Business leaders lay out priorities for tax reform

Business leaders, specifically the National Association of Manufacturers, have sent a letter supporting the tax reform bills that have recently passed the U.S. House and U.S. Senate. Included with that support were a few suggestions for consideration as the conferees deliberate the final bill.

The first, and most major of these suggestions is maintaining the corporate tax rate cut to 20 percent. Both the House and the Senate bills have a 20 percent corporate tax rate. However, there is talk that it may increase in the final version of the bill. Even a small increase would greatly reduce the competitiveness of America’s tax rates. The NAM has spoken out, asking lawmakers to either keep the 20 percent rate or reduce the rate to 15 percent. In addition, the Senate’s plan to wait until 2019 for the tax cuts to begin would be detrimental to manufacturers and other businesses.

The second suggestion is the need for reduced tax rates on pass-through business income. The House bill provides for a top rate of 25 percent on pass-through business income, but this rate comes with a great deal of complexity that is detrimental to small business owners. The Senate bill does not have a reduction, but comes with increased deductions for pass through income, which is less complex than the House bill.

The third suggestion is related to capital investment. Both the House and the Senate bills add new limitations on the ability to deduct investment expenses, including disallowing a current deduction for interest on debt. The NAM would prefer such limitations be eliminated or, at the very least, that such limitations not be applied to existing debt.

“Companies of all kinds have entered into loan agreements expecting to be able to deduct the interest from their taxable income when computing their income taxes,” said Ray McCarty, president of Associated Industries of Missouri, the official designated partner of the NAM in Missouri. “Congress should not change the rules and now require businesses to pay tax on interest payments, especially for debt that has already been incurred. Businesses weigh debt options carefully and consider all costs and benefits when making a debt decision. Changing the deductibility of interest could have an impact on these decisions. If not removed entirely, this limitation on the deductibility of interest should only be applied to new debt incurred after the effective date of the limitation,” said McCarty. McCarty said he had been in touch with U.S. Senator Roy Blunt regarding the interest provisions and his office was very helpful in exploring options.

A major concern for manufacturers is maintaining the research and development credit. The House bill had originally eliminated the Alternative Minimum Tax (AMT), however the Senate bill restored it. Under the Senate plan, the AMT rate would be the same as the regular rate, but with less deductions. Many businesses would be forced to pay the AMT, excluding them from realizing any benefit from the research and development credit.

“Research and development is the lifeblood of manufacturing,” said Chris Netram, vice president for tax and domestic economic policy at the National Association of Manufacturers. “The NAM supports pro-growth tax reform, and is working with key policymakers to ensure the final bill does not inadvertently harm manufacturing.”

“We have been advocating re-establishing a state level research and development tax credit in Missouri to help draw that investment into our state,” said McCarty. “At the very least, we need to maintain the existing federal research and development credit to encourage that investment within the United States.”

READ MORE HERE

Governor Greitens signs Corlew’s expert witness bill

Governor Eric Greitens has signed HB 153, sponsored by Rep. Kevin Corlew, that will allow Missouri to join most other states and federal courts in the way they evaluate whether a person testifying in court is an expert or not. The governor signed the bill earlier today at Midland Transport in Jefferson City, MO.

Similar legislation was passed last year and vetoed by Governor Jay Nixon. This bill is different because it will not apply in work comp cases or other cases that do not involve a jury. In reality, the new standard really would have little or no impact in these cases anyway because the judge decides whether the testimony is credible under existing law and the new law expected to be signed today.

Associated Industries of Missouri has long supported correcting the standard in Missouri.

“Missouri’s low standard of evaluating experts in state court is why plaintiffs’ attorneys try to move cases into Missouri state courts,” said Ray McCarty, president and CEO of Associated Industries of Missouri. “The proposed standard works in most other states and is used in federal courts in Missouri. This is a commonsense bill and we applaud the sponsor, Rep. Kevin Corlew, the House and Senate leadership that made this a priority, and Governor Eric Greitens for making this a priority and signing the legislation,” said McCarty.

Click here for the AP story.

The U.S. Chamber Institute for Legal Reform issued a statement supporting signature of the bill. Associated Industries of Missouri is a proud member of the U.S. Chamber of Commerce. You may read the statement here.

Ford-UAW agreement provides major boost to Kansas City Assembly Plant

A tentative agreement reached between Ford and the United Auto Workers would provide a significant boost to Ford’s Kansas City Assembly Plant and Missouri’s economy.  Under the agreement, Ford would provide a $8,500 ratification bonus and $1,500 in profit sharing to every employee by the end of the year and invest an additional $200 million on the F-150 and Transit lines, in addition to securing existing jobs at the plant.  In total, the deal would inject an additional $75 million into local communities before the end of the year.

