AKFCF GAC 2011 Fall Regional AKFCF GAC 2011 Fall Regional MeetingsMeetings

Federal Legislative UpdateFederal Legislative UpdatePrepared by: Dan Gans, Polaris Consulting, LLCPrepared by: Dan Gans, Polaris Consulting, LLC

AKFCF 2011 Washington Fly-INAKFCF 2011 Washington Fly-IN

• October 4 – 6, 2011October 4 – 6, 2011

•the 6the 6thth Annual AKFCF Congressional Annual AKFCF Congressional Reception – over 1000 congressional staff Reception – over 1000 congressional staff and members of Congress attendedand members of Congress attended

Congressman Michael Grimm (R-NY) with Brandon

Robertson and Larry Starkey

AKFCF 2011 Washington Fly-INAKFCF 2011 Washington Fly-INcontinued…continued…

•Members of the GAC metMembers of the GAC metwith over 30 Member Offices with over 30 Member Offices to discuss the legislative to discuss the legislative Priorities of the AKFCFPriorities of the AKFCF

Membership of the GACMembership of the GAC

Southwest – Brandon Robertson, GAC ChairmanSouthwest – Brandon Robertson, GAC ChairmanGreat Lakes – Lesley Hottinger, PAC ChairmanGreat Lakes – Lesley Hottinger, PAC Chairman

Southeast – Wiley DeanSoutheast – Wiley DeanSoutheast – Chris Fowler, At-LargeSoutheast – Chris Fowler, At-Large

Northeast – Bob CarlucciNortheast – Bob CarlucciNorthwest – Brett SibertNorthwest – Brett Sibert

Northwest – Brett Harris, At-LargeNorthwest – Brett Harris, At-LargeUpper Midwest – Gene DuenowUpper Midwest – Gene DuenowSouthern California – Jeff BakerSouthern California – Jeff Baker

Upper Midwest – Peg Duenow, TreasurerUpper Midwest – Peg Duenow, TreasurerExecutive Committee Designees – Larue KohlExecutive Committee Designees – Larue Kohl

Larry StarkeyLarry Starkey

AKFCF Legislative PrioritiesAKFCF Legislative Priorities

•Ethanol SubsidiesEthanol Subsidies

• Tax Priorities / Super CommitteeTax Priorities / Super Committee

• NLRB / Card CheckNLRB / Card Check

• ImmigrationImmigration

EthanolEthanol

•AKFCF opposes subsidizing the end use of commodities for AKFCF opposes subsidizing the end use of commodities for one purpose to the detriment of anotherone purpose to the detriment of another

•The cost of commodities is approaching an all time high. The cost of commodities is approaching an all time high. Franchisees are particularly vulnerable to corn and chicken Franchisees are particularly vulnerable to corn and chicken pricesprices

•The price of chicken was at $0.82 per pound in October 2009 The price of chicken was at $0.82 per pound in October 2009 and now is at $1.05 per pound, a 25% increaseand now is at $1.05 per pound, a 25% increase

•Some franchisees are seeing their costs rise dramatically – up Some franchisees are seeing their costs rise dramatically – up to 10%to 10%

Super CommitteeSuper Committee

•The Super Committee, created by the Budget Control The Super Committee, created by the Budget Control Act of 2011, consists of 12 Members of Congress, 6 Act of 2011, consists of 12 Members of Congress, 6 Senators and 6 Representatives, divided bipartisanlySenators and 6 Representatives, divided bipartisanly

• They are charged with issuing a recommendation by They are charged with issuing a recommendation by November 23, 2011 for at least $1.5 Trillion in deficit November 23, 2011 for at least $1.5 Trillion in deficit reduction over the next ten yearsreduction over the next ten years

•  The committee's recommendations would then be put The committee's recommendations would then be put to to a simple up or down vote by Congress by December 23, a simple up or down vote by Congress by December 23, 20112011

•Speaker Boehner (R-OH) has stated that tax reform Speaker Boehner (R-OH) has stated that tax reform should be on the tableshould be on the table

Super Committee Continued…Super Committee Continued…

•We expect the Super Committee to repeal the ethanol We expect the Super Committee to repeal the ethanol subsidies which will create $1.33 Billion in savingssubsidies which will create $1.33 Billion in savings

•  President Obama and Congressional Democrat President Obama and Congressional Democrat Leaders are demanding tax increases as part of the Leaders are demanding tax increases as part of the Super Committee processSuper Committee process

•Republican Congressional Leaders are demanding Republican Congressional Leaders are demanding entitlement reformentitlement reform

•The differing priorities of Republicans and Democrats The differing priorities of Republicans and Democrats have created a difficult environment to reach a have created a difficult environment to reach a compromisecompromise

• If the Committee cannot reach a deal, then cut will be If the Committee cannot reach a deal, then cut will be enacted using a process called Sequestrationenacted using a process called Sequestration

Super committee / Tax ReformSuper committee / Tax Reform

• AKFCF believes raising taxes in a recession is bad AKFCF believes raising taxes in a recession is bad fiscal policy and punitive on small businessesfiscal policy and punitive on small businesses

•We oppose any attempt to raise individual tax rates. We oppose any attempt to raise individual tax rates.

• Corporate Tax Rates – Many in Congress are talking Corporate Tax Rates – Many in Congress are talking about cutting corporate tax rates in the context of tax about cutting corporate tax rates in the context of tax reform.reform.

