WASHINGTON—Legislation covering transportation infrastructure, taxation and wages promises to have an enormous potential impact on tire dealers and other small businesses in the coming year, according to the associations that represent them.
With the Moving Ahead for Progress in the 21st Century Act (MAP-21) set to end at the end of September, and the Highway Trust Fund likely to run out sometime during the summer, passage of a long-term transportation infrastructure funding bill has become an urgent issue for all stakeholders in the various industries that provide, support or use any sort of transportation.
The presidents of 30 state Chambers of Commerce wrote the leaders of the Senate Environment and Public Works Committee and the House Transportation and Infrastructure Committee March 25, urging that Congress pass at minimum a five-year highway and transportation funding reauthorization bill.
That bill, they said, must contain dedicated federal funds to ensure the solvency of the Highway Trust Fund. It must also give states flexibility to invest in transportation infrastructure as they see fit, as well as the freedom to choose their own funding options.
“One of the United States' greatest competitive advantages is our ability to quickly move goods and people across long distances,” the letter said. “Today that advantage is threatened as countries like China, India and Brazil have dramatically increased investments in their transportation infrastructure.
“Our deteriorating national transportation infrastructure is not a small state issue or a large state issue,” the letter said. “It is not a small business issue or a large business issue. It is a national issue and it directly impacts America's competitiveness in the global marketplace.”
Sarah Puro, prinicipal analyst with the Congressional Budget Office, told TIA representatives March 27 that Congress sees an increase in the motor fuel tax as the easiest way to address the shortfall in highway funds.
Proposed gas tax increases of 15 cents to $2 per gallon are floating around Capitol Hill, according to Tire Industry Association (TIA) Executive Vice President Roy Littlefield. So are proposals to reinstate federal excise taxes on passenger, laminated and non-highway tires and retread rubber, and to increase taxes on heavy truck tires.
TIA opposes all these ideas, Mr. Littlefield told Tire Business, though it supports one other proposal: the establishment of a national infrastructure bank to protect highway funds for highway use.
In the area of taxation, the leaders of both the House Ways and Means and Senate Finance Committees have said they are willing to consider extending a number of popular tax credits in the fiscal year 2015 budget.
From TIA's standpoint, the most important is the Work Opportunity Tax Credit (WOTC), which allows businesses to claim 40 percent of the first $6,000 of wages for new hires from any of eight targeted groups, including military veterans and families receiving government assistance.
This is a very popular tax credit among small businesses, especially the auto aftermarket, according to Mr. Littlefield.
House Ways and Means Committee Chairman Dave Camp, R-Mich., said he will hold separate hearings on various tax extenders, rather than considering them as a package. This is good news for supporters of the WOTC, according to Mr. Littlefield, who urged TIA members to contact Republican congressmen in favor of a permanent extension of the credit.
The Senate Finance Committee passed April 3 a retroactive extension of WOTC until Dec. 31, 2015. That extension was part of an omnibus bill granting extensions to some 50 popular tax credits.
The committee approved two changes to WOTC sponsored by House Finance Chairman Ron Wyden, D-Ore. One change adds the long-term unemployed to the list of new hires eligible for the credit; the other increases the credit for veterans to 100 percent and removes the business size limit on the veterans' credit.
TIA also has been a strong longtime advocate of repeal or reform of the estate tax, which charges a hefty tax on estates above a certain set level. There have been many proposals for estate tax reform in the past 15 years; one, which passed in 2000, allowed for a gradual decrease in estate taxes until it was completely rescinded in 2010—but only for that year. The tax was reinstated in 2011.
Although federal legislation to reform the estate tax has not advanced far in the current Congress, the Maryland legislature has approved a bill that would lessen the estate tax burden on small businesses in that state.
Under the previous law, Maryland charged a 16-percent tax on estates worth more than $1 million. The new law, approved in March, gradually raises the exemption level, first to $1.5 million on Jan. 1, 2015, then eventually to the current federal exemption threshold of $5.34 million on Jan. 1, 2019.
Meanwhile, a recent executive order by President Barack Obama is creating deep concern among small business owners.
This is the President's March 13 memorandum to Labor Secretary Thomas E. Perez, ordering the extension of overtime pay benefits under the Fair Labor Standards Act to millions of salaried workers, including managers and supervisors in small retail operations.
The Labor Department is expected to issue a proposed rule soon on Mr. Obama's directive. According to SESCO Management Consultants, TIA's consultant on labor laws, the new rule could raise the minimum guarantee salary threshold for overtime pay exemption to at least $1,000 a week—more than double the current threshold of $455.
The pay differential could mean the difference between profit and bankruptcy for many small businesses, according to Mr. Littlefield, who currently serves as chairman of the Small Business Legislative Council as well as TIA executive vice president.
“I've received more calls on this than I did on Obamacare,” he said.
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