05/16/2008
FONCE effort stalls in committee
On Wednesday, sponsor Sen. Jim Kyle (Memphis) requested removal of the FONCE provisions from the so-called "technical corrections" amendment to Senate Bill 4173 in the Senate Finance Tax Subcommittee. The action was important to thousands of small business families that receive passive income from commercial property investments from FONCEs, or family owned non-corporate entities. The amendment would have removed an important franchise and excise tax exemption that enabled many families to pool their resources and invest for important purposes, such as for college funds and retirement income.
The effort ran into trouble when it began to receive objections House Majority Leader Gary Odom (Nashville) and Sen. Joe Haynes (Goodlettsville), a member of the Tax Subcommittee. Odom called the measure a tax on small business, noting on the House floor Thursday he hadn't received the amendment until Monday for review. Both leaders expressed concerns about the measure's inclusion in a broad, 77-provision "technical corrections" package. They and other leaders expressed concerns about the lack of data to support the projected $15 million fiscal note and the belief most owners of FONCEs would quickly move out of the arrangements and seek new shelters, in effect making the initiative a futile attempt to increase state revenues. NFIB argued that many of the smallest owners of FONCEs would wind up being hurt most if the provisions passed.
The opposition effort picked up steam when legislators and more than a dozen organizations began hearing from concerned members. NFIB joined eight organizations in opposing the removal of the FONCE tax exemption. On behalf of the strong coalition, the Associated Builders & Contractors and NFIB testified against the measure, noting the effort should have been debated and deliberated as a standalone bill. NFIB offered objections stated by members, including: the amendment's vague fiscal note, the substantial cost to thousands of small business families at a time when it is very difficult to operate a mom-and-pop business; the disruption of long-term planning; the discouragement of long-term investing in a real estate market that is depressed and in need of capital; and the discouragement of small business investing that would lead to more large corporate-type ownership. NFIB refuted the notion a FONCE is a "wealthy person's tax exemption" by sharing specific comments many of you shared with us. You can view the testimony, which begins at Minute 40, at www.legislature.state.tn.us under Senate, then Video Streaming, then 2008 Committees. Click "05-12-08" under "Tax Sub."
NFIB thanks Rep. Odom, Sen. Haynes, Lt. Gov. Ron Ramsey (Blountville) and House Minority Leader Jason Mumpower (Bristol) for their important leadership roles ensuring the issue is thoroughly studied before being reintroduced. NFIB has pledged to the administration and Department of Revenue full good faith efforts to the gather more information about FONCEs.
Read more:
Bill stalls in Senate committee
AP coverage of FONCE debate
Business remains, session not over
Legislators had hoped to end this year's session today, but were unable to conclude because of remaining budget concerns. The Legislature will reconvene next week to finalize the proposed budget, which is drawing criticism from several leaders. Many are asking for more details on the state's voluntary buyout plan to reduce the state workforce by 2,000 employees. Gov. Phil Bredesen outlined his proposal to the Legislature Monday, proposing significant cuts to TennCare, pre-K and the state workforce, as well as other cuts, including a $1.25 million reduction in the state's Rural Opportunity Fund. The administration, which introduced the effective program for small business, has had no option but to scrutinize every program during this difficult process. The Legislature expects to reconvene Tuesday.
NFIB takes stand on energy for small business
Finding timely solutions to high energy costs is a matter of critical importance to small business. NFIB voiced support for several proposals that would lower energy costs while protecting small business. This week, the House and Senate passed House Resolution 6022, which NFIB is backing. The measure would suspend deliveries to the Strategic Petroleum Reserve through the end of the year so long as the price of crude oil remains above $75 per barrel. The House and Senate plan to send a bill to the president for his signature. NFIB strongly supports:
- Suspending the federal gas tax, from Memorial Day through Labor Day
- Reducing the federal diesel tax from 24.3 cents per gallon to 18.3 cents per gallon
- A temporary freeze on oil shipments to the Strategic Petroleum Reserve
- Exploring domestic energy supplies in an environmentally friendly way
According to NFIB research, more than 37 percent of businesses have energy costs linked primarily to operating vehicles. In addition, the single largest business cost for more than 10 percent of small businesses is related to energy used in the business.
Labor law posters available
NFIB offers our members one complimentary all-in-one Federal Labor Law poster per calendar year. You can request by visiting www.NFIB.com/federalposter. You can order additional federal and state labor law posters at a 50 percent discount by visiting www.fwlli.com/NFIB. To complete, you will need your NFIB member identification number; please e-mail Valerie.Nagoshiner@NFIB.org to request, if needed. If you have questions about the program, please call Bob Cameron at 1-800-767-9243, Ext. 226, or e-mail bob@fwlli.com.
Chattanooga members alert
"Financial Security Now: A Showcase on the Issues" will be held at the Chattanooga State Technical Community College from 2-3:30 p.m. on Wednesday, May 28. The forum, hosted by AARP, will focus on the ways American workers, businesses and community leaders can increase opportunities for savings and promote financial security. Speakers include AARP Chief Operating Officer Tom Nelson and Tennessee Comptroller John Morgan. Chattanooga Times-Free Press Publisher/Executive Editor Tom Griscom will moderate a panel discussion with Chattanooga business leaders. There is no coat to attend, but pre-registration is requested by calling 1-877-926-8300.
Small business news you can use
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Sincerely,
Jim Brown
NFIB/Tennessee State Director
615-874-5288
Jim.Brown@NFIB.org
