By: Laurie Knight, NBWA Executive Vice President, Government Affairs
As we head into the final stretch of the 114th Congress, the issue of funding the federal government is on the front burner. Current federal funding expires September 30, and lawmakers will have to determine the parameters and length of a continuing resolution. Our expectation is that there will be agreement on a continuing resolution that will carry into mid-December. The House is scheduled to adjourn at the end of September, and the Senate will stay in Washington through the first week of October. Neither chamber is expected to return until mid-December for the lame duck, year-end wrap up.
For the remainder of the year and into next year, NBWA’s legislative team will be focused on tax issues. In addition to our engagement on comprehensive tax reform, we will be working specifically on two proposed regulations that were recently released by the U.S. Department of the Treasury. One proposal pertains to estate, gift and generation-skipping taxes; and the other proposal would affect debt-equity and S corporations.
The first proposed regulation, which was released days after Congress left Washington for its summer recess, would increase valuations on family businesses that are transferred as part of an estate. NBWA has expressed concern to key congressional staff and is working with like-minded groups, including the Family Business Estate Tax Coalition, the U.S. Chamber of Commerce, the S Corporation Association and the Policy and Taxation Group, on a joint letter of opposition. Legislation to thwart the proposed rules is being considered.
The second proposed regulation that was released by the Department of the Treasury could potentially terminate S corporation status for some businesses. The regulation could recharacterize certain debt as equity, resulting in a second class of stock and triggering the termination of S corporation status. NBWA has met with key congressional leaders to discuss the negative impact this could have on S corporations and also weighed in with the Department of the Treasury.
As we look to 2017, tax reform is expected to be a front-and-center issue and will receive robust discussion. House Speaker Paul Ryan (R-WI), Ways and Means Committee Chairman Kevin Brady (R-TX) and Senate Finance Committee Chairman Orrin Hatch (R-UT) have all identified tax reform as a priority for 2017. Additionally, Chairman Brady has released a tax reform “blueprint” that could serve as a foundation for tax reform legislation. Under the proposed blueprint, the individual tax system would have three rate brackets – 12 percent, 25 percent and 33 percent. Income from pass-through business entities that is taxed on individual returns would pay a maximum rate of 25 percent.
The legislative activity on tax reform and other issues in 2017 will be predicated on the outcome of the November elections. Regardless of which party claims victory, NBWA will be well-positioned to work with Congress to ensure that members understand the contributions that beer distributors make to their communities, the jobs they provide and their overall impact on the economy.