The Kansas City Assembly Plant, following a $1.1 billion investment by Ford, now has the largest capacity to build vehicles of any Ford plant in the world.  Employing more than 7,000 workers, the Kansas City Assembly Plant also has one of the largest hourly workforces in the Ford network.

The Tentative Agreement was approved by local union leaders on the UAW National Ford Council on Monday and will now go before all UAW Ford members for a final vote.

The continued growth of Ford’s Kansas City Assembly Plant, once thought to be at risk of closure, is one of the signature achievements of Associated Industries of Missouri’s Missouri Manufacturing Jobs Act. Passed by the Missouri General Assembly during the special legislative session in the summer of 2010, the legislation is credited with the revival of Missouri’s auto industry.

As a result of the act, automotive manufacturers and suppliers have invested $2 billion in Missouri over the last five years.   Expansions by automakers have led to increased demand for automotive parts, strengthening Missouri’s automotive supplier network and providing a significant boost to the state’s economy. Since 2010, some 61 automotive suppliers have added or announced plans to add more than 4,619 new jobs, retain 220 existing workers, and make more than $613 million in capital investments.

EPA ozone regulation published in Federal Register

The Environmental Protection Agency has taken the first steps to increasing the regulation of ozone by publishing the new proposed  rule in the Federal Register today.  Click here for the actual 179 page document.  Comments on the rule, that would lower the allowable ozone threshold to 65-70 ppb and is estimated to result in all but three counties in Missouri becoming nonattainment areas, are due to the EPA by March 17, 2015.  We will be giving you further instructions on how to comment on these onerous regulations so stay tuned.

If this regulation is implemented and nearly every county in Missouri is designated a nonattainment area, future manufacturing and industrial growth requiring air permits would be nearly impossible.  A business seeking a permit to emit a certain amount of pollution would be denied without a corresponding loss of an equivalent amount of pollution from another business.  In other words, no overall growth in the manufacturing and industrial sector of the economy would be allowed under the regulation.

“This short-sighted regulation is just another example of the Obama Administration’s EPA not paying attention to the importance of middle class jobs in the manufacturing sector, not caring about the real costs associated with these regulations that they introduce before major holidays and the tremendous negative impact they will have on our hard working Missourians and our nation’s economy,” said Ray McCarty, president of Associated Industries of Missouri. “We hope our leaders in Congress can turn the tide on this torrent of regulations coming from the EPA that appears to be set on increasing costs for every American through higher energy costs with their carbon regulations and the President’s so-called ‘war on coal’ and eliminating jobs through their new water and ozone regulations.  This simply must stop — or the only jobs available may be working for the EPA.”

AIM happy to see tax cut discussions, but advocates broad based tax relief for ALL Missouri employers

AIM president Ray McCarty said today he was glad to see Governor Jay Nixon is participating in conversations to reduce the tax burden on Missouri taxpayers, but notes there is need for greater understanding of the types of taxpayers that would benefit from AIM’s tax cut proposals.

“Last week’s announcement by Governor Nixon is a good first step toward our goal of reducing the tax burden for all Missouri taxpayers, including Missouri employers, and increasing our ability to compete for jobs in a global economy,” said Ray McCarty, president of Associated Industries of Missouri.

Governor Nixon recently issued a statement in which he says, “I have never been opposed to making responsible changes to our tax code.”  The governor requests cuts in tax credit programs and full funding of the foundation formula for K-12 education.  He cites legislation that will be sponsored by Senator Will Kraus that will include these components and a requirement that state revenues grow by more than $200 million before tax cuts take effect.

But the governor also said he was opposed to providing any tax reductions on “…what’s called ‘pass-through’ business income.”  He continues, “…these tax cuts primarily benefit well-heeled corporate partnerships like law firms, and there is no evidence, anywhere, that these schemes do anything to create jobs.”

In fact, many businesses are organized as “pass-through” entities and would benefit from AIM’s business income deduction, such as that contained in HB 1253, sponsored by Rep. T.J. Berry, and SB 496, sponsored by Senator Eric Schmitt.  This includes sole proprietorships in which one owner owns the business; partnerships where husbands and wives or multiple individuals own the business; subchapter S corporations; and other types of business organizations.

According to 2010 tax year data published by the Internal Revenue Service, only 16% of S corporations were “professional, scientific and technical” firms such as law, lobbying and accounting firms.  Such firms also accounted for only 16% of the net business income of all S corporations.  The remaining 84% of S corporation income was reported by manufacturers (16%), wholesale trade businesses (13%), healthcare professionals and hospitals (11%), construction businesses (8%), retail trade (7%), finance and insurance companies (7%) and the rest was reported by various other industries.

