Report of the MCAA Legislative Committee

Words: Paul OdomAs was expected, Republicans picked up 63 seats to take control of the House of Representatives, holding a 242-193 majority. Republicans picked up 6 seats in the Senate, where Democrats hold a 53-47 majority.

While much will be made about ‘the message of the electorate’, it is clear that this Congress will be highly politicized leading up to the 2012 Presidential election and the Senate elections, where Democrats must defend 23 seats (think the Democrat wave in 2006).

Outside of healthcare and financial reform, Congress saved most legislating for the lame duck session that concluded shortly before Christmas. An overview of relevant legislative accomplishments includes the following:

Continuing Appropriations through March 4, 2011

Funded MilCon, Energy & Water, among others

Tax Relief Act

Extended many 2001 and 2003 tax breaks through 2012

Personal income tax brackets
Temporarily patched the AMT
Reinstated the estate tax
Expensing and depreciation provisions

Defense Spending Bill

However, a number of our priorities did not pass Congress and will be on the table for the 112th:

3% withholding
Life-cycle costing on MilCon projects
Permanent estate tax and AMT fix

MilCon — LCC

We came very close to getting language to direct the Army to use a 50-year life cycle cost requirement in MilCon projects. Congressman Chet Edwards was prepared to offer report language, and during Senate debate on the omnibus appropriations bill, Senators Inouye and Murray were receptive to our idea.

We were able to get our 50-year language in the Approps bill that died with no action; and a similar version (not our exact language, but it included 50 years) in the Omnibus Senate bill sponsored by Senator Inouye (HI) which died on the Senate floor. In sum, we lost our language due to process and politics, 100% out of our control.

Congressman Culberson (R-TX) is the incoming chairman of the MilCon Approps Subcommittee. We are very close to his office, and we plan to make the initial run with our language through the House, since the new Republican majority will pass all Approps bills before the summer recess.

Congressman Dicks and Senator Inouye both have asked us to meet with the Secretary of Defense in the coming months to revisit this issue.

Estate Tax

Position
The Masonry Industry supports permanent repeal of the federal estate tax. The Masonry Industry also urges examination and consideration of proposals providing reasonable exemptions.

MCAA has been supportive of efforts to permanently repeal the estate tax, and short of that, has supported legislation (H.R. 3905) to increase the exemption level to $5million, and reduce the rate to 35%, phased-in over ten years.

Update
A reinstatement of the lapsed estate tax was included in a broad measure that extended the 2001 and 2003 tax cuts, provided a one-year reduction in Social Security taxes paid by workers, and renewed expanded benefits for the long-term unemployed.

Blanche Lincoln, D-Ark., and Jon Kyl, R-Ariz., worked out a deal in the Senate that was more generous to large estates than the House-passed bill.

Lincoln and Kyl proposed to set the top rate at 35 percent and impose it on the value of estates in excess of $5 million. They faced hurdles in their effort to win passage and were unsuccessful in trying to attach the proposal to a small-business stimulus measure when Senate leaders decided to hold off on addressing all the Bush tax cuts until after the November election.

With the end of the year — and a reinstatement of the estate tax at pre-2001 rates approaching — lawmakers agreed in December to include the Lincoln-Kyl compromise in a broad measure (H.R. 4853) that extended the other Bush tax cuts for two years.

3% Withholding Tax

Position
The Masonry Industry opposes the 3% withholding tax. MCAA has met with Members of Congress to generate cosponsors and pass H.R. 275 (Meek-Herger) and S. 292 (Specter-Vitter), which would immediately repeal this requirement.

Update
These bills, despite having cosponsors, went nowhere in the 111th Congress.

Senator Vitter plans to reintroduce this legislation and we will work with Congressman Herger to do the same. Our legislative focus is on pitching this as a pro-Small Business / jobs bill. This bill passed a Republican House previously, and we need to coordinate with the Senate to push it across the finish line.

Alternative Minimum Tax

Background
The Individual Alternative Minimum Tax (AMT) operates parallel to the regular income tax, with different rates and definition of income and deductions. Although the AMT has historically applied to few taxpayers, the tax will grow rapidly over the next decade under current law. By 2010, the AMT will affect 33 million taxpayers — about one-third of all tax returns, up from 1 million in 1999.

Congress provided a 2-year patch to the AMT, punting this issue until 2012.

Position
The Masonry Industry supports repeal of the AMT or appropriate indexing of the AMT to its original date of enactment or the date of enactment of the new AMT bill.

Immigration Reform

Background
In the past, legislation has been introduced in both the House and Senate that focuses solely on employer sanctions and would mandate that employers use Social Security numbers to verify their entire workforce, both existing and new employees. The new legislation does not take into account the unreliability of the current system or the high rate of errors produced by the system. Furthermore, there are no requirements for the system to be properly tested or revamped before implementation. Under the new legislation employers would be required to re-verify their entire workforce within four years or enactment. This will be an enormous administrative burden on employers and employees, particularly small business owners.

The Masonry Industry’s main concern with proposed legislation mandating that all employers must use the electronic verification system, E-Verify, is the potential negative impact this may have on small businesses.

Position
The Masonry Industry supports a comprehensive approach that includes provisions to secure our nation’s borders and creates a temporary guest worker program that meets the demand for labor and a process for addressing the undocumented currently employed in the U.S.

The Masonry Industry opposes immigration legislation that:

assigns liability for contractors who unknowingly use subcontractors that employ undocumented workers;
would make employers become the de facto “immigration police;”
fails to include a reasonable implementation period for electronic employee verification system (EEVS);
would include excessive debarment penalties for immigration violations;
implements a system that has not been thoroughly tested and revamped;
places a considerable financial strain on small business owners, due to the technological infrastructure;
does not provide liability protection for employers from discrimination lawsuits for an employer who relies on E-Verify information and subsequently denies employment to or fires a current employee who is later found eligible to work in the United States.

Update
This will be a low priority for the House, as they likely will insist on border security measures ahead of any visa program changes or undue compliance burdens on small businesses. While the White House may try to advance immigration legislation, it is unlikely it moves beyond the House.

Regulation/Agency Rulemaking

Given the House Republican’s positioning of the Oversight and Government Reform Committee, we will see a bully pulpit attacking the federal agencies for their prior rulemaking and regulations. Chairman Darrell Issa already has scheduled over 160 oversight hearings, where federal agencies will be brought in to testify. House Republicans will use this committee to slow the pace of regulations and provide sunlight on how the agencies operate.

This could be a great opportunity for MCAA to testify on harmful DOL/OSHA regulations and rulemakings.

Conclusion

The House will prove to be open to many of our ideas, but we must be careful not to be tied-in to large bills that have no chance of passing the Senate. A prudent approach is to focus on LCC through appropriations, and try to pass our priorities stand-alone, or tied to pro-small business / mini-jobs bills. There are 23 Senate Democrats up for re-election in 2012, so many of those votes could be in play if Senate Republicans pitch their cause properly and the House provides them with legislative opportunities.