Weekly Legislative Update - May 6, 2019
Trump and Democrats Discuss $2 Trillion Infrastructure Plan
Last week, President Donald Trump and Democratic congressional leaders agreed to work together on a $2 trillion infrastructure package - but put off for later the difficult question of how to pay for it.
Senate Minority Leader Chuck Schumer said, "we agreed on a number." That number being $2 trillion.
"Originally, we had started a little lower. Even the president was eager to push it up to $2 trillion, and that is a very good thing," Schumer said.
Added Pelosi: "We did come to one agreement: that the agreement would be big and bold."
Asked whether Trump supports raising the gas tax, White House adviser Kellyanne Conway said before the meeting: "This president is the guy who lowers taxes."
So far this year, Alabama, Arkansas, Ohio and Virginia have enacted gas tax increases, although Virginia's only applies to a portion of the state. Some 30 states have done so since 2013.
TIA believes that an infrastructure bill is a jobs bill that cuts across party lines.
TIA has opposed any proposed taxes in past infrastructure proposals that would be harmful to the tire industry.
TIA will continue to report and monitor on these developments and discussions.
TIA and FBETC Work to Repeal Estate Tax
TIA is a member of the FBETC. The Family Business Estate Tax Coalition (FBETC) - a grassroots coalition of national family-owned business organizations dedicated to the full, permanent repeal of the estate tax - appreciates the opportunity to comment on regulations proposed by the Internal Revenue Service (IRS) addressing the effect of changes made in tax reform to the basic exclusion amount used in computing federal gift and estate taxes (REG-106706-18).
As noted above, TIA and FBETC supports full, permanent repeal of the estate tax. Unfortunately, Congress was unable to agree on repealing the tax and, instead, passed legislation that doubled the basic exclusion amount (from $5 million to $11.4 million per taxpayer, adjusted for inflation). Despite TIA and FBETS's urging to make this change permanent, the Tax Cuts and Jobs Act instead would allow this provision to sunset at the end of 2025, resulting in the exclusion amount returning to pre-tax reform levels.
In addition to the policy justifications for permanently doubling the basic exclusion amount, the temporary nature of the change has resulted in questions about the potential for the inconsistent treatment of taxpayers - something the IRS acknowledged in its preamble to the proposed regulations. In particular, the sunsetting of the increased basic exclusion amount - which would revert to the lower, pre-tax reform amount beginning in 2026 - has the potential to retroactively deny taxpayers who die after 2025 the full benefit of the doubled exclusion amount.
If a decedent had made cumulative post 1976 taxable gifts of $9 million, all of which were sheltered from gift tax by a [basic exclusion amount (BEA)] of [$11.4] million applicable on the dates of the gifts, and if the decedent died after 2025 when the BEA was $5million, the credit to be applied in computing the estate tax is that based upon the $9 million of BEA that was used to compute gift tax payable.
Finally, the IRS notes in its proposed regulations that "Congress' grant of regulatory authority in section 2001 (g)(2) to address situations in which differences exist between the BEA applicable to a decedent's gifts and the BEA applicable to the decedent's estate clearly permits the Secretary to address the situation in which a gift is made during the increased BEA period and the decedent dies after the increased period ends." TIA and FBETC agrees with this assessment and believed that this special rule is a vital piece of the regulatory implementation process and should be included in any final regulations the IRS might issue related to this important policy change. Failing to do so would frustrate the legislative intent underpinning the doubled exclusion amount, unfairly deny certain taxpayers the benefits of this change, and result in disparate treatment for taxpayers based upon arbitrary and unpredictable factors.
USA Workforce Coalition Building Momentum
Introduction and Background:
The USA Workforce Coalition stretches across the country with just under 300 organizations including labor groups, industry trade associations, parent organizations and religious organizations. Collectively the coalition supports national education tax credits for community-based apprenticeship initiatives, career and technical education, workforce development, vocational schooling and adult education and K-12 educational preparedness. TIA is a member of the coalition.
In early 2017, school choice reform organizations came together and agreed that the best legislative strategy to achieve school choice would be a national education tax credit. Briefings were conducted across the country and the national school choice supporters and donor base was consulted on the emerging opportunity. Various community, religious and parent organizations came together to form the #EdTaxCredit50 coalition.
During those various outreach meetings, former Michigan Governor Engler heard of the movement and suggested that the school choice community expand their traditional K-12 arena to include vocational, technical and trade school supporting our Nation's workforce. As we explored the concept, we quickly realized this was the true definition of school choice for all.
During that time, the successful Tax Cuts and Jobs Act was gaining momentum. A growing jobs crisis in America was evident in that we had available workers and available jobs that did not gel. The rebranding of the #EdTaxCredit50 coalition occurred and we became the USA Workforce Coalition.
With nearly 7 million jobs unfilled, with numerous and growing number of manufacturing jobs available, Americans lack the requisite skills. At the same time over 6 million Americans are unemployed. Clearly, we needed to expand our traditional k-12 school choice arena to include adult (re)training, worker development and apprenticeship programs. A rebranding and expansion of the national education tax credit evolved into the USA Workforce Tax Credit Act and the #EdTaxCredit50 coalition was joined in concert with the new USA Workforce Coalition.
In the 115th Congress, the coalition shopped draft legislation to primarily Pennsylvania Representatives as the State of Pennsylvania has one of the most successful state education tax credit programs in the country. Prior to his election to Congress, Representative Lloyd Smucker (R-PA) was a small business owner and served in the Pennsylvania state legislature when the Pennsylvania education tax credit passed. He easily understood the merging of the two issues and enthusiastically agreed to sponsor the legislation (115th Congress, H.R. 5153) which was introduced and immediately referred to the Committee on Ways and Means.
Legislation Overview and Status:
In the current Congress, Representative Smucker re-introduced the legislation (H.R. 1739) just last month. In addition, Senator Ted Cruz (R-TX) has introduced S. 634, the Education Freedom Scholarship and Opportunity Act which included a workforce component reflective of the Smucker legislation. The Cruz legislation would provide tax credits of "$5,000,000,000 shall be allotted for qualified contributions to eligible workforce training organizations" while the Smucker legislation caps credits at $2 billion annually. The coalition stands strong in support of these tax credits that extend to the workforce community.
TIA supports the legislation and the efforts of the coalition.