WASHINGTON — At the Plumbing-Heating-Cooling Contractors – National Association’s 2011 Legislative Conference, May 11-12, here, approximately 125 PHCC–NA members met with senators and representatives about issues facing plumbing and HVAC companies across the country. The main issues discussed were 3% withholding, the estate tax, Carl D. Perkins Career & Technical Education Act Funding and tax credits.
The conference started out with a legislative briefing and orientation in which Mark Riso, director of government relations, PHCC–NA, reviewed key points and background of the issues PHCC was lobbying on. Jo Wagner, president of CTO Inc., Harlingen, Texas, and chair of the PHCC–NA government relations committee, spoke to members about grassroots lobbying.
When asked by CONTRACTOR why members should partake in grassroots lobbying, Wagner said that it is important to first be involved in local and state politics, then take it to the next level.
“We are all upset about jobs, the environment, and the national debt, and we know Washington has to do something about all of these things, but the best place to start doing something about it is at home,” said Wagner. “We at the Texas PHCC stay involved in state politics, so when we go to Washington we know the issues that mean the most to all of us and our businesses and can intelligently discuss them.”
Guest speakers at the briefing included Jonathan Karl, ABC News Senior Congressional Correspondent, and Dr. Winslow Sargeant, chief counsel of advocacy of the U.S. Small Business Administration, an independent voice for small business in the federal government. Sargeant spoke about a variety of policies, including the 3% withholding.
“The Advocacy is very involved in this issue, and we want to eliminate this unfair tax,” Sargeant told PHCC members.
According to Mark Giebelhaus, chairman of Past National Officers, PHCC–NA, and member of the association’s Government Relations Committee, PAC Committee, Nominating Committee, Foundation Chairperson’s Advisory Committee and Foundation Investment Management Committee, and president of Marlin Mechanical Corp., Phoenix, the 3% withholding is the most important issue for his business.
“We are doing more federally funded projects and it would be very detrimental to have an additional percentage withheld on them,” explained Giebelhaus. “They already hold 10% retention to “insure” that we complete the project. Then to withhold an additional 3%, with no idea of when we would get it back is unreasonable. Industry average net profit before taxes is somewhere around 2%. If they hold 3% we are in the red.”
The Office of Advocacy of the U.S. Small Business Administration issued a press release the same day Sargeant spoke at the PHCC Legislative Conference, stating that Sargeant applauded the recent decision by the Internal Revenue Service to postpone the starting date for the 3% contractor withholding rule and continued to call for its elimination. With the postponement, the rule now applies to contracts awarded after Dec. 21, 2012.
On May 12, PHCC – NA members visited Capitol Hill.
According to Frank Maddalon, president of PHCC–NA, and founder and owner of F. R. Maddalon Plumbing & Heating, Trenton, N.J., there were very positive reports from members regarding their visits on the Hill.
“To me, the tax credits and Perkins Act are the two major issues,” explained Maddalon. “If we can get the tax credits back to where they use to be that will mean work, and the Perkins Act is so important since it helps fund training that is needed for a skilled workforce.”
Kate Tynan of McDonnell Plumbing, Needham, Mass., met with Representatives Stephen Lynch and William Keating of Massachusetts.
“Congressman Lynch was able to come up and meet us for about 30 minutes and his senior policy advisor, Jim Gordon, also took time before and after our meeting with the Congressman to discuss our issues,” said Tynan. “During that time, we discussed the estate tax, energy tax credits, the 3% withholding and the Perkins Act. The Congressman was a laborer for over 18 years and understands the value of trained workers and a good education. He also is constantly searching for green technologies (as are most from what we heard), the energy tax is huge and he sees the value of it from all sides.
“Congressman Keating met with the entire Massachusetts delegation,” said Tynan. “There was a great back and forth dialogue regarding all the PHCC issues. Attention was paid to the estate tax legislation as it is a hot topic currently and will dictate the future of small business. Additionally, we discussed education and the value of the Perkins legislation.”
According to Tynan, the meetings were a huge success.
“I think the issues were well presented and as long as people interjected their own life examples, our message should have been heard loud and clear.”
Ben Friedman, marketing manger of Atlas Plumbing Co., Dallas, and board member of the North Texas PHCC, also said the conference was a success. He met with Senator John Cornyn, Representative Bill Flores, Senator Kay Hutchinson, aids of Representative Ron Paul and Representative Pete Sessions’ office — all representing Texas.
“While we didn't get to speak to every congressman we wanted to, they did have their top aids (staff members) meet and greet us and make us feel welcome,” said Friedman. “Obviously, I would have preferred to have met with the Congressman directly, but knowing how busy they were I understood their time was limited.”
According to Friedman, the Perkins Act is most important since there is a current shortage of plumbers in the U.S. and funds are needed to help educate and train those that want a career in the trades to be the best techs possible, and the tax credit that was cut from $1,500 to $500 is most important too.
“The tax credit helped us as a small business drive more energy-efficient product into the marketplace while making it cost effective for homeowners to take advantage of the energy upgrades,” explained Friedman. “Similar to the mortgage tax credits that also went away last year, the government needs to continue to increase household spending any way they can and tax credits are a good way to do that; keeping the economy on an upward track vs. declining track.”
According to Wagner, the one issue that can certainly hurt the trades in years to come is the Perkins Act and the slashing of those funds.
“We are already seeing the effects of a shortage of technicians in this country that are qualified to do plumbing, electrical and HVAC, and this money is desperately needed for that training,” said Wagner.
In meetings on the Hill, Wagner brought up an issue that is of interest to her, which is why aren't the banks lending money to developers.
“I explained that I knew many [developers] and was one myself and the banks although admittedly have billions to loan, their hands were tied by new banking rules,” said Wagner. “In other words, we have gone too far the other direction in loan requirements. They all admit this is unfortunately true. We will never get jobs moving if we can't get money moving also.”
When asked why is it important to repeal the estate tax, Jim Pendergrass, executive director, PHCC of North Carolina, told CONTRACTOR that it’s one of the more blatant examples of double (or more) taxation. “Much of the value of a company has already been taxed at a local, state and national level,” said Pendergrass. “To quote another phrase, the Death Tax just ‘adds insult to injury.’
“It will be a part of turning back arrogance, and hopefully turning us more toward statesmanship,” continued Pendergrass. “When the argument is proposed that, ‘Well, your company is more valuable because we've provided a favorable environment for your business to thrive, so we're entitled to a cut of that increase,’ to me it is unforgivably arrogant of our government to think they had anything to do with a company's growth and value increase. Experience says that through time their regulations, rules, taxes and oversight seem to do everything possible to hinder, not help, a small business owner's hard work. Even at current rates, with a $5 million dollar exemption, how on earth can you justify that you're entitled to 35% of a companies worth beyond that? That is the certainly epitome of arrogance.
“It is a jobs killer, as the tax burden imposed upon a successor's generation means less money available for business expansion, and at times even has a negative impact on its ability to retain employees. At worst case, which happens often, the Death Tax will kill a business, when a successor doesn't have the funds to both pay the tax and stay in business.”
More than ever, p-h-c industry must get back to grassroots