NFIB expecting a few costly proposals for small business left over from last session to return with renewed push
The 2018 session of the Oregon State Legislature opens for business February 5 with some immediate work for NFIB.
Preserving Small Business Tax Cut, Defeating Gross Receipts Tax
Last year, the state reached a new high in audacity, angering small-business owners as never before. Not content to have $1.5 billion more in revenues to work with, thanks to an improved economy, the governor and Legislature wanted more, and that more was to come out of the hides of small business, first, by eliminating the small-business tax cut NFIB helped win in 2013 as part of the “Grand Bargain,” and second by attempting to institute a gross receipts tax.
NFIB helped secure a new small business pass-through entity (PTE) tax structure with a starting rate of 7 percent, down from the 9 percent or 9.9 percent that most business owners pay on their business income. Starting in tax year 2015, this was a significant tax reduction for qualified small businesses: S corps and partnerships whose owners “materially participate” in their business operations and have at least one full-time, non-investor employee who works at least 1,200 hours per year. In her first budget proposal for the current fiscal year, Gov. Kate Brown proposed eliminating the small-business tax cut and during the 2017 session of the Legislature, two measures called for doing the same.
Similarly outrageous, given that the voters just spoke against instituting a gross receipts tax by rejecting Measure 97 in 2016, legislation was introduced in the 2017 session that sought to give it another try. Small businesses’ opposition to a gross receipts tax lies, viscerally, in fundamental economics: The state takes its cut of a business’s monthly gross receipts whether or not a small-business owner made a profit from that month after paying employees, suppliers, and others.
NFIB expects another attempt to impose a gross receipts tax and rollback the small-business tax cut and is prepared to fight both.
Stopping Further Paid Leave Mandates
Recent successes in winning paid sick time, increased minimum wages, and a state-run retirement program have emboldened activist groups to try for more by adding additional reasons to take paid leave. Last session, NFIB succeeded in stopping bills expanding paid leave.
The vast majority of businesses already offer paid or unpaid time off, and for any reason the employee chooses: sickness, care for a family member, parental duties, personal or family member victim of domestic violence, etc. (see infographic here). Also, the federal Family and Medical Leave Act “provides certain employees with up to 12 weeks of unpaid, job-protected leave per year. It also requires that their group health benefits be maintained during the leave.”
Additional state mandates could do more harm than good. As NFIB continues to point out, unlike the heads of corporations, small-business owners know personally each of their employees and their families, and most offer paid time off on a case-by-case basis, providing the employee what he or she needs in a way the business can afford. Mandatory paid leave would only impose unnecessary limitations on these businesses. Such initiatives assume one size fits all. In the small-business world, what works in one company could be detrimental for the next. The rigid nature of mandated paid leave often has a negative impact on employee morale.
Three other points NFIB reminds policymakers of are:
- Big businesses and huge corporations have full-time legal and human resource departments to deal with local, state, and federal rules and regulations. Small businesses do not.
- Small businesses already pay 30 percent more per employee than big businesses do to comply with the same regulations.
- Employee replacement costs can be a big issue for small-business owners when an employee goes on paid leave.
- A worker taking extended time off leaves a hole that must be filled by other staff working overtime or by finding, hiring, and training a new temporary employee as a replacement—both of which are direct costs to the business.
Making Health Care Affordable
For 30 consecutive years, the cost of health care has been a small-business owner’s No. 1 worry—out of 75 concerns measured by NFIB. The lion’s share of the credit for the problem goes to Washington D.C., but states do their part to exacerbate the crisis by passing more and more mandates on insurers who pass the cost along to small businesses in the former of higher premiums—at least to those who can still afford to provide their employees with health care. NFIB/Oregon will continue its battle to make health care affordable to a broader base of consumers by opposing state mandates that only drives insurance farther out of reach for Main Street enterprises.
Shutting Down Costly Lawsuits
Several bad bills introduced in 2017 would have had serious legal consequences for small business facing a wage claim lawsuit, including replacing “prevailing party” with “prevailing plaintiff” for the purposes of awarding attorney fees, authorizing the creation of a lien on the real or personal property of an employer, and creating a presumption of guilt unless the employer proved they did not take specific illegal actions. NFIB/Oregon strongly opposed these bills and fortunately all three died after their first public hearing.
