Category Archives: Government

Chamber Talks Workforce Needs, Impact of Opioid Addiction as 2018 Legislative Session Begins

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As the 2018 General Assembly gets underway, the Indiana Chamber is highlighting three big issues expected to be debated in the coming days and weeks: workforce needs, the opioid crisis and smoking rates.

Indiana Chamber President and CEO Kevin Brinegar says, “We’ve done so well recently from an employment standpoint that we’ve almost outstripped our ability to hire skilled workers since unemployment is so low in the state.

“It’s clear we need to raise up the skills of those who are here, but the Indiana Chamber is also suggesting that perhaps we need to pursue a parallel strategy of recruiting people from out of state. Talent is more mobile than ever before and once people gethere, they really appreciate our cost of living.”

But make no mistake, Brinegar stresses, the state’s priority should be on the potential talent pool at home. That means some major changes will need to occur – ones that hopefully start in the new legislative session.
“What we’ve been doing wrong is saying, ‘Here is our program, you come use it and we hope that it will solve your needs.’ Instead, there should be a conscious effort to truly listen to employers and then develop training programs that are demand-driven to what the needs of the marketplace are now.”

Many of those jobs today and down the road are in the middle skills area – skills that require more than a high school diploma but less than a four-year bachelor’s degree. Brinegar states this should be a focus for both Hoosier workers who need to improve their skillset and young students.

“We know from our member companies that they are reaching down to high schools and even middle schools to explore with students what job opportunities there are with their companies, what skills they need to have, what classes they need to take in high school to be eligible to take those jobs. It’s becoming a lot more focused on getting people ready with some specificity for jobs after high school.

“There will always be the need for a number of jobs requiring a four-year degree or more, but the real growth is in show me what you know, show me what you can do, show me what machinery you can operate. That’s the mindset we need to have to transform some of these government silos … along with listening to employers and creating programs that communicate to young people what those job needs are.”

Additionally, the Indiana Chamber is partnering with the Governor’s office and the state’s drug czar, Jim McClelland, to be the source for the business component of the state’s plan to combat the opioid crisis.

“We will be researching on best practices, disseminating information to employers and putting on training programs. I’ve told the Governor’s office that we want to be part of the effort and part of the solution. It’s a big problem and it’s not going to be solved overnight, but this has become an employer problem in addition to a personal and societal problem,” Brinegar offers.

“We’ve rapidly gotten to the point to where employers almost can’t fire somebody for failing a drug test because there isn’t the depth in the workforce to tap into for new workers. Employers are looking for guidance. They want more information on what they can do, how they can train supervisors to recognize signs and know where the effective treatment programs are.”

The Indiana Chamber, a founding member of the Alliance for a Healthier Indiana, would like the same urgency placed on reducing the state’s smoking rates.

“There are 10 times more people dying from smoking-related illnesses every year than opioids. And it’s the most preventable source of disease,” Brinegar notes.

“We need to improve our health metrics, including obesity, which are in the bottom third of the states. I rarely accept average for anything, but if Indiana rose to be just average when it comes to smoking, that would significantly curb health issues and save those individuals and businesses a lot of money on insurance coverage and health care costs.”

Indiana’s current smoking rate is at 21% of the population; the national average is 15%.

Enhanced workforce efforts and reducing the state’s smoking rates are among the Indiana Chamber’s Top 9 legislative priorities for 2018. The full list is available at www.indianachamber.com/priorities.

Walorski Pushes for New Repeal of Medical Device Tax; Messer’s Reverse Transfer Concept Amended Into Reauthorization Bill

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Congresswoman Jackie Walorski (IN-02) has brought forth legislation to suspend the medical device tax for five years. She joined Rep. Erik Paulsen (R-MN) in co-authoring the bill, H.R. 4617, which would delay the implementation of the 2.3% tax that was originally created through the Affordable Care Act. In 2017, Congress delayed the tax for two years, but without intervention it is set to take effect January 1, 2018.

