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BPAA Federal Policy Update - November 6

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TAX REFORM

From the MBS Initial Analysis of the House Republican Leadership tax reform bill: “On November 2, House Republicans released their tax reform bill titled, “Tax Cuts and Jobs Act.” Michael Best Strategies’ tax policy experts, Denise Bode and Anne Canfield, both veterans from the last tax reform overhaul that was passed by Congress in 1986, provided their preliminary analysis of the initial bill, which is below and in the chart on the following page. As they predicted, the legislation is currently being refined and perfected. On November 3, House Ways & Means Committee Chairman Kevin Brady released a revised version of the bill -- the "Chairman's Mark. "Chairman Brady stated that he will make further revisions to his new Chairman's Mark over the weekend, and that a new "Chairman's Mark" will be released on Monday at the beginning of the Committee markup. Those revisions will be both substantive and technical. Updates will be distributed by Michael Best Strategies as we receive them.

Below are links to all of the key documents, including the "Chairman's Mark" released on Friday, November 3, the summary of changes reflected in the Chairman’s Mark prepared by the Joint Committee on Taxation, and the Joint Committee on Taxation revenue table for the Chairman’s Mark.

Of particular interest is the aggressive schedule the GOP leadership has outlined. Speaker Paul Ryan indicated he expects the full House to hold a vote on the bill the week of November 13. If the bill passes, it will head to the Senate. The Senate Finance Committee is already working on their own tax reform bill, which might be released on Wednesday, November 8, and could be voted on by the full Senate on the week of November 20. President Trump has repeatedly made it clear that he wants to see tax reform wrapped up before the end of the year. With Republicans in dire need for a political 'win' to campaign on in 2018, it appears that the House and Senate leadership is eager to meet the President's timetable. Below is the updated tax reform schedule that the Republicans have put together.”

To note:

SALT deductions: The deduction of state and local property taxes would be capped at $10,000, and state and local income and sales taxes could no longer be deducted.

From the House Committee on Ways and Means Section-by-Section Summary - Sec. 3203. Small business exception from limitation on deduction of business interest: “Under current law, business interest is generally allowed as a deduction in the taxable year in which the interest is paid or accrued, subject to a number of limitations. Under the provision, business with average gross receipts of $25 million or less would be exempt from the interest limitation rules described in section 3301. This provision would preserve the deduction for business interest expense for small businesses, which generally struggle to finance their business operations and growth through equity capital.” Section 3301 explains that under this new law “every business, regardless of its form, would be subject to a disallowance of a deduction for net interest expense in excess of 30 percent of the business’s adjusted taxable income.” To read more on this provision and the rest of the House Ways and Means Section-by-Section Summary, please click here.

To view MBS’s Initial Analysis of the House Tax Cuts and Jobs Act, please click here

LABOR

Fox News reports, Trump's Labor Department aims to make tip-pooling legal again. The Trump administration is planning to revoke a rule that banned tip-pooling for restaurants. The Obama-era rule prohibited restaurants from taking servers’ tips, combining them and then redistributing them as the owner or manager sees fit. The Trump administration has been saying they plan to repeal the ban for months, but has recently taken the steps to do so. The pending rule change would only “rescind the current restrictions on tip pooling by employers that pay tipped employees the full minimum wage directly.” Meaning restaurants that pay servers the full $7.25 minimum wage, instead of the $2.13 tipped wage, can pool tips. The law Obama’s administration created ruled that employees own their tips, not the restaurant, and that restaurants are not allowed to pool tips or give them to non-tipped employees. The rules applied to all levels of wage-earning servers. The Oregon Restaurant & Lodging Association welcomes the rule change as well, stating it would protect “our members from private lawsuits for the period the rule was purportedly in place.” Federal courts have disagreed over if the changes were okay, meaning the issue could be escalated to the Supreme Court unless Trump’s administration intervenes with a federal ruling beforehand.

MINIMUM WAGE

Click here to see a state-by-state minimum wage changes for 2018

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