Report of the MCAA Legislative Committee

Words: Charlie Rangel, Norm Coleman, Susan Collins, Max Baucus, Roy Beck

Three Percent Government Withholding Tax

Issue: The withholding requirement, added in the Conference Committee of the 2005 Reconciliation bill, without debate or inclusion in either the House or the Senate bills, is a sweeping mandate on federal, state and local governments to withhold 3 percent of payments for goods and services. The Congress saw this tax as one way to close the government's "tax gap" - the difference between the amount due to the Treasury in the form of tax payments and the amount actually received from taxpayers. The provision, effective in 2011, affects payments for goods and services under government contracts as well as payments to any person for a service or product provided to a government entity. In addition to the burden on business, this new tax is an unfunded mandate on state and local governments, because it does not provide funding for the collection and management of the tax. MCAA has opposed this withholding tax and has urged Members of Congress to support H.R. 1023, S. 2394 and S. 777 to repeal this tax.

Update: The Tax Collection Responsibility Act of 2007, introduced by Congressman Charlie Rangel (D-NY), Chairman of the House Ways and Means Committee, includes language that would delay the implementation of the 3 percent tax withholding requirement by one year. This legislation passed the House on October 10, 2007 and has been referred to the Senate Finance Committee where it has stalled. There are three other pieces of legislation that have been introduced to address the three percent withholding tax and the tax gap problem, H.R. 1023 (Meek and Herger), S.777 (Craig) and S. 2394 (Coleman and Collins). H.R. 1023 has 259 co-sponsors and is the lead legislation to repeal the three percent withholding tax. It has been referred to the House Committee on Ways and Means and has stalled at that point. Its Senate companion legislation S. 777 has fourteen co-sponsors and has been referred to the Committee on Finance where it has not had any movement. We have been diligently working on both of these pieces of legislation; however, with the costs of repealing this tax, it is difficult to find an offset in spending cuts. The tax will probably be handled on a year by year basis as we see happening with the annual AMT patch.

The Good Government Act of 2007 (S.777) was introduced by Senators Norm Coleman (R-MN) and Susan Collins (R-ME) in November of 2007. This legislation amends the Internal Revenue Code of 1986 to simplify, modernize, and improve public notice of and access to tax lien information by providing for a national, Internet accessible, filing system for Federal tax liens, and repeals the three percent withholding tax. This legislation has been referred to the Finance Committee with no further action.

Alternative Minimum Tax

Issue: The Individual Alternative Minimum Tax (AMT) operates parallel to the regular income tax, with different rates and definition of income and deductions. Although the AMT has historically applied to few taxpayers, the tax will grow rapidly over the next decade under current law. By 2010, the AMT will affect 33 million taxpayers - about one-third of all tax returns, up from 1 million in 1999. Last year, Congress approved a "patch" for the AMT. The patch increased the AMT exemption, which is basically a standard deduction for taxpayers hit by the alternative minimum tax. The masonry industry supports repeal of the AMT or appropriate indexing of the AMT to its original date of enactment or the date of enactment of the new AMT bill.

Update: The AMT was "patched" in 2007. Due to the amount of tax revenue from the AMT tax, it will be very difficult to ever completely repeal the AMT. It is extremely difficult to find another source of this much revenue or enough reduction in spending. Congress is currently considering a tax extenders bill that would bundle tax issues into one large bill, to be passed before the end of September. The tax extenders legislation is deadlocked because of a fight over revenue-raising offsets. Senator Max Baucus, Chairman of the Senate Finance Committee, recently announced that the tax extenders bill "must wait until lawmakers resolve the upcoming energy debate, which is scheduled to start in the Senate next week. Let's figure out the energy part first, then we'll see what we do with extenders," Baucus' extenders bill would revive a wide range of expiring and expired provisions, including a one-year "patch" to the alternative minimum tax to keep it from hitting more middle-income taxpayers.

Baucus said the AMT patch must be enacted by the end of this work period, because he does not expect Congress to return after the election. He anticipates the patch will become law without offsets, as it was last year. CQ, Fight over Extending Tax Breaks, AMT Heading Down to the Wire, by Richard Rubin, September 9, 2008.

Immigration Reform

Issue: Legislation has been introduced in both the House and Senate which focuses solely on employer sanctions and would mandate that employers use Social Security numbers to verify their entire workforce, both existing and new employees. The new legislation does not take into account the unreliability of the current system or the high rate of errors produced by the system. Furthermore, there are no requirements for the system to be properly tested or revamped before implementation. Under the new legislation employers would be required to re-verify their entire workforce within four years of enactment. This will be an enormous administrative burden on employers and employees, particularly small business owners.

The masonry industry supports a comprehensive approach that includes provisions to secure our nation's borders and creates a temporary guest worker program that meets the demand for labor and a process for addressing the undocumented currently employed in the U.S. We urge Congress to act quickly and decisively to address the ever growing problem and to pass a Comprehensive Reform package rather than piecemeal legislation which only addresses very few narrow components of the overall problem.

