Home / News / BCA Washington Briefing / Timing Right to Lower U.S. Tax Rate

Timing Right to Lower U.S. Tax Rate

Business Council of Alabama President and CEO William J. Canary this week urged Congress to pass a domestic tax cut in order to preserve the growth the nation has been experiencing and to enable future generations of U.S. businesses to compete with global competitors.

Canary’s op-ed, published in several media outlets including the Birmingham Business Journal, urges Congress as it returns to Washington facing enormous challenges to include a domestic tax cut on its agenda.

President Trump has suggested a tax cut to reduce the unbelievable domestic income tax rate for corporations, including manufacturers, of 39 percent, to a competitive 15 percent.

In addition, Congress must lower the tax rate for the two-thirds of manufacturers that pay taxes at individual tax rates as pass-through entities, Canary writes. The pass-through rate on small business owners can be as high as 44 percent, according the National Association of Manufacturers (NAM). These small businesses are the backbone of our economy and create the majority of jobs.

(And this week, the U.S. Chamber of Commerce urged Congress “to jumpstart the U.S. economy by passing comprehensive, pro-growth tax reform that lowers tax rates for small businesses and simplifies today’s tax code maze.”)

A 2015 NAM study concluded that a reform package like this could add more than $12 trillion in Gross Domestic Product over 10 years, deliver more than 6.5 million jobs to the U.S. economy, and increase investment by more than $3.3 trillion, NAM Chairman David Farr said in a recent speech to the Economic Club of New York. (Farr is chairman and CEO of Emerson, a global manufacturer.)

Combined with overarching regulations, the burdensome tax rate makes it harder for manufacturers to meet intense competition for business and jobs. A tax rate of 39 percent – higher when you throw in state and local taxes – is a crushing obstacle when competing against manufacturers in the top 35 industrialized nations who enjoy a tax rate, on average, half that of the United States.

A tax cut will create jobs for Alabama manufacturers that compete internationally against lower tax rates.

This nation’s bountiful resources, which include willing investors and hard-working men and women (a recent study showed that Americans are among the hardest-working in the world), can be stifled by a non-competitive tax code.

The timing for tax reform is right. As the market is proving, businesses and individuals have been investing in anticipation of a tax cut and its effect on manufacturers, jobs, and our families’ standards of living.


MANUFACTURERS URGE GRASS-ROOTS EFFORT TO REPEAL HEALTH INSURANCE TAX

The National Association of Manufacturers is urging its grassroots network members to ask Congress to permanently repeal the health insurance tax on fully insured health plans that, unless repealed, will go into effect in 2018.

The link to the NAM’s online advocacy center Manufacturing Works contains a link on how to contact members of Congress who can help manufacturers maintain a healthy workforce and continue doing right for employees by eliminating the health insurance tax.

The Business Council of Alabama urges members to share this message with associates and others or use it in your own communications: Urge Congress to help lower healthcare costs by fully repealing the burdensome health insurance tax.

Rising health care costs stand in the way of increasing wages, hiring new employees, purchasing new equipment, and making other needed investments that keep manufacturing production competitive. One driver of these cost increases is the health insurance tax, a multi-billion-dollar tax on fully insured health plans, the NAM said.

Take action because without repeal, manufacturers will continue to struggle with rising health care costs, as the health insurance tax obligation will lead to rising premiums, impacting fully insured employers and their employees, the NAM said. With 98 percent of manufacturers providing health insurance, the repeal of this tax is an industry priority.

Questions about the NAM’s advocacy activities may be directed to Christopher Glen, director of grassroots advocacy, cglen@nam.org or (202) 637-3121.


JOINT EMPLOYER BILL HELPS BUSINESSES ESCAPE LABOR LAW UNCERTAINTIES

Congress is considering Alabama U.S. Rep. Bradley Byrne’s bill to undo an Obama-era National Labor Relations Board decision that allows lawsuits against an employer for another company’s unfair labor practices. Byrne, R-Fairhope, introduced H.R. 3441 and it’s on the House’s to-do list.

The bill would simply and directly restore the meaning of employer that was in place before the NLRB’s decision, writes Randel K. Johnson, the U.S. Chamber of Commerce’s senior vice president, labor, immigration, and employee benefits.

