-- September 13, 2000
-- Vol. l. No. 6

In this issue:

• NELSON SEES NEW MOMENTUM IN CONGRESS FOR IMPROVING MSA'S, PATIENTS BILL OF RIGHTS.

• NEW OPPORTUNITY FOR AGGIE BOND CAP EXEMPTION LEGISLATION

• DEATH TAX VETO OVERRIDE FAILS, ISSUE WILL REMAIN FOR NEW CONGRESS.

• CA HEALTH CARE CAMPAIGN KICKS-OFF IN IOWA, MONTANA MEETING NEXT.

• HEALTH TAX DEDUCTION, SOME SMALL BUSINESS TAX REFORM MEASURES STILL POSSIBLE IN MINIMUM WAGE BILL.

• ENHANCED AMTA PAYMENTS OUT THIS MONTH TO FARMERS.

• MINGE INTRODUCES BEEFED-UP ANTITRUST LEGISLATION.

• CHECK OUT CA'S NEW WEBSITE AND SIGN UP FOR CHANCE TO WIN TRIP TO HAWAII.

CA PRESIDENT NELSON RETURNS FROM CAPITAL HILL MEETINGS; REPORTS RENEWED INTEREST IN MSA LEGISLATION, COMPROMISE PATIENTS BILL OF RIGHTS

CA President Wayne Nelson was in Washington early this week for meetings on Capital Hill on legislative initiatives CA is pressing before Congress adjourns in early October and heads back for local elections. Following a meeting with House Ways and Means Committee Chairman Bill Archer, R-Texas, Nelson reports that the powerful Archer is aiming to move several tax provisions in the waning weeks of his last legislative session before he retires.

• There is renewed interest in legislation to reauthorize and improve tax-favored Medical Savings Accounts (MSA's). MSA's are now set to sunset on December 31, 2000. The proposed MSA language would reauthorize MSA's to be offered ongoing. It would also increase the allowable, tax-deductible annual contribution up the 100 percent of the medical deductible of the health plan. It would also improve MSA's by authorizing lower deductible plans with $1,000 deductible for individuals, $2,000 deductible for families. More small businesses would also be allowed to take advantage of MSA's.

• It is probable that some form of a stripped-down Patients Bill of Rights stands a chance of passage, unfortunately with many of the best, constructive portions of the bill stripped out. The primary focus is to fix abuses of managed care. It remains to be seen if it will deal with the entire insurance industry, or be limited to corporate self-insured plans.

AGGIE BOND CAP EXEMPTION LEGISLATION MAY GET NEW TRACTION BEFORE END OF LEGISLATIVE SESSION

CA President Wayne Nelson met with Sen. Charles Grassley's chief agricultural aide on Tuesday, Sept. 12. Nelson learned that Grassley is poised to introduce two important CA-backed tax legislative proposals - 1. the proposed removal of the current cap on state's use of tax-exempt private activity bonds for beginning farmers and ranchers programs, and 2. legislation that would provide incentives to support further development of farmer-owned cooperatives. Grassley pushed for these proposals in a Senate Finance Committee meeting on Monday. Grassley pointed out that the total cost of these two provisions is miniscule - less than $100 million over five years - compared to the recently-vetoed estate and marriage tax reform proposals, and other more ambitious efforts. Inspite of their low cost, Grassley and Nelson believe they represent a good payback and great long term value to agriculture.

CONGRESS' FAILURE TO OVERRIDE VETO OF ESTATE TAX ELIMINATION BILL DOESN'T MEAN THE DEATH TAX IS PERMANENT

Last week's close vote in the U.S. House of Representatives that failed to gain enough votes to override President Clinton's veto of the Death Tax Elimination Act won't be the end of the story on this issue. The bill, which would have phased out federal estate taxes over a 10-year period, became a case study example of a proverbial political football in an intensely competitive political football season.

The bill actually proposed very modest reductions in the first years of the phase-out - cutting the current maximum tax rate of 55 percent on estates above trigger levels to 50 percent next year, then cutting it by one percentage point per year from 2003-2006, 1.5 percent more in 2007, and two percentage point cuts in 2008 and 2009, before elimination in 2010.

The Democrats charged it gave too much aid to the wealthy, and the GOP labeled estate taxes patently unfair, misguided and harmful to family-owned businesses. Both sides charged the other with being more interested in politics than the substance of the issue. The Democrats did say they were open to some reduction in the level of estate taxes, but it remains to be seen if the parties will agree to come together behind a tax cut compromise package before the elections. It originally passed the House with substantial Democratic support, but the 274 votes to override (versus 157 against) fell 14 votes short of the necessary two-thirds majority. Yet, it confirmed wide bipartisan support for ending the Death Tax and leaves open possibilities for future action.

CA has worked long and hard for estate tax reform, along with a host of other small businesses and agricultural organizations. CA Chairman Milt Smedsrud, said, "It's a shame the President's legacy for family farmers and family businesses will be tainted by this veto. The Death Tax places an undue strain on rural communities, with the loss of farm and small businesses, plus the loss of jobs associated with these enterprises."

