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RTA NEWS YOU CAN USE
November 24, 2014

TIA's Weekly Legislative Update

AS WE HAVE MENTIONED RECENTLY WE TRY TO POST COPIES OF TIA'S WEEKLY LEGISLATIVE UPDATE WHENEVER WE CAN. WE MAY MISS SOME WEEKS BUT WE WILL KEEP TRYING AND THE REASON WE DO IS BECAUSE THE WEEKLY MESSAGES FROM ROY LITTLEFIELD ARE TIMELY AND VERY MUCH WORTH READING IF YOU WISH TO KEEP ABREAST WITH THE GOINGS ON
IN WASHINGTON, ESPECIALLY WHEN THEY ARE TIRE RELATED.

November 24, 2014

HOUSE LEADERSHIP
 
The Speaker of the House for the 114th Congress will be elected by the full House on January 6th.  Speaker John Boehner of Ohio has been nominated by Republicans, and the current House leadership team of Kevin McCarthy of California (Majority Leader), Steve Scalise of Louisiana (Majority Whip), and Cathy McMorris Rogers of Washington (Chair of the Republican Conference) is slated to continue.
 
Congresswoman Lynn Jenkins of Kansas, a Ways and Means Committee member and WOTC supporter, has been re-elected vice-chair of the House Republican Conference, making her 5th-ranking in the House leadership.
 
Congressman Paul Ryan of Wisconsin will become chairman of the House Ways and Means Committee in the 114th Congress.
 
Congressman Tom Price of Georgia will take over Ryan's spot as chairman of the House Budget Committee.
 
Congressman Sander Levin of Michigan will continue as Ranking Minority Member of the Ways and Means Committee.
 
Congressman Bill Flores of Texas is the new head of the Republican Study Committee, the influential House conservative caucus which expects to reach 170 members out of 244 Republicans in the 114th Congress.
 
Because the number of Republicans will increase by 12 in the new House, their number on the Ways and Means Committee is expected to increase by two and the number of Democrats reduced by two.
 
(The Constitution sets January 3rd as the meeting date for a new Congress, but this may be waived by law-Republican leaders have set January 6th to facilitate travel and relocation of members.)

CONGRESS ADJOURNS
 
Both houses of Congress have now adjourned until December 1 for Thanksgiving recess.

House and Senate leaders are staying in town to wind up talks for a bill to fund the government and a tax extenders bill.

Republicans and Democrats are far apart on extenders to be made permanent, which is the main hold-up; but Speaker Boehner, Senator Reid, and Senator McConnell are becoming engaged in these talks and this should speed up progress for a deal.

When Congress returns there will be eight legislative days remaining in the lame duck session, assuming adjournment on December 11th.
 
Leaders can keep Congress in session if they haven't completed "must-do" bills like government appropriations and the tax extenders, but there's a strong desire to end the lame duck as soon as possible and start over in the new Congress on January 6th.

TALKS ON TAX EXTENDERS MOVING SLOWLY
 
Talks between Senate and House for an extenders bill are moving in "baby steps" according to a Ways and Means member.
 
The lead negotiators at present are Ways and Means Chairman Dave Camp, Senate Finance Chairman Ron Wyden, and Ranking Member Orrin Hatch.
 
Their goal is to come up with a bill that makes some extenders permanent and extends others as long as possible.  This was the opening demand of the House and it has thrown the talks into a struggle over what should be made permanent and what happens to the rest.
 
For extenders NOT made permanent, Congressman Camp has proposed extending a select list retroactively for one year; Senate Democrats, backed by Senator Hatch, are arguing for a two-year extension of all extenders in the EXPIRE bill.
 
Word filtering out from the talks is that WOTC is safe for extension, at least for one year retroactive, that is, for 2014.
 
What's uncertain is whether agreement is possible for an overall bill that makes some key Republican priorities permanent-such as R&D credit, bonus depreciation, section 179 small business expensing-while Democrats, backed by the White House, are pushing for a different set of permanent extensions including the American opportunity credit and earned income tax credit expansion of the 2009 stimulus bill.
 
Making some extenders permanent more than doubles the cost of the original EXPIRE bill and could run into trouble with House conservatives for lack of offsetting revenue, adding to the deficit.
 