IRS data also confirm 94% of all businesses would benefit from the business income deduction supported by AIM for “pass-through” entities.  AIM supports broad-based tax relief that would help ALL businesses in Missouri, including regular corporations that are responsible for nearly one-fourth of all net income reported on tax returns.

“Associated Industries of Missouri will continue to work toward a balanced and measured approach in providing tax relief that will help Missouri job creators be more competitive in the global marketplace, and we look forward to continuing the conversation with the governor and all legislative leaders in the coming weeks,” said McCarty.

Senator Eric Schmitt and Rep. Anne Zerr file special session economic development bills

Senator Eric Schmitt (R-15) and Representative Anne Zerr (R-65) have filed bills in the Senate and House respectively.  They are the only bills filed so far in this special legislative session called by Governor Nixon for the purpose of increasing the caps for existing economic development programs.  The programs would be expanded to make Missouri more competitive in a bid for a large aerospace project.

Click here to see video of a press conference with Senator Schmitt shortly after filing his bill yesterday. 

Click here to see a press conference with leadership in the Missouri House, also from yesterday. 

Associated Industries of Missouri supports the plan for several reasons.  In addition to the direct and indirect benefits of securing a large aircraft production project in Missouri, such a project would benefit suppliers across Missouri, many of which need additional work to replace declining orders in the defense sector due to federal sequestration and reductions in the federal defense budget.

Associated Industries of Missouri remains committed to broad-based tax relief for EVERY Missouri employer because this would make Missouri more attractive to prospective employers and help our existing Missouri employers increase employment and capital investment in Missouri.  Although we were successful in passing a bill that would have lowered the tax burden of every Missouri taxpayer in the 2013 regular session, Governor Nixon vetoed that measure.

Both of the special session bills will be heard in their respective committees tonight.  Associated Industries will be on record in support of both of these bills.

Associated Industries of Missouri Congratulates ATK on Selection to Continue Operating Lake City Army Ammunition Plant in Independence

INITIAL CONTRACTS COVER SEVEN-YEAR PERIOD

ATK BUILDS ON PROVEN OPERATIONAL SUCCESS AT LCAAP

ARLINGTON, Va., Oct. 1, 2012 /PRNewswire/ — ATK (NYSE: ATK) announced today that it has been notified by the U.S. Army that it was selected for both the production of ammunition and continued operation and maintenance of the Lake City Army Ammunition Plant (LCAAP) in Independence, Mo.  The initial contracts period is seven years, and if all award terms are exercised, the contracts would cover a 10-year period.

“ATK is proud to continue our collaboration with the U.S. Army, building on more than a decade of direct operational experience, to assure the continued health and vitality of the small-caliber ammunition enterprise,” said Mark DeYoung, President and CEO. “Our vision for Lake City reasserts our commitment to deliver safe, affordable solutions that ensure LCAAP remains the most responsive military industrial asset in the world.”

“We are honored with the responsibility to continue operating this key military industrial base capability. ATK is committed to the future success of our warfighters by optimizing and sustaining LCAAP,” said Mike Kahn, President of ATK Defense. “We are fully committed to delivering to our customer a lean, scalable and sustainable operation that will serve our nation for years to come.”

ATK is an aerospace, defense, and commercial products company with operations in 21 states, Puerto Rico, and internationally. News and information can be found on the Internet at www.atk.com.

Certain information discussed in this press release constitutes forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995.  Although ATK believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be achieved.  Forward-looking information is subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected. Among those factors are: changes in governmental spending, budgetary policies and product sourcing strategies; the company’s competitive environment; the terms and timing of awards and contracts; and economic conditions.  ATK undertakes no obligation to update any forward-looking statements. For further information on factors that could impact ATK, and statements contained herein, please refer to ATK’s most recent Annual Report on Form 10-K and any subsequent quarterly reports on Form 10-Q and current reports on Form 8-K filed with the U.S. Securities and Exchange Commission.

SOURCE ATK

Governor Nixon Signs Several Bills Today, Including Work Comp, Sales Tax Refunds, Buy Missouri, Hazardous Waste Regulations

July 10, 2012 – Governor Jay Nixon has signed several bills today, including several priority bills of interest to Associated Industries of Missouri (AIM) members.

The Governor signed HB 1540, an AIM-supported bill that will prevent employees from suing each other in most worker’s compensation cases.  AIM led the charge to correct a flaw in the law that had been used by plaintiff’s attorneys to sue co-employees in regular work situations – injuries that should have been covered under worker’s compensation insurance as the exclusive remedy.

