For the legislative and political week ending April 2
Welcome to the March 29 edition of the NFIB California Main Street Minute from your NFIB small-business advocacy team in Sacramento.
Before we report on legislative activities, we’d like to call your attention to three important updates on small-business loans and grants.
- The state opened a new application round (Round 5) for small-business grants between $5,000 and $25,000 last Wednesday, March 25. But hurry! Applications must be in by this Wednesday, March 31. According to the California Office of the Small Business Advocate, if you are already on the waitlist, you don’t need to apply again. Click here for complete information, which includes links to applying online.
- Speaking of March 25 and March 31, the U.S. Senate on March 25 passed H.R. 1799, the PPP Extension Act of 2021, which would extend authorization of the Paycheck Protection Program past the March 31 deadline. You can read NFIB Vice President of Federal Government Relations Kevin Kuhlman’s news release praising the vote here.
- The Spam of federal loans, grants, and tax credits. Like the unfairly maligned canned meat product, small-business owners seem to have a ‘What’s In It?’ puzzlement over the Employee Retention Tax Credit (ERTC) In a recent survey of NFIB-member, small-business owners, 58% weren’t familiar with the ERTC and 35% were only somewhat familiar. According to the IRS, “The Employee Retention Credit is a fully refundable tax credit for employers equal to qualified wages (including allocable qualified health plan expenses) that Eligible Employers pay their employees.” Small business employers can receive up to $33,000 in refundable tax credits per employee for qualified wages paid after March 12, 2020. Want to know more? NFIB’s Elizabeth Milito, senior executive counsel of the NFIB Legal Foundation, and Holly Wade, executive director of the NFIB Research Center, have produced this informative video.
Now, back to Sacto Land …
- Kudos to Kevin. NFIB California’s chief legislative advocate, Kevin Pedrotti, provided the lead testimony in support of Senate Bill 104, which would create “an elective tax that allows pass-through entities to pay tax on behalf of their owners and allows a credit to the owners of those pass-through entities,” according to Senate staff analysis. Pedrotti’s persuasion helped pass the bill out of the Senate Governance and Finance Committee March 25. It now heads to the Senate Appropriations Committee. The measure seeks a way around the $10,000 limit on state and local tax (SALT) deductions clamped on small businesses by the federal Tax Cuts and Jobs Act of 2017.
- The Legislature is on Spring Recess for the entire week. It returns next Monday, April 5.
- News Release of the Week. NFIB California was delighted to read Assembly Member Adam Gray’s March 22 news release, “Assemblyman Gray Calls Out Congress for Banning Small Business Tax Cuts in Latest Stimulus Bill.” In it, the Democrat from Merced writes, “Congress has banned small businesses on Main Street from receiving a tax cut. This prohibition even applies to struggling businesses that have received zero dollars in federal and state aid … What’s worse, they placed no such prohibition on tax increases, opening the door for special interests to pursue billions of dollars in tax hikes. I am urging California’s Congressional delegation to reverse this provision immediately. Small businesses are the backbone of our economy. We cannot abandon them just as we are beginning to see light at the end of the tunnel.”
- As a reminder, the provision referred to above is a prohibition against using federal American Rescue Plan Act money to offset state tax reductions. This immediately slammed the brakes on two bipartisan measures: one, to align state tax conformity with the federal government’s on forgiven PPP loans (Assembly Bill 80); and the other, to reduce the minimum franchise tax (Assembly Bill 632). State governments across the country await U.S. Treasury Secretary Jen Yellen’s determination, or another Congressional action, on whether they can proceed. AB 80 and AB 632 were formulated long before Congress cooked up the American Rescue Plan Act of 2021.
- As mentioned in last week’s Main Street Minute, 21 state attorneys general have sent a letter to Secretary Yellen, “urging the U.S. Department of Treasury to take immediate action to ensure the American Rescue Plan Act does not strip States of their core authority to implement basic state tax policy.”
- But wait! Those are all AGs from red states? Sorry, but blue states feel the same way. Take California for instance.
- In a more conciliatory letter to Yellen, the California Department of Finance asked for “Tax Conformity. California also recommends that Treasury consider taking steps to prevent inadvertent inequities between states that have automatic conformity with federal tax laws and those that do not. Penalizing the non-automatic implementation of conformity—by treating conformity legislation as a tax cut—could limit a state’s ability to adopt policies that support federal goals and could thus constrain the economic benefits that were intended by the authorization of these funds. For example, automatic conformity states will exempt the first $10,200 in unemployment insurance and student debt forgiveness from income, and they have already implemented state conformity with prior federal legislation exempting forgiven Paycheck Protection Program loans from taxable income. Assuming that automatic conformity states will not be penalized for those tax cuts, we believe California should also not be penalized for the exact same policy.”
- Hero Pay? Last week, NFIB joined a coalition of other business groups, such as the California Retailers Association, the California African American Chamber of Commerce, and the California Hispanic Chambers of Commerce, in a campaign to stop the spread of local ordinances slapping an extra $3- to $5-an-hour wage increase on so-called ‘Hero’ workers, a definition which has broadened beyond emergency personnel and medical workers to include pharmacies, employees in big-box stores, restaurant workers, and could include janitors, warehouse workers. Where will it end? The coalition is called Californians for a Safe and Rapid Recovery. There is no website for the coalition, yet.
- Save the Date. April 21 is NFIB California’s Small Business Day at the Capitol (Virtually). Special guests include Dee Dee Myers, a senior adviser to Governor Newsom and director of the Governor’s Office of Business and Economic Development (GO-Biz); Assembly Member James Ramos (D-Rancho Cucamonga), author of AB 104, the small business liability protection bill that NFIB is co-sponsoring; and Senate Republican Leader Scott Wilk (R-Santa Clarita). For more information, send an email to NFIB Grassroots Manager Taylor Criddle at [email protected].
Media wise …
- The Sacramento Bee reported on NFIB California-member ballot results in its Capitol Alert section. NFIB’s news release announcing the results can be read here.
- Cision PR Newswire noted NFIB California’s support for stopping taxpayer dollars from being spent on a State Capitol annex project in a news release sent by the Save our Capitol coalition.
Nationally,
- The next NFIB webinar is this Wednesday, March 31, at 9 a.m. Pacific. This week’s topic is Small Business Tax Essentials: Tax Security and Filings During COVID-19 – Do’s and Don’ts with special guest: Veronica Tubman, stakeholder liaison, IRS. Register here.
- Your NFIB-member federal ballot has been sent to you. You can also vote right here.
- The filing deadline for your taxes may have been moved to May 17, but those paying quarterly estimated taxes must still do so by April 15.
- Line 13. We’re not talking about a streetcar route. We’re talking about where on your Form 1040 you’ll find the Small Business Tax Deduction NFIB won in 2017. Click here for an infographic.
- The Small Business Tax Deduction will expire on January 1, 2026—unless we act now. Congress will consider making the Small Business Tax Deduction permanent later this year, and you can add your voice to its decision right here.
Next Main Street Minute, April 5.