H.R. 3441 states clearly that one employer can only be a joint employer if he or she directly, actually, and immediately, and not in a limited and routine manner, exercises significant control over the essential terms and conditions of employment (including hiring employees, discharging employees, determining individual employee rates of pay and benefits, day-to-day supervision of employees, assigning individual work schedules, positions, and tasks, and administering employee discipline).

Johnson writes in the U.S. Chamber’s blog that businesses face uncertainty from the NLRB’s “infamous Browning-Ferris Industries decision” issued in August 2015 that changed the definition of when an employer would be considered a “joint employer” and be found liable for another company’s unfair labor practices and breaches of collective bargaining agreements under the National Labor Relations Act.

Under BFI, no longer would one employer need actual or direct control over another employer’s terms and conditions of employment to be considered a joint employer. Now they could be a joint employer based merely on indirect and reserved, or potential, control.

BFI overturned 30 years of NLRB precedent, Johnson writes, and added that the decision was purely outcome determinative.

“It was always intended to give unions new opportunities to organize employees previously unavailable to them regardless of the logic or contorted arguments necessary to achieve that goal,” Johnson’s article states. “The full scope of this definition has yet to be determined.”

Under the BFI decision, if one employer hires a second employer to provide staffing or just uses an outside vendor for certain services such as security, IT, payroll, janitorial, etc., the two can be considered joint employers and therefore jointly responsible for unfair labor charges under the NLRA and can be forced into union contracts for the other company’s employees.


IN CASE YOU MISSED IT

House Passes $1.2 Trillion Government Funding Package for 2018
The HILL (Marcos, Elis 9/14) “The House on Thursday completed its work on the annual appropriations bills for 2018, ahead of expected negotiations at the end of this year to keep the government funded. By a vote of 211-198, the House passed a $1.2 trillion package of spending bills to fund wide swaths of the federal government, ranging from the Department of Homeland Security to the Environmental Protection Agency.

“The package included eight new bills, plus four previously passed appropriations bills that advanced through the House in July. Congress sent a three-month government funding extension to President Trump’s desk last week to avoid a government shutdown on Oct. 1. That means Congress will have to finalize government spending for 2018 in December.

“The Senate remains significantly behind the House in its appropriations process, having passed none of its spending bills and only 10 of the 12 are through the full appropriations committee. Congress is likely to enact an all-encompassing spending package known as an ‘omnibus’ before current government funding runs out on Dec. 8. If lawmakers fail to do so, even a funding extension would result in sequestration – across the board cuts to meet the budget cap requirements – in late January.”

Trump Officials Eying Replacement for Key Obama Climate Rule
The HILL (Cama 9/15) “The Trump administration is planning to pursue a less ambitious, more industry friendly climate change rule for coal-fired power plants as it works to scrap the one written under former President Barack Obama. Multiple sources familiar with the Environmental Protection Agency’s (EPA) plans say that as soon as next month, the EPA could put out a preliminary proposal for a rule to replace the Clean Power Plan.

” … [T]he administration is starting to accept arguments from industry and business groups that for reasons like regulatory certainty and legal prudence, some limits on carbon emissions from power plants are a good idea. The regulation is likely to focus solely on the carbon reductions that can be achieved at the coal-fired power plants themselves – mainly improving the efficiency of coal-fired generators, an approach known as ‘inside the fenceline’

“That’s in contrast to Obama’s rule, which was ‘outside the fenceline’. It ordered a 32 percent cut to the power sector’s carbon emissions, and based each state’s reductions on a formula that judged how much each state could achieve not just in efficiency, but also through utilities using more low-carbon power sources like natural gas and renewables.

“[EPA Administrator Scott] Pruitt hasn’t yet spoken publicly about whether he wants to replace the climate rule. At a May event hosted by law firm Faegre Baker Daniels, he said the EPA might not have the responsibility or the authority to regulate carbon from power plants. ‘I think it’s yet to be determined’, Pruitt said. ‘I think there’s a fair question to be asked and answered on that issue with stationary sources [of emissions]. What are the tools in the toolbox’?”

About Dana Beyerle

Dana Beyerle
Director of Communications
(334) 240-8768 | Fax: (334) 241-5984
Email Dana Beyerle

Check Also

BCA Presents Chairman’s Award to U.S. Rep. Aderholt

Business Council of Alabama Chairman Jeff Coleman on Wednesday presented the 2017 Chairman’s Award to …