Tag: missouri

“Fake news” or unfair reporting?

By Ray McCarty, President and CEO, Associated Industries of Missouri

We received a call Tuesday, August 1, from a CBS Evening News producer wanting to do a story on Senate Bill 43, the employment law reform bill we helped pass in the last legislative session. Specifically, the producer said the story was on the NAACP’s travel advisory.

We agreed to be interviewed by them and they brought a very professional crew into our offices. Ms. Jericka Duncan, an Emmy-nominated CBS News correspondent from New York interviewed me about the bill. She could not have been more professional in her questions and we answered all her questions during the interview.

I emphasized throughout the interview that SB 43 had nothing to do with travel through Missouri and we were curious as to why the NAACP had issued the travel ban. The bill affects only the relationship between employers and their employees and institutes the same standards used in Missouri prior to a 2007 Missouri Supreme Court decision. The bill also uses the same standard used in federal discrimination cases in Missouri and in state courts in many other states. We also explained the caps on damages contained in the bill were very similar to caps on damages in discrimination cases brought under federal law. And the fact the sponsor had filed this bill years before any discrimination charges were ever levied against his business.

Throughout the interview, we gave a reasonable assessment of the bill and its true impact: to reduce frivolous discrimination lawsuits against employers by requiring the plaintiff prove discrimination motivated whatever action was at issue. The bill was necessary because of the Missouri Supreme Court’s previous interpretations that a plaintiff show discrimination was only a “contributing factor” in the employer’s action, shifting the burden of proof to the employer to prove themselves innocent. We explained this bill restores the “innocent until proven guilty” protection for innocent employers and continues to allow those that are truly discriminating against employees to be punished.

We watched as the interview was properly uploaded to New York and was acknowledged as received. The producer explained the story may run later that same day on the CBS Evening News, or perhaps the following morning. Altogether, we spent a couple of hours with the correspondent and crew.

I watched the story on the CBS Evening News that evening, which you may also watch here.  I was surprised that despite our lengthy interview explaining why travelers through Missouri were not affected by the bill, only the NAACP’s views were carried in the two taped interviews they ran in the program: Nimrod Chapel, Jr., president of the Missouri NAACP (and a plaintiff’s attorney that sues businesses); and Pat Rowe Kerr, who recently won a discrimination lawsuit against the state of Missouri. Only one sentence at the end of the article carried our point of view, a brief mention that Governor Greitens said the bill would implement the same standard used by the EEOC in evaluating federal discrimination claims.

Later Tuesday, I received a message from the producer that the story had been bumped for the following morning so they would not be using the footage they shot at our location.

Of course, we have been interviewed by many in the news media before and I am very aware that only a minute or less of the footage is usually used out of an hour long interview. I have resisted writing about this for fear it may look self-serving, so let me be very clear: I don’t care whether they used the footage or not, but it would have been a fair, balanced story if they had at least used the points I made in our lengthy interview. But that did not happen.

No wonder people cannot believe the media version of events. Good journalism should provide balance in a story. We provided the facts, and they were ignored. This is another example of how viewers’ attitudes about subjects are often affected by the news media – and why it is important for all of us as viewers to ask ourselves if what we are viewing is the whole story.

For the record, SB 43 does nothing to impact travel in the State of Missouri. If you would like to read the new law, you may click here for the full text and read it for yourself. The bold language is new language that is added to the law in the bill and language in brackets is deleted by the bill. The law revision is effective August 28, 2017.

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.”

Senate debates tax cut, but corporation tax cut not part of conversation

This week, we saw some activity on SCS SB 509 & 496, a tax cut bill in the Missouri Senate.

This bill, as approved by the Senate Ways and Means Committee, was a combination of Senator Eric Schmitt’s SB 496 that contained AIM’s business income deduction for flow-through entities and Senator Will Kraus’ SB 509 (originally a 1% cut in individual income tax plus 50% business income deduction over 10 years of $100m+ growth, exemption of first $25,000 of C corporation income, additional personal exemption for individuals with less than $20,000 in MAGI).

