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January 04, 2018 01:00 AM

YEAR IN REVIEW: Taxing year in Washington

Miles Moore
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    Trump

    WASHINGTON — President Trump dominated the federal regulatory and legislative picture in 2017.

    The year began with Mr. Trump's first executive orders, which froze all federal regulations; ordered federal agencies to identify two regulations to repeal for every one they promulgate; and canceled the Trans-Pacific Partnership, a trade agreement with 11 other Pacific Rim countries negotiated by the Obama administration.

    It concluded with the Republican-led Congress passing sweeping tax-reform legislation. Mr. Trump signed the Tax Cuts and Jobs Act into law on Dec. 22, giving his administration its first major legislative victory.

    The bill cuts the corporate tax rate to 21 percent from 35 percent beginning in 2018. The top individual tax rate will drop to 37 percent. It cuts income tax rates, doubles the standard deduction and eliminates personal exemptions.

    The corporate cuts are permanent, while the individual changes expire at the end of 2025.

    The act doubles the estate tax exemption to $11.2 million for singles and $22.4 million for couples. The repeal of the estate tax was a goal long sought by the Tire Industry Association and other small business groups.

    The new law raises the standard deduction to 20 percent for pass-through businesses, which include sole proprietorships, partnerships, limited liability companies and S corporations. This deduction ends in 2026. Deductions are limited once income reaches $157,500 for singles and $315,000 for those filing jointly.

    The bill also repeals the individual mandate portion of the Affordable Care Act. Many business groups supported the American Health Care Act (ACHA), the Republicans' replacement for the ACA, when it was introduced early this year.

    U.S. retailers, including tire and auto parts retailers, dodged a tax bullet in July when House Speaker Paul Ryan, R-Wis., said he would not pursue passage of the Border Adjustment Tax, a Trump administration proposal to tax imported goods as a budget-balancing measure.

    Bills that would have benefited brick-and-mortar retailers were introduced in the spring. The Remote Transactions Parity Act in the House and the Marketplace Fairness Act in the Senate took different approaches to allow states to tax online transactions, but neither bill advanced.

    In the area of trade, renegotiation of the North American Free Trade Agreement ran into trouble over proposals from the Trump administration regarding regional and local content requirements.

    Meanwhile, the Alliance for American Manufacturing and other groups criticized President Trump for not getting tough with Asia on international trade, as he promised to do during his election campaign.

    On the regulatory side, 2017 could best be described as regressive, in line with Mr. Trump's anti-regulatory executive orders.

    In August, the Environmental Protection Agency (EPA) requested public comments for a review of the Obama administration's vehicle fuel-efficiency standards.

    This was widely seen as consistent with the policies of EPA Administrator Scott Pruitt to roll back as many of the previous administration's regulatory programs as possible.

    However, the tire industry encountered problems at the National Highway Traffic Safety Administration (NHTSA).

    In December 2016, NHTSA sent the consumer information portion of its tire fuel-efficiency rating rule to the White House for consideration.

    The tire industry, which had awaited those provisions since 2010, hoped for a reasonably quick conclusion, but nothing further had been done as of December 2017.

    This was not the only, or even the greatest, concern the industry had regarding NHTSA. In September, Anne Forristall Luke, president and CEO of the U.S. Tire Manufacturers Association (USTMA), wrote Mr. Trump requesting that he appoint a NHTSA administrator as soon as possible.

    "NHTSA's role in regulating the motor vehicle, tire and motor vehicle equipment industries requires leadership to ensure implementation of smart, efficient regulations required by Congress to ensure a competitive marketplace," Ms. Luke said in her letter.

    The USTMA also urged NHTSA to rescind several "outdated, unnecessary or ineffective" regulations that have been on the books for decades, including the Uniform Tire Quality Grading Standards.

    Tires played a prominent role in state legislation, with both New Jersey and Arizona approving used tire bills.

    New Jersey Assembly Bill 3896, which was advocated by the USTMA, imposes fines of up to $500 for first offenses in selling unsafe used tires and up to $20,000 for third or subsequent offenses.

    A-3896 defines an unsafe used tire as having a tread depth of less than 1/16th inch; having any visible damage or improper repairs; having a defaced or missing identification number; or having bulges indicating internal damage.

    In Arizona, Gov. Doug Ducey signed Arizona House Bill 2399, which defines waste tires to prevent them from being sold as used tires.

    HB 2399 defines waste tires in much the same way as New Jersey A-3896. However, it was not a model bill from the USTMA, but written by Myles P. Hassett, a Phoenix attorney who became interested in tire safety after two friends died in a tire-related auto accident.

    A third used tire bill, a USTMA-advocated bill that passed the Texas legislature, was vetoed by Gov. Greg Abbott, who objected to the bill's imposition of new criminal penalties.

    Two bills before the California legislature — one of which began as a tire-related bill and the other of which stayed that way — were amended and reassigned to Senate committees before the legislative session ended.

    Before opposition from the USTMA and other sources caused it to be rewritten, Assembly Bill 1180 would have required the California Department of Toxic Substances Control to designate tires containing zinc as a priority subject of regulation under the state's Green Chemistry initiative.

    Assembly Bill 509 would have required the California Department of Resources Recycling and Recovery (CalRecycle) to replace its current Rubber Pavement Market Development program with a Tire Recycling Incentive Program that would have made payments to entities that purchase waste tire material to use in making products for end-users.

    In April, Maryland became the eighth state to ban lead and mercury wheel weights. The bill passed by the Maryland legislature makes it illegal to use external wheel weights containing more than 0.1-percent of lead or mercury by weight beginning in 2020.

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