AED Washington Insights Newsletter
June 2006
Prepared by Christian A. Klein, AED Vice President of Government Affairs
and the AED Washington team
In this Issue:
Do you LIFO?
AED is continuing its work to prevent LIFO repeal legislation from moving forward.
In late April, Senate Republican leaders proposed repealing LIFO to pay for a $100 per family gas tax rebate. AED and other trade associations representing inventory-intensive industries "loudly objected" and the proposal was quickly withdrawn. However, some leading senators expressed a desire to revisit the idea at some future date.
Since then, AED has been working with the National Association of Wholesaler-Distributors and other members of the LIFO Coalition to educate key senators about the impact that LIFO repeal would have on equipment distributors and other businesses. As part of those efforts, a small delegation of equipment dealers from Iowa traveled to Washington this week to meet with Senate Finance Committee Chairman Charles Grassley (R-IA). The goal of the meeting was to reinforce the fact that repealing LIFO would have real and potentially devastating economic consequences for small businesses in Iowa and elsewhere.
Our sense is that although LIFO repeal is no longer a priority for the Finance Committee leadership, it might still be proposed by an individual senator or come up in the context of broader tax reform. So we''re not letting our guard down.
As part of our activities on the LIFO front, we''re conducting a survey to gauge the impact that LIFO repeal would have on the equipment distribution industry. Our coalition partners are conducting similar surveys of their own membership.
Because we want to get a true picture of how widely LIFO is used by distributors, we are asking all AED members to respond to this survey, whether or not you use LIFO.
The survey only has a few questions and shouldn''t take more than a minute or so to fill out. Rest assured that individual survey responses will be kept confidential and that survey results will only be shared publicly in aggregate form.
To take this brief the survey, click here: http://www.aednet.org/lifo-survey.cfm
Thanks for your help.
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House sends Senate permanent death tax relief bill
It''s been a busy month for death tax repeal advocates.
The flurry of activity culminated in last week''s passage by the House of Representatives of legislation aimed at resolving the uncertainty surrounding the death tax and making death tax relief - though not full repeal - permanent.
The Permanent Estate Tax Relief Act of 2006 (HR 5638), which passed the House on a bipartisan vote of 269 to 156 on June 22 would:
- Increase the exemption amount to $5 million per person (indexed for inflation) effective January 1, 2010.
- Peg the tax rate on estates up to $25 million to the capital gains tax rate (currently 15 percent, set to increase to 20 percent in 2011 unless extended).
- Set the tax rate on estates of $25 million (not indexed) or more at twice the capital gains rate (currently 30 percent, set to increase to 40 percent in 2011 unless extended).
- Allow married couples to take full advantage of the indexed $5 million exemption by carrying over any unused exemption to the surviving spouse.
- Maintain the "stepped-up" basis for property acquired from a decedent by repealing the modified carryover basis rules that would have gone into effect in 2010.
- Create a new 60 percent deduction for qualified timber capital gains (a provision apparently added to attract support from timber state Democrats).
Unfortunately, in an effort to minimize the budgetary impact of the bill, it also eliminates the credit for state death tax payments.
Under the 2001 tax law, the death tax is being phased out and will be repealed entirely in 2010. However, the 2001 law expires in 2011. Without further congressional action, the death tax will then revert to the pre-2001 $1 million exemption and 55 percent rate.
Earlier this year, the House passed legislation (HR 8) to make repeal permanent. However, on June 8, repeal supporters failed to muster the 60 votes needed for a procedural vote to bring HR 8 to the Senate floor. The cloture motion failed 41 to 57.
The decision to move a permanent death tax relief bill in the House seems to be based on a recognition by Republican congressional leaders that there are not sufficient votes for full repeal in the Senate. There are also doubts that the political climate will be more favorable for repeal after the November elections. The House bill has therefore generally been viewed by repeal advocates as a positive step towards eventual elimination of the death tax.
Although the House vote gives the death tax relief bill important momentum going into the Senate, passage there is far from certain. To pass the relief bill, death tax opponents will have to hold the four Democrats who voted for cloture earlier this month and, assuming the two dissenting Republicans (Lincoln Chafee (R-RI) and George Voinovich (R-OH)) don''t change their votes, pick up three more Dems. Top targets are Mark Pryor (D-AR), Mary Landrieu (D-LA), Maria Cantwell (D-WA), Patty Murray (D-WA), and Ron Wyden (D-OR).
Senate Majority Leader Bill Frist (R-TN) has repeatedly said that he would support a compromise along the lines of the new House bill. However, the Senate leadership has sent mixed messages about when and whether it will take up HR 5638. At least some GOP leaders seem reluctant to do so without a guarantee that it has the 60 votes needed to pass. However, as Insights went to press there were reports that Frist planned to bring the House bill to the Senate floor sometime in mid-July even without a firm 60 votes in hopes of getting the bill to the president''s desk before the August recess.
AED members who feel strongly about this issue should contact their senators. Senator contact information is available at: http://www.congress.org.
Stay tuned for more information as this story develops.