Update: Immigration reform has been a major issue over the past two years. In March, a dozen Republican senators introduced 15 enforcement-oriented immigration bills. This was the most sweeping effort to revive the immigration debate since the failure of last year's comprehensive legislation. Among the proposals are familiar initiatives, including one that would improve workplace screening procedures, and one identifying English as a national language. But there were fresh ideas as well, including a proposal by Sen. Arlen Specter, R-Pa, to streamline the deportation process for illegal immigrants convicted of violent crimes by increasing pressure on foreign governments. The push on the Senate side was Republican, and focuses on enforcement.

More recently, before the Republican and Democrat conventions, both parties were ducking the immigration issue. Even groups such as NumbersUSA didn't devote resources to pressuring convention attendees. Instead, "our plan is to continue to educate the American people on how the use of E-Verify offers business owners peace of mind, protects workers, saves taxpayers money and promotes competition," said Roy Beck, the group's president. CQ, Divisive Overhaul Stays Mostly Off the Radar, by Caitlin Webber, September 3, 2008.

The immigration calculus could conceivably change now that Sen. John McCain has become the GOP nominee. McCain had been a champion of comprehensive reform, but his campaign seemed to falter after the Senate bill died last year. More recently, McCain has said securing the border must be the top priority, but he has also maintained that an effective immigration policy must "recognize the importance of a flexible labor market" that provides immigrants with opportunity. CQ, Senate Republicans Unveil Broad Sweep of Immigration Measures, by Karoun Demirjian, March 5, 2008.

Nothing of substance will be done on immigration before the November election. You will more than likely see some form of a comprehensive immigration plan with either an Obama or McCain administration. McCain has been very active promoting a comprehensive plan. The following statement made by Senator Obama on the Senate floor, May 2007, gives insight into his immigration plan: "The time to fix our broken immigration system is now… We need stronger enforcement on the border and at the workplace… But for reform to work, we also must respond to what pulls people to America… Where we can reunite families, we should. Where we can bring in more foreign-born workers with the skills our economy needs, we should".

Estate Tax

Issue: Inheritance tax, estate tax and death tax are the names given to various taxes which arise on the death of an individual. The estate tax is a tax imposed on the transfer of the "taxable estate" of a deceased person. The masonry industry favors permanent repeal of the estate tax or the establishment of a reasonable exemption that gives employers and workers an opportunity to continue operations.

Update: Due to the costs of elimination to the federal government, in reduced revenues, it is highly unlikely that the estate tax will ever be completely repealed. This issue will have to be dealt with before it expires in 2010. Obama does not support extending the estate tax relief provided in the Bush tax cuts. McCain has abandoned Bush's plan to repeal all the estate taxes. McCain is proposing some estate taxes for the very rich. Even estate tax opponents, like Senator Chuck Grassley believe that McCain may have the more realistic position. These statements make complete repeal unlikely. CQ, GOP Looks to Uncertain Future on Tax Policy, By Richard Rubin, September 5, 2008.

Military Construction

Issue: The U.S. Army Corps of Engineers (USACE), faced with limited funding for military construction (MilCon) and charged with staying abreast of a rapidly transforming military, is favoring low initial cost construction. The masonry industry urges Congress to direct the Armed Services to incorporate life cycle cost and other durability considerations heavily into design and construction protocols. The masonry industry urges Congress to direct the Armed Services to incorporate life cycle cost and other durability considerations heavily into design and construction protocols. The present policy, particularly that of the Army Corps, of grossly undervalues life cycle cost and durability as criteria for awarding construction contracts. This policy is costing the government billions of dollars long-term.

Update: The Army, faced with a force structure transformation that is arguably more acute than the Navy's, has been hard at work developing MilCon requirements and practices to ensure that facilities and infrastructure keep pace. Consequently, the Army has embarked upon a policy of entrusting the construction, operation and maintenance of facilities that are supposed to last to civilian designers and contractors motivated to build cheaply. Conversely, the Navy has taken a more long-term view in its choice of materials. For example, it its Gulf Coast post-Katrina rebuild era, the Navy is rebuilding with a broad range of durable materials, including masonry, while the Army is choosing to rely upon modular/stick construction.

To have success on this issue we must continue to work with the applicable House and Senate Appropriations and Authorizations Committees, specifically the MilCon Subcommittees. The Appropriations Subcommittee Chairman and Ranking member on the House side are Chet Edwards (D-TX) and Ander Crenshaw (R-FL). The Appropriations Subcommittee on Military Construction, Veterans' Affairs, and Related Agencies Subcommittee Chairman and Ranking Member on the Senate side are Tim Johnson (D-SD) and Kay Bailey Hutchison (R-TX). We will work with the committee and personal staff of the members mentioned above to move MCAA's agenda forward.

