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BPAA Biweekly Federal Policy Updates - January 25

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CONGRESSIONAL UPDATE:

  • Trump Agrees to Three-Week Spending Bill With No Wall Funding to End Shutdown: President Trump announced Friday afternoon that he will sign a stopgap spending bill that will fund the government through February 15 and end the longest running government shutdown in history — but will not provide the $5.7 billion in border-wall funding that initially precipitated the shutdown. Trump’s concession on border wall funding will allow Congress to quickly pass a continuing resolution, ending a shutdown that began December 22 and has left some 800,000 federal workers without paychecks. Following the passage of the continuing resolution, a committee representing both parties will develop a homeland security bill addressing border wall funding, Trump said during his address from the White House Rose Garden. Read more here at National Review.

LABOR UPDATE:

  • Bloomberg Government - $15 Minimum Wage Bill Unveiled by Congressional Democrats: Democrats Jan. 16 unveiled a bill to raise the hourly federal minimum wage to $15—long-shot legislation that would likely require compromise with Republicans to become law. Sen. Bernie Sanders (I-Vt.) and Rep. Bobby Scott (D-Va.) announced the Senate and House versions of the Raise the Wage Act, which would increase the federal wage floor from the current $7.25 per hour to $15 by 2024. The legislation also would remove subminimum wage mandates for disabled workers and gradually increase the tipped minimum wage from $2.13 to $15. Twenty-nine states and Washington, D.C., have minimum wages higher than the federal $7.25; other states, including Maryland, are considering a $15 wage law. Merchants such as Amazon also have increased minimum wages for their employees. Moreover, protests by the labor-backed “Fight for $15" movement continue. Democrats say the $15 wage floor is needed because of inflation and because some states and local governments have been slow to react to worker needs. Republicans and others counter that the wage hike could hurt businesses. The U.S. Chamber of Commerce, for example, cautioned that a $15 hourly wage floor potentially could cause hardships for some employers.
    • “Chairman Alexander has never supported the federal government fixing wages,” an official for Senate Committee on Health, Education, Labor and Pensions Chairman Sen. Lamar Alexander (R-Tenn.) said in an email to Bloomberg Law. “He continues to believe the best way to help workers earn higher wages is to do what Congress and the President have done: cut taxes, reduce regulations, and improve the economy.”
    • Democrats could essentially pass the legislation along party lines in the House but need some conservative support to clear the Senate, where the GOP has a 53-47 majority. Moreover, some conservative Democrats didn’t co-sponsor Sen. Bernie Sanders’ (I-Vt.) minimum wage legislation in the last Congress despite voting in favor of a $10.10 minimum wage in 2014.
    • There’s also no indication Republicans will allow a vote on the proposal in the Senate, create a stalemate, or force a compromise of sorts.
      • Remember, Sanders is a member of the HELP Committee, but Alexander sets direction of the panel that has been assigned the legislation.
  • Politico reports - OSHA Publishes Final Recordkeeping Rule: A final rule to roll back Obama-era OSHA injury and illness recordkeeping requirements is scheduled for publication in the Federal Register today. The rule will exempt companies with 250 workers or more from a previous obligation to submit detailed injury and illness data for OSHA to publish online. Under the final rule, companies still must submit summaries of the data to OSHA for review. Democrats and labor advocates argue that the rollback contradicts Trump's campaign promises to support American workers.
    • The Trump administration's nominee to lead OSHA, Scott Mugno, who has been awaiting Senate confirmation since 2017, has supported strengthening OSHA's surveillance programs. The former FedEx safety executive was a member of a committee that drafted a 2018 National Academies of Sciences report recommending the agency expand the information it collects from employers and develop a searchable, publicly available injury and illness database.

TAX UPDATE:

  • Warren To Propose Tax On People With More Than $50m, Post Says: Sen. Elizabeth Warren, a likely presidential candidate in 2020, will propose a 2% “wealth tax” on Americans with more than $50m in assets, the Washington Post reports, citing an economist advising the Democrat. People with more than $1b in assets would be subject to a 3% tax, according to the Post. The levy would raise $2.75t over ten years from about 75,000 families, or less than 0.1% of U.S. households, according to Emmanuel Saez of the University of California, Berkeley. Warren’s campaign declined to comment to the Post. Read more at Bloomberg.
  • The IRS will start accepting tax returns on Monday, and senior officials there told Congress on Thursday. IRS officials had been unable to reach 9,000 workers and another 5,000 claimed hardship exemptions. The recalled workers, many of whom work in the tax processing and call centers, were being brought in—without pay— as the IRS prepares for tax-filing season, which begins next week.
  • Private Equity Investors Get Rules on 20 Percent Tax Break: Business owners -- and their accountants -- can rest a bit easier: the IRS has given them the long-anticipated final word on how they can claim one of the biggest perks in the 2017 Republican tax overhaul. The regulations detailing the new 20 percent deduction for pass-through business owners are of critical importance to the operators of such entities, who range from mom-and-pop convenience store owners to private equity investors. The guidance, issued on Friday, January 18, despite a five-week partial government shutdown that has many Internal Revenue Service employees on furlough, can cut those business owners’ tax bills by as much as one-fifth. The rules would govern what many say is one of the most complex changes in President Donald Trump’s tax law. The IRS made a series of changes to make it simpler for businesses to determine if they can or can’t get the tax break, a senior Treasury official said on a call with reporters. The rules make it clear that income from originating and selling mortgages is eligible for the deduction, said Alan Keller, first vice president of legislative policy at Independent Community Bankers of America, a trade and lobbying group.
    • Small Businesses
      • The pass-through deduction was included in the overhaul to give a tax break to businesses whose owners pay the taxes on their personal tax returns -- partnerships, limited liability companies, and S corporations. Trump and Republican leaders have said that middle-class Americans and small businesses would be the biggest beneficiaries under the $1.5 trillion tax cut. All taxpayers who earn less than $157,500, or $315,000 for a married couple, can deduct 20 percent of the income they receive via pass-through businesses from their overall taxable income. If taxpayers earn above those amounts and aren’t service professionals -- such as lawyers or accountants; they must meet certain tests to take the full deduction -- the size of their deduction depends on how much they pay in employee wages or how much they’ve invested in capital like real estate.
      • For service professionals, the break fully phases out if they earn more than $207,500 if they’re single, or $415,000 if they’re married.
    • Simpler Record-Keeping
      • The deduction is limited for employers who pay low wages or hire few workers. The rules make it easier for related pass-through businesses to maximize their deduction by allowing companies to combine at the entity level or at the owner level. For example, two related businesses -- one with a lot of employees but little profit, and another with a lot of profit but few wages -- could aggregate their payroll and income to get a bigger tax break.

SPORTS BETTING:

  • LAS VEGAS (AP) — The Department of Justice will wait 90 days to implement a legal opinion that will affect online gambling. Deputy Attorney General Rod Rosenstein on Tuesday issued a memo saying the delay will allow businesses to adjust their operations. The legal opinion that became public Monday says a federal law that prohibits interstate wagering applies to any form of gambling that crosses state lines, not just sports betting. It is a reversal for the department, which in 2011 determined that online gambling within states that does not involve sporting events would not violate the federal Wire Act. Legal experts say casino operators and online lotteries will likely take the issue to court.  Read more at SFGate.
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