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GOVERNMENT AFFAIRS TOP ISSUES

CLIMATE CHANGE PROPOSALS

WHAT TO EXPECT FOR OUR INDUSTRY?

  • The Biden Administration wants to move to 100% renewable energy by 2050, including reforms to the energy grid for distributed power production and smart grid technology.
  • Proposals also call for increases in fuel efficiency standards and moves for medium and light duty truck fleets to include electric vehicles.
  • New administration officials and the Biden campaign have previously called for aggressive appliance and building energy efficiency regulations including Zero net energy buildings

MORE DETAILS
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.

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SUPPORT FULL REPEAL OF THE ESTATE TAX

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?

  • Many NAED members are owners of multigenerational family businesses. The industry has seen consolidation in recent years partly due to the massive compliance costs imposed by the estate tax and difficulty passing on operations to the next generation.
  • Repealing the death tax will help level the playing field between family businesses and publicly traded corporations that are not forced to pay 40% of their value to the government at the passing of every generation.
  • Repealing the death tax would spur job creation. According to a study by the non-partisan Tax Foundation, repealing the estate tax would create 160,000 new jobs.

MORE DETAILS
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.

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HEALTHCARE REFORM

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?

  • The Biden Administration’s healthcare proposal largely is designed to “Protect the Affordable Care Act.” However, provisions such as the public option are costly and will need to be paid for if budget reconciliation is used.
  • Congress repealed the “Cadillac Tax” because of its negative effects on the cost of insurance plans for middle class workers. With new costs being added by the proposed changes, the legislation may try to resurrect the “Cadillac Tax” or create new taxes on businesses to help pay for the changes.
  • Protecting the Affordable Care Act will maintain the employer mandate and could try to strengthen it to expand insurance coverage to additional workers. This costly mandate has contributed to increasing premium prices over the last decade.

MORE DETAILS
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.

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OPPOSE REPEAL OF LAST-IN, FIRST-OUT (LIFO) INVENTORY VALUATION

WHAT ARE WE ASKING MEMBERS OF CONGRESS TO DO?
OPPOSE any efforts at LIFO repeal.

WHAT DOES IT MEAN FOR OUR INDUSTRY?
  • We estimate half of NAED member companies use LIFO inventory valuation. The marginal increase in their tax liabilities will damage growth prospects.
  • Distributors would be forced to pay a tax on unrecognized “phantom profits” caused by swings in commodity prices.
  • A “drop in the bucket” in increased federal revenue is an existential threat to family businesses who have counted on LIFO for decades.

MORE DETAILS 
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.

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PROTECT EMPLOYER RIGHTS AND MAINSTREET BUSINESSES: OPPOSE THE PRO ACT (HR 842)

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?

  • The PRO Act aims to boost the number of dues-paying union members at the expense of workers, small and local businesses, entrepreneurs, and main street consumers
  • The bill would eliminate Right-to-Work protections for workers across the country, including in the twenty-seven states that have passed Right-to-Work laws
  • The bill would codify into law the NLRB’s controversial Browning-Ferris Industries joint-employer standard that has threatened our nation’s small and local businesses and curbed opportunities for people to work independently through gig economy platforms or more traditional independent contractor roles
  • The legislation attempts to implement policies that have been rejected by the judicial system, opposed on a bipartisan basis in Congress, and/or abandoned by the agencies asked to enforce them
  • The bill would prohibit arbitration agreements in employment contracts

MORE DETAILS
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.

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SUPPORT THE REINS ACT (REGULATIONS FROM THE EXECUTIVE IN NEED OF SCRUTINY)

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?

  • The Federal Code of Regulations contains more than 163,000 pages – making it difficult and costly for business to manage regulatory compliance. This bill makes sure the most impactful regulations receive appropriate review.
  • Major rules will be subject to a stand-alone, up or down vote by Congress.
  • Major rules are those that have an annual economic impact of $100 million or more.

MORE DETAILS
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.

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Support maintaining the beneficial tax changes passed in the Tax Cuts and Jobs Act

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.

WHAT DOES IT MEAN FOR OUR INDUSTRY?
  • The new 199A small business deduction is how Congress cut taxes for pass through businesses in the Tax Cuts and Jobs Act. Maintaining this deduction will provide certainty for NAED members and ensure tax parity for members.
  • Under current law, the 20 percent tax deduction for qualified business income is set to expire in 2025. Keeping lower taxable income rates to help corporate and pass-through businesses prosper is a priority for NAED.
  • Full business expensing incentivizes business to invest in new, safer, and more efficient equipment.
  • Tax Foundation predicts full business expensing will increase GDP by 5.4% and help create more than 1 million new jobs.
  • Many NAED members are owners of multigenerational family businesses. The industry has seen consolidation in recent years partly due to the massive compliance costs imposed by the estate tax and difficulty passing on operations to the next generation. Maintaining current exemptions protects many small businesses and makes repeal easier.

MORE DETAILS 
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.

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WORKING FAMILIES FLEXIBILITY ACT

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?

  • Allow NAED businesses to offer employees the option of accepting compensatory time in place of overtime pay.

MORE DETAILS
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.

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