National Energy Policy

Issue: Rapidly increasing oil prices are putting a huge strain on the U.S. industrial base, which in turn negatively affects the average consumer. This is forcing the U.S. to seek alternative forms of energy. Adequate, affordable and reliable supplies of energy - especially natural gas - are essential to the near and long term growth of the U.S. economy. The U.S. government can do much more to help conserve energy in business by using passive solar and other energy efficient technologies, as well as supporting other means of energy exploration.

Update: With gas prices hovering at nearly four dollars, energy is the top issue on American's minds. During the month of August, after the Democratic members of the House voted to adjourn for summer recess, the Republican Congressional members were present on the floor on a daily basis discussing energy issues. After much political maneuvering and policy discussion, the more liberal members on the Democrat side and Speaker Pelosi have begun working with Republicans to try to draft an energy bill acceptable to both sides of the aisle. This is a very difficult issue with most Republicans and at least forty-five moderate Democrats supporting off-shore drilling and a comprehensive energy plan. It is possible that an energy plan will pass the Congress during September. If Congress fails to pass an energy plan this year, in an Obama or McCain presidency, energy will be the top issue.

School Construction

Issue: According to the U.S. Department of Education's National Center for Education and Statistics (NCES), "three-quarters of schools reported needing to spend some money on repairs, renovations, and modernizations to put the school's onsite building into overall good condition." For those schools reporting to the NCES survey the average investment needed per school was about $2.2 million. The total amount needed nationally is approximately $127 billion.

Update: Congressman Charlie Rangel (D-NY) together with Congressman Jim Ramstad (R-MN) and Congressman Bob Ethridge (D-NC) has introduced bipartisan legislation titled, America's Better Classroom Act of 2007. The bill would provide approximately $25 billion in interest free bonds for school construction and renovation, has enjoyed broad bipartisan support in the past. In the Senate Senators Rockefeller. Harkin, Kerry, Conrad, Bingaman, Schumer. Johnson, Dodd, Levin, Boxer, Lautenberg, and Menendez have introduced and are co-sponsoring S. 912 America's Better Classroom Act.

The 21st Century Green High-Performing Public Schools Act, H.R. 3021, was introduced by Congressman Ben Chandler (D-KY) in July of last year and passed the House on June of 2008. H.R. 3021 approves $6.4 Billion a year for school construction. This bill increases spending for school construction by $20.3 billion dollars. After House passage, the bill has stalled in the Senate. MCAA will continue next Congress to focus on this legislation if it is not included as part of a larger bill passed at the end of the session.

Workplace Crystalline Silica

Issue: OSHA continues to designate issuing a workplace crystalline silica regulation as a top agency priority at a time when silica Personal Exposure Limits (PELS) is already in place. A new OSHA regulation will have negative economic and market use impact on the health of the masonry industry, affecting acquisition and handling of raw materials, manufacture and handling of the product, insurability, and installation. The masonry industry is concerned that OSHA may be following after bad science and political correctness. Bad science can be overcome with contravening studies, given time, money and a fair chance to air them, which, supposedly, the rulemaking process will enable. A rush into political correctness, however, can result in a misguided regulatory focus that can destroy the masonry industry and tens of thousands of jobs.

Update: Exposures to crystalline silica are addressed in specific standards for the general industry, shipyard employment, and the construction industry. The statement of need recently issued by the US Labor Department states: "Congress has included compensation of silicosis victims on Federal nuclear testing sites in the Energy Employees' Occupational Illness Compensation Program Act of 2000. There is a particular need for the Agency to modernize its exposure limits for construction and maritime workers, and to address some specific issues that will need to be resolved to propose a comprehensive standard." The Agency is currently evaluating several options for the scope of the rulemaking. The scope of the proposed rulemaking and estimates of the costs and benefits are still under development. We will continue to follow the rule making process at OSHA for crystalline silica regulations.

E-Verify

Issue: E-Verify (formerly the Basic Pilot/Employment Eligibility Verification Program) is an online system operated jointly by the Department of Homeland Security and the Social Security Administration (SSA). Participating employers can check the work status of new hires online by comparing information from an employee's I-9 form against SSA and Department of Homeland Security databases. More than 69,000 employers are enrolled in the program, with over 4 million queries run so far in fiscal year 2008.

Update: President Bush recently issued an executive order requiring all Federal contractors to use the E-Verify employment verification system once they enter into a contract with an Executive Department or Agency. This rule was proposed in June with a sixty-day comment period. After the comment period closed; the government began to considering comments received and addressing them in a final rule. The rule will not apply to existing federal contracts, only to new solicitations and contracts awarded after the effective date of the final rule. The final rule will probably be effective near the end of 2008 or beginning of 2009.

Report of the MCAA Legislative Committee

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Report of the MCAA Legislative Committee

About: FeaturedLegislative

Not-So-Boring Brick: Gadi House, India

MCAA Represents at 2025 North Carolina SkillsUSA Competition

The Cornerstone of Success: Safety and Documentation in Masonry

How It's Made: Natural Stone Veneer

About: Featured Legislative