“The job-killing medical device tax would have a devastating impact on Hoosier workers and patients across the country who depend on life-saving medical innovation,” Walorski said. “I am committed to permanently ending this burdensome tax. As we continue working toward repeal, we must protect workers and patients by preventing it from taking effect.”

Congressman Luke Messer (IN-06) and Congresswoman Jackie Walorski (IN-02)

Walorski’s bill was part of a group of legislation introduced by members of the House Ways and Means Committee aimed at stopping Obamacare taxes set to take effect in 2018. The other four measures are:

• H.R. 4618, introduced by Rep. Lynn Jenkins (R-KS), provides relief for two years from the tax on over-the-counter medications, expanding access and reducing health care costs by once again allowing for reimbursement under consumer-directed accounts;
• H.R. 4620, introduced by Rep. Kristi Noem (R-SD), provides relief in 2018 from the Health Insurance Tax (HIT) that drives up health care costs;
• H.R. 4619, introduced by Rep. Carlos Curbelo (R-FL), provides needed relief from HIT for two years for health care plans regulated by Puerto Rico; and
• H.R. 4616, introduced by Reps. Devin Nunes (R-CA) and Mike Kelly (R-PA), delivers three years of retroactive relief and one year of prospective relief from the harmful employer mandate paired with a one-year delay of the Cadillac tax.

Earlier this year, Congressman Luke Messer (IN-06) introduced legislation that encourages a more seamless transition for community college transfer students earning degrees. Messer’s proposal would make it easier for students to earn a degree through a “reverse transfer,” where students who transferred from a community college to a four-year-institution but haven’t completed a bachelor’s degree can apply those additional credits back toward an associate’s degree.

Originally titled the Reverse Transfer Efficiency Act of 2017, it was recently added as an amendment to the Higher Education Re-authorization by the House Committee on Education and Workforce. The provision would streamline credit sharing between community colleges and four-year institutions so transfer students can be notified when they become eligible to receive an associate’s degree through a reverse transfer.

“An associate’s degree can make a huge difference for working Hoosiers,” Messer said. “By making it easier for transfer students to combine credits and get a degree they’ve earned, Hoosiers will have more opportunities to get good-paying jobs and succeed in today’s workforce.” This legislation was supported not only by the Indiana Chamber, but also by Ivy Tech Community College and the Indiana Commission for Higher Education.

FCC’s Official Net Neutrality Decision Coming This Week

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On Thursday, the Federal Communications Commission (FCC) will decide whether to overturn the Obama-era net neutrality regulations that currently govern the internet. It is highly anticipated they will decide to return to the pre-2015 regulations.

Net neutrality implies an open internet environment that internet service providers should enable access to all content and applications regardless of the source, and without favoring or blocking particular products or web sites.

The 2015 net neutrality laws reclassified high-speed broadband as a public utility under Title II of the 1934 Communications Act rather than the 1996 Telecom Act. These regulations applied to both mobile and fixed broadband networks. The reclassification changed how government treats broadband service and gave the FCC increased controls over internet service providers.

The office of FCC Chairman Ajit Pai recently issued this Myth vs. Fact statement on returning to the pre-2015 regulations. One issue the public is concerned with is if internet providers would block or “throttle back” certain content to the public. Another is if content developers would pay internet providers for accelerated data transfer. The bigger issue is whether internet providers can operate their businesses as businesses rather than as a public utility. Data show that private investment in internet services has slowed under the post-2015 regulations.

The Indiana Chamber supports free-market competition in the delivery of advanced communications services. The competition in a free-market environment among industry service providers is consistent with providing choice to consumers and an adequate service of last resort in extended service areas.