NFIB/Oregon also supported SB 279, a bill that would have required wage claimants to inform their employer of the employer’s right to pay a limited penalty for unpaid wages if paid within 12 days of receiving a written notice of nonpayment. The bill passed unanimously in the Senate, but died in the House Rules Committee.
Another bad bill introduced in 2017 would have created a new unlawful employment practice for “creating” or “maintaining” an abusive work environment, effectively turning our court system into the new Human Resources department for every employer in the state by treating workplace conduct issues the same way the law treats workplace discrimination. NFIB/Oregon testified in opposition and helped defeat this misguided proposal.
NFIB/Oregon will remain vigilant in its opposition to efforts that increase the likelihood of costly litigation – lawsuits that target small businesses directly and lawsuits that indirectly impact our members’ bottom lines. Powerful special interests made three separate and strategic attempts at rolling back Oregon’s reasonable and constitutional limit on noneconomic damages (pain and suffering) in 2017. These attempts failed, but if successful in coming years, liability insurance premiums would likely increase significantly. This would include medical liability insurance for health care providers, which affects heath care premiums for all business owners.
Fighting for Meaningful Regulatory Reform
Of the 75 issues NFIB measures every four years and publishes in its Small Business Problems & Priorities report, “Unreasonable Government Regulations” came in second in 2016, a three-point jump from its fifth place in 2012. In a special poll just on regulations that NFIB conducted in 2017, it found that one-third of small employers have had a government official enter their place of business to inspect or examine their records and/or licenses or otherwise check on their compliance with some government requirement.
Although the federal government was the biggest regulatory headache for most small-business owners, 30 percent listed state government as their biggest problem and 15 percent cited the local level.
NFIB/Oregon has led the charge for a more sensible regulatory environment. In 2017, NFIB/Oregon supported numerous attempts to pass regulatory reform legislation, including SB 664, a bill that would have prohibited state agencies from imposing civil penalties on small businesses for minor paperwork violations so long as the civil penalty was not required to be imposed under federal law, the small business was in substantial compliance with all other applicable laws, and so long as the failure or error was the first violation by the small business of the requirement and the failure or error did not pose an unreasonable risk of harm to an employee of the small business or a member of the general public.
SB 664 passed unanimously in the Oregon Senate, but it unfortunately died in the House Business and Labor Committee. The cost of the current regulatory environment to American businesses is $2.25 trillion. To help alleviate this, NFIB/Oregon will continue to work for passage of regulatory relief that allows small businesses an opportunity to correct issues before job-killing punishments are imposed.
Supporting a Balanced Budget Amendment in the U.S. Constitution
The nation is $20 trillion in debt and counting. Congress held by either party seems incapable of doing anything about the problem. States must act.
Article V of the U.S. Constitution provides for two equally valid ways to propose constitutional amendments, one is by way of the Congress and the other through a Convention of the States. Article V requires two-thirds (34) of state legislatures to adopt similar Balanced Budget Amendment resolutions to call the convention—27 state already have.
Oregon should be one of the states to join the effort. Once Congress receives petitions from 34 states, Congress must call for the convention—it has no say in the matter. People apprehensive about a convention of states have raised some concerns, all of which are easily assuaged by the facts.
First, a convention of states would not be new. It’s been done 20 times before in our nation’s history. Second, could a convention of states confine itself to just the federal budget without straying into other issues such as Second Amendment rights or foreign or social policy? Yes. In the resolutions calling for a convention of states, states limit the purpose to just the federal budget and would also select the delegates to the convention. Everyone has a vested interest in keeping to the task at hand.
But the most important thing of all is to remember that the final product coming out of a convention of states would still have to be ratified by 38 states before becoming part of our nation’s constitution.
NFIB/Oregon will lobby for the state to join the national effort to get America’s finances in order. Further information is at www.bba4usa.org and at www.BalancedBudgetForever.com.