Talks will continue during the recess and we shall have to wait and see whether Camp-Wyden-Hatch are successful or negotiations kicked upstairs to the leaders-Boehner, Reid, McConnell.
 
In the end it may take a high-level bargain of the Leaders and White House to obtain a bill.  Senator McConnell and Speaker Boehner have a good relationship and want to get the extenders settled before the new Congress begins-they will be calling the shots for Republicans if Camp-Wyden-Hatch reach an impasse.
 
We will keep you informed.

WHERE WILL THE MONEY COME FROM?
 
The November 23 lead story on CBS' "60 Minutes" focused on America's crumbling infrastructure - including roads, bridges, trains, airports, and ports - and the duty of Congress to show some leadership and figure out how to pay for what needs to be done.
 
There is a general consensus in Washington of the need to pass a long-term transportation bill but there is no consensus on how it should be funded.

MARK YOUR CALENDARS!
 
TIA members from across the nation are invited to Washington, DC to meet and speak directly with members of Congress and Committee staff about this important topic at our Federal Lobby Day on February 5th.
 
In 2015, Congress will have to address transportation funding and it is more important now than ever we come together with our members to host a Federal Lobby Day.
 
TIA's Federal Lobby Day will include a luncheon with Congressional leaders, meetings with members of Congress and Committee staff, followed by a reception on Capitol Hill.
 
TIA is working collaboratively with a number of other automotive and highway-user industry groups including the American Highway Users Alliance, and the Service Station Dealers of America and Allied Trades (SSDA) on the Lobby Day.
 
The more attendees we have, the stronger our message becomes. The next transportation bill could include tax provisions that would affect the tire industry adversely for the next decade. With transportation funding being addressed in the spring of 2015, the timing could not be better to have our voices heard in front of the decision makers in Washington.
 
We are asking our membership to attend this event and support the association in their efforts to oppose unfair taxes aimed at the tire industry!
 
FREE transportation will be provided on February 5th, as well as a FREE lunch, FREE cocktail reception, and most importantly the PRICELESS opportunity to have your voice heard in the halls of Congress.
Members of Congress and their respective staff appreciate the input provided from business professionals, and on February 5th we have this opportunity.
 
We ask that you RSVP as soon as possible for this event! More information is listed below.

NEED VS. FUNDING  
 
Congressional leaders agree that there is a need for a long-term bill. But no two legislators agree on how it should be funded.
 
While TIA supports a long-term bill, we are opposed to many of the committee staff proposals being circulated.
 
A Brief History on Tire Taxes
 
The Federal Excise Tax on tires was first levied in 1918 mainly of revenue needs brought about by World War I. The Revenue Act of 1918 imposed a tax on both tires and tubes at the rate of 5% of the retail price.
 
The tax was reduced after war, and then later repealed in 1926.
 
The levy was reintroduced during the Great Depression, and was increased in 1941 to help finance World War II.
 
In 1956, the rate of the tax was raised in response to legislation enacted to build the interstate highway system and to create the Highway Trust Fund.
 
The Federal-Aid Highway Act of 1956 provided for a significant expansion of the federal-aid highway program and authorized federal funding over a longer period of time so as to permit long-range planning. It was considered necessary to authorize the entire interstate highway program to assure orderly planning and completion of this network of highways throughout the United States as efficiently and as economically as possible. In the case of tire taxes, the act raised certain rates and expanded the rate structure by prescribing different rates for different tire types. Tires for highway vehicles were taxed at 8 cents per pound, other tires at 5 cents per pound, inner tubes at 9 cents per pound, and tread rubber at 3 cents per pound. Later, of course, that was raised to 5 cents per pound.
 
In an effort to stimulate job creation, the Congress passed the Surface Transportation Assistance Act of 1982. The tire tax was actually hammered out late on a Friday night during a conference committee session. In the previous Congress I had worked closely with Senator Long and Senator Dole to enact legislation to allow for a refund of the FET paid on tread rubber that was lost in the retread process. All of the industry lobbyists had gone home for the weekend. Senator Bob Dole, who was chairing the meeting, called for a brief recess. I can remember him coming into the hallway and when he saw me he said, "Don't the retreaders have an opinion on what the tire tax should be?"
 
