For the legislative and political week November 1-5
Welcome to the November 1-5 edition of the NFIB California Main Street Minute from your NFIB small-business-advocacy team in Sacramento.
Bagpipes and Loch Ness Monsters
- This was to have been the week Gov. Gavin Newsom led a delegation of 15 legislators to Glasgow, Scotland, for the 26th United Nations Climate Change Conference. But he canceled his trip on Friday, October 29, citing family reasons.
- “While some leaders are still debating the urgency of climate action, California has become a working model for how to aggressively fight the climate crisis while bolstering the clean economy,” said the governor in a news release prior to his cancelation.
- Going in his place will be Lt. Gov. Eleni Kounalakis. The names of the 15 lawmakers joining her are in the above news release.
- Will anything be accomplished?
- “… the history of these conferences is that they cost a fortune and attract tens of thousands of well-paid activists who talk all night and then announce something so meaningless they might as well not have bothered,” writes Matt Ridley in The Spectator. “There was the Kyoto Protocol (1997), which everybody signed and everybody ignored; the Bali Action Plan (2007), which merely recognised that ‘deep cuts in global emissions will be required’; the Copenhagen Accord (2009), which was just a bit of paper; the Cancun Agreements (2010), which agreed to set up — but not to fund — a fund. And these were the ones that claimed to achieve something.”
- Wait. That’s just one man’s opinion. OK. Here’s another man’s thought on climate conferences, as reported in Politico. “Speaking at an environmental justice conference put on by the South Coast Air Quality Management District, Schwarzenegger — who signed California’s first economywide greenhouse gas mandate in 2006 — said the international climate process was largely an exercise in futility.
- “’What does a promise and a pledge mean in the end?’ he asked. ‘Nothing. Over and over, year after year, they make these pledges and they come out to declare victory, but then nothing is getting done.’”
Back Home in California
- Big Macs might be harder to get for a few hours at select McDonalds in California on November 9.
- “The protests aim to pressure state lawmakers to support AB 257, a proposed law that would establish a statewide Fast Food Sector Council made up of workers, corporate representatives, franchisees and state officials that would meet every three years to negotiate industry standards on wages, work hours and other conditions for fast-food workers,” reports the Los Angeles Times for a story about another attempt to chip away at the franchise-corporate model of the fast-food industry.
- NFIB has joined the Stop the Takeout Takeover coalition fighting AB 257. “It’s fast-food franchises today but it will be retailers tomorrow and others in short succession as the ripple effect starts,” said State Director John Kabateck. “We want to keep this evil genie in its bottle.” AB 257 has until the end of January 2022 to make it out of the Assembly and over to the Senate, reports NFIB California’s chief legislative advocate, Kevin Pedrotti.
Supply Chain Issues that Touch us All
- “Prices of toilet paper, diapers, facial tissues and paper towels will likely rise in coming weeks as consumer giant Kimberly-Clark warned that inflation and supply chain concerns aren’t ‘likely to be resolved quickly.’
- “’Our earnings were negatively impacted by significant inflation and supply chain disruptions that increased our costs beyond what we anticipated, he [CEO Michael Hsu] said in a statement … ‘We are taking further action, including additional pricing and enhanced cost management, to mitigate these headwinds as it is becoming clear they are not likely to be resolved quickly.’”
In Congressional News
From Caitlin Lanzara, NFIB’s Congressional Legislative Program Manager.
- The House failed to vote on the $550 billion bipartisan infrastructure bill. In the meantime, the White House released a new version of President Biden’s Build Back Better Act, now a $1.75 Trillion budget reconciliation bill, removing some problematic provisions that were in his earlier proposal such as:
- Limiting the Small Business Deduction (section 199A)
- Raising the top individual tax rate to 39.6%
- Raising the top corporate tax rate to 26.5%
- Expanding the estate tax’s reach
- Repealing stepped-up basis
- Increasing the top capital-gains tax rate
- Mandating paid family and medical leave
- Mandating employers to offer retirement plans
- Increasing IRS information reporting of business owners’ account inflows and outflows
- But, the new Build Back Better Act framework includes:
- Expanding the reach of the “Small Business Surtax” (3.8% tax on passthrough businesses) to include trade or business income earned by taxpayers on income in excess of $400,000. This threshold is not indexed for inflation so it will absorb an increasing number of small business owners and increasing amount of small business income. The new Build Back Better Act’s “Small Business Surtax” is estimated to generate $250 billion alone.
- What is the genesis of the 3.8% “Small Business Surtax?”
- The “Small Business Surtax” originated in the Affordable Care Act and was called “Unearned Income Medicare Contribution,” in the Health Care and Education Reconciliation Act of 2010. It was proposed to fund Medicare, but now goes into the nation’s general fund.
- Applies to individuals, families, estates, and trusts.
- 3.8% tax on investment income such as capital gains, dividends, and rental property.
- Why is the “Small Business Surtax” Problematic?
- This bill massively expands the scope of the “Small Business Surtax.”
- The “Small Business Surtax” threshold is not indexed to inflation.
- The “Small Business Surtax” will take away business investment from creating jobs, increasing compensation, and investing in the business.
NFIB continues to meet with Members of Congress.
- Next NFIB webinar, Wednesday, Nov. 3, “Small Business Reset and Recovery Series, Episode #3 – Succession Planning for the Small Business Owner: Navigating the Exit with Special Guest Martin H. Abo, CPA/ABV/CVA/CFF.” Register here.
Next Main Street Minute November 8.