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Line item veto bill amended to protect Highway Trust Fund
Last week the House considered a proposal to establish line item veto authority for the president. The Legislative Line Item Veto Act (H.R. 4890), as initially drafted, would have allowed the president to propose packages of cuts in spending, and expedite their approval through the House and Senate. This year''s proposal is much more limited than the line item veto law enacted in 1996 and struck down by the Supreme Court in 1998.
The line item veto bill, in its original form, would have permitted funds to be diverted from the Highway Trust Fund (HTF) to reduce the deficit. However, thanks to the efforts of House Transportation and Infrastructure Chairman Don Young (R-AK) and Transit and Pipelines Subcommittee Chairman Tom Petri (R-WI), the bill was amended to protect the integrity of the HTF and the user-fee funded federal highway program.
Under the bill that passed the House last week, federal transportation investment would still be subject to a line item veto. However, if repealed, the funds would be returned to the HTF and available only for transportation purposes.
The line item veto bill now heads to the Senate, where its future is uncertain.
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Interstate Highway System turns 50
Washington celebrated the 50th anniversary of the establishment of the federal highway program this week. President Dwight Eisenhower signed legislation establishing the interstate program on June 29, 1956.
At a conference organized jointly by the American Association of State Highway and Transportation Officials (AASHTO) and the Transportation Construction Coalition (TCC), leaders of the House Transportation & Infrastructure Committee and Transportation Secretary Norman Mineta hailed the construction of the interstate system, which today includes more than 47,000 miles of roads, as the most significant infrastructure achievement in human history.
The consensus of conference attendees and speakers alike was that the interstate highway system has bound the nation together more closely, both socially and economically. However, investment needs will continue to grow with the U.S. population and the job is far from finished.
More information about the 50th birthday celebration for the interstate system is available at: http://www.interstate50th.org/.
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House-passed approps bill would boost highway spending by $3 billion
On June 14, the House passed a $139.6 billion FY 2007 Transportation, Treasury, Housing and Urban Development appropriations bill. Among other things, the bill provides $39.1 billion for the federal highway program, $3.5 billion more than was appropriated for FY 2006.
Given AED''s estimates that approximately seven cents of each dollar spent by the federal government on roads makes its way into the hands of equipment distributors, next year''s highway program may have a $2.7 billion market impact on the equipment industry.
The FY 2007 transportation appropriations bill also includes $3.7 billion for the Airport Improvement program, which funds airport construction. That amount, which is in line with AIR-21 authorized levels, is $185.5 million more than the program received in FY 2006 and almost a $1 billion more than was requested by the Bush administration.
Transportation appropriations legislation is still awaiting action in the Senate.
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AED PAC raises close to $23,000 in first half of ''06
As the first half of this election year draws to a close, AED PAC has received close to $23,000 in member contributions. During the 2005-2006 election cycle, AED PAC has also already contributed more than $46,000 to pro-growth federal candidates. To see a list of AED PAC contribution recipients, click here: http://www.aednet.org/government/pdf/2005-2006-election-cycle-contributions.pdf.
The following AED members have contributed to AED PAC in 2006:
Chairman''s Caucus ($2,500+ Contribution)
Dale Leppo – Leppo Rents/Bobcat of Akron
Capitol Club ($1,000+ Contribution)
Les Bebchick – Equipment & Systems for Industry
Walter Berry – Berry Companies
Dan Butler – Butler Machinery Co.
Paul Campbell – Wheeler Machinery Co.
Robert Campbell – Wheeler Machinery Co.
Donald Chambers – Low Country Machinery
Roy Hunt – Hunt Tractor
Patrick McConnell – Clyde/West
William Reardon – Low Country Machinery
Harry Stowers Jr. – Stowers Machinery
Ken Taylor – Ohio CAT
R. Dale Vaughn – OCT Equipment
Joe Vrablik – Cummins Rocky Mountain
Michael Walsh – Walsh Equipment
Edward Weisiger – Carolina Tractor & Equipment
Thomas Wilson – United Equipment
Curtis Zeigler – Low Country Machinery
Washington Team ($500+ Contribution)
Dennis Heller – Stephenson Equipment
Stephen Nixon – Nixon-Egli
Jim Price – Valley Supply & Equipment Co.
Randy Schwandt – Cate Equipment Co.
David Scott – Scott Machinery Co.
Other Contributors
John & Jessica Eyde – Pioneer Equipment & Supply Co.
AED PAC is a special account funded entirely by the personal contributions of executive, management and administrative employees of AED member companies.
Unfortunately, federal law prohibits us from telling you any more about AED PAC or accepting contributions from you if your company hasn''t given solicitation consent in accordance with the requirements of the Federal Election Campaign Act.
If your company''s name does not appear on the list below, please download a copy of the form from http://www.aednet.org/government/pdf/aed-pac-solicit-form.pdf, complete it, and return it to AED at 121 North Henry Street, Alexandria, VA 22314 or fax it to us at 703-739-9488.
When we receive your form, we''ll send you more information about the role the PAC plays in enhancing our industry''s visibility on Capitol Hill and helping elect members of Congress who share AED''s commitment to infrastructure, the free market and entrepreneurship.