We went into a private room and called ARA Executive Director Ed Wagner, and that is how it happened. For the next 20 years, ARA, NTDRA, TRMG, and RMA lobbied the position. NTDRA and RMA tried to eliminate the FET on tires by adopting a weight-distance tax. ARA/ITRA and TRMG fought to preserve the tax advantage for retreaders. How will the new tire manufacturers, who have made great investments in retreading, come down on this issue this year?
 
One of its goals (besides increased revenues for construction and maintenance of the Nation's highways) was a redistribution of highway costs between car and truck users. Accordingly, the act changed several of the excise taxes that fund the Highway Trust Fund. For example, the excise taxes on tread rubber and inner tubes were repealed as were the taxes on non-highway and laminated tires. A new tax structure for heavy tires with graduated excise tax rates dependent on tire weight was established. Tires which weigh less than 40 pounds were exempted from the excise tax so that tires for most passenger cars are no longer taxable. The excise tax rates on heavy tires ranged from 15 to 90 cents a pound according to the weight of the tire. These rates are shown in the following table.
 
Excise Tax Rates on Tires Under the Surface Transportation Assistance Act of 1982

Weight of Tire
Tax
0-40 lbs.
No tax
40-70 lbs.
15 cents per lb. over 40 lbs.
70-90 lbs.
$4.50 plus 30 cents per lb. over 70 lbs.
90 lbs. - up
$10.50 plus 50 cents per lb. over 90 lbs.

Following the merger, we quickly met with RMA and worked out language to end the dispute.
The American Jobs Creation Act of 2004 changed the method of taxing tires from the graduated weight structure of prior law to a tax based on the load capacity of the tire.  The tax is set at the rate of 9.45 cents for each 10 pounds of tire load capacity in excess of 3,500 pounds.  In the case of super single or bias ply tires the tax rate is set at 4.725 cents for each 10 pounds tire load capacity in excess of 3,500 pounds.
 
A provision included in the Energy Tax Incentives Act of 2005 clarifies the definition of super single tires.
 
The following chart shows the current tax rate which funds the Highway Trust Fund.

 
Federal Highway-User Tax Rates-Current in Cents
 
Distribution of  Taxes to the HTF
 
Non-HTF
 
Fuel
Tax Rate
 (per gallon)
Highway Account
Mass
Transit
Account
Leaking Underground Storage Tank
 Trust Fund
Gasoline
18.4
15.44
2.86
0.1
Gasohol
18.4
45.44
2.86
0.1
Diesel Fuel
24.4
21.44
2.86
0.1
Liquefied Petroleum Gas
18.3
16.17
2.13
0
Liquefied Natural Gas
24.3
22.44
1.86
0
M85 (85 percent methanol)
9.25
7.72
1.43
0.1
Compressed Natural Gas (cents per thousand cubic feet)
48.54
38.83
9.71
0
 
Nonfuel Taxes (All proceeds to Highway Account)
 
Tires
Maximum rated load capacity over 3,500 pounds - 9.45 cents per each 10 pounds in excess of 3,500.
Truck and Trailer Sales
12 percent of retailer's sales price for tractors and trucks over 33,000 pounds gross vehicle weight (GVW) and trailers over 26,000 GVW.
Heavy Vehicle Use
Annual tax: Trucks 55,000-75,000 pounds GVW, $100 plus $22 for each 1,000 pounds (or fraction thereof) in excess of 55,000 pounds.  Trucks over 75,000 pounds GVW, $550

Without Congressional action, the Highway Trust Fund will run out of money by the end of May next year. Will Congress pass a short-term bill, or will they fund the infrastructure at a level deemed necessary to sustain the system for the foreseeable future? Let's look at the range of options being considered.
 
Option #1
Raise the fuel tax by $2 a gallon.  This would be the easiest option to administer, and would be supported by environmentalists.  It would be opposed by most in the auto and truck industries.

This option would not require any changes to nonfuel taxes.
 
Option #2
Raise the fuel tax by 50 cents a gallon, reinstate the FET on passenger tires and retread rubber (5 cents a pound).

Option #3
Raise the fuel tax by 15 cents per gallon, reinstate FET on passenger tires and retread rubber (5-15 cents a pound), and increase existing nonfuel taxes by 10% (including heavy tires).

