SEMA Federal Legislative Priorities: 2015
Low-Volume Motor Vehicle Manufacturing: SEMA is working with key members of Congress to advance legislation that would enable low volume car manufacturers to produce up to 500 replica vehicles per year that are designed to resemble classic vehicles. H.R. 2675, the “Low Volume Motor Vehicle Manufacturers Act of 2015,” directs the National Highway Traffic Safety Administration (NHTSA) and the U.S. Environmental Protection Agency (EPA) to establish a regulatory structure covering limited-production vehicles. Currently, the U.S. does not have a separate process for certifying automobiles produced in limited numbers. The system is only designed to regulate companies that mass-produce millions of vehicles, which has resulted in an unnecessarily restricted “one-size-fits-all” marketplace. H.R. 2675 creates an alternative regulatory program for American companies that acknowledges the unique circumstances associated with limited production custom vehicles.
The bill provides for the manufacture of “replica” vehicles, which it defines as re-creations of vehicles originally produced at least 25 years ago. Generally, these specialty vehicles are typically found in exhibitions and parades or used for occasional transportation. The replica vehicles produced under this bill would be required to meet current emissions standards, with low volume manufacturers being permitted to install engines that have already been EPA-certified for vehicles being produced by the larger automakers.
H.R. 2675 presents an opportunity to unlock the talents of SEMA’s members and will have an immediate positive effect on the American economy by invigorating a depleted manufacturing base and creating jobs in the automotive sector. This bill modernizes an outdated regulatory approach and creates a more equitable playing field for small manufacturers.
Collector Car Appreciation Day: As a result of SEMA’s strong relationships on Capitol Hill, the U.S. Senate passed a resolution in June of 2015, which designated July 10, 2015 as "Collector Car Appreciation Day" (S. Res 196) and recognized that “the collection and restoration of historic and classic cars is an important part of preserving the technological achievements and cultural heritage of the United States.” The date marks the sixth consecutive commemoration in what has become an annual event to raise awareness of the vital role automotive restoration and collection plays in American society. SEMA thanks Senator Richard Burr (NC) for introducing the resolution and Senator Jon Tester (MT) for co-sponsoring the measure and working to get it passed in the Senate!
To celebrate, enthusiasts across the country gathered to recognize the value in collecting and restoring historic and classic cars. With SEMA’s and SEMA’s Action Network’s support, car clubs, enthusiast organizations, and affiliated businesses hosted more than 140 events to commemorate the day. Events ranged from car cruises to small-business open houses and product giveaways.
E15 Ethanol: The EPA approved the sale of gasoline containing 15% ethanol (E15) for use in 2001 and newer vehicles while making it illegal to fuel older cars, motorcycles and other motorized equipment based on evidence that it could cause damage to those vehicles and engines. SEMA is engaged in this matter because ethanol can cause metal corrosion and dissolve certain plastics and rubbers, especially in older cars that were not constructed with ethanol-resistant materials. This issue is especially problematic due to the fact that the EPA requires gas pumps to simply include a warning label, which does a poor job of making motorists aware that E15 use may damage their vehicle.
E15 is directly related to the Renewable Fuel Standard (RFS), which mandates that an increasing amount of biofuels must be blended into gasoline each year, increasing from 9 billion gallons in 2008 to 36 billion gallons by 2022.The EPA has turned to sales of E15 to achieve the law’s artificial mandate.
SEMA continues to work with a diverse coalition of organizations opposed to the RFS mandates, from the auto/boat industries to the petroleum, food and environmental communities. SEMA’s position on E15 is very clear: EPA needs to set more realistic RFS goals and rescind the E15 rule. The association supports legislation (HR 704) to prohibit the sale of E15 and eliminate the RFS’s mandate that 15 billion gallons of corn-based ethanol be blended into the U.S. fuel supply each year.
Bonneville Salt Flats: The Bonneville Salt Flats (BSF) are a national treasure and unique resource of international significance central to the history of motorsports. Hundreds of land speed records have been set and broken there in a variety of automotive and motorcycle classes. While 2014 marked the 100-year anniversary for landspeed racing at the BSF, the Salt Flats have significantly decreased in size, strength and thickness over a number of decades as salt brine was channeled away from the area.
