More than 150 dealers, regional LBM association leaders and building material manufacturers visited Capitol Hill today to urge their members of Congress to enact regulatory reforms, renew America's Softwood Lumber Agreement (SLA) with Canada, keep the mortgage interest deduction amid any moves for tax reform, and repeal the estate tax.
The four-part message carried the key points that members of the National Lumber and Building Material Dealers Association (NLBMDA) stressed during their annual spring meeting and legislative conference. In keeping with the arrival of President Trump and the continued Republican majorities on Capitol Hill, this year's proposals shifted from such perennials as the Innocent Sellers Fairness Act to focus instead on several hot-button issues being debated in Washington. Here's a summary of the association's four "asks."
NLBMDA supports the House-passed Regulatory Accountability Act (H.R. 5) and wants the Senate to do the same. According to NLBMDA's summary, the bill would give interested parties access to data that federal agencies rely on when they write regs; mandate that agencies select the lowest cost option unless a costlier rule is needed to protect public health, safety, or welfare; and require agencies to publish an Advanced Notice of Proposed Rulemaking when the rule is particularly costly. In addition, there is a provision "to ensure adequately analyze proposed rules for their potential impacts on small businesses."
The association also asked the House to vote for H.R. 469, the Sunshine for Regulations and Regulatory Decrees and Settlements Act, and the Senate to support S. 119, the Sunshine for Regulatory Decrees and Settlements Act. Both measures would end what NLBMDA calls a practice by federal agencies of enacting regulations through "sue and settle" agreements. The practice involves "complicit federal agencies entering into legally binding agreements behind closed doors with pro-regulatory special interest groups," NLBMDA's briefing paper says. "Unlike the normal rulemaking process, potentially affected parties--such as businesses and even states--are often kept completely in the dark about the negotiations, and the resulting regulations can come as a complete surprise."
Softwood Lumber Agreement
The long-simmering dispute between the U.S. and Canada over lumber prices came to a boil again last October with the end of the one-year cooling-off period following the October 2015 expiration of the last SLA. U.S lumber producers have renewed petitions with the U.S. Department of Commerce and the International Trade Commission (ITC), alleging that the Canadian government unfairly subsidizes that nation's lumber industry. ITC has until April 24 to rule on whether a countervailing duty should be imposed on imports of Canadian softwood, and until May to decide if an antidumping duty will be applied. There's widespread anticipation both will be imposed.
NLBMDA cited growing concern that a prolonged legal battle between the U.S. lumber industry and the Canadian government is going to take place. It said it supports "a new SLA that helps meet domestic demand for softwood lumber, does not put American lumber producers at a competitive disadvantage, unnecessarily restrict the availability of products, or increase the cost of housing." It is asking Congress to write to the Acting U.S. Trade Representative telling her "to consider the interests of all domestic lumber stakeholders as negotiations with Canada continue on a new softwood lumber agreement."
Mortgage Interest Deduction
The tax deduction that Americans can claim on the interest they pay for home mortgages and home equity loans has often been questioned in recent discussions about tax reform, and concerns in the homebuilding industry abound that the deduction could get swept up in the Trump Administration's planned push for tax reform.
"NLBMDA opposes any proposal reducing or eliminating the mortgage intrerest deduction as part of comprehensive tax reform," the association's briefing paper declares. "The consequences would be devastating for home owners, the housing market, and the nation's economy."
Estate Tax Repeal
This perennial NLBMDA cause could enjoy renewed support this year given the Trump Administration's tax reform campaign. In 2013, the federal estate tax was amended to exempt the first $5 million of wealth that an individual--or the first $10 million that a couple--can pass on to survivors. Those numbers go up annually based on inflation. The top estate tax rate is 40% on the nonexempt amount of the estate.
NLBMDA's briefing paper says that the owner of a family-owned business must include the value of the business assets (both liquid, like cash, and non-cash, like land and equipment) when calculating the value of his or her total estate. "For the majority of family-owned businesses, because most of the value is in these non-cash assets, estate taxes require the liquidation of capital assets," NLBMDA says. "Any estate tax owned by a family member that exceeds the liquid assets of the business results in a heavy and disruptive burden on the remaining members of the business."
NLBMDA said it supports full and permanent repeal of the estate tax, but would consider partial reforms "that recognize the high asset base of lumber and building material dealers' businesses and set the exemption level high enough to adequately cover the value of non-cash assets such as land, inventory, and management."