Following a long pause in activity Senator Kraus again brought the bill before the full Senate for debate on March 5.

Senator Kraus offered a substitute bill that contained many of Governor Nixon’s requirements for a tax bill that were detailed in a recent press release.  Sen. Kraus added a flow-through business income deduction that would be effective only if tax credit limits were placed on low income housing and historic preservation tax credits.

The first part of the tax cut requires a growth of $200 million over the highest amount of General Revenue collected over the previous three years and full funding of the education foundation formula.  The tax cut would be for individual income tax only and would be a .25% rate cut.

If the tax credits are capped (low income at $110m and historic at $90m), the individual income tax rate would be further reduced by .15% (for a total reduction of .4%) and a business income deduction would be allowed for the first $100,000 in income from specific lines on individual returns.  The bill did not actually cap the tax credits.

Neither would affect the corporation income tax rates at all.

There was much debate and little consensus on the plan.  Some Democrat senators argued against the idea of cutting taxes and argued the state needed all the money it could get. Another Democrat senator denounced the governor’s demands and declared, “He is not the 35th Senator.”

Some Republicans did not appear to be supportive of the plan either. Senator Schmitt took issue with many of the governor’s requirements that were included in Kraus’ substitute bill, while Senator Schaefer argued that the Senate should not include any contingency requirements at all.  Here is a link to a video of Senator Schaefer’s statement.

Eventually, Senator Schmitt offered an amendment to the bill that would move the top individual income tax rate bracket down from $9,000 in taxable income to $8,000 and lower the top rate to 5.5% from the current 6%, effective with the 2015 tax year. The amendment would further reduce the rate beginning in tax year 2016 if the general revenue collections exceed the highest collections of the previous 3 years by at least $100 million.  The amount of the cut would be dependent on the amount of the increased revenues.  The rate would be cut 1/10% for each $100 million in excess revenue. The lowest the top rate would be 5% under this amendment.

Then, Senator Schmitt assured he would have control over the bill by filing an amendment to this amendment.  Under the rules of the Senate, he now controls the bill until his amendment to the amendment, or the underlying substitute, is acted upon or withdrawn.  The amendment to the amendment would use the same methodology, but would allow the top rate to be reduced to 4% over a period of time.

Senator Kraus placed the bill on the informal calendar.  It may be taken up again at any time. You may see copies of the actual language of the Senate Substitute and the two amendments by Senator Schmitt by clicking here.

Also, Senator Kraus posted a committee hearing for another tax bill he sponsored, SB 858, for Thursday, March 13, at 8:30 a.m.  This bill would be submitted to a vote of the people, bypassing the Governor.  This bill contains a 1% cut to the individual rate over 10 years of $100 million growth in GR and a 50% business income deduction over five years of such growth, along with an additional exemption for MAGI less than $20,000.  No corporation tax relief is included in this bill.

Be sure to listen to our Monday morning legislative webinars for more information on this and other hot issues affecting your business.  If you are not yet registered for those webinars, contact Dick Aldrich at daldrich@aimo.com or by calling 573-634-2246. They are free to AIM members, but you must be an AIM member to participate.

AIM supports Lager’s plan to allow voters to impose spending limit

In what has become an annual exercise in futility, Associated Industries of Missouri once again testified in support of a joint resolution, sponsored by Sen. Brad Lager (R-12, Savannah), that would allow voters to decide if they want to impose a spending limit on the Missouri General Assembly.

The measure would establish a limit on state appropriations equal to the amount appropriated in the previous year plus any increase in inflation plus any increase in population, if revenues exceed the amount that is able to be spent, money would be deposited in a “savings” account called the cash operating reserve fund.  Also, the resolution would require 7% of general revenue to be appropriated into another savings account called the budget reserve fund.  Revenues in excess of the amount needed to ensure the balance in the cash operating reserve fund is at least 5% of the amount of general revenue collected, would be used to provide a reduction in income taxes.

“Every year this has been proposed, we support this measure that would force the state to put some money back for a rainy day and provide tax relief to taxpayers if revenues exceed our needs,” said Ray McCarty. “We believe we are spending enough of the taxpayers’ money on state services now and we allow them to grow for increases in price and the number of people in the state.  This bill would allow taxpayers to stop unbridled growth in state spending and keep more of THEIR money,” said McCarty.

