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Advocacy Corner: Week of 03/08/19 Bookmark

Advocacy Corner: Week of 03/08/19

Unrelated Business Income Tax

Reps. Mark Walker (R-NC) and Tom Suozzi (D-NY) introduced a bill March 5th to repeal the unrelated business income tax on certain employee benefits provided by associations and other tax-exempt organizations. The bill is a companion to legislation introduced last week in the U.S. Senate.

The tax on nonprofit fringe benefits, like parking and mass transit assistance, was implemented as part of the 2017 Tax Cuts and Jobs Act. The tax is proving to be a huge burden for the nonprofit community, including churches and small charities that have little or no experience dealing with the IRS and insufficient guidance on how to calculate the value of parking and other benefits provided to their employees.

Multiple bills to repeal the nonprofit benefits tax have been introduced in the 116th Congress, and participants in American Associations Day, ASAE’s legislative fly-in, on March 28-29 will advocate for passing UBIT repeal legislation.

Minimum Wage

On March 7th, HB 4299 and SB 168 were introduced, reinstating the $12 per hour minimum wage initiated act passed by the Legislature last year before lame-duck changes gutted the proposal.

The original minimum wage petition would have gradually increased the minimum wage from its current $9.25 per hour to $12 per hour by 2022 and tipped workers, who currently make 38 percent of the regular minimum wage, would gradually be brought up to the regular minimum wage by 2024.

The law signed by then-Governor Rick Snyder instead set the minimum wage to reach $12.05 by 2030 with much smaller increases per year and keep tipped workers at 38 percent of the regular minimum wage. Additionally, the bill removes a provision added as part of a 2014 compromise that meant the minimum wage annually would increase according to inflation. If the voter-initiated law had never been enacted, workers likely would have made $12 per hour anyway by 2030 under the 2014 law.

State Budget

With more than $2 billion in increased taxed and changes to current tax laws, Governor Gretchen Whitmer unveiled her administration’s first budget proposal on March 5th.

Featuring a 45-cent fuel tax increase as the primary funding source for improving road, bridges, and travel infrastructure – reaction around the state and amongst partisan and interest groups has largely been sticker shock and immediate pushback.

Regarding education, the proposal would add $507 million to schools with a total of $14.5 billion to be directed into the School Aid Fund. The state’s General Fund would also see changes – funding for higher education will again be paid for through the General Fund although community colleges will remain financially backed through the School Aid Fund.

Other proposals included in the recommendation were:

  1. Improving other state infrastructure, including significant funding for water systems
  2. Earned Income Tax Credit – would be doubled; for those who qualify
  3. State Pension Tax – would be ended; Sub-chapter S corporations and limited liability companies would then pay the equivalent of the Corporate Income Tax
  4. A revenue sharing increase of 3% to local governments
  5. $9.6 million to oversee implementation of the Redistricting Commission

Review the full proposal, here.

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