HB 1504 contains an AIM provision that will allow purchasers to file sales tax refunds with the Missouri Department of Revenue (DOR) directly when a vendor refuses to participate in the refund process, or if the vendor voluntarily signs a release allowing the taxpayer to seek the refund directly from the DOR. The bill also limits penalties and interest that may be charged on city license taxes to the amount that is allowed for sales tax and states that the timeline for bringing suits for delinquent license taxes is the same as in the sales tax law.  HB 1504 was signed into law today.

HB 1402 clarifies a sales tax exemption for trucks licensed for 54,000 pounds or more, the trailers pulled by such trucks and the repair parts, materials and equipment purchased for use on such trucks from sales and use taxes.  Another provision of the bill keeps municipalities from enacting ordinances that prohibit commercial traffic on public streets and roads in the municipality. The bill also allows some billboard replacements that are not allowed under current law.  Governor Nixon signed the bill today.

HB 1251 is AIM-supported language that we passed by working with REGFORM.  The bill says hazardous waste regulations at the state level may not be stricter or require action sooner than federal law except in certain circumstances.  The bill also contains a provision drafted by one of AIM’s members that allows permit applicants more time to prepare for challenges of permits.  The Governor signed this bill today, as well as .HB 1647, a bill that addresses the hazardous waste regulations.

The Governor also signed HB 1231, a bill that gives Missouri bricks and forest products preference when the state is purchasing such items.

There may be more bills signed and we will update the blog when we learn of them.  Any bills not vetoed by Saturday, July 14, will become law without the Governor’s signature.  CLICK HERE FOR A COMPLETE LIST SHOWING THE GOVERNOR’S ACTION ON BILLS.

Associated Industries of Missouri Supports “Whistle Blower” Reform

April 11 – AIM President Ray McCarty testified before a House Committee yesterday in favor of two bills that would reform protections for employees claiming “whistle blower” protection under Missouri’s employment law.

While many committee members expressed agreement with at least some components of HB 2099, a bill that reforms only the “whistle blower” statutes, vigorous discussion ensued when the committee opened testimony on SB 592, a broader bill that aligns Missouri’s discrimination laws with federal discrimination laws on the books today.  AIM and other business groups have endorsed both changes, but testified in support of the narrower bill in an attempt to reform at least the whistle blower provisions.  McCarty stressed to committee members AIM’s support of the narrower bill on whistle blower, but also explained and answered many questions regarding the discrimination provisions in SB 592.

Governor Jay Nixon vetoed HB 1219 last month.  That bill addressed both discrimination and whistle blower reforms.  It is unclear whether the Governor supports the more limited bill dealing with only the whistle blower issues.

Under current law, employees may claim whistle blower protection even if they are alerting authorities to an action by the employer that is not illegal or in violation of regulations or public policy.  The bill would clarify that protection is available to employees, but only if the company is contemplating an action that would violate the law, regulations or public policy.

The hearing on the bills will be continued.

Second Worker’s Comp Bill with Second Injury Fund Fix Clears Missouri House

April 11 – The Missouri House today passed an AIM-supported bill to the Senate that will address two important issues in worker’s compensation and implement reforms for the Second Injury Fund.  CLICK HERE FOR THE RECORDED VOTE (Note: Page 1 is the vote on the “emergency clause” and Page 2 is the vote on the passage of the bill).

The bill, HB 1403, sponsored by Representative Dave Schatz, would prevent co-workers from suing each other in workplace accidents and continue to provide coverage for occupational diseases under the worker’s compensation system.  Recent court decisions have threatened to exclude occupational diseases from worker’s compensation coverage.  “Occupational diseases” include repetitive motion diseases and other conditions that develop over time, as contrasted with “workplace injuries” that are the result of a single event in the workplace.  While worker’s compensation has always covered occupational diseases, recently the courts have held that these diseases are not covered under the worker’s compensation system, leaving employees without coverage and employers with expensive legal bills when these cases are moved into the civil court system.

The bill also would reform Missouri’s failing Second Injury Fund by making sure the original injuries are work related, eliminating permanent partial disability cases that allow workers to be more than 100% “disabled” and still able to work, and denying benefits to incarcerated individuals and other common sense reforms.  The bill would also increase the surcharge cap to pay down some of the pending claims against the fund.  Employers may have to pay 9% interest on these claims, so all the business representatives endorsed a temporary increase in the surcharge to 4.5% next year and up to an additional 1.5%, if the latter increase is endorsed by a three-fourths vote of the Governor, Attorney General, President Pro Tem of the Senate, and Speaker of the House. The surcharge cap would return to 3% in 2020.

Governor Jay Nixon vetoed legislation earlier this year that would have fixed the two problems in worker’s compensation.  The bill now heads to the Missouri Senate for further deliberation.  Associated Industries of Missouri will continue to work on arriving at a compromise that will improve the situation for employers and secure either a signature by the Governor, or allow us to obtain the necessary votes to override a veto.