SEMA, along with the Save the Salt Foundation and a number of other organizations and companies, has been actively participating in the effort to help save the BSF and support a requirement that salt brine be pumped onto the BSF. About 600,000 tons of salt was pumped in 2013 and nearly 1 million tons the previous two years. During the summer in 2014, the coalition deposited about 2,000 tons of dry salt at the end of the access road to the BSF.
The “Save the Salt Coalition” is pursuing a public fundraising campaign to expand the pumping program and to pursue other alternative efforts. All public contributions will be used to purchase salt and the equipment necessary to pump, transport and lay down the salt. For those interested in making a donation, please visit the “Save the Salt Coalition’s” donation page at http://www.savethesalt.org/donate.html.
SEMA is also working with key members of Congress to raise the profile of this issue on Capitol Hill and identify ways Congress could help to restore the Bonneville Salt Flats.
OHVs and Land Use Legislation: Threats to off-highway vehicle (OHV) access typically take form in legislation passed by Congress or regulations issued by the U.S. Forest Service (USFS), Bureau of Land Management (BLM) or other federal and state agencies. The actions threaten recreational access, designate lands as “wilderness” (roadless) or “National Monuments,” or unnecessarily close lands to protect endangered species. Public land access issues are of keen interest to off-roaders and the SEMA-member companies that market products to those groups. SEMA supports land-use decisions that are reasonable and enjoy local community support and will continue to monitor and keep SAN members informed of restrictive legislative proposals.
For additional information, please click on the following link: http://www.semasan.com/page.asp?content=off_roading&g=semaga
National Monuments: Under current law, the President of the United States has the authority to declare public land with “historic or scientific interest” to be a National Monument. While this designation does not immediately close any roads, it prohibits new roads or trails for motorized vehicles and will require drafting of a new land management plan. SEMA is particularly engaged on this matter, as President Obama has used his powers under the “American Antiquities Act of 1906” 16 times to designate land and sea as national monuments over the past six years. Most recently, President Obama designated 21,500 acres of land in south-central Colorado as the “Browns Canyon National Monument” in February 2015.
President Obama is also being pressured to establish a 1.4 million acres “Greater Canyonlands National Monument” in Utah, close 1,050 miles of off-road vehicle trails and monitor another 1,450 miles for future closure. SEMA and its motorized recreation partners sent a letter to the President urging him to abandon the idea, citing the positive economic impact of motorized recreation activities, which account for over $257 million in annual economic impact nationwide. SEMA supports a collaborative approach to land-use decisions, including input from local citizens, elected leaders and other stakeholders. This would include widespread local support for National Monument designation. Accordingly, SEMA supports HR 900 and S 228, which curtail the President’s power to unilaterally designate National Monuments by requiring that National Monuments be approved by Congress and the impacted state legislature(s). These bills would ensure greater public involvement in land use decisions and a more collaborative approach by local citizens, elected leaders and other stakeholders.
Congressional Automotive Performance and Motorsports Caucus: The Caucus was formed in 1996 in honor of the 100th year of the American automobile and to recognize the contributions the automotive performance and motorsports industry has made to the U.S. economy. This informal and bi-partisan Congressional Caucus, which now has over 70 members, pays tribute to America’s ever growing love affair with the car, motorsports and the specialty auto parts industry. Consumer sales of motor vehicle performance, appearance, comfort, convenience, and technology products total $33 billion in annually, while providing jobs for more than a million Americans. In its 19-year history, the Caucus is serving to raise the industry’s profile on Capitol Hill and in the eyes of the public. The Caucus does not seek to reach a consensus on legislative issues. For more information on joining the "Motorsports Caucus,” please contact Christian Robinson, PAC & Congressional Relations Manager, at ChristianR@sema.org or 202.783.6007 x. 20.
Health Care: While the Affordable Care Act was signed into law in March 2010, it continues to cause confusion amongst small and mid-size business owners alike. While the law is being phased-in over a number of years, many deadlines have been extended to ensure that businesses can comply with the law’s requirements. These extensions are appreciated, although they have added to the confusion for many business owners. SEMA encourages our member companies to review their current situation, speak with health insurance professionals and determine how to proceed. SEMA Government Affairs staff has compiled these resources with an easy to use website to assist our member companies with compliance at www.sema.org/healthcare.