The Chamber opposes any attempt to impose new regulations on broadband and other next-generation telecommunications services by the FCC, especially through the unilateral reclassification of such services under Title II of the Federal Communications Act.  The Indiana Chamber supports the U.S. Congress examining and deciding issues such as net neutrality. We believe that advanced communications and digital infrastructure are critical to long-term economic development. Since 2006, private companies have invested more than $1.5 billion in new broadband capacity in the state, expanding service to more than 100 Hoosier communities and creating 2,100 new jobs within the industry.

If the FCC rules to return to the pre-2015 regulations, it is expected that Congress will entertain legislation to promote some of the concepts of net neutrality and limit the ability to stifle content.

Many Business Provisions Still Being Reconciled in Federal Tax Reform

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We’re almost there. Tax reform has passed both the House and Senate. It now seems very possible that the President will have a bill to sign by Christmas. As some have described: All they need to do now is “sand the rough edges”. But another saying is equally applicable to the business tax components: “The devil is in the details”. Specifically, details directly relating to the taxation of both C-corporations and pass-through entities. Terms that will impact those who do business here and those who do business around the globe. In other words, details that will significantly affect big businesses, small businesses and everybody in between.

The process for reconciling the two versions of tax reform is already underway as the House and Senate name members to the conference committee that will determine exactly what will be in the package before it is voted on one last time. Indications are that majority leaders want to have a committee report for their respective bodies to act on by the end of next week. So while the details still have to be worked out, both bodies are very engaged and they’ve passed legislation that defines the general parameters.

There will continue to be debate, in public and in private, over the deficit, how much growth tax reform will generate, who benefits and who doesn’t, but the House and Senate are effectively committed to getting something done at this point. On the individual income tax side, they will need to find agreement regarding the limits on the deductibility of state and local taxes (SALT), as well as mortgage interest. These items are important to individuals, important to the numbers and important politically. But the two sides really aren’t that far apart. A $10,000 SALT deduction of some kind and a healthy mortgage interest deduction will almost certainly remain in the final product.

But where they land on many items critical to business is harder to predict; a lot is up in the air. Let’s start with the corporate rate itself. While both plans call for a 20% rate, the President hinted it could still change slightly. That appears unlikely, however, but the rate is tied closely to the fiscal projections. And the fiscal projections are why the Senate delayed the effective date for corporate rate change to 2019, to reduce the cost of the bill. So when exactly the change goes into effect is at issue.

Similarly, the taxation of pass-through income is also unsettled. The House limits the pass-through rate at 25%. The Senate approach was to give a deduction to pass-throughs to keep their tax down. Effectively, the different approaches would not have drastically different bottom line impacts for most pass-through income recipients. The real complications come via provisions directed at guarding against individuals in higher brackets from categorizing personal income as business/pass-through income.

What about the issues of interest to multinationals who conduct huge volumes of business activity around the globe? The House and Senate agree that the U.S. must move to a territorial system and companies shouldn’t be taxed here on income they earn overseas. But beyond that basic principle, how multinationals and their foreign-sourced income is handled is anything but clear right now. Both the House and Senate have included forms of supplemental taxes intended to prevent their perception of “base erosion” and to discourage what they view as corporations “gaming the system”.

Likewise, they are still working through how best to address the repatriation of foreign-earned profits and are looking at special, one-time tax provisions to encourage companies to bring those assets back to the U.S.  Another item important to many businesses of all types and sizes is how quickly, to what extent and for how long will they be able to claim deductions for capital expenditures/investments. Two final differences to note: (1) The Senate preserves the corporate alternative minimum tax; the House repeals it; (2) the House and Senate versions both limit the interest expense deduction, but in materially different ways. (A good summary of all the differences can be found in this report from the Tax Foundation.)

Of course, there are many, many other pending issues wrapped up in this legislation for the tax folks in Washington to resolve in short order. They include the health care mandate, estate tax, exemptions for educational institutions and nonprofits, and the list goes on. Tax reform appears close. Let’s hope good solutions are close too.

Some Puzzling State Revenue Numbers

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The Indiana State Budget Agency recently released the revenue collections report for October. The overall collections for the fiscal year now stand 2.8% ($136 million) below projections; not good, but not critical at this juncture.

