TAX UPDATE

• National Federation of Independent Businesses: Tax provisions under the Tax Cuts and Jobs Act expire in 2025 absent Congressional action. Here’s what you need to know: Small business owners experienced tax relief on many fronts with the passage of the Tax Cuts and Jobs Act (TCJA) in 2017. But many of the benefits, including the valuable Small Business Deduction, are scheduled to expire after Dec. 31, 2025, absent Congressional action. Here is a breakdown of some of those provisions.
  • The New Small Business Deduction: The most important change for small business owners, this provision of the tax law allows owners of pass-through businesses such as S-Corporations, LLCs, sole proprietorships, and partnerships to deduct up to 20 percent of their share of business income. The majority of NFIB members benefit from the Small Business Deduction.
  • Lowered Individual Income Tax Rates: The law lowers the tax rate for most brackets and reduces the highest marginal tax rate from 39.6 percent to 37 percent. Many small business owners file their income taxes as individuals rather than as corporations.
    • Read some of the other issues here at NFIB.

• National Federation of Independent Businesses: First Step for Permanent Tax Relief in Senate: The Joint Committee on Taxation estimates that this deduction saved small businesses $28 billion in tax year 2018. Uncertainty is poison for small business. But last week, the Senate helped move us one step closer to certainty by introducing legislation to make the tax cuts permanent and give small businesses the certainty they need to plan and succeed.
  • United States Sen. Steve Daines (R-Mont.) introduced the Main Street Tax Certainty Act, S.1149. It’s a companion bill to bipartisan legislation introduced in the House, H.R. 216, by Reps. Jason Smith (R-Mo.) and Henry Cuellar (D-Texas); and it intends to make the 199A Small Business Deduction, passed as part of the 2017 Tax Cuts and Jobs Act, permanent.
  • The Joint Committee on Taxation estimates that this deduction saved small businesses $28 billion in tax year 2018. And it is projected to save $415 billion over the next 10 years. In addition to the savings provided by the Small Business Deduction, there are higher levels for the alternative minimum tax and estate tax, as well as lower individual income tax rates. At last, small business owners are feeling financial relief.
  • Tax relief sparked critical growth among small businesses. 2018 saw record-high levels of job creation, expansion of operations, and wage and benefit increases. And just this February, small business job creation broke a 45-year record. Confidence and optimism among small business entrepreneurs continues to soar. Taxes are no longer cited as the single most important business problem by NFIB members.
  • Read more at NFIB.

LABOR UPDATE

• Restaurants Raise Prices, Cut Staff as Minimum Wages Rise: As minimum-wage increases take hold across the U.S., some food-service workers are going home with bigger paychecks -- at a cost to businesses. A recent survey by restaurant software company Harri shows that 71 percent of operators have raised menu prices, with most tacking on an extra 5 to 10 percent, to help offset the higher expense. Others have cut employee hours, eliminated positions entirely or even closed locations.

• Washington Post reports - House Democratic push to raise minimum wage opens rift over amount of hike: House Democrats, who repeatedly promised “bigger paychecks” as they campaigned for the majority last year, have found their efforts to raise the federal minimum wage for the first time since 2007 stalled due to an internal rift over the amount of the hike.
  • Minimum-wage increases have been a core campaign plank for Democrats going back decades, and a sizable majority of the party’s House caucus has coalesced around a bill that would raise it from the current $7.25 per hour to $15 by 2024.
  • But there is not universal agreement. The $15-an-hour legislation remains a handful of votes short of the 218 it needs to pass the House, and a small group of centrist members — many representing rural areas where both wages and living costs are low — are pushing an alternative bill that would adjust the federal minimum wage region by region to account for those differences. Read more here at The Washington Post.

• Bloomberg Government reports - Health Savings Accounts Would Fund Family Leave Under GOP Plan: House Republicans are exploring a potential “free-market” solution to federal paid family leave, using health savings accounts as a funding mechanism for new parents.
  • The Freedom for Families Act was unveiled April 9 by Rep. Andrew Biggs (R-Ariz.). Under the plan, employers would make pre-tax contributions to health savings accounts for expenses during a period of leave for the birth or adoption of a child, or serious family illness. Individuals would be able to access HSA funds regardless of whether they qualified for federally mandated leave under the Family and Medical Leave Act, took other unpaid leave, or weren’t currently employed, according to the proposal.
  • “With so many paid family leave proposals out there that raise taxes or include federal mandates on businesses, Congressman Biggs thinks this is a really important time to advocate for free market solutions that empower families to control their own savings and leave,” a spokesman for Biggs told Bloomberg Law.
  • The proposal is one of several floating around the House. Reps. Ann Wagner (R-Mo.) and Dan Crenshaw (R-Texas) are backing the New Parents Act, which would give new parents access to Social Security benefits early in exchange for delayed or reduced retirement benefits down the line. Meanwhile Rep. Rosa DeLauro (D-Conn.) has long supported the Democrats’ paid leave solution, the FAMILY Act. It would create a social insurance program funded by a payroll tax on employers and employees to give workers 12 weeks of leave for a new child, a serious medical illness, or to care for a family member.

MUSIC LICENSING UPDATE

• Bloomberg Government reports - DOJ Hasn’t Made Any Final Decisions on ASCAP/BMI Consent Decrees: Justice Dept antitrust chief Makan Delrahim says the agency hasn’t made any decisions on consent decrees in a speech on Capitol Hill.
  • NOTE: The decrees are agreements that determine how songwriters are paid by radio stations, restaurants and streaming services. Songwriters want changes to the consent decrees, which could affect billions in royalties doled out each year. DOJ considering whether to modify or terminate consent decrees: Delrahim says, “We will not take abrupt steps that could create chaos” for those that rely on the decrees.

SPORTS BETTING UPDATE

• DOJ ‘Did Not Address’ Lotteries In Wire Act Opinion, Deputy AG Rosenstein Says In Memo: A new memo from the US Department of Justice says that state lotteries are not at all impacted by the DOJ’s reinterpretation of the Wire Act, a development that could mean the end of a federal court case brought earlier this year. You can see the latest filing from the DOJ below, which includes a memo signed by Deputy Attorney General Rod Rosenstein. There, he talks about the Office of Legal Counsel opinion offered earlier this year. In the April 8 memo, he says the DOJ did not conclude that lotteries are impacted by the new opinion, which replaced the 2011 OLC opinion that stated the Wire Act applies only to sports betting. The newer opinion implies that all forms of interstate gaming are impacted by the Wire Act. Sources and Online Poker Report believe this move is an attempt to scuttle the federal case brought by the New Hampshire state lottery and limit the scope of the OLC memo to online gambling that is not conducted by lotteries. It’s not at all clear how the DOJ can draw such a line, as many forms of the lottery — from Powerball to online lotteries — have at least an interstate component. Read more at Online Poker Net.