Weekly Legislative Update
November 15, 2021

TIA Signs onto Estate Tax Grantor Trusts Valuation Discounts Letter

Dear Chairmen Wyden and Neal,

Family owned and operated businesses face a number of challenges when transitioning to the next generation of ownership, including navigating the tax code. As recent jobs reports indicate, the economy remains on delicate footing, and at a time when many family businesses are still struggling to stay afloat, several proposals put forth this Congress have the potential to make operating and passing on a family business, farm, or ranch even more difficult.

Earlier this year, both the small business and agriculture communities identified taxing unrealized capital gains at death--a kind of "double death tax"—as an unworkable policy for family businesses. Multiple Senate votes and its exclusion from the House Ways and Means Committee draft might have led one to believe the threat was over, only to see a similar concept resurrected in Chairman Wyden's "mark-to-market" bill. Taxing phantom gains in any form, whether through unrealized gains at death or through the recently released mark-to-market approach has the potential to create serious liquidity issues for privately held businesses.

Family businesses across a wide number of industries tend to operate on small margins with their value almost entirely tied up in equipment, machinery, land, buildings, and other non-cash assets.

That makes paying taxes on imaginary gains problematic. It also creates difficulties when attempting to pay estate taxes when no profitable sale has occurred, only the death of a business owner. Family businesses without sufficient liquid reserves to pay new taxes on capital and a more aggressive estate tax will be forced to fire workers, close branches, or shut down the businesses altogether. No family business should be forced into losing their business, employees, and their legacy in order to pay multiple layers of tax on the same dollar.

One disappointing feature of the Ways and Means passed language was the inclusion of indirect death tax hikes in the form of severe restrictions on grantor trusts and on common-sense family business valuation rules. While these may seem obscure or minor, the language reported out of committee has the potential to be the biggest death tax hike in over a decade. Grantor trusts are used in succession planning to help pass family businesses from one generation to the next. The estate valuation rules would require families to pay death tax on assets which are appraised at a theoretically high, as opposed to fair market, value. If a business owner dies, the value of the business likely declines--it's unfair to value the business as if nothing has changed.

Another threat to the death tax is more straightforward--halving the exemption. The Tax Cuts and Jobs Act doubled the unified credit for estate, gift, and generation skipping taxes to roughly $12 million in 2021--twice that for surviving spouses. Rolling back the clock on this progress could result in 50 to 100 percent more families paying the estate tax every year.

Congress should be single-mindedly focused on helping small businesses keep their doors open and their workers employed. Taxing unrealized gains in any form, subjecting more families to the estate tax by cutting the current exemption in half, removing important tools that family businesses use for succession planning, and changing longstanding rules on valuing family businesses are not ideas that are likely to help spur job creation and economic recovery. While the recently released “framework” contains several concerning tax hikes, it wisely abandoned these aforementioned provisions. On behalf of family businesses across the country, the undersigned organizations urge you to keep these harmful policies off the table as negotiations continue.

Signed,

Tire Industry Association and other trade associations

---

DRIVE Safe Update

With recent passage of the Infrastructure Investment and Jobs Act (H.R.3684), we are that much closer to enabling qualified 18-20 year old CDL holders, with the right safety, training and technology, to drive in interstate commerce and join the trucking workforce!

The DRIVE Safe pilot program included in the bill is a critical step forward for our many industries in reaching a new talent pool of future drivers.

As such, we wanted to send a huge for your continued efforts to promote the DRIVE Safe Act over the last few years.

Once the President signs the bill into law, the clock will begin ticking on DOT to stand up the pilot program (within 60 days). As that occurs, advocacy will shift into the regulatory realm, and identifying motor carriers who can participate.

That all being said, we know that the pilot program is not the silver bullet to solve the driver shortage, and we intend to continue looking to other legislative and regulatory solutions to ease this supply chain pressure point. As we continue in this effort, we will keep you all apprised of opportunities for continued workforce development advocacy. And should you have ideas and solutions that you are considering in this space, please don’t hesitate to reach out.