The troubling numbers for the revenue watchers are the corporate tax collections. They were down again this month and are now at 52% below the April revenue forecast projections. Nobody really knows how to fully explain the drop. While the corporate collections historically fluctuate widely from month to month and are the hardest to predict for many reasons (that are not directly related to predictable economic activity), the gap between projections and collection is extraordinary. Fortunately, corporate collections have never represented a big piece of the pie (only around 6%) when compared to sales (48%) and individual income (36%) tax collections. Still, the unforeseen drop accounts for $126 million of the $136-million-dollar shortfall.

The State Budget Agency has drilled down on the matter and is attributing it to a high volume of refunds. But what is triggering the refunds is not clear either. Sometimes refunds can cover a number of years. They could be tied to a recent settlement of numerous cases or result from changes in the law – lots of possible factors. Whatever they are attributable to, they probably don’t mean that corporate collections will stay down; they are likely to rebound over the balance of the fiscal year and smooth out the impact, but they are not likely to recover to the total of the original projections. Let’s hope this is just a temporary mysterious dip that is evened out over time.

For those interested, you can review all the numbers and commentary from the State Budget Agency.

Federal Tax Plan = Meaningful Cuts More Than Comprehensive Reform

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The “Tax Cuts and Jobs Act” (H.R. 1) has finally arrived! The long-awaited details – over 400 pages worth – are now out there for all to debate. This is a debate that will play out before the House Republican Ways and Means Committee this week. Much of the public discourse will focus on how it impacts individuals, but for the business community it is the taxation of businesses, large and small, that is of the most significance.

The plan includes a reduction of the corporate rate from 35% to 20%, an important and meaningful step. It also caps the taxation of income derived from pass-throughs (S corporations, LLCs, partnerships and sole proprietorships) at 25%. Key provisions are outlined below. And if you are truly into tax law, the full bill is also available, as is a section-by-section summary.

Now you may note that this legislation is labeled a tax cut, not tax reform. And while many will call it that, it is probably better characterized as a tax cut bill. Cuts are good, and these measures will certainly be the impetus for some level of economic growth. But the trillion dollar questions remain: How much will it spur in gross domestic product (GDP) growth? And, can that realistically be enough to offset the projected reductions in tax collections?

Nobody can really know the answers to these politically-charged questions. But as you read the “scoring” of this legislation (to be published by the Congressional Budget Office after passage out of the House Ways and Means Committee), you may consider these items for context: the GDP growth rate in the United States averaged 3.22% from 1947 until 2017; GDP has pleasantly surprised people by breaking the 3% mark the last couple quarters; and the GDP will probably need to go a good bit higher to prevent the bill from adding substantially to the already staggering federal deficit. So listen for what growth rates are assumed in the projections that will be discussed and debated – and draw your own conclusions.

Key provisions affecting businesses

  • Reduces the corporate tax rate: The rate will drop to 20% from the current 35% and is designed to be permanent.
  • Establishes a repatriation tax rate: The repatriation rate on overseas assets for U.S. companies would be as high as 12%. The bill also may include a mandatory repatriation of all foreign assets. Illiquid assets would be taxed at a lower rate, spread out over a longer period than liquid assets like cash.
  • Creates a 25% rate for pass-through businesses: Instead of getting taxed at an individual rate for business profits, people who own their own business would pay at the so-called pass-through rate. (There will be some guardrails on what kinds of businesses can claim this rate to avoid individuals abusing the lower tax.)