SJR 26  was supported by Associated Industries of Missouri and Americans for Prosperity.  The joint resolution was opposed by some of the same groups that have consistently opposed our tax reduction plans for the last several years: the Civic Council of Greater Kansas City, the Missouri NEA, and the Missouri Budget Project.

If passed by the Missouri Senate and Missouri House, the resolution would bypass the governor and go straight to the voters in November, 2014.

Missouri/Kansas Border War – “Truce” bill may be unconstitutional

January 3, 2014 – Much has been written about the so-called “border war” between Missouri and Kansas, and whether or not tax incentives should be used to attract businesses from one state to the other.  The conversation often involves incentives in the Kansas City metropolitan area, where only State Line Road divides the two states.

Political leaders and economic development officials on the Missouri side of the border have called for an end to such incentives.  Kansas Governor Brownback has recently indicated he may be willing to engage in discussions calling a truce in the border war.  Missouri Governor Nixon in a recent speech decried incentives that are used to simply move jobs across the state line and pledged to support legislation to end the use of incentives, if Kansas will do the same.

A little over a year ago, Governor Brownback made it clear in an interview with KMBC-TV that his successful effort to reform income taxes in Kansas were not on the table for discussion in any truce, but he left the door open to discuss special incentives.

Last session, Associated Industries of Missouri worked hard to pass a broad-based tax cut bill that would have helped every Missouri taxpayer, including all employer taxpayers in Missouri.  That bill, HB 253 sponsored by Rep. T.J. Berry (R-38, Kearney), was vetoed by Governor Nixon and the Missouri House of Representatives failed to override his veto.  As a result, Missouri does not have a tax structure that is able to compete with the reformed Kansas tax system, especially when it comes to high growth, highly profitable small and mid-sized employers who pay no Kansas income taxes.

Senator Ryan Silvey (R-Kansas City) filed SB 635 to be considered in the 2014 Missouri legislative session that starts Wednesday.  The bill seeks to codify the truce in Missouri law, contingent on passage of a similar law in Kansas.   The bill would deny tax incentives to employers that move jobs from four border counties in Kansas to any of four border counties in Missouri.  Employers moving the same types of jobs from another county in Kansas or anywhere else to Missouri would still be eligible for benefits, but those moving from the Kansas counties of Douglas, Johnson, Miami or Wyandotte would be barred from receiving incentives for those jobs.

The effect of the law will be to deny a tax benefit to employers moving from these counties to Missouri, while allowing similarly situated employers moving from other locations to enjoy the benefit.

Many question the goal of such legislation.  Is it a good idea to lay down your arms when you are losing a battle?  Assuming this is a good idea, is it constitutional?  Can a law be enacted that denies a tax benefit to some out-of-state employers while giving tax breaks to competitors moving from other areas?  Wouldn’t such a law be discriminatory?

To find the answers, I turned to the AIM Tax Committee.  The AIM Tax Committee is comprised of more than 100 of the finest tax practitioners, tax lawyers, and accountants in Missouri.  It turns out many believe such a law would have constitutional problems and could be voided by the courts.

Members of the AIM Tax Committee that responded to the inquiry overwhelmingly agreed such a law would raise serious constitutional questions, especially with regard to the Commerce Clause or constitutional provisions guaranteeing equal protection.  The Equal Protection Clause is part of the Fourteenth Amendment to the United States Constitution. The clause, which took effect in 1868, provides that no state shall deny to any person within its jurisdiction the equal protection of the laws. The Commerce Clause, found in  Article I, Section 8, Clause 3 of the United States Constitution states,”[The Congress shall have Power] To regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes.”

Prominent tax attorney and former Missouri Director of Revenue Janette Lohman with the law firm of Thompson Coburn LLP responded the law “…might be facially void under the Commerce Clause.”  She continues, “Accordingly, it might even be a violation of the Missouri Constitution, Article X, Section 3, because they would not be treating similarly situated taxpayers in the same manner.  That is, a company that relocated here from Illinois could qualify but a company that relocated here from one of the four counties in Kansas could not?”

