PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

HEADLINE ISSUES: Build Back “Better,” Update on the Vaccine Mandate

By at 27 November, 2021, 11:33 am

by Karen Kerrigan – 

Before the Thanksgiving break, the U.S. House passed (220-213) a massive spending package. The “Build Back Better” Act is not fully paid for, according to the Congressional Budget Office (CBO); includes higher taxes on private businesses (a disproportionate impact on family businesses and pass throughs as documented by the S-Corp Association); and imposes various requirements across industries.  The Committee for a Responsible Federal Budget reports that “extending temporary provisions in the bill could add $2 trillion to $2.5 trillion to the total cost” of the “Build Back Better” (BBB).

Wasn’t the BBB supposed to cost $0?

As SBE Council president & CEO Karen Kerrigan wrote in a letter to all U.S. House members about BBB prior to the vote:

“This massive tax and spending package is irresponsible, as our economy is flailing through record inflation and as our small businesses desire stability through responsible policy… The gimmicky BBB creates deficits and will add to government spending woes in the not-too-distant future, which will inevitably lead to more tax increases on businesses. Many small businesses are already teetering on the brink of closure, and further disruptions via unremitting inflation, supply chain shortages, higher taxes and the unforeseen consequences caused by BBB may actually mean Build Back Never for those vulnerable firms that managed to grind it out over the last 19 month of the pandemic.” 

And as she told Inc. in an interview following the vote:

“Inflation, supply chain challenges, high gas prices, and labor shortages could worsen if BBB were signed into law. It would extract capital out of the private sector that is needed for investment and to weather the unstable economy moving forward.”

In addition, new price controls on drugs via “negotiation” would undermine innovation and access to life-saving drugs. The CBO also noted that fewer drugs would make their way into the pipeline as a result of the price controls in BBB. In a blog post, SBE Council chief economist Ray Keating noted:

“Imposing Rube Goldberg price controls on the pharmaceutical industry means that lives will be diminished and lost. After all, the pharmaceutical industry produces drugs, medicines and vaccines that improve and save lives. But when government seeks to inflict price controls, it is effectively limiting potential returns on innovative endeavors in the areas of drugs, medicines and vaccines that are fraught with high costs, uncertainty and risk.”

And in a TownHall.com Op-ed, Kerrigan wrote:

“The impact on business would be enormous. An analysis by the Congressional Budget Office found that if passed, the proposal would ‘immediately’ lower ‘current and expected future revenues’ for biopharmaceutical companies, with ‘broad effects’ on the drug market. The healthcare consultancy Avelere did its own analysis, and found that the industry as a whole could face a loss of more than $1 trillion in revenue over 10 years….As a percentage of revenue, drug makers spend more on research and development than other industries — an average of 23 percent across the sector. Facing price controls, though, drug companies would be forced to cut spending.”

SBE Council has been telling Congress and the Biden Administration that policies need to promote U.S.-based innovation, investment and quality job creation – not harm it, as the price control measure and other provisions in BBB would do. Additional provisions of the House-passed BBB include:

$80 billion in new IRS funding. A good portion of which will go towards enforcement with 87,000 new IRS agents. “Funding for audits, investigations, and other tax enforcement would be 23 times greater than funding for taxpayer education and assistance,” according to ATR. And, as noted by Chris Edwards of Cato “bigger is not better,” as “more aggressive enforcement would also cause collateral damage.” Currently, the U.S. has the lowest tax gap in the world and our “shadow economy” is the second smallest among 157 countries writes Edwards.

What about the next (or continuation of the current) pandemic? From Citizens Against Government Waste: “$550 billion on climate change, or 31 percent of the total cost [of BBB] and 170 times more than Democrats allocated to prepare the country for the next pandemic.” In addition, “an extra $4,500 tax break for buying electric cars made in union shops.”

Tax hikes aimed at “billionaires” punishes entrepreneurs. According to the U.S. Chamber: “Eighty-six percent of the businesses that receive investment capital (venture capital, angel investors, private equity) are small businesses. By putting higher taxes on investments, the provisions will drive wealthy investors away from investing in entrepreneurial ventures and, instead, they will look to investment portfolios that are risk averse.”