Key provisions affecting individuals

  • Creates new individual income brackets:
    • 12% for income up to $45,000 for individuals and $90,000 for a married couple
    • 25% up to $200,000 individual/$260,000 couples
    • 35% up to $500,000 individual/$1 million couples
    • 6% over $500,000 individual/$1million couples
  • Caps state and local property tax deduction at $10,000, but does NOT cap income or sales tax deductions.
  • Eliminates the estate tax: The threshold for the tax, which applies only to estates with greater than $5.6 million in assets during 2018, would double to over $10 million; the plan then phases out the tax after six years.
  • Does NOT change taxation of 401(k) plans.
  • Increases the child tax credit to $1,600 from $1,000. The bill would also add a credit of $300 for each non-child dependent or parent for five years, after which that provision would expire.
  • Limits home mortgage interest deduction: On new-home purchases, interest on loans up to $500,000 would be deductible. (The current limit is $1 million.)
  • Nearly doubles the standard deduction: To avoid raising taxes on those currently in the 10% tax bracket, the standard deduction for all taxes would increase to $12,000 for individuals (up from $6,350) and $24,000 for married couples (up from $12,700).
  • Eliminates most personal itemized deductions and many credits. The only deductions preserved explicitly in the plan are for charitable gifts and edited home-mortgage interest.
  • Repeals the alternative minimum tax (AMT). The tax, which forces people who qualify because of an outsized number of deductions, would be eliminated under the legislation.

Full policy highlights of the bill can be found here.

Keep in mind this is the House’s plan and it will be subject to a different form of scrutiny in the Senate. So regardless all the prior coordination among those working together on this effort for months, some (perhaps many) things will change – they always do!

As for the timeline, it’s hard to say. But we do know that the House Ways and Means Committee will begin hearing amendments this week, and the process could take several days. A vote on the bill by the full House, as it is passed out of Ways and Means, is anticipated to come as early as November 13. From there it goes to the Senate Finance Committee, then full Senate. Optimists hope for something to pass before the end of the year. However, don’t be surprised if the debate isn’t carried over into the beginning of 2018.

Indiana’s delegation members are also weighing in with their views on the new tax bill. Chief among them is Congresswoman Jackie Walorski (IN-02), a member of the pivotal House Ways and Means Committee: “Hoosiers deserve every opportunity to achieve success and live the American Dream, and that’s what tax reform is all about. The Tax Cuts and Jobs Act will help American businesses expand, invest and hire more workers, and it will let middle-class families keep more of the money they earn. It’s time to fix our broken tax code and level the playing field for hardworking Americans by once again making America the best place in the world to do business.”

Resource: Bill Waltz at (317) 264-6887 or email: bwaltz@indianachamber.com 

Senate Health Care Reform – Act III

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A bipartisan agreement has been reached in the Senate to help stabilize health care markets – from Senate Health, Education, Labor and Pensions Committee Chairman Sen. Lamar Alexander (R-TN) and ranking member Sen. Patty Murray (D-WA).

Among other things, the Alexander-Murray agreement would:

  • fund cost-sharing reduction payments, which help lower consumers’ deductibles and co-pays, for two years;
  • broaden the pool eligible for a “copper plan” (catastrophic medical) coverage option, which would help reduce the mandate implications for essential benefits;
  • include funding to help Americans navigate signing up for health insurance, which had been cut by the Trump administration; and
  • set up high-risk pools that will allow for continued coverage for these individuals.

What this is not is a “repeal and replace”. That said, the two-year funding promise is good news for insurers and would help alleviate their unease, which would also be felt by consumers. But this bill does nothing to address the core problems in the individual marketplace that threaten its sustainability.

Indiana Sen. Joe Donnelly, who has been pushing for bipartisan fixes to the Affordable Care Act (ACA), has thrown his support behind the Alexander-Murray agreement and is a co-sponsor of the legislation. He stated, “This is the product of hard work from members on both sides of the aisle, and it’s an important step in providing much needed stability to the market. I’m proud to be part of the effort, and I will continue working with Republicans and Democrats to move this much-needed legislation forward.”

President Trump has alternately met the agreement with both optimism and skepticism. Overall, he’s indicated that he would favor a short-term subsidy fix; however, he doesn’t want to help insurers either.

