TRADE AND TARIFFS
According to the U.S. Chamber of Commerce, American businesses and consumers are already feeling the negative impact of tariffs. Tariffs on steel, aluminum, and Chinese imports, and the potential for additional tariffs on autos and auto parts, have pushed the U.S. into a global trade war. As described by the U.S. Chamber, “Millions of U.S. jobs depend on America’s ability to trade with other countries. Half of all U.S. manufacturing jobs depend on exports, and one in three acres of American farmland is planted for international sales . . . tariffs will threaten as many as 2.6 million American jobs and stymie our economic progress.” Based on current economic reports, tariffs are causing very significant to extremely significant damage to businesses in over 37 states.
The current Administration’s tariff policies are hurting the foodservice equipment industry by raising the cost of materials and components, leading to higher manufacturing prices and smaller profit margins. Further, tariffs are endangering established supplier relationships and may force businesses to restructure supply chains at great cost. In some cases, there are no equivalent American suppliers for specific components, meaning there is no way for companies to avoid the added expense tariffs impose. We don’t believe tariffs aid American businesses.
FEDA supports the United States-Mexico-Canada Agreement (USMCA) and opposes the current tariffs on steel, aluminum, Chinese imports, and any additional tariffs on autos and auto parts.
While an updated and efficient transportation system is necessary to help businesses be competitive and thrive, Congress needs to approve an infrastructure funding bill. The Highway Trust Fund supports construction and maintenance of our country’s highway system but has a $20 billion annual deficit.
The good news is that a bipartisan effort to solve this problem has led to the development of an infrastructure bill, the America’s Transportation Infrastructure Act (ATIA). The ATIA would fund the enhancement of our highways and bridges at historic investment levels, reducing bureaucracy for implementation, and leveraging private sector capital. The ATIA would be a significant first step in modernizing America’s infrastructure.
The foodservice equipment industry depends on freight transportation to move products from supplier to dealer to customer. Smooth roads and easing gridlock are essential to efficient operations, timely delivery, and market expansion. FEDA supports passage of the America’s Transportation Infrastructure Act (ATIA), which will first depend on the reauthorization of the federal surface transportation programs for floor consideration. Committees would then develop their components of this bill, moving Congress closer to passing the ATIA.
BUSINESS COSTS AND REGULATIONS
The American Action Forum (AAF) reports that toward the end of the Obama Administration, 274 regulations were finalized with an economic cost of $30.6 billion, with $24.8 billion from 38 rules published at the very end of that term. The current Administration’s focus has been on reducing regulatory costs and new paperwork mandates. According to AAF, “in 2018 federal agencies finalized 324 regulations with estimated costs, savings, or paperwork impacts . . . resulting in cost savings of $7.8 billion.” Of concern are the Administration’s unfilled regulatory agency positions and how quickly agencies are writing rules, which may cause deregulatory efforts to be overturned by district judges, slowing down deregulation efforts.
One bill recently introduced in Congress is an example of an unnecessary and burdensome regulation. According to the U.S. Chamber, the True Incorporation Transparency for Law Enforcement (TITLE) Act would mandate millions of small businesses to file additional “beneficial ownership” paperwork with the government, “requiring nearly every corporation or limited liability company (LLC) with 20 or fewer employees, $5 million or less in gross receipts or sales, a physical operating presence in the U.S. or 100 or fewer shareholders – over 90% of businesses in the U.S. – to report beneficial ownership information to States at incorporation, update any changes in ownership within 60 days, and annually update this information.” This legislation is problematic for many reasons, including: it lacks a clear definition of a beneficial owner; small business owners may not be able to ascertain who specifically may exercise insubstantial control over, have substantial interest in, or receive substantial economic benefits from the corporation or LLC; the bill’s gray areas could cause owners to file incomplete information and receive civil penalties up to $1 million, criminal penalties of up to 3 years in prison, or both. To make this bill worse, states may add more civil and criminal penalties.