Tax Code: The tax code was last reformed in 1986 when lawmakers simplified the code, broadened the tax base and eliminated many tax shelters and other preferences. It was a revenue-neutral effort, as the law decreased individual income tax rates and the number of deductions without adding to the deficit. Nearly 30 years later, the code has again become overly complex and the shelters and deductions have returned. Meanwhile, budget deficits have exploded and entitlement programs, i.e. Medicare, Medicaid and Social Security, are in need of fiscal reform.
While both tax and entitlement reform have been primary campaign themes for years, comprehensive tax legislation has not advanced in Congress. Among the most important reforms discussed in 2014 was a proposal from the former Chairman of the House Ways & Means Committee, which included a top corporate tax rate of 25% to be phased in over 5 years, a permanent research and development (R&D) tax credit, a permanent enhancement of Section 179 expensing for small businesses (provides a 50% bonus depreciation on capital investments), a modified capitol cost recovery system, a repeal of the corporate alternative minimum tax (AMT), and a repeal of “last in, first out” (LIFO) rules with transition rules. There was also discussion of creating two tax brackets, 10% and 25%, while providing a larger standard deduction, $11,000 for individuals and $22,000 for married couples.
In 2015, the Senate Finance Committee, which has jurisdiction over tax policy in the Senate, has formed five bipartisan Tax Working Groups in an effort to drive comprehensive tax reform efforts during the 2015-2016 session of Congress. Each working group is focused on one of the following areas of reform: 1) Individual Income Tax; 2) Business Income Tax; 3) Savings & Investment; 4) International Tax; and 5) Community Development & Infrastructure. Each group is responsible for analyzing options and developing potential legislative solutions within its assigned area. The House Ways & Means Committee has also worked behind the scenes on tax reform in 2015. However, neither committee has signaled a path forward regarding the various components of its plan for comprehensive tax reform.
While SEMA is closely monitoring comprehensive tax reform efforts, we are also working with Congress to extend bonus depreciation, Section 179 expensing and the R&D tax credit. Congress waited until the end of 2014 to approve these incentives for 2014. It is imperative that Congress makes tax policy decisions for future years, so that businesses don’t have to wait until late in the year to find out whether they will be able to use tax incentives on investments they made in their business earlier in the year. SEMA members make significant investments in R&D and capital expenses in order to create innovative, safe and efficient products for the global market. Accordingly, Congress needs to provide them with some certainty that tax incentives will be in place at the end of the year and in future years.
Below is additional information on the tax incentives that are of particular interest to SEMA members:
- Bonus Depreciation: This provision allows businesses to write-off 50% of the cost of new equipment in the first year rather than depreciating the cost over multiple years. SEMA contends that the depreciation write-off encourages companies to invest in newer, more efficient equipment which in turn increases sales and creates jobs.
- Section 179 Expensing: Congress extended the IRS’s “Section 179” expensing at a maximum deduction of $500,000, with a $2 million phase-out level for 2014. This incentive expired at the end of 2014. Absent its renewal in 2015, the allowance reverts to $25,000, with a $200,000 phase-out level.
- R&D tax credits: The Research and Development (R&D) tax credit, which drives innovation and encourages small business growth, expired at the end of 2014. The U.S. House of Representatives passed SEMA-supported legislation (HR 880) to renew the research and development (R&D) tax credit in May 2015. The bill increases the alternative simplified credit from 14% to 20%, makes the credit permanent and provides small businesses with a credit against the alternative minimum tax.
SEMA also supports a comprehensive approach to tax reform to reduce both corporate and individual tax rates, establish a tax structure that is competitive in the global marketplace, and eliminate the federal budget deficit. Many tax credits may need to be eliminated in order to reduce the overall tax rate. The reforms would create a predictable tax climate, allowing companies to pursue long-term strategies for economic growth. It is clear that companies cannot operate efficient businesses when their elected leaders run the country on a month-to-month basis. Washington politicians must tackle the tough issues: tax and entitlement reform.
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