•AKFCF supports reducing corporate tax rates, but only AKFCF supports reducing corporate tax rates, but only if a comparable tax reduction is provided to small if a comparable tax reduction is provided to small business owners who file as an LLC or S Corp. business owners who file as an LLC or S Corp.

Tax Depreciation Tax Depreciation

•Set to expire 12/31/2011Set to expire 12/31/2011

•H.R. 1265 , introduced by Jim Gerlach (R-PA-6) and H.R. 1265 , introduced by Jim Gerlach (R-PA-6) and Richard Neal (D-MA-2)Richard Neal (D-MA-2)

•S. 687, introduced by Senator Kent Conrad (D-ND) and S. 687, introduced by Senator Kent Conrad (D-ND) and Senator John Cornyn (R-TX)Senator John Cornyn (R-TX)

•for every $1 spent in the construction industry, an for every $1 spent in the construction industry, an additional $2.39 has been generated for spending in additional $2.39 has been generated for spending in the rest of the economy. the rest of the economy.

•Moreover, for every $1 million spent in the Moreover, for every $1 million spent in the construction industry, 28 U.S. jobs have been created construction industry, 28 U.S. jobs have been created in the broader economy.in the broader economy.

Death TaxDeath Tax

•The AKFCF supports the abolishment of the death tax, The AKFCF supports the abolishment of the death tax, however half or three quarters of a loaf is better however half or three quarters of a loaf is better then none. then none.

•For the 2010 and 2011 tax years franchisees will For the 2010 and 2011 tax years franchisees will receive a $5 Million exemption and 35% tax rate receive a $5 Million exemption and 35% tax rate beyond beyond the first $5 million. the first $5 million.

•the current provisions expire in 2012. If Congress the current provisions expire in 2012. If Congress does n’t act, then the provisions will revert back to does n’t act, then the provisions will revert back to the original 55% .the original 55% .

•The AKFCF GAC would like to see Congress provide The AKFCF GAC would like to see Congress provide longer term certainty on this and other tax issues.longer term certainty on this and other tax issues.

Work Opportunity Tax Credit (WOTC)Work Opportunity Tax Credit (WOTC)

•Current provision expires 12/31/2011.Current provision expires 12/31/2011.

• It was enacted as a key component of the 1996 It was enacted as a key component of the 1996 welfare reform law. welfare reform law.

•WOTC provides a 40% credit on the first $6,000 of WOTC provides a 40% credit on the first $6,000 of qualified wagers paid to certified employees. WOTC qualified wagers paid to certified employees. WOTC helps to offset the higher costs of recruiting, hiring, helps to offset the higher costs of recruiting, hiring, and retaining those who are eligible. and retaining those who are eligible.

•WOTC is a key bridge from Welfare Dependence to WOTC is a key bridge from Welfare Dependence to Work. Work.

•It has helped over 6,000,000 individuals (940,000 in FY It has helped over 6,000,000 individuals (940,000 in FY 2010)2010)

NLRB / Card CheckNLRB / Card Check

•EFCA is dead on arrival in the current House of Representatives, EFCA is dead on arrival in the current House of Representatives, the concern now is that the Obama Administration is looking for the concern now is that the Obama Administration is looking for ways to implement Card Check on a regulatory basis through the ways to implement Card Check on a regulatory basis through the NLRB. NLRB.

•The NLRB recently proposed a plan to dramatically speed up the The NLRB recently proposed a plan to dramatically speed up the timeline for holding union elections (from 42 days to 10 days).timeline for holding union elections (from 42 days to 10 days).

•In August, the NLRB finalized rules requiring employers to post a In August, the NLRB finalized rules requiring employers to post a notice informing employees of their right to organizenotice informing employees of their right to organize

•A number of groups led by NAM and the NRA have filed suit A number of groups led by NAM and the NRA have filed suit against this requirementagainst this requirement

•Last week, the NLRB delayed the notice requirement until January Last week, the NLRB delayed the notice requirement until January 31, 201231, 2012

•AKFCF opposes any legislation or regulation that tilts the balance AKFCF opposes any legislation or regulation that tilts the balance of employer/employee relations. of employer/employee relations.

E-Verify / ImmigrationE-Verify / Immigration

•Immigration reform should accomplish the following goals: Immigration reform should accomplish the following goals: control and secure our borders; improve employment control and secure our borders; improve employment verification systems for determining whether an employee is verification systems for determining whether an employee is authorized to work in the United Statesauthorized to work in the United States

•AKFCF supports the establishment of a mechanism to AKFCF supports the establishment of a mechanism to provide temporary and possibly permanent legal status for provide temporary and possibly permanent legal status for undocumented workers currently in the United States seeking undocumented workers currently in the United States seeking employment. employment.

•AKFCF desires a stable and legal workforce and recognize that AKFCF desires a stable and legal workforce and recognize that current employment verification procedures need to be current employment verification procedures need to be improvedimproved

•AKFCF is fundamentally supportive of E-Verify, but is opposed AKFCF is fundamentally supportive of E-Verify, but is opposed to legislation that does not contain a safe-harbor clause for to legislation that does not contain a safe-harbor clause for employers who follow the proposed expansion of E-Verify in employers who follow the proposed expansion of E-Verify in good faith.good faith.

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