The following information was recently published by our friends at Forest Resources Association (FRA)
The House of Representatives passed the Build Back Better Act this morning by a vote of 220-213. The bill now proceeds to the Senate for consideration. We remain concerned with revenue raisers in the package and have communicated opposition to them with Members of Congress. Our focus has been on provisions raising tax rates on small and medium-sized businesses that are organized as S-Corporations or other pass-through structures. The current tax rate for these businesses under the Tax Cuts and Jobs Act is 29.6 percent. The House version of the Build Back Better Act would add a 3.8 percent Net Investment Income Tax (NIIT) to S-corporation and partnership income earned by active owners of the business. Currently, active owners of these businesses do not pay the NIIT on their business’ profits. This expanded tax applies to owners with incomes exceeding $400,000 (single) and $500,000 (joint), but for business shares held in trust, the expanded tax applies to income over just $13,000.
In addition to the NIIT, the bill includes a new surtax on all forms of adjusted gross income of 5 percent on income over $10 million and 8 percent on income over $25 million. For family businesses with taxable trusts, those thresholds are $200,000 and $500,000, respectively.
Adding all these components up, the tax rate for small and medium-sized businesses jumps up to 41.4 percent—a sizable increase for businesses across the country that employ over half of all the private-sector workforce.
We have noted in earlier updates that the package does include some positive provisions, including significant funding for the Wood Innovation grant program, as well as important forestry programs. In addition, there is language authorizing $2.1 billion for the U.S. Department of Agriculture’s rural housing program. Specifically, the bill directs $2 billion to carry out new construction projects and an additional $100 million in grants to help low-income homeowners in rural areas repair and upgrade their homes.
For those located in areas where the state and local taxes (SALT) are high, the measure includes SALT cap relief. Under the new provision unveiled in the latest iteration of the Build Back Better Act, the SALT cap is extended to 2031, but increased from $10,000 to $80,000 beginning in 2021, before decreasing back to $10,000 in 2031.The current cap is scheduled to expire after 2025.
Assuming the measure passes the House, it is certain to be modified in the Senate. FRA will continue to keep you apprised of developments.
On November 16, the challenges to OSHA’s proposed vaccine and testing mandate moved to the Sixth Circuit Court of Appeals, where it could rule on the temporary restraining order soon. The Sixth Circuit Court’s decision will ultimately proceed to the U.S Supreme Court, where it may act relatively quickly if it moves forward without a full briefing. If the Supreme Court proceeds with a full briefing and oral argument, it might issue a decision by the end of this year or later. In light of the litigation, OSHA announced that it is suspending all activities around implementation and enforcement pending judicial review. That announcement may be found HERE
Biden Administration to Define WOTUS
On Thursday, the EPA and U.S. Department of the Army announced that the agencies will repeal the Trump administration’s definition of the Waters of the United States (WOTUS). The agencies will repeal the Trump era definition and re-instate the pre-2015 definition of WOTUS. The proposed rule will be open for a 60-day comment period following publication in the Federal Register. Repealing the rule is the first step in a two-step process. The EPA will prepare a new, more protective definition of protected waterways. FRA will continue to monitor and submit comments on the proposed rule.
Robert Bonnie Confirmed
The Senate voted 76-19 on November 16 to confirm Robert Bonnie for undersecretary of farm production and conservation at USDA. Bonnie currently serves as deputy chief and senior climate advisor to Agriculture Secretary Tom Vilsack. Bonnie also served under the Obama administration as an undersecretary of natural resources and the environment. FRA has a good relationship with Bonnie and has met with him on several occasions over the past year on forest-based biomass and logger financial relief. Bonnie was instrumental in establishing the program for logger financial relief. In July of 2021, FRA signed on to a letter supporting his nomination.
Administration Fails to Release Supplemental H-2B Visas
The Department of Homeland Security (DHS) and Department of Labor (DOL) has not released additional H-2B visas for the first half of the fiscal year. On September 30, Congress authorized the DHS to issue additional visas, as demand for the 33,000 H-2B nonimmigrant workers was two times greater than the cap. Demand for H-2B workers is at an all-time high, and it is estimated that more than 130,000 H-2B workers will be requested for the second tranche of the 33,000 H-2B visas. The application period for the second half visas begins on January 1, 2022. FRA has been working to advance legislation in the House and Senate to address the H-2B visa cap. The Returning Workers Exception Act (HR 3897) was introduced by Congressman Henry Cuellar. In the Senate, Senator Thune has introduced the H-2B Forestry Worker Exemption Act (S.2207). FRA encourages you to reach out to your representative and senators and ask them to support the legislation. To send a letter to your representative on the Returning Workers Exemption Act click here. To contact your senator on the H-2B Forestry Worker Exemption Act click here.
FRA Sends Letter to Department of Labor
FRA prepared and led an effort to gather signatures on a letter that addressed the Department of Labor’s excessive delays in approving Farm Labor Contract Certificates. These certificates are required prior to receiving an H-2B visa for forestry work. The letter was supported by 76 forestry and agricultural organizations.
Farm Bureau Opposes BBB Plan
The American Farm Bureau (AFB) is on record as officially opposing the Build Back Better (BBB) plan. In a letter sent to House members on November 16, the AFB opposes the social spending plan as the taxes outweigh the benefits. “While certain funding increases or newly created programs may, by themselves, be commendable, the totality of the increased federal spending in this bill coupled with the enormously burdensome tax increases leveled on businesses and individuals to pay for it will stifle economic growth and destroy jobs,” said Zippy Duvall, AFB president.