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Monday, 05 March 2007 16:59

From health care to tax relief on Capitol Hill for 2007

With the November 2006 elections, the people have spoken and their voices are resonating throughout the corridors of Capitol Hill. The balance of power in Washington shifted from Republicans to Democrats for the first time since 1994. This dramatic change presents new opportunities and challenges for the collision industry.

Many issues important to the industry continue to be debated, but the approach for addressing the topics is now different—from health care to minimum wage and energy legislation. SEMA is adapting to these changes and also working with the new leadership to educate Congressional members to the growing economic impact of the automotive specialty and performance industry, its home grown roots and the need for lawmakers to embrace pro-business policies that will help keep the industry thriving and the nation strong. Below is the current status of a few high priority items.  

Small Business Health Plans

Lawmakers are seeking to define common ground in tackling the nation’s growing health care crisis. That may include pursuing legislation allowing trade associations to offer health care policies to their members, known as small business health plans (SBHPs). Democrats may support a scaled-back version of SBHP legislation if the plans are subject to state rather than federal oversight.

Discussions are underway in the U.S. Senate to identify a common approach on a state-based SBHP bill.  (The Senate is considered the battleground for compromise legislation since it will require a 60-vote margin for passage.) Issues being negotiated include the number of benefits to be mandated. While these discussions are ongoing, attention is also being focused on other health care issues such as improving the Medicare prescription drug program and providing grants to states to experiment with ways to increase health insurance coverage. It remains unclear whether Congress will ultimately adopt incremental reforms this year or position the health care debate for the 2008 presidential election.

Minimum Wage

SEMA supports polices that allow wages to be set by the marketplace and contends that a minimum wage hike filters up the pay chain and hurts small businesses.  SEMA generally believes a hike in the minimum wage should be avoided or at least be balanced by tax relief targeted at small businesses. The U.S. House of Representatives has approved a bill that would increase the minimum wage to $7.25 per hour over two years, setting the stage for the first minimum wage increase in almost a decade. It would rise from $5.15 an hour to $5.85 per hour 60 days after enactment. One year later, the wage would increase to $6.55 an hour and a year after that, it would increase to $7.25.

The Senate has passed legislation which includes the $7.25 wage hike along with a package of tax cuts intended to offset the hike’s impact on small businesses.  The cuts increase business deductions under Section 179 of the Internal Revenue Code, allow businesses with up to $10 million a year in gross receipts to use the simpler cash method of accounting, and allow building owners to depreciate the costs of improvements in 15 years rather than 39 years.  The House and Senate leadership must now work to find a compromise in order to move the bill forward.  President Bush has pledged support for a minimum wage increase as long as sufficient small business incentives are attached to the legislation.

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