Jeffrey Dardick, State and Local Tax Partner at PricewaterhouseCoopers agreed with Lohman.  In a detailed response, Dardick analyzed recent court cases involving state laws that allegedly violated the Commerce Clause of the United States Constitution.    The “negative” or “dormant” Commerce Clause implicitly limits a state’s right to tax interstate commerce, according to a ruling issued by the U.S. Court of Appeals for the Sixth Circuit in Cuno v. DaimlerChrysler, Inc.  In that case, the Court ruled “discrimination” means differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter.  You may read Dardick’s full analysis and summaries of several interesting cases by clicking here.

Kevin Boyer, Partner at Ernst and Young, questions whether the law would be found to be in violation of the Commerce Clause.  “In this situation, the state’s taxing methodology is not changing based on where a company is located, just the amount of incentives available are changing, and I’m not sure that can be challenged under the Commerce Clause,” said Boyer.

Ray McCarty, president of Associated Industries of Missouri said, “At Associated Industries of Missouri, we believe we should use all tools at our disposal to attract and retain quality Missouri employers and the jobs they create.  We believe the best solution is a taxpayer-friendly tax structure that benefits all existing employers as well as the new ones we want to attract.”  One AIM Tax Committee member put it this way: “Business relocation is based on a variety of issues. Immediate tax incentives are just part of that. The long term tax structure is also a large part of that decision.”

As to whether the concept of a truce is worth pursuing, another member said, “I think Missouri would welcome a western Illinois business relocating to St. Louis.  I can’t imagine why the western side of the state would be offended by a relocation from eastern Kansas.”  And one member from a prominent accounting firm in the Kansas City area said, “As someone who is in the trenches of this situation, I find this bill silly as well.  I think Missouri is pushing for this because they continue to lose out to Kansas and have for years.”

Any tax professional employed by any AIM member company may be a part of AIM’s Tax Committee.  The goal of the group is to share ideas, stay informed on all issues affecting employer tax liability, and to weigh in on new issues.  We conduct regular meetings with state tax officials to resolve problems quickly and before they become major problems.  To join AIM’s tax committee, contact Ray McCarty at 573-634-2246 or send an email to rmccarty@aimo.com indicating your interest in joining the tax committee.

Employer Representatives Send Letter on Workers’ Compensation/Second Injury Fund

LETTER TO HOUSE LEADERS:

The organizations listed below represent many Missouri employers.  On behalf of these employers, we respectfully request that HCS SS#2 SCS Senate Bill 1 be returned to the committee of origin for further amendment.

Because of the haste with which the House Committee on Workforce Development and Workplace Safety acted upon this House Committee Substitute, there was no opportunity to offer constructive amendments that could have resulted in a workable bill.  As written, there are so many changes necessary to this bill there is no practical way to craft the bill in an acceptable form through the amendment process during House floor debate on the bill.  The Substitute in its current form is unacceptable for many reasons, some of which are as follows:

The bill as currently drafted levies a tax increase on Missouri employers in the form of a surcharge to pay large amounts to workers that contract diseases from exposure to toxic substances, even if the employer has never exposed employees to toxic substances. These enhanced remedies and this tax increase must be removed from the bill;

While creating a second fund is a bad idea, the exemption of employers with fewer than 15 employees from this new tax creates several concerns.  The term, “employees” is not defined.  Ironically, employers with fewer than 15 employees that have exposed employees to toxic substances may be excused from all liability, while employers with more than 15 employees that have never exposed employees to a toxic substance would be liable for the additional tax;

The limitation on the surcharge to support the “Toxic Disease Fund” is likely to prove insufficient to meet obligations of the Fund in future years after plaintiff’s attorneys advertise and fully exploit the enhanced remedy provided for the listed toxic exposure diseases.  We do not believe it is responsible to create another fund that is likely to require additional employer tax increases in the future;