Option #4
Consider:
Increased tolling
 
Congestion fees
 
Vehicle Miles Traveled (VMT) charges
 
National Weight-Distance Tax on Truckers
 
Increase private sector investment (i.e. privatization of highways)
 
National Infrastructure Bank
 
Sales tax on oil producers at the wholesale level
Today, revenues from the excise tax on tires provide less than 2% of the Highway Trust Fund receipts.
In December, legislation was introduced to raise the Federal gas tax by 15 cents a gallon. Industry groups like the U.S. Chamber of Commerce, ATA, and AAA made headlines by coming out in support of the proposal. TIA held strong in its position.
 
We are taking 2 strong positions:
Eliminate diversion. We are approaching 30% of the funds collected for the Highway Trust Fund diverted for non-highway purposes.
 
Engage creatively in future highway funding. We were an early supporter of legislation introduced by Congressman John Delany (D-MD) "The Partnership to Build America Act" (H.R. 2084)
The Partnership to Build America Act is a bipartisan effort to find new funding for roads, bridges, and transit. The Act finances $750 billion in infrastructure investment using no appropriated funds and has 50 co-sponsors (25 Republicans and 25 Democrats). On January 27, 2014, two Senators - a Republican and a Democrat, introduced a companion bill. Within a week, 5 Republican Senators and 3 Democratic Senators came out in support of the bill.
 
The bill is an attempt to address two problems: how to fund transportation and how to entice U.S. corporations, which have stashed an estimated $1.45 trillion abroad, to bring that money home. Delaney's plan would create a $50 billion federal fund to bankroll loans and leverage private investment for transportation and other infrastructure. The money would come from bonds bought by companies who want a tax break if they bring cash earned abroad back to the U.S.
 
I believe that Congress will pass a highway bill in 2014, but I also believe that will not happen until after the November elections. That would be consistent with the game plan that Ronald Reagan had when he supported and signed into law a motor fuel tax increase after the 1986 Congressional elections.
 
TIA's position is very clear. We have reached out to RMA and TRMG for their positions. I hope that the industry can speak with one voice on this very serious issue.
 
In Las Vegas, we will speak with TRMG and TRIB. On February 5, 2015, we will partner with TRIB on a Federal Lobby Day effort to give members a chance to tell their story to members of Congress about the impact that some of these proposals would have on our industry.
 
Remember, nobody can tell your story as good as you can. See you in Washington on February 5. Details and travel information to follow.

WOTC

Any headway on tax extenders is unlikely till Congress returns and Boehner, Reid, and McConnell make decisions on which to pass and which to leave behind.
 
WOTC remains safe for the "must do" list but Chairman Dave Camp, negotiating for the House, is offering only a one-year retroactive extension for 2014.  By giving some extenders only a year, Camp can make others permanent without increasing the cost of the bill beyond what he believes the House will accept.
 
It seems a morass.  Without knowing what size bill the leadership is willing to bring to the House and GOP members will support, Camp is pushing to add $350 billion to the deficit to make the R&D tax credit, small business expensing, bonus depreciation, and others permanent; this has drawn a rejoinder from Senate Democrats that they won't accept that deal unless it makes permanent the child credit and earned income tax expansions and grants two-years for the other extenders.
 
Clearly, this kind of standoff won't be resolved until the leaders-Reid, McConnell, and Boehner-get involved, which is happening.  Permanent extenders would give a big boost to the economy, and we want WOTC to be one of them.
 
House Republicans have chosen four new members of Ways and Means in the 114th Congress: Kristi Noem of South Dakota, Jason T. Smith of Missouri, George Holding of North Carolina, and Patrick Meehan of Pennsylvania.
 
These members replace Dave Camp and Jim Gerlach who are retiring, and Tim Griffin who was elected Lieutenant Governor of Arkansas.  We earlier reported Paul Ryan of Wisconsin becomes chair of the committee, and Sander Levin of Michigan continues as ranking member.
 
Because Republicans won an additional 12 seats in the mid-terms, they gain an additional member on Ways and Means.

•     •     •

THOUGHT FOR THE DAY

"That the situation appears hopeless
should not prevent us from doing our best."
~ Aldo Leopold
Aldo Leopold (January 11, 1887 – April 21, 1948) was an American author, scientist, ecologist, forester, and environmentalist. He was a professor at the University of Wisconsin and is best known for his book A Sand County Almanac (1949),
which has sold more than two million copies.