Legislative Update: TIA Discusses Tax Credits, Trade War and More
While major bills such as health care and tax reform garner the most attention, lawmakers are discussing, debating and voting upon numerous proposals that affect businesses, including independent tire dealerships.
The Tire Industry Association (TIA) is advocating for the political interests of its members at both the federal and state levels. Here’s a rundown of some key proposals on the association’s radar, provided by Roy Littlefield IV, director of government affairs for TIA.
Taxing online sales
Online retailers have traditionally avoided collecting sales tax for items shipped outside of their home states. TIA is advocating for an even playing field where virtual sellers and brick-and-mortar stores pay the same taxes, according to Littlefield.
In June 2018, the U.S. Supreme Court ruled that states have broad authority to require online retailers to collect sales taxes, even if the merchant doesn’t have a physical presence in their state.
To make it easier for multi-state retailers to collect and remit sales taxes, Congress is considering legislation called the Marketplace Fairness Act.
Supporters say the proposed federal legislation would improve compliance with all local sales tax collection laws.
“We support the Marketplace Fairness Act,” says Littlefield. “A lot of online retailers are avoiding the sales tax when they sell in different states because there’s no system set up for collecting those taxes.”
TIA’s lobbying efforts involve letting members of Congress know the importance of a uniform system for taxing online purchases.
“This legislation is necessary to clear up confusion and make it fair for the brick-and-mortar stores that are paying taxes and supporting local communities,” he says. “We want an even playing field where everyone’s paying the same taxes on products, and no one online is avoiding those taxes.”
The Online Sales Simplicity and Small Business Relief Act of 2019 also was recently introduced. TIA is gathering feedback from members before taking a position on the bill.
The current highway funding bill expires in September 2020. Congress has several legislative options to fund the nation’s surface transportation programs. More than 40 proposals are under consideration. One of these is the bipartisan America’s Transportation Infrastructure Act of 2019 (ATIA).
The ATIA bill authorizes $287 billion in surface transportation spending over five years, up 27% over current funding levels.
No taxes have been raised under this bill. The additional revenue would come from the General Fund.
Littlefield says President Donald Trump has proposed a major infrastructure/jobs bill to the level of $1.5 trillion to $2.5 trillion, with money raised from the highway community via raising existing taxes, increased tolling, and large scale privatization of federal highways.
“So far, all funding proposals for the wide-ranging infrastructure proposal focus on the highway users community,” says Littlefield. “Only a small percentage of these new funds would go to highways.”
The proposals range from putting the federal excise tax back on tread rubber and on passenger tires to a weight-distance tax on motor carriers. “Some of those proposals would be hard on our industry. We’re lobbying Congress to let them know the negative impact,” says Littlefield.
TIA is supporting the America Transportation Act as it is moving through Congress.
“We support the goals of the president’s infrastructure proposal,” says Littlefield, “but we oppose raising all industry taxes, raising significantly the federal motor fuel taxes, and privatizing the majority of the federal highways.”
Extending work tax credits
Among the tax credits available to businesses, one of the most important to independent tire dealerships is the Work Opportunity Tax Credit, or WOTC, for short.
The WOTC, which is set to expire at the end of 2019, provides business owners with a tax credit for hiring veterans or disabled people. “The WOTC has helped employ veterans who have had trouble finding a job. We have many tire dealers who have hired veterans and have taken advantage of this tax credit,” says Littlefield.
TIA is hopeful an agreement to extend the program will be reached in December.
Ongoing trade war
International trade tensions, especially the U.S. retaliatory tariffs on Chinese imports, are affecting all TIA members, according to Littlefield. “It seems like every day there are changes,” he says. “It’s up and down (on) what’s being tariffed and what’s not. It makes it very hard for a business owner to plan for the future.”
TIA has arranged for members to give testimony on the impact of tire tariffs to the International Trade Commission and the Federal Trade Commission. The association has also brought members to give testimony at all tire tariff hearings.
“We hear from members on both sides and the struggles they’re having. We want to assist and provide whatever resources and advice we can. But as an association, we haven’t been able to come out with a position on the tariffs.”
Tariffs levied on auto parts may be the exception, he notes. “I think we are going to look at some of these auto part tariffs. There seems to be a lot of consensus that auto part tariffs are driving up prices across the board, and everyone’s pretty much suffering with that.” ■
To stay current with proposals that lawmakers are considering, Littlefield recommends checking updates on federal and state legislation at TIA’s website, www.tireindustry.org.