Washington Report - June 26, 2023

Tax Package Advances in the House
Earlier in June the House Ways & Means Committee marked up and passed a tax package that includes a number of positive tax benefit extensions for WMMA members. For one, the legislation extends the 100 percent bonus depreciation benefit (full expensing) for property placed in service after December 31, 2022 and before January 1, 2026. Recall that under the Tax Cuts and Jobs Act of 2017, companies could fully write off—100 percent—the costs of investments in machinery and equipment in the same year in which those costs are incurred. At the beginning of this year, that percentage ratcheted down to 80 percent and will continue to decrease by 20 percent each year until this benefit if fully phased out in 2027. Eliminating this critical tax benefit will only serve to increase the cost of investment at our facilities and at manufacturing sites in every sector and in every state. Extension of the full expensing benefit has been a priority for WMMA. 

Also included in the package is language extending the research and development (R&D) tax credit. Specifically, the legislation would permit companies to fully write off their R&D costs in the same year in which they were incurred. The provision extends this benefit from December 21, 2021 through December 31, 2025. Finally, the measure includes language restoring the EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) standard for calculating adjusted taxable income. That standard switched to EBIT under a provision of TCJA and resulted in the reduction in a business’s ability to deduct interest expenses. This legislation would extend EBITDA retroactively to January 1, 2023 and forward through 2025. These expiration dates for all of these benefits were selected so that they line up with other provisions of the TCJA that are slated to expire at that time. 

What was not included in the measure is an extension of the Sec. 199A deduction for S-Corporations and other pass-through entities. Recall this is the 20 percent deduction that was included in the TCJA to attempt to level the playing field between traditional C Corporations and the S-Corporation community. While this provision does not expire until after 2025, small and medium sized business groups like WMMA have been advocating that an extension of Sec. 199A be included in the package. We will continue our advocacy both in the House and Senate over the coming weeks and months. 

We expect a floor vote on this measure later in June. WMMA is hopeful that this package will begin the process of fashioning a compromise bill that can make it to the President’s desk some time later this year. 

Supply Chain Bills Advance in House
Late last month, the House Transportation & Infrastructure Committee held a mark-up where several key WMMA-supported trucking and shipping related measures advanced. 

Primary among them was H.R. 3372, legislation led by Rep. Dusty Johnson (R-SD) that authorizes a pilot program whereby states may opt in to allowing 91,000-pound rigs equipped with a sixth axle to travel on their portion of the federal interstate highway system. This has been a long-time priority for the shipping community and the last time action in Congress was taken on this issue is 2015, when the bill failed on the House floor. We will be working with our Congressional champions and with our trade association allies in promoting passage of this key measure. The bill passed out of committee largely on a party-line vote (33-27) and it does not have a companion in the Senate. Nevertheless, we are pleased with this important first step and will ramp up our advocacy accordingly. Dusty Johnson had this to say about yesterday’s action:  

The committee also approved H.R. 3013, the Licensing Individual Commercial Exam-takers Now Safely and Efficiently (LICENSE) Act of 2023. This bill, led by Rep. Darin LaHood (R-IL), codifies two waivers that were issued during the pandemic to make the process of obtaining a commercial drivers license (CDL) more streamlined and efficient. A good example is that prior to these waivers, CDL test takers had to take the CDL exam in the same state in which they received their training. So a resident of Ohio would have to travel back to West Virginia if that is where the applicant received training.  The LICENSE Act simply makes permanent some of these commonsense actions that FMCSA took during the pandemic to free up the supply chain, albeit modestly. 

Also approved was H.R. 2367, the Truck Parking Improvement Act, which seeks to address a shortage of truck parking by increasing resources for the construction of new Commercial Motor Vehicle (CMV) parking, added parking at current CMV parking areas and improvements to existing CMV parking. It also requires CMV parking spaces constructed to be accessible to all CMVs without charge.

On the ocean ports front, the committee reported out H.R. 1836, the Ocean Shipping Reform Implementation Act of 2023. This legislation builds upon the Ocean Shipping Reform Act of 2022, including by allowing the Federal Maritime Commission to review complaints about market manipulation and anti-competitive operations of maritime exchanges. Rep. Dusty Johnson issued this statement about his bill:

One bill that was on the docket but was pulled during consideration is the Drive Safe Integrity Act, which aims to boost participation in the Safe Driver Apprenticeship Pilot program that was enacted as part of the Inflation Reduction Act. This pilot would allow younger truck drivers ages 18-21 to operate trucks across state lines. Participation in the pilot has been lackluster due to some extraneous requirements imposed on the program by the Department of Transportation. This bill seeks to remove those requirements and directs DOT to report to Congress on the status of the program and corrective actions DOT has taken to improve participation. Evidently, there was some confusion about the bill during committee deliberations and the decision was made to pull it from consideration. We expect this bill to be considered again at a markup of additional supply chain measures expected in September. 

An important bill that did not make the cut for this markup is the Strengthening Supply Chains through Truck Driver Incentives Act, legislation that authorizes lucrative tax credits to new and existing truck drivers to attract more drivers to the profession and keep existing drivers behind the wheel. This is another bill that has been a focus of WMMA. Again, this bill may be part of the follow-up action in Committee in the fall. 

In a related supply chain development, the Administration earlier this month made an important funding announcement to help make domestic supply chains more efficient and resilient. The program funding is targeted at small to medium sized manufacturers. Click here to read the announcement.

Employer Directed Skills Act Introduced
Last Friday, Rep. Elise Stefanik (R-NY) reintroduced her Employer Directed Skills Act. The bill would empower job creators to determine the skills their workforce needs, streamline the process for workers to access skills development, and leverage private sector investments to make employers a stakeholder in the reskilling process.

Specifically, this legislation would:

1. Allow employers to identify prospective workers to participate in a skills development program selected by the employer
2. Expand eligible programs to include work-based learning provided by the employer or an outside program from a third-party provider
3. Provide partial reimbursements for the costs of upskilling programs through an Employer-Directed Skills Account