The language of subsection 6 of section 287.715 must be modified.  As currently drafted, the language implies the legislature intends to fully fund the Second Injury Fund.  The language may lead to misinterpretation by the judicial branch that may view the language as a commitment by the legislature to ensure adequate funding of the Second Injury Fund irregardless of the surcharge cap contained in that subsection;

Section 287.220, subsection 3 must be redrafted, particularly subdivision (1) (a) c of that subsection, as the current language would allow many cases that are currently accessing the Second Injury Fund to continue to be paid from the Fund.  Previous conditions that have nothing to do with work, such as obesity and diabetes, could meet the criteria provided in this subdivision, allowing those claims to continue to be paid from the Second Injury Fund.  Employers are willing to increase the amount they pay for this Fund, but only if the Fund is appropriately reformed and this provision defeats that purpose;

Subrogation language in section 287.150, subsection 7, is verbose and ambiguous and includes provisions of comparative fault that are not necessary.  We have substitute language that should be considered by the Committee;

Sections 287.955 and 287.957 are new to the bill and have nothing to do with Second Injury Fund or occupational disease coverage, which was the original subject of the bill.  This new language involves rating methodologies used to set workers’ compensation rates.  The language needs to be fully explained and reviewed as this was not considered in a public forum by the Committee and there has been no opportunity for the Committee to hear testimony in support or opposition to these provisions.

Thank you for your consideration and please let us know if you have any questions.

Sincerely,

Jack Atterberry, Associated General Contractors of Missouri, Inc.

Ray McCarty, Associated Industries of Missouri

Dan Shaul, Missouri Grocers Association

Tim Phelps, Missouri Merchants & Manufacturers Association

David Overfelt, Missouri Retailers Association

Mike Winter, Missouri Self Insurers Association

Brad Jones, National Federation of Independent Business

John Bryan, The Poultry Federation

 

AIM: “Transformation must be part of Medicaid expansion bill”

AIM President Ray McCarty testified this week before the Senate Appropriations Committee on SB 349, a bill sponsored by Senator Paul LeVota (D-Independence) that would expand Missouri’s Medicaid program, Mo HealthNet.

McCarty testified that Associated Industries of Missouri only supports Medicaid expansion if it is combined with or preceded by transformation of the Mo HealthNet system.  “The current system is inefficient and results in duplicated services, waste, fraud and abuse,” said McCarty. ” The Missouri Senate should take this opportunity to transform the Mo HealthNet system into one that uses the taxpayers’ money more wisely.”  SB 349 contains no such reforms, but McCarty suggested reforms should be added to the bill by the Senate.  McCarty was asked by Senator David Pearce (R-Warrensburg) whether HB 700 provided a framework for such reforms.  McCarty responded that bill could provide a basis for more thorough review and transformation of the system.

The Senate Appropriations Committee voted NOT to advance SB 349.   The “Affordable Care Act” or “Obamacare” drastically reduces payments to hospitals and other health care providers that currently help offset the costs of care when patients fail to pay for services.  If Missouri fails to enact Medicaid expansion, Missourians with insurance will pay higher premiums and healthcare costs.

Pro Food Systems Expanding…Again!

AIM member Pro Food Systems, Inc., the parent company of Champs Chicken, is expanding again.  Shawn Burcham, president and CEO of Pro Foods, tells their story in a great article that appeared in the December 1 edition of the Columbia Daily Tribune.  Click here to view the article.

Pro Food Systems, Inc., the parent company of Champs Chicken, is a program-oriented wholesale food and equipment company specializing in complete deli operations. They provide layout assistance, installation, training, marketing support, service on equipment, and complete distribution to their customers’ stores. They work predominately with convenience stores, supermarkets, and stand alone operations helping retailers establish and operate profitable food outlets. Pro Foods’ cornerstone is the CHAMPS CHICKEN branded program.

Check out the Pro Food Systems, Inc. website at http://www.champschicken.com for more information.

Nixon Appoints New Director of Revenue: Brian Long

Governor Nixon has named a former budget director under the Holden Administration the new Director of Revenue.  Brian Long replaces Alana Barragan-Scott will now be an Administrative Law Judge.