$100,000 fines. Again, from the U.S. Chamber: Under the proposed legislation, small businesses could face up to $100,000 per citation from the National Labor Relations Board (NLRB)—double the current amount—for actions deemed “anti-union.”

Puts a “tax target” on U.S. manufacturers. “This bill, regardless of its intentions, is paid for by taxes that will hit manufacturers harder than other industries…This comes at a time when Americans are counting on manufacturers to lead our recovery and respond to supply chain challenges. The ‘book tax’ in particular harms manufacturers more than others because it increases the cost of machinery and equipment purchases, which are central to manufacturers’ operations and our ability to create and support American jobs,” writes NAM in response to House BBB passage.

Action now moves to the Senate, where Senators Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) have expressed various concerns about the size and scope of the package, and specific provisions. Senate Republicans have vowed to fight the bill and “end this madness.”

Vax Mandate or No Vax Mandate?

That question is making its way through the courts, and on November 19 the Department of Labor said it would not enforce the vaccine mandate on employers “until further court order” following a federal appeals court decision that blocked OSHA’s vaccine mandate from taking effect.  While OSHA’s emergency temporary standard (ETS) requires businesses with 100 employees or more to have workers show proof of vaccination and weekly testing for unvaccinated employees by January 4, on December 5 these businesses are required to have collected and recorded proof of vaccination status for all employees, along with a vaccination policy in place. On December 5, mask-wearing for the unvaccinated would be required along with paid leave for those getting a shot. OSHA inspections were to begin at this time, with a maximum penalty of $13,653 per violation, and willful or repeated violations carrying a $136,532 maximum per violation.

According to OSHA, it has “suspended activities related to the implementation and enforcement of the ETS pending future developments in the litigation.”

As SBE Council president & CEO Karen Kerrigan noted in a media release at the time of the announced mandate: “This vaccine and testing mandate will generate a big mess, and I urge President Biden to rethink this ill-advised step.” And on Fox Business with Making Money with Charles she said that businesses were managing the vaccine issue with great sensitivity, and employee and customer safety in mind. All seemed to be working out fine in private businesses, until President Biden announced the mandate. According to a Job Creators Network poll of employers, 44% said that some employees would quit if their business enforced the worker vaccine mandate.

Please keep in mind that OSHA regulators are still considering whether to impose the vaccine mandate on employees under the 100-employee threshold. They are currently seeking comment on the issue and SBE Council plans to file comments, which are due December 6.

On November 17, Senator Mike Braun (R-IND) was joined by his all his GOP colleagues in filing a formal challenge against the vaccine mandate under the Congressional Review Act (CRA). Again, every Republican member joined the challenge. The CRA is the official process for Congress to eliminate an executive branch rule. With regard to the vaccine mandate impacting federal contractors and subcontractors, which has no testing alternative and even applies to those who work remotely ALL the time, Senator James Lankford (R-OK) and Steve Daines (R-MT) have filed an amendment (#4097) to the National Defense Appropriations Act that would overturn those executive orders.

ERC Fix? The Employee Retention Credit (ERC) was terminated early for the fourth quarter of 2021 as part of the infrastructure package signed by President Biden on November 15.  The ERC was advanced to help SMB employers retain workers during COVID-19, and many already took the credit for the fourth quarter prior to its unexpected sunsetting. The IRS has taken notice and plans to issue some type of guidance. SBE Council will be watching for the guidance.

As noted by Greenberg Traurig: “The 70% refundable tax credit for wages paid (up to a maximum of $7,000 per employee per quarter) may be claimed quarterly in 2021 by an eligible business (one with 500 or fewer full time employees in 2019) if the business will have a greater than 20% reduction in gross receipts for the quarter, compared to the same quarter in 2019.”

That means employers will have to pay it back, unless Congress steps in and reverses the sunset, which SBE Council supports.

Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council.

 

News and Media Releases