Scottsdale, Ariz.–As the Centurion show opened in Scottsdale, a lawyer and lobbyist gave about 100 show attendees a rundown on what’s happening in Washington right now that might impact their businesses.
In a session held Sunday morning and presented by Jewelers of America, Tim Haake outlined provisions of the recently passed tax reform bill that are of interest to business owners.
Haake is a retired major general who is an attorney in the Washington, D.C. office of international law firm Dentons and is a principal at Haake Fetzer, the D.C. consulting firm that lobbies on behalf of JA and its political action committee, JAPAC, in the nation’s capital.
Haake presented his points on the tax reform bill largely without political comment, despite the fact that the tax overhaul, like any legislation, has plenty of both detractors and supporters.
Signed into law by the president Dec. 22, the bill has been criticized by some as being slanted in favor of the wealthy and big corporations and harmful to the middle and lower classes in the long run, while others have lauded it as much-needed reform that will ultimately benefit everyone.
The tax reform bill cut the corporate tax rate from 35 percent to 21 percent and includes a 20 percent tax deduction for “pass-through businesses,” like S corporations, partnerships, LLCs and sole proprietors.
Haake said it also allows for full expensing of equipment and other property for a roughly five-year period, between Sept. 27, 2017 and Jan. 1, 2023.
In addition, the bill doubled the estate tax exemption to $11.2 million for singles and $22.4 million for couples. It is indexed for inflation, which means it will increase every year.
The Border Adjustment Tax, or BAT, which is a levy JA lobbied against via JAPAC, was eliminated from the bill, while the LIFO (Last In, First Out) method of accounting, which is used to place an accounting value on inventory and saves jewelers large amounts of money every year, was preserved. He categorized these both as “victories” for JA and its members.
Haake also provided updates on several other pieces of legislation of interest to the jewelry industry, including online sales tax and recently introduced legislation to reinstate the ban on Burmese rubies.
As reported earlier this month, the Supreme Court has agreed to reconsider Quill, the 1992 decision that allows online businesses today to avoid charging sales tax in states where they don’t have a “physical presence,” meaning an office, store or shipping facility.
JA has been lobbying for online sales tax reform for years on behalf of its members, who say they lose sales to online competitors due to the fact that consumers can save the sales tax when shopping online.
While the Supreme Court’s decision to reconsider Quill is a victory for proponents of sales tax “fairness,” Congress would still need to intercede in order to pass a federal framework for sales and use tax. Otherwise, businesses could find themselves operating within a network of potentially disparate laws passed by individual states.
Though online sales tax reform has been stymied by Congress for a decade, Haake pointed out that one major opponent of the change recently announced that he won’t seek re-election.
Rep. Bob Goodlatte (R-Va.), chairman of the House Judiciary Committee and a longtime opponent of online sales tax legislation, said in November that he’s not running again and so will not be in Congress come January 2019.
“We’re not out of the woods yet,” on the issue, Haake said, “but we’re looking pretty good.”
Haake also noted that bills to reinstate the ban on Burmese rubies and jadeite, which was lifted in October 2016, have been reintroduced in the House and the Senate.