Thank you again for your continued efforts on the DRIVE Safe Act, and help in ensuring the pilot program’s enactment.

---

TIA Pens Letter to President Biden on Supply Chain Solutions

We, the undersigned coalition of associations, representing agriculture, tire industry, foodservice, trucking, warehousing, manufacturing, retail, construction, energy, and other key supply chain stakeholders, call on the Biden Administration to work with our industries to address the immense challenges impacting our nation’s supply chain.

While we represent different industries, we share the common burden of current supply chain disruptions, which are driving up prices and leading to a growing shortage of goods in the United States, with the holidays just around the corner.

As business leaders and proud Americans, we are firmly committed to this country's economic recovery. We are working to usher in a return to normalcy and striving to help all Americans enjoy a better way of life by providing them with access to the essential products and supplies they need.

We appreciate that you have called on your Administration to strengthen our supply chains and recently stated: “If federal support is needed, I will direct all appropriate action.” In that spirit, we ask for your leadership on the following five actions:

1. Younger Driver Pilot Program
   We believe it is imperative to attract younger commercial drivers into our industries. We strongly support a pilot program that will enable employers to create a two-stage, safety-focused apprenticeship program to allow younger, qualified drivers – between the ages of 18 and 20 – who satisfy rigorous safety, training, and technology requirements to operate in interstate commerce. With 49 states and the District of Columbia already allowing drivers under the age of 21 to get their commercial driver’s license and operate intrastate, this pilot program will provide a real opportunity to address current and future driver shortages by promoting a career pathway in trucking and developing a professional, qualified, and highly-trained emerging transportation workforce.
2. Promotion of Careers in Transportation and the Supply Chain
   We must work together to highlight the importance of transportation and supply chain jobs and how crucial they are to America’s families and communities. We encourage federal agencies, including the U.S. Departments of Transportation and Labor, to collaborate with industry and state and local partners to promote transportation and supply chain occupations, particularly commercial truck driving, as a career of choice. Commercial truck drivers enjoy stability, good benefits, and higher-than-average wages. We can improve the lives of many unemployed and underemployed Americans by giving them opportunities for advancement while boosting the economy.
3. Flexibility in Vaccine Mandates
   Our industries are committed partners in the fight against COVID-19, and we unequivocally support the use of vaccines to fight its spread. However, we are concerned a mandate will cripple an already strained supply chain. We estimate companies covered by the mandate could lose 37% of drivers at a time when the nation is already short 80,000 truck drivers. We ask for flexibility for transportation and supply chain essential workers, particularly truck drivers who spend most of their time in their trucks and have minimal contact with colleagues and customers.
4. Hours of Service Relief
   Regulatory flexibilities, especially during emergencies, are vital to supply chain continuity. We continue to support last year’s changes to the hours of service regulations that give commercial truck drivers greater flexibility while improving safety and efficiency. We encourage the Administration to retain these changes and consider providing additional flexibilities that may be needed for the timely delivery of essential goods and that make sense from a safety and operational standpoint. Such flexibility is particularly important at ports that are open 24 hours to help alleviate current bottlenecks.
5. Flow of Goods through Ports
   We encourage the Administration to continue to investigate the causes of inefficiencies at our nation’s ports, draw input from a wide variety of supply chain stakeholders, and work collaboratively to minimize the bottlenecks and operational practices that prevent the seamless movement of cargo through the supply chain. Through continued dialogue and information sharing, appropriate action can be taken to ensure resources and equipment are utilized efficiently and effectively to improve performance at our nation’s ports.

We stand ready to assist in any way we can.

Sincerely,

Tire Industry Association and other trade associations

---

Thanks for Playing Top Golf in Vegas!

Thanks for a successful and fun event supporting TIA's government affairs efforts!

A HUGE THANK YOU TO OUR SPONSORS:

See you next year!