NLMBDA breaks down the tax plan
The National Lumber and Building Material Dealers Association published the following report today on proposed changes to the federal tax code. It was written by Ben Gann, NLBMDA VP of legislative and political affairs:
Today, the Trump Administration, House Committee on Ways and Means, and Senate Committee on Finance released a framework that would make major changes to the federal tax code. Titled the Unified Framework for Fixing Our Broken Tax Code, the plan seeks to deliver fiscally responsible tax reform by broadening the tax base, closing loopholes and growing the economy.
President Trump is scheduled to start selling the tax reform plan this afternoon at an event in Indiana. A group known as the Big Six-House Speaker Paul Ryan (R-WI), House Ways and Means Committee Chairman Kevin Brady (R-TX), Senate Majority Leader Mitch McConnell (R-KY), Senate Finance Committee Chairman Orrin Hatch (R-UT), Treasury Secretary Steve Mnuchin, and White House Economic Adviser Gary Cohn–have been meeting for months in order to draft a plan that serves as a starting point in the negotiations.
Congressional Republicans are expected to use the budget reconciliation process as the legislative vehicle for tax reform. That would permit the Senate to bypass certain procedural hurdles and allow a simple majority to approve a tax overhaul package. Using reconciliation would require that at least some of the tax cuts lapse within 10 years to comply with the Byrd Rule, a Senate rule that prohibits budget reconciliation provisions increasing the deficit beyond 10 years.
Senators Bob Corker (R-TN) and Pat Toomey (R-PA), members of the Senate Budget Committee, have reached a verbal agreement on a budget resolution allowing up to $1.5 trillion in tax cuts over 10 years. The House and Senate must still pass a budget resolution for the upcoming fiscal year (2018) to serve as the tax reform vehicle. Some conservative House Republicans have complained that the budget resolution should do more to cut spending as part of tax reform.
NLBMDA is still evaluating the tax reform proposal and has not taken a position; however, the association remains committed to preserving the mortgage interest deduction and eliminating the estate tax. Below is a summary of plan provisions that are relevant to lumber dealers.
- Consolidates Personal Income Tax Brackets from Seven to Three – The three income tax brackets are 12%, 25%, and 35%. It also contains a potential fourth tax bracket for high-income taxpayers.
- Permanently Repeals the Estate Tax – Permanently repeals the estate tax and generation-skipping transfer tax. It also cuts the gift tax to 35% and maintains full step-up in basis.
- Increases the Standard Deduction – Approximately doubles the standard deduction. $12,000 for single filers. $24,000 for married couples filing jointly.
- Preserves the Mortgage Interest Deduction – The mortgage interest deduction is preserved. However, the increased standard deduction could cause fewer households to claim the mortgage interest deduction.
- Lowers Tax Rate for Small Businesses – Caps the income tax rate for pass-through entities at 25%, which is significantly lower than the top rate that these businesses pay today.
- Full "Expensing" of Capital Investments – Allows businesses to immediately write-off (or "expense") the cost of new investments other than structures for at least the next five years.
- Lowers Corporate Income Tax Rate – Reduces the corporate income tax rate to 20%. The average corporate tax rate for the industrialized world is 22.5%.
- Repeals the State and Local Tax (SALT) Deduction – Eliminates the itemized deductions for state and local taxes to help pay for the reduction in income tax rates.
- Retains the Net Interest Expense Deduction – Retains the business interest deduction for small businesses. The deduction for C corporations is partially limited.
Learn more about the NLBMDA here.
Five steps to leadership
Teaching kids basic values is arguably a parent’s most important job. We repeat these important messages constantly but wonder, “Will they ever listen?” In the long run, they do. And we can only hope that children will put these core values to use in their professional lives.
Why? Because the practice of maintaining solid values is as essential to business as it is everywhere in life.
As both a parent and a life-long leader, I’ve made values a big part of my message. At Tractor Supply sales meetings, I always found time to talk about our company values. I hammered on this so much that at one corporate event several senior managers asked kiddingly if I was going to get up on stage and talk about what I always talk about. My response: “Damn right!” Leaders can never say enough about values.
As business leaders, we have the responsibility to reinforce the basic values of our organization with those who work for us. Instilling the right values in a team can have a huge impact on the results we produce.
Here are some values that pertain to every business:
1. Respect is an essential component for ensuring that teams not only get along, but also achieve results and long-term success. Sometimes people under pressure can get very emotional about hitting difficult goals, and occasionally individuals just “lose it.” When tempers flare leaders must step in to calm things down and encourage peacemaking. It’s our obligation to talk about the importance of maintaining mutual respect as a principle for success.
2. Ethical behavior should be basic practice in all business operations and in all aspects of our lives. Your team needs to know about your organization’s ethical standards and hear about them repeatedly from you. It’s also essential that leaders are available and open to discuss ethical dilemmas that may present themselves unexpectedly. It’s important to demonstrate and voice your commitment to ethical behavior as well as your openness to coaching on the subject.
3. Communication that is open and honest is another fundamental value in every organization. Hidden or concealed information, whether intentional or not, creates a lack of trust that can lead to mistakes, misunderstandings and bad decisions. As leaders, we need to demonstrate open communication in all we do and never keep secrets from our team. The great leaders practice free and open communication as a way of life and talk about its importance on a regular basis.
4. Initiative is another value that every leader wants in a team. Start by letting your people see you take the initiative on a project and then discuss how and why you did it. Challenge your folks to do the same. And when a team member actually takes the initiative on a new project coach him or her along the way. When you see a big success, make a big deal of it. Celebrate initiative and you will get more of it in return.
5. Positive attitudes will encourage teams to work together enthusiastically. As leaders, we set the tone — and people tend to mimic our behavior. Be positive and upbeat, and your team will typically follow your lead.
Values matter everywhere in life. So, no matter the time or place, demonstrate your passion for values by setting the right example. Then find the time to talk about your principles more frequently than you think you should. Values really do matter.