Taxes And More Taxes

Congressional activities on a number of tax issues are swirling. Following are the latest developments on the tax issues of great importance to ASA members.

LIFO: A massive tax package introduced by House Ways and Means Committee Chairman Charles Rangel (D-NY) includes repeal of LIFO. The LIFO provision calls for full repeal phased-in over eight years. Revenue generated from repeal will be used to offset a reduction in the corporate income tax rate of about 4.5%. Referred to as the “mother of all tax reforms” by Chairman Rangel, his bill also includes other significant corporate tax changes and individual income tax rate changes. ASA and other members of the Tax Relief Coalition sent a letter to all Members of the House and Senate outlining our strong objections to specific provisions in Rangel’s proposal. The letter is available at http://www.asa.net/docs/GA/LtrToCongresss-RangelBill.pdf. Although the Chairman’s tax bill is not expected to move this year, the stage is set for action next year.

Three-percent Withholding: A House-passed bill contains a provision delaying until 2011 the start date on the 3 percent withholding on government contracts. The legislation (HR 30560) contains language extending the starting date from 2010 to 2011. The measure is now pending in the Senate where passage seems unlikely. While this 1-year delay is a positive step, ASA and others in the Tax Withholding Coalition will continue working for full repeal. The Coalition also sent a letter to all 50 governors to inform them of the 3% withholding requirements and to request their assistance in repealing the withholding requirement. A copy of the letter to the governors is at www.asa.net/docs/GA/3%25LtrtoStates.doc

Death Tax: Without congressional action, the death tax will be fully repealed in 2010, before snapping back in 2011 to tax all estates worth more than $1 million at a 55 percent rate. The Senate Finance Committee is expected to hold a hearing on the death tax this month. Berkshire Hathaway CEO Warren Buffet, an opponent of repealing the tax, is expected to testify. The panel will also hear from a business owner and a rancher who will testify for permanent repeal of the death tax. Senate Finance Committee Chairman, Max Baucus (D-MT) says he will mark up death tax legislation in the spring of 2008. However, with several supporters of repeal having lost in the 2006 elections, prospects for a repeal bill next year appear to be a long shot.

AMT: House and Senate lawmakers are still at odds over how to pay for an alternative minimum tax (AMT) patch. Even if the House votes on the issue this week, it is doubtful that the Senate will consider the legislation before Thanksgiving. Another hurdle - any House AMT measure will need the support of 60 senators to overcome procedural obstacles in the Senate. Treasury Secretary Paulson has warned of dire consequences if Congress does not act before December, including delays in processing refunds for many taxpayers who file by mid-March.

Energy Legislation - Regional Efficiency Standards

Congressional leaders are hopeful that negotiations on pending energy legislation will be completed before Congress breaks for Christmas. Informal negotiations have been underway to reconcile differences between House and Senate-passed energy bills. The pending legislation includes new authority for the Secretary of Energy to adopt regional energy efficiency standards for furnaces and air conditioners. A recent compromise agreement between an environmental group and the Air-Conditioning and Refrigeration Institute expands the scope to include heat pumps and places primary responsibility for compliance on distributors.

Workplace Injuries

The rate of workplace injuries and illnesses in private industry declined in 2006 for the fourth consecutive year, according to the Labor Department's Bureau of Labor Statistics (BLS). Approximately 4.1 million injuries and illnesses occurred in 2006. The number translates to a rate of 4.4 cases per 100 full-time employees, slightly less than the 4.6 rate reported last year. Secretary of Labor Elaine L. Chao said that “workplace injuries and illnesses declined 3% in 2006 over the previous year against the backdrop that overall hours worked increased (by 2%). The Department of Labor continues to focus on ensuring that workplace injury and illness rates continue to decline and that workers are healthy and safe on the job.”

No-Match Rules

A federal judge in San Francisco put a hold on the Department of Homeland Security's (DHS) "no-match" regulations applicable to employers who hire illegal immigrants. Warning that the penalties could hurt both businesses and documented workers, the judge issued a preliminary injunction to bar any penalties until he can hand down a final ruling - likely in several months. This latest injunction replaces the temporary ban that had been in place since mid-September. The business community claims the rule should not be implemented arguing that the government failed to consider the new regulation's impact on small business. The rule lays out steps employers can take to protect themselves from civil or criminal sanctions if a discrepancy cannot be resolved in 90 days. After that, employers must terminate the worker or risk being charged with breaking immigration laws. The rule was originally scheduled to take effect September 14.

A Reminder - Motor Carrier Fees

As reported in last month’s Washington Update, the Unified Carrier Registration (UCR) agreement is now in place. The UCR replaces the Single State Registration System (SSRS). One important change from the old system is that under the UCR, private companies as well as for-hire carriers must pay the registration fee. For ASA members, this change means that the UCR now applies to companies that have their own trucks crossing state lines. ASA members with questions should contact ASA’s Washington Representative Pat O’Connor at patoconnor@kentoconnor.com.

2008 Elections

The national press is consumed with covering the 2008 race for the White House. The large number of candidates running in both parties and the compressed January-February primary dates continue to provide an abundance of news material. However, not to be forgotten are the 2008 Senate races. Senate Republicans face many challenges in their quest to hold on to their 49 seats. Five Republican Senators have announced they are retiring, which could lead to the Democrats winning some of the “open seats.”
These five seats, currently held by Republicans are: Senators Wayne Allard (Colorado); Pete Domenici (New Mexico); Chuck Hagel (Nebraska); John Warner (Virginia); and Larry Craig (Idaho). Early predictions give the Democrats an edge in claiming the open seats in Colorado, Virginia and New Mexico. Add these three pick-ups to be expected close races in New Hampshire and Minnesota and the Democrats look on track to increase their majority.