One big item on their to-do list is to consider the $3.5 trillion reconciliation package. Included in this legislation will be provisions on climate, childcare, education, and expanding Medicare, among others.
On Wednesday, Sept. 15, the U.S. House of Representatives Ways and Means Committee completed its markup on the portion of the reconciliation package which they have jurisdiction over. The Big “I” voiced opposition to the Committee’s passage of legislation that would raise roughly $2 trillion of new revenue through tax increases on businesses and individuals.
“The Big 'I' was disappointed to see House Democrats on the Ways and Means Committee vote to move forward with a number of substantial tax increases on our nation's small businesses," said Charles Symington, Big “I" senior vice president of external, industry and government affairs.
“The last 18 months have been incredibly difficult for small businesses across the country, with many being forced to close permanently due to the coronavirus pandemic. As Main Street small businesses try to recover, the last thing they need to be worried about is a tax increase coming out of Washington, D.C."
The legislation includes several harmful provisions for small businesses. Important for pass-through businesses, it would raise the current top individual tax rate from 37% to 39.6% while adding an additional 3% surtax on individuals with adjusted gross income exceeding $5 million or $2.5 million for a married individual filing separately. The plan also takes aim at the 20% small business deduction by setting the maximum allowable deduction at $500,000 for joint returns, $400,000 for an individual return and $250,000 for a married individual filing a separate return.
Additionally, the proposal increases the top capital gains tax rate from 20% to 25%, effective after Sept. 13, the date House Democrats introduced the tax portions of their legislation. The legislation also replaces the flat corporate income tax with a graduated rate structure. The rate structure provides for a rate of 18% on the first $400,000 of income; 21% on income up to $5 million; and 26.5% on income thereafter. The benefit of the graduated rate phases out for corporations making more than $10 million.
“The Big 'I' is especially concerned with the combined impact that these tax increases will have on Big 'I' members and their clients," said Wyatt Stewart, Big “I" assistant vice president of federal government affairs. “The Big 'I' urges House Democrats to oppose these tax increases as the legislation makes its way to the House floor. As the economy tries to recover from the impacts of COVID-19, now is not the time to increase taxes on our nation's job creators."
Funding the NFIP
One of the most pressing items to accomplish by Sept. 30 is to fund the federal government and reauthorize a number of critical programs, including the National Flood Insurance Program (NFIP).
Any lapse in the NFIP would mean policyholders would not be able to obtain coverage.
This could be problematic to policyholders across the nation who are facing an increasing number of severe flooding events.
Additionally, Congress must act to raise the debt ceiling sometime this fall. Republicans and Democrats are currently arguing whether a debt limit increase should be included in government funding legislation or the reconciliation package. For insurance agents, disagreement between the two parties could lead to a government shutdown, which could then lead to a lapse in the NFIP.
As many of these issues come to a head at the end of September, the Big “I" will continue to advocate on behalf of its members and strongly oppose any attempts to increase taxes on independent agencies.