Companies that have given AED PAC solicitation consent:
American State Equipment Co.
Anderson Machinery Co.
Andress-Walsh Co.
B & W Equipment Co.
Bacon Universal Co.
Balzer Pacific Equipment
Baschmann Services
Berry Companies
Bobcat Enterprises
Bobcat of Omaha
Briggs Construction Equipment
Burke Equipment Co.
Butler Machinery Co.
Carolina Tractor & Equipment
Casey Equipment Co.
Cashman Equipment Co.
Cate Equipment Co.
CIA Machinery
Clark Machinery Co.
Clyde/West
Continental Equipment
Contractors Equipment
Contractors Sales Co.
Cummings, McGowan & West
Cummins Rocky Mountain
Ditch Witch of Kansas
Ditch Witch of New Mexico
Equipment & Systems for Industry (ESI)
Equipment Corporation of America
Fabick CAT
Falcon Power
Faris Machinery Co.
Flagler Equipment Co.
Garden State Bobcat
Gateway Equipment
General Equipment and Supplies
Groff Tractor & Equipment
H & E Equipment Services
Hawthorne Machinery Co.
Holt Equipment Co.
Hoss Equipment Co.
Hunt Tractor
J.A. Riggs Tractor Co.
J.W. Burress
Kirby - Smith Machinery
Lano Equipment
Leppo Rents / Bobcat of Akron
Lewis International |
Liftech Equipment Companies
Linder Industrial Machinery
Low Country Machinery
Lyons Equipment Company
MacAllister Machinery
McCann Industries
Metrac
Miller-Bradford and Risberg
Nationwide Equipment Co.
Nixon-Egli
Northside Tool Rental
OCT Equipment
Ohio CAT
Pacific American Commercial Co.
Pioneer Equipment & Supply Co.
Power Equipment Co.
Power Motive
PS Equipment
R.C. Hazelton Co.
Rental Service Corp.
Road Machinery & Supplies Co.
Ronson Equipment Co.
Ruffridge-Johnson
Sahlberg Equipment Co.
Scott Machinery Co.
Scott Powerline & Utility Equipment
Security Equipment Co.
Star Equipment
Stephenson Equipment
Stowers Machinery Corp.
The McLean Co.
Thompson Tractor Co.
Tractor Loader Sales
United Equipment
Universal Tractor Co.
Valley Supply & Equipment Co.
Vantage Equipment
Vermeer MidSouth
W.I. Clark Co.
Walsh Equipment
Washington Air Compressor Rental Co.
Wesco
Westchester Tractor
Western Plains Machinery Co.
Whayne Supply Co.
Wheeler Machinery Co.
Wolverine Tractor & Equipment Co.
Yancey Bros. Co. |
If your company is not listed as providing solicitation consent please email Crystal at AED''s Washington office (cthayer@aednet.org) or call us at 703-739-9513 for more information about AED PAC.
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Supreme Court limits Clean Water Act interpretations
On June 19, the Supreme Court issued its long-awaited decision in Rapanos et ux., et al. v. United States. With this decision, the Court strongly urged the lower courts to "change their ways," by restricting their ability to interpret the Clean Water Act (CWA).
The Rapanos cases involve four Michigan wetlands lying near ditches or man-made drains that eventually empty into traditional navigable waters. The United States brought civil enforcement proceedings against a developer who had backfilled three ditches without a permit. The lower court ruled that since the wetlands were adjacent to "waters of the United States," the developer could be held liable for CWA violations. Because the ditches and drains were eventually connected with navigable waters, the court believed that the Army Corps of Engineers could require a permit. The lower courts had also ruled that the Army Corps has the sole authority to issue permits to landowners who want to discharge dredged or fill material into "navigable waters."
Essentially, any development undertaken without a permit would be subject to enforcement and regulation by the federal government. The Army Corps is also responsible for the interpretation of the term "navigable waters," and it has generally given this phrase an expansive reading: it defines navigable waters as anything that is adjacent to any navigable water or a tributary. This means that a stream in your backyard or a ditch on a construction site that has any runoff into a larger tributary could be seen as under the control of the federal government.
In Rapanos, the Supreme Court re-interpreted the language of the CWA to limit the jurisdiction of the Army Corps. Under Rapanos, it can only deny development permits related to "relatively permanent, standing or continuously flowing bodies of water" or those wetlands that have "a continuous surface connection to that water, making it difficult to determine where the water ends and the wetland begins."
If the lower courts can clearly define the Army Corps'' ability to regulate under the CWA, the decision should bolster development activities and private property owners will no longer have to fear that their land will be made valueless by regulatory agencies.
Although the ultimate impact of Rapanos is still uncertain, the decision is being hailed as a victory for advocates of private property rights. Rep. Richard W. Pombo (R-CA), chairman of the House Resources Committee said that, "When the government interprets man-made ditches as waterways deserving Clean Water Act protections, we have clearly deviated from the original intentions of the Act. The Supreme Court is right to demand that lower courts clarify what waterways merit protection under the Clean Water Act."
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