The HVAC industry must not be complacent after tax reform passage
It’s hard to believe President Donald Trump has been in office for a year now. But in that first year, tax reform has been accomplished, and he can check off that big win for himself, families and businesses across America.
The first quarter or two of 2018 is the “Let’s figure out how to implement this thing” phase for the new tax reform package, and while there is definitely caution in regards to what the Internal Revenue Service says about the different provisions, we at the Heating, Air-conditioning and Refrigeration Distributors International are pretty optimistic about some of the changes the legislation is bringing to our industry.
In case you haven’t been able to keep close tabs on tax reform or if you’ve forgotten some of the details since the passage, here’s some of the big things we liked:
- Inclusion of industry-endorsed HVAC Expensing and Technology Act provisions (full, immediate expensing of qualified HVAC products)
- Improvement on the treatment of pass-through entities
- Preservation of “last-in, first-out” accounting
- Repeal of the alternative minimum tax
- Progress toward repeal of the estate tax
Although we in the HVACR industry share in this big win, we cannot grow complacent. While we’ve got some big wins to check on our side of the ledger, there is more to do as an industry.
For example, the tax reform bill did not fully repeal the estate tax, but instead doubled the exemption threshold to $11.2 million for individuals and $22.4 million per couple. Many HARDI members are multigenerational family-owned businesses that feel the hit from the estate tax. The issue here that is still difficult for many legislators to grasp is that many of these family-owned businesses such as HVACR distributors hold the majority of their equity as inventory. If this type of business is valued at, say, $30 million, the estate tax scoops out a chunk of that business, and if that chunk comes from inventory that needs to be liquidated to pay that bill, that whole business has just been torpedoed.
There should never be an acceptable threshold for the estate tax. The long-term goal is and has always been for full repeal. Moreover, most of the tax reform provisions for individuals, including the increased estate tax exemption, currently have expiration dates. We need to push to make these provisions permanent.
HARDI’s Washington-based lobbyists — Vice President of Government Affairs Palmer Schoening and Government Affairs Director Alex Ayers — are out there fighting for our industry and keeping HARDI members informed on important developments.
To help them ensure we are representing your interests, or for you to gain a better understanding of legislative or regulatory changes that may affect your business, they welcome all of your comments and questions email firstname.lastname@example.org or email@example.com.
Together and individually, we need to keep up the pressure, engaging with elected representatives to try and carry this momentum through what is shaping up to be an intense midterm election year.
A great way for you to directly help ensure our industry’s interests are maintained and pursued is by taking advantage of HARDI’s annual congressional fly-in event May 22-23. If you’re a HARDI member who has never been before, we set up meetings for you with congressional representatives and staffers all day on Capitol Hill, and we prepare you to successfully navigate them to help ensure your voice gets heard and makes an impact. After all, some of the tax reform provisions such as those from the HEAT Act were included as a direct result from our efforts at the previous event in May 2017.
Hopefully we’ll see you there, and while you probably never get to hear this elsewhere, Palmer, Alex and I would love to talk politics with you.