CA's "CAMPAIGN FOR CONSUMER CHOICE AND LOWER HEALTH COSTS" KICKED OFF AT MEETING IN CHEROKEE, IOWA; BOZEMAN, MONTANA MEETING SET FOR OCTOBER 6

The grassroots part of CA's new health care initiative, "The Campaign for Consumer Choice and Lower Health Costs" got a successful launch Sept. 5 at a local townhall dinner meeting held in Cherokee, Iowa that drew approximately 50 CA members, friends and interested consumers.

Attendees heard from CA President Wayne Nelson about the campaign's call to Congress to make wiser choices in health care reform that are focused on building a more competitive, consumer-driven health care system rather than on regulations that have restricted choice and driven up costs of health care. The meeting also produced signed petitions supporting the five main points of the campaign:

1. Expand choice available in health plans, while reducing unnecessary mandates that drive up costs.

2. Provide 100 percent tax deduction for health premiums for everyone who pays for their own health insurance.

3. Provide refundable tax credits, vouchers or other incentives so more working people can afford health insurance.

4. Strengthen support for state risk pools to offer insurance access for the uninsurable.

5. Strengthen the ability of member-owned associations to bargain for better, affordable health plans for their members.

The next local grassroots meeting is set for October 6 in Bozeman, Montana.

COMPROMISE MINIMUM WAGE BILL STILL IN WORKS WITH SOME SMALL BUSINESS TAX BREAKS

Nelson reports that interest is still high in passing some form of a Minimum Wage Increase Bill. Small business advocates, including CA & the Self-Employed, will continue to assure that the legislation will include some of the small business tax breaks as a trade-off for the increased costs for small business. Tax provisions still high on that agenda include:

• Accelerating the allowing of a 100 percent tax deduction for health insurance premiums for the self-Employed.

• Section 179 - raises the amount of depreciable equipment eligible for immediate expensing from $19,000 to $30,000.

• Installment Sales Tax Glitch - Nelson noted Ways and Means Chairman Archer reiterated his support for reinstating the installment sales provision for small businesses that use the accrual basis for tax purposes.

• Meal Deduction - increases the business meal deduction from 50% to 80% effective 2001.

• Alternative Minimum Tax (AMT) reform.

• Pension plan reform -changes in 401K plans that would increase allowable contributions from $10,000 to $14,000 per year, and also allow increases in annual contributions to IRA's for individuals. This provision looks to have the strongest backing. If it's not included in this bill, it stands a good chance to be attached to another vehicle.

ENHANCED AMTA PAYMENTS SENT OUT TO FARMERS IN SEPTEMBER

The emergency farm relief payments, included under the omnibus crop insurance reform package approved by Congress earlier in the summer, have been sent out from USDA to grain producers this month. The financial assistance included a doubling of the scheduled Agricultural Market Transition Act payments due farmers this year under the 1996 farm legislation. The relief payments were needed as farmers face a third consecutive year of unprecedented low crop prices, and are set to begin fall harvest of another year of surplus crops.

"With low crop prices and high fuel costs, many producers will not make back the cost of preparing, planting and delivering the work of an entire season," said House Agriculture Committee Chairman Larry Combest, R-Tex. "September's additional transition payment delivers on our financial commitment to producers with a timely and meaningful result."

CA's two-year "Campaign for Family Agriculture" will continue to push for an improved economic safety net for farmers in the new Congress.

MINGE INTRODUCES BEEFED-UP ANTITRUST LEGISLATION TO CONTEND WITH CONCENTRATION IN AGRICULTURE AND FOOD INDUSTRIES

In the wake of concerns about consolidation and market control in the agriculture and food industries, Rep. David Minge, D-Minn., has introduced legislation that would strengthen antitrust laws and enforcement. The bill would increase criminal penalties for antitrust violations from $10 million to $100 million. It would also beef-up federal oversight of mergers, including establishing a position for agriculture at the Justice Department's anti-trust division. While farmers have expressed deep concerns about the lack of competitive markets for the commodities they produce, Minge said "There's a new awareness of the cost to consumers from violations of antitrust laws," citing the recent Microsoft court case. He acknowledged that chances are slim the bill would come up for a vote in this Congress, but pointed out it will help gain attention for the issue and can be reintroduced in the next Congress.

CA'S NEW WEBSITE GOES LIVE. VISIT AND SIGN UP FOR CHANCE TO WIN TRIP TO HAWAII

Check out CA's new website, if you haven't already, at www.selfemployedcountry.org. CA's revamped site caters to self-employed people and their needs, featuring an array of discounts and deals from commercial partners, as well as daily news updates from Associated Press, CA news on issues of interest to members from Washington and the states, plus free email, free classified ads, and free yellow pages. Be sure to sign up for the drawing for a free trip to Hawaii.

FEEDBACK WANTED

CA welcomes member comments, ideas and thoughts on these and other legislative issues. Email us back your reply. Or give us a call and ask for Wayne Nelson, President, or Bruce Abbe, Vice President of Public Affairs at 1-800-432-3276.

Email your reply to - publicaffairs@cainc.org