance plans. Under rules for budget reconciliation, all new tax expenditures must be offset through spending cuts or tax increases. With recent repeal of the Cadillac Tax and other pay-fors, these could resurface as possible options to offset the cost. Additionally, Congress may develop new tax increases that focus on business plans to offset individual plans.
WHAT ARE WE ASKING MEMBERS OF CONGRESS TO DO?
OPPOSE any efforts at LIFO repeal.
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Revenue raised by repealing LIFO would only be a tiny fraction of the federal budget: rosiest estimates call for an additional $112 billion in revenue over the next decade, but this amounts to a drop in the bucket of the projected $43.5 trillion in projected federal revenues over the same period. And once the LIFO reserves are no longer available to tax, the revenue to the treasury would be diminished further, and Congress will be coming back to business for a way to make up for the lost revenue, making this essentially a short-term revenue raiser with no other justifications for repeal. LIFO repeal will do more harm than good.
If repealed, companies using LIFO would be forced to report their reserves as income, resulting in a massive incremental tax liability. Additionally, repealing LIFO would mean potentially higher future tax bills and would make it harder for companies to manage inflation.
With tax reform debate ongoing in DC, tax writers are continuously looking for possible revenue sources and former House Ways and Means Committee Chairman, Dave Camp (R-MI) included LIFO repeal in his tax reform proposal. That means both Democrats and Republicans in both houses of Congress and the White House have called for LIFO repeal.
With an annual federal deficit of nearly $500 billion, it will take a lot more than LIFO repeal to fill that gap. LIFO repeal may also be introduced as part of a tax reform package, as many lawmakers see it as a tax loophole for oil companies and a source of revenue that would help offset the costs of a desired lower corporate tax rate.
WHAT ARE WE ASKING MEMBERS OF CONGRESS TO DO?
Ask your Member of Congress to oppose HR 842, the PRO Act.
WHAT DOES IT MEAN FOR OUR INDUSTRY?
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The PRO Act would codify into law the shortened representation election time frames created by the Obama-era National Labor Relations Board (NLRB). These shortened time frames serve no other purpose than silencing debate about the possible disadvantages of unionization generally or the specific union in question. The PRO Act would also eliminate employers’ ability to challenge union misconduct during elections and greatly expand the Board’s power to foist union representation on employers and employees without an election. Additionally, the bill mandates employers provide to union organizers employees’ contact information without prior approval from the employees themselves. Employees would not be able to opt out of this requirement and would not have a say in which information was provided, exposing them to potential harassment and intimidation tactics.
WHAT ARE WE ASKING MEMBERS OF CONGRESS TO DO?
Members of House and Senate: please support this bill and consider cosponsoring.
WHY IS IT GOOD FOR OUR INDUSTRY?
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The REINS Act would require Congress to take an up or down, stand-alone vote, and for the President to sign-off on all new major rules before they can be enforced on the American people, job-creating small businesses, or state and local governments. With the return of a Democratic administration, more regulations are likely, many of which will have major impacts on businesses.
Major rules are those that have an annual economic impact of $100 million or more. According to George Washington University’s Regulatory Studies Center, in 2020 167 major rules were finalized by the Executive Branch.
A study by the Competitive Enterprise Institute found that annual regulatory compliance costs in the United States hit $1.9 trillion in 2017.
Not all regulations are bad; many provide important public safeguards. However, when a proposed regulation could have an impact in the hundreds of millions or even billions of dollars on our economy, it should be subject to the review by the elected representatives of the people. The REINS Act is about improving the regulatory process.
The REINS Act would prevent Administrations from either party from bypassing Congress to implement a political agenda through regulation. NAED encourages Congress to support the REINS Act as a means of restoring badly-needed oversight on the pace of regulation in the U.S.
WHAT ARE WE ASKING MEMBERS OF CONGRESS TO DO?
Ask your Congressional members to oppose repealing the Tax Cuts and Jobs Act and support maintaining the pass-through business deduction, lower corporate rate, estate tax exemption, and full business expensing.
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The Tax Cuts and Jobs Act reformed how NAED members are taxed for the first time in 30 years but the new Democratic majority and Biden Administration have announced plans to repeal parts of the tax cuts. Positive changes like the deduction for qualified business income (QBI), lower corporate tax rate, increased estate tax exemption and business expensing are good for NAED members and should be protected from changes.
In addition to opposition from Democrats, some of these changes expire on December 31, 2025. NAED supports permanency of the small business tax deduction for qualified business income and the increased estate tax exemption. Currently, over 60 percent of NAED members are classified as pass-through entities. Permanency will allow NAED members (like subchapter S corporations, partnerships, sole proprietorships, and LLCs) to reinvest in their businesses and help them make better decisions when planning for the future.
WHAT ARE WE ASKING MEMBERS OF CONGRESS TO DO?
Ask Congressional members to support legislation providing workers more flexibility in the workplace.
WHAT WOULD THIS MEAN FOR OUR INDUSTRY?
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NAED supports the Working Families Flexibility Act (WFFA). This bill reflects the desire of workers today. It would amend the Fair Labor Standards Act of 1938 (FLSA) which currently holds that employers cannot offer compensatory time to non-exempt employees. The change would allow employers and employees to agree on comp time in lieu of overtime pay. Overtime employees would be allowed up to 160 hours each year in comp time if the employee chooses time off rather than overtime pay. If enacted, an employee could choose to use the “time and a half” overtime they have earned to take a paid hour and a half off work. The WFFA offers the labor force options without taking any current benefits away. An employer cannot force the employee to take comp time rather than overtime pay.
Studies have shown workers are seeking flexibility in the workplace; providing workers with an option of time off instead of overtime pay is a simple solution. Government employees currently have this option, and many employers are currently offering this option to employees illegally. Taking away the legal restriction of comp time for private-sector employers gives employees more incentive to work and provides a desirable work place.