Association News

NWRA urges US House and Senate leaders to oppose 'harmful' legislation

The Arlington, Virginia-based National Waste & Recycling Association has joined other organizations in a letter to congressional leaders urging them to oppose the expansion of the Net Investment Income Tax (NIIT) in reconciliation legislation.

NIIT is a 3.8 percent tax on investment income that usually only applies to high-income taxpayers. It also could apply to estates, families, individuals and trusts that meet certain tax income thresholds. Generally, this includes interest, dividends, capital gains, rental and royalty income and nonqualified annuities, the Internal Revenue Service says.

The expansion would include applying the 3.8 percent tax to income earned by pass-through businesses, generally small businesses, that earn more than $400,000 annually.

The letter, signed by groups like the Plastics Industry Association, the American Bankers Association and the Tire Industry Association, says the 3.8 percent NIIT would be expanded to individuals and family members who participate in their businesses. Additionally, the move would limit the ability of small, individually- and family-owned businesses to fully deduct their losses during an economic downturn by expanding and extending the excess business loss limitation for noncorporate taxpayers. The letter says that while expanding the NIIT is sometimes characterized as closing a tax loophole and would increase Medicare funding, neither of these claims are true. When the NIIT was created as part of the Affordable Care Act, it was meant to apply to investment income only. The business income of small individually and family-owned firms where the owners run the business was exempted and does not constitute a loophole.

Also, attributing funds raised by the NIIT expansion to Medicare likely would violate the Byrd Rule, which determines what can be included in a reconciliation bill, according to the letter.