It would appear the bipartisan legislation would garner most, if not all, Senate Democrat votes (as Minority Leader Chuck Schumer alluded to on Thursday), so that would leave a lot of wiggle room for passage if some, or even many, Republicans vote against it. The question is what Senate Majority Leader Mitch McConnell will do and what he says to his caucus.

Meanwhile, Sens. Bill Cassidy (R-LA) and Lindsey Graham (R-SC), the authors of the Senate’s second ACA reform attempt, have been working with Alexander and Murray on ways the bill can be made palatable to the very conservative arm of the congressional Republicans – most notably in the House.

In other words, this is far from a done deal.

Technology Policy Summit, Other Events on Tap

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One sign of the continued growth of Indiana’s technology and innovation sectors is the plethora of meetings, conferences, summits and other events that fill the calendar.

Leading the way is the Indiana Chamber’s second Technology Policy Summit. After a successful year advocating on innovation and entrepreneurship issues at the Statehouse in 2017, the organization’s tech policy committee has identified priorities for the year ahead. Look for summit sessions on data center strategies; autonomous vehicles; Smart Cities, Smart State initiatives and more.

The December 1 event (8:00 a.m.-1:30 p.m.) will take place at the Conrad in downtown Indianapolis. We’ll share a more in-depth preview in this space in the coming weeks. Learn more and register at https://www.indianachamber.com/event/technology-policy-summit/.

Among the many other programs coming up:

  • Indy IoT 2017: The New Crossroads of IoT features a focus on making things, moving things and growing things. ClearObject is the organizer of the luncheon program on October 25 at 502 East Event Centre in Carmel.
  • The CIS-IEEE EnCon Engineering Conference highlights the cutting edge of technical innovation. The Cyberinfrastructure Building and the Innovation Center on the Indiana University campus in Bloomington will host the November 10-11 sessions.
  • Innovation, entrepreneurs and more will come together for the 2017 Indiana AgbioSciences Innovation Summit. AgriNovus Indiana presents the daylong program on November 29 at the JW Marriott in downtown Indianapolis.

Again, these are just a few of the many programs focused on advancing technology, innovation and entrepreneurship in Indiana. We encourage you and your team members to take advantage of the opportunities, get involved and benefit from the collective learning.

New Training Grants for Employers Now Available

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The Indiana Chamber has been strongly encouraging our state government leaders to take bold action to address Indiana’s current and future workforce needs – a significant concern for many of our members.

We’re pleased to see Gov. Holcomb’s recent rollout of the Next Level Jobs initiative, which will help to further ensure employees have the skills needed to compete in the 21st century workforce.

What does this mean for your business?

• Employer Training Grants are available! Employers in high-demand business sectors can be reimbursed up to $2,500 for each new employee that is trained, hired and retained for six months.

• Your employees can also take advantage of Workforce Ready Grants and access free education opportunities to help sharpen their skill set for the changing workforce.

Let us know if you need assistance in navigating these opportunities.

State Wants to Hear From You on How to Streamline Small Businesses Reporting

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Cutting red tape for Indiana’s job creators is key to making our state a better place for small businesses to expand and hire more Hoosier workers. To that end, during the 2017 legislative session, the Indiana Chamber supported House Bill 1157, Small Business Duplicative Reporting, which was authored by Rep. Doug Miller (R-Elkhart). The law is simple, but hopefully effective in generating ideas to make early-stage and small business interactions with state government in Indiana even more business-friendly.

As a result of the successful legislation, the Indiana Economic Development Corporation has set up an online survey to gather feedback from employers and government officials on instances of duplicative reporting.

The Indiana Chamber is encouraging small business owners and local governments to take part in the survey. It only takes about five minutes to complete and asks participants to identify situations where they are required by state law, rule or guideline to submit similar information to at least two state agencies. Duplicative information can include notifications, tax reports, employment information and other statistical data.

By helping to identify these issues, the state can work to streamline reporting processes or even eliminate some – which should save business owners time and money.