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Catherine Treadwell Perry, J.D., Director of Government Relations
|LIFO Could Be Used as a "Pay For" for Medicare for All!
Last week, ASA Advocacy was on The Hill meeting with the offices of Congressman Kevin Brady (R-TX-8) and Congressman Devin Nunes (R-CA-22) pertaining to LIFO. ASA is part of the LIFO Coalition and we are gearing up our efforts due to Senator Bernie Sanders (I-VT) attempting to use LIFO as a “pay for” for Medicare for All. This would essentially mean that LIFO would be repealed and for those ASA members who use LIFO, this would mean they would have to invest in a completely different inventory accounting system.
ASA Advocacy has taken the lead with the coalition to meet with all of the members of Congress who sit on the House Ways and Means Committee and Senate Finance Committee, both republican and democrat. Our first two meetings were with Congressman Kevin Brady (R-TX-8) who is the Ranking Member of the Ways and Means Committee and Congressman Devin Nunes (R-CA-22). Our next meetings will be with Congressman Tom Reed (R-NY-23, Congresswoman Jackie Walorski (R-IN-2), Congressman George Holding (R-NC-2), Congressman Darin LaHood (R-IL-18), and Congressman David Schweikert (R-AZ-6).
Our focus is educate members of Congress on the importance of LIFO for ASA members, such as the way LIFO works, small business dependency, repeal would slow the economy, cost jobs, and reduce revenue prospectively, also LIFO repeal would be retroactive!
LIFO is designed to react to price fluctuation. It has a built in “toggle switch” that triggers tax when prices go down. The benefit from LIFO is recaptured when the taxpayer’s inventory levels decline, prices fall, or the taxpayer goes out of business.
Small businesses that operate on tighter margins particularly rely on LIFO to ensure their ability to maintain inventory levels. Repeal of LIFO could force many of them into deny not only to pay the recapture tax, but to replenish inventory- a backward spiral that will put them in a position of always trying to play catch up. Some may even be forced to go out of business.
LIFO repeal would slow the economy, cost jobs, and reduce revenue prospectively. The economic dislocation that repeal of LIFO would cause would more than offset any new Federal revenue. A Tax Revenue Study released in February, 2016, found that repeal of LIFO would reduce GDP by $116 billion per year, reduce federal revenue by $518 million annually, and cause the loss of an many as 50,300 jobs.
LIFO repeal would require the retroactive recapture of all LIFO related deductions that have been taken by LIFO taxpayers, sometimes over many decades. Under current law this recapture tax is paid only when the company reduces its inventory levels, experiences deflation, or goes out of business. To impose that tax in the absence of any of those triggering events would retroactively change the rules of LIFO taxpayers.
While repeal has been discussed for nearly a decade, no factually accurate substantive argument for repeal has been made. Rather, LIFO repeal has been proposed to generate revenue to fund other programs or tax cuts. This is why ASA Advocacy is on The Hill educating member of Congress and advocating for ASA members who use LIFO as a means of an inventory accounting system.
- House Majority Leader Kevin McCarthy (R-Calif.) said lawmakers and officials from both parties were "further apart" after a nearly 90-minute meeting about striking a deal to fund the government after funding expires on Oct. 1. Treasury Secretary Steve Mnuchin said the Trump administration was prepared to extend current funding and raise the debt ceiling for one year, a move Democrats view as a last-ditch option. (The Wall Street Journal)
- The Senate Appropriations Committee voted 30-1 to approve a $4.6 billion bill to respond to the influx of migrants at the U.S.-Mexico border, with only Sen. Jeff Merkley (D-Ore.) in opposition. Senate Majority Leader Mitch McConnell (R-Ky.) has said he will bring up the legislation next week, though it's less certain if the House will bring up and pass a similar funding boost. (Politico)
- Former Vice President Joe Biden refused to apologize for citing two Southern segregationists as people he "got things done" with in the Senate, responding to remarks from several of his 2020 Democratic rivals who criticized him for speaking fondly of working with segregationists. "There's not a racist bone in my body," Biden told reporters in Washington. (Politico)
- A new rule from the White House will allow employers to back out of providing health insurance for their workers and instead give them the option to use tax-free health reimbursement arrangements to purchase their own health plans in the individual market. According to the administration, the expansion of these accounts is targeted at small or mid-sized businesses grappling with high costs of premiums.
- Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.) unveiled legislation to bring down the cost of health care and address surprise medical bills by setting a federal benchmark linked to the median in-network rate for an area, a strategy opposed by providers. The pair of senators, who lead the Senate Health, Education, Labor and Pensions Committee, are hoping to mark up the plan next week. (Politico)
- Senate Finance Committee Chairman Chuck Grassley (R-Iowa) said he opposes the Trump administration's plan to lower the cost of prescription drugs by tying Medicare prices to prices in other countries. Grassley had long held off on commenting on the International Pricing Index, and his opposition - paired with that of the pharmaceutical lobby - sets up an uphill battle for the administration as it attempts to move this policy forward. (The Hill)
- In a statement, House Speaker Nancy Pelosi (D-Calif.) said the Democrats will "fight relentlessly" against President Donald Trump's plans to repeal and replace the Affordable Care Act. Pelosi referenced the Trump administration's backing of the Texas-led lawsuit aiming to dismantle the ACA, taking with it protections for people with pre-existing conditions. (The Hill)
- The Federal Reserve kept interest rates steady but signaled that it could cut rates later this year, the central bank said in a statement following its policy-setting meeting, one day after President Donald Trump suggested he might try and remove Fed Chairman Jerome Powell. The Fed dropped the word "patient" from its statement, suggesting that a rate cut could be coming, and said that uncertainties have increased around the central bank's current outlook of an expanding U.S. economy. (Politico)
- The Environmental Protection Agency released its final rule to replace the Clean Power Plan, the first among many anticipated regulatory actions this year to curb EPA regulatory control. The new rule removes carbon emission reduction targets set under President Barack Obama, replacing them with guidelines on how states may make their power plants more efficient. (Politico)
- The Minnesota Pollution Control Agency and Department of Natural Resources said they will wait to decide on permits for Enbridge Inc.'s $2.6 billion Line 3 pipeline project until the state Public Utilities Commission fixes problems identified by a state appeals court of its environmental analysis for the project. The replacement pipeline is intended to take crude oil from Alberta to Superior, Wis. (The Associated Press)
- The Senate Environment and Public Works Committee is set for a June 19 mark-up of legislation that would direct the Environmental Protection Agency to set standards for toxic per- and polyfluoroalkyl substances within two years, according to aides and lobbyists. A copy of the bill showed that under the measure, water utilities would have five years to comply with those standards. (Bloomberg BNA)
- The United States and China are reviving the trade talks that broke down last month after American officials accused Beijing of backing down from previous commitments. Trump said both sides would begin preparations for a meeting between himself and Chinese President Xi Jinping next week at the G-20 summit in Osaka. (Reuters)
- Lead in Drinking Water Bill Clears Committee. This week, the Senate Environment and Public Works Committee (EPW) unanimously voted to advance legislation that could help communities across the country remove lead from drinking water. Specifically, the Water Infrastructure Funding Transfer Bill would give states facing public health crises from lead in drinking water the flexibility to make a one-time transfer of a portion of their available funds from their Clean Water State Revolving Fund to their Drinking Water State Revolving Fund for projects that will remove lead from drinking water. The legislation was originally introduced in May 2019 by U.S. Senator Cory Booker (D-NJ). This an issue that currently hits close to home in New Jersey. The state already has transferred the maximum amount it can from its clean water fund to its drinking water fund. There is still more money that could be transferred, but there are currently limits under federal law, Booker said. More than 1.4 million state residents currently drink water from one of the state’s 35 systems with high levels of lead. Newark officials in May began using a new chemical to address high levels of lead in the drinking water of its residents and those of nearby towns. And in March, the water utility serving customers in dozens of Bergen and Hudson municipalities reported that they might have elevated lead levels. (The IAPMO Group Washington Update—June 21, 2019)
- House and Senate are in session.
- Monday- ASA Advocacy is meeting with the offices of Congressman Glenn Thompson (R-PA-15) and Congressman Jim Langevin (D-RI-2)pertaining to workforce development and infrastructure.
- Tuesday, ASA Advocacy is meeting with the White House pertaining to workforce development.
| || NEWS FROM STATE AND LOCAL |
Update on State Bills Being Tracked
Wisconsin (AB 56) - creates a revenue limit adjustment for a school district that incurs costs to remediate lead contamination in drinking water in the school district, including costs to test for the presence of lead in drinking water, to provide safe drinking water, and to replace lead pipe water service lines to school buildings in the school district. Bill referred to Committee on Rules and made a special order of business at 10:01 AM on 6-25-2019
Michigan (HB 4743) - Veterans; veterans' homes; testing of water for lead at veterans' facilities established under the Michigan veterans' facility authority act; require. Amends 2016 PA 560 (MCL 36.101 - 36.112) by adding sec. 6a.
Michigan (HB 4750) - Water; quality; lead service line; require disclosure of by water suppliers to customers and by landlords to tenants. Amends sec. 21 of 1976 PA 399 (MCL 325.1021) & adds sec. 19d.
Michigan (HB4744) - water; quality; program for testing and removing lead in drinking water used by vulnerable population centers; provide for. Amends sec. 2 of 1976 PA 399 (MCL 325.1002) & adds sec. 7
New State Activity
New Jersey (S3965) - Requires DEP, DOH, DCA, owners or operators of public water systems, and owners or operators of certain buildings to take certain actions to prevent and control cases of Legionnaires' disease.
New Jersey (S3973) - Allows gross income tax deduction for amounts paid for lead or asbestos hazard abatement in taxpayer's primary residence.
A House committee approved a package of bills that provide tax breaks for a variety of select industries and constituencies, kicking off what’s likely to be a protracted negotiation with Senate Republicans over whether and how to pay for them. The bills include dozens of breaks for specific industries, including biodiesel producers, wind-energy farmers, and beer and wine distillers.
The House Ways and Means Committee recently advanced Democratic legislation to extend expired and expiring tax breaks and to expand tax credits that benefit workers and families. The committee passed by a party-line vote of 25-17 a bill to extend through 2020 a host of tax breaks that expired in 2017 and 2018 or will expire at the end of 2019.
The Wall Street Journal
Lawmakers are attempting to impose structure on tax breaks for disaster victims, seeking an end to a haphazard process that often leads to uneven results and leaves some people waiting years for relief. The list of storms that caused financial damage to households has grown since Congress last completed a disaster tax bill, and breaks for disasters in 2018 and 2019, including Hurricane Florence in the Carolinas and flooding in Nebraska, are stalled.
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