FEDA opposes the TITLE Act and urges policymakers to step back and view all regulatory bills from the perspective of American businesses. Our members need decision makers to work toward reducing the costs and company time associated with managing confusing, conflicting, poorly written and often unnecessary regulatory burdens.
Like many employers today, a tight labor market has meant that FEDA members are also struggling to fill positions with qualified employees. And no wonder, as new government data show there is now barely one available worker for every job opening in America. The U.S. Chamber reports that today’s employers “are experiencing a labor market that’s nearly three times tighter than it has been on average over the last two decades and eight times tighter than it was 10 years ago.”
For many FEDA companies, another growing concern is that too few individuals are graduating from high school and college with the technology skills companies need. We urge congressional members to support policies that improve our educational system, including technical skills education, and that advance STEM-related programs at all stages of education, especially supporting funding for more technology education as early as possible.
Last year the National Association of Wholesaler-Distributors supported the Workforce in the 21st Century Act. The Act permits employers who choose to provide a certain minimum number of days of paid time off and options for flexible work arrangements through an Employee Retirement Income Security Act (ERISA)- authorized Qualified Flexible Work Arrangement Plan (QFWA) to be exempt from the patchwork of local and state mandated paid leave laws. The employer’s QFWA plan must include both a paid leave and a flexible work arrangement component. FEDA will work with NAW to evaluate this legislation, which may be re-introduced next year.
Another bill, the New Parents Act of 2019, creates a voluntary option for paid parental leave by permitting parents to use a portion of their Social Security after the birth or adoption of a child. This bill does not raise taxes or place mandates on employers. FEDA also will review this legislation.
According to the National Association of Wholesaler- Distributors (NAW), the current Administration’s appointment of pro-business members to the National Labor Relations Board (NLRB) signals continued efforts to reverse Obama-Board pro- labor rules and decisions to restore balance to labor policies.
The converse occurred earlier this year when a “PRO Act” bill was introduced in the House that, according to NAW, “would increase union membership to the point of implementing policies that have been rejected by the judicial system, opposed on a bipartisan basis in congress, and or abandoned by the agencies asked to enforce them.”
The PRO Act would: eliminate worker privacy/protection in union elections; impose the joint-employer standard on small and local businesses; eliminate Right-to-Work protections for workers across the country, including in the 27 states that have passed Right-to-Work laws; interfere with attorney-client confidentiality and make it harder for businesses to secure legal advice on complex labor law matters; prohibit arbitration agreements in employment contracts; infringe on the due process rights of employers; and strip away “secondary boycott” protections that prevent unions from using their anti-trust exemptions and immunity from certain state laws to target businesses for anti-competitive purposes other than organizing.
Employers, like employees, need labor policies to be fair and reasonable. FEDA urges congressional members to oppose the PRO Act and legislation like this that does little to protect employees and eliminates needed protections for businesses.
In December 2018, the current Administration signed into law the most helpful tax bill businesses have seen in decades, the Tax Cuts and Jobs Act of 2017. As a result, many FEDA members are experiencing tax rate reductions, the preservation of LIFO, tax deductions for pass-through businesses, and liberalized small business expensing. FEDA strongly supported, and continues to support, the provisions of this Act.
Democratic candidates for President are now making the corporate tax rate their prime tax agenda target, proposing to increase the corporate rate to help support new programs. They are also proposing increases to the top individual tax rate, which would impact pass-through businesses. FEDA opposes both tax increase proposals.
The Main Street Tax Certainty Act of 2019 is bipartisan legislation that would support small businesses by making permanent the 20 percent pass through deduction enacted as part of tax reform. FEDA supports this legislation.
The Federal Trade Commission’s new Technology Task Force has been charged with examining technology markets to ensure consumers benefit from free and fair competition and to ensure they are not violating antitrust laws. The task force includes FTC staff attorneys and economists with expertise in complex markets for online advertising, social networking, mobile operating systems and apps, and platform businesses. They will work with FTC staff in reviewing prospective mergers in the technology sector and also review completed mergers. FEDA is very interested in the outcome of these reviews, and in any resulting scrutiny of large tech consolidation.