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Brand Protection/Anti-Counterfeiting Card Check and the Employee Free Choice Act Commercial Vehicle Safety Technology Global Environmental Regulations International Trade Negotiations Research and Development (R&D) Tax Credit Stopping Distance for Heavy Duty Trucks
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supplier issues Tax Policy Description: Congress is grappling with a wide range of tax policy issues. These issues, coupled with a Pay-Go requirement, make it challenging to make changes to current tax law or to address near-term challenges. Status: Two specific tax concerns have taken center stage in the ongoing tax debate: the expiration of the Bush tax cuts and the expansion of the Alternative Minimum Tax (AMT) to more taxpayers. If the Bush tax cuts are allowed to expire, it will represent the largest single tax increase in American history – as much as $2 trillion over ten years. The expiration of the tax cuts would raise marginal tax rates on all income levels, increase the current 15% rate on dividends to the higher regular income rate, raise the capital gains rate to 20%, and re-institute the inheritance tax. In one of its final actions of the year, Congress cleared a one-year “patch” to the AMT preventing up to 21 million additional taxpayers from having to pay the tax for 2007. But Senate Republicans blocked Democrats’ revenue-raising offsets, forcing the House to capitulate on its pay-as-you-go pledge. The AMT was originally instituted as an add-on tax in 1969 to catch about 150 high income individuals who were able to legally avoid any tax liability. It was changed in 1982 to something more closely resembling its current form, which is a completely parallel tax system with its own calculation of taxable income, rate structure, and set of deductions and exclusions. The Democrats have instituted a requirement that every spending proposal or tax cut must be offset with a corresponding spending cut or tax increase (Pay-Go). This system has made it virtually impossible to pass tax legislation. Given larger issues like the mortgage crisis and national fears of recession, Congress will likely consider an economic stimulus package early in 2008. Impact on Industry: Like all businesses in the United States, the supplier industry must cope with the tax laws and both their intended and unintended consequences. 2008 Anticipated Action: MEMA will work with other business groups to address tax issues of importance to the industry and will press for tax incentives that will benefit the supplier community in any economic stimulus package. MEMA Staff Contact: Ann Wilson
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