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Tag: Norris McLaughlin

Taxes, immigration and climate among issues to watch in Biden’s first 100 days, panelists say

Less than one month into the Biden administration, actions taken by the president have indicated a much more progressive approach to governing than in the conservative Trump administration.

More than 30 executive orders signed by Joe Biden so far have mostly overturned many of the more controversial policies of his predecessor.

Like with any change, there will be winners and losers.

Central Penn Business Journal and Lehigh Valley Business spoke with a panel of legal experts on what to expect during the first 100 days of the Biden administration and beyond.

Sectors of the economy most likely to benefit under the administration are health care, manufacturing and technical industries, who will now have a more stable stream of access to foreign-born workers with specialty skills.

The environment and those companies that support clean technology will also likely find a better friend in the Biden administration than they did with Trump. On the flipside, companies involved in fossil fuel are likely to see a drop in subsidies and support.

High-wealth individuals will also likely feel a larger tax impact than they had under Trump, but maybe not as much as they fear.

The legal panel of experts from left to right: S. Graham Simmons III, Melissa Kelso, Steven Koehler, Christian Johnson

Boost to M&A

Melissa L. Kelso of Kelso Law in Carlisle said she is hearing concern from many of her small business clients who are worried about potential changes in the minimum wage and estate taxes could impact their profitability.

“I think one point that I don’t want to overlook, they are concerned things will be less stable, whether that is founded or not,” she said. “They’ve very concerned they are going to see their costs go up.”

She said the minimum wage going from its current $7.25 an hour to $15 is the largest concern she is hearing. “Most of our clients pay above that, but they’re concerned about that making everything go up,” she said.

Meanwhile, she said, concern over issues like estate tax are leading many of her clients, who may have been thinking of selling their business, to wonder if now is the right time.

Christian Johnson, a law professor at Widener University in Harrisburg, agreed that such concerns will likely lead to a short-term jump in merger and acquisition activity. “With big changes on the horizon there’s always going to be a rush for the exits,” Johnson said. “The tax structure is very favorable right now and I don’t think it will get any better.”

Stimulus payback

The big looming concern with taxation is the question of how the government is going to pay for all of the stimulus money it’s handing out now, which will certainly lead to higher taxes in the long run. S. Graham Simmons III, an attorney with Norris McLaughlin in Allentown, said that time will come.

“It will be interesting to see when we get to that point where they look across the aisle and realize we have no choice to raise taxes to pay for what we are doing with the stimulus and spending to get out of the COVID situation,” he said.

The fact that such a conversation isn’t happening now concerns Johnson.

“There appears to be very little thought about how were’ going to pay these amounts back in the long run,” he said. “It’s impossible to say with a straight face that $1.7 trillion dollars isn’t going to have any impact on our economy. It is just total nonsense.”
Fintech

“I’d be looking to see how this administration is going to look to make changes involving crypto currency and the fintech tax,” said Simmons.

The Biden admin has been more crypto friendly, he noted, and with crypto currency, like Bitcoin beginning to have more widespread acceptance, that could have an impact on the economy.

Immigration

One issue that the world has been paying particular attention to is how Biden is reversing many of the Trump-era restrictions on immigration, said Steven A. Koehler, an immigration attorney with Stock and Leader in York.

“As an immigration lawyer we’re certainly hoping that Biden’s big shot will be in the immigration field,” he said.

He said the US Citizenship Act of 2021 is expected to expand citizenship to undocumented immigration.

Corporate America, however, is keeping a close eye on the Biden administration renewing accessibility to H-1 Visas, which will help in the recruitment of individuals with specialty skills into fields such as health care, technology and engineering.

“Employing foreign-born workers is vital to our economy. Business will see a more stable playing field in having access to that stable workforce,” he said. “It will definitely affect the health care industry. It will definitely affect the manufacturing industry. A lot of professors are foreign born. It’s probably the most widely used visa in the U.S.”

Going electric

The environment will also be a bigger concern under the Biden administration, said Johnson.

“Biden is pushing for the U.S to become a leader in batteries, electric cars and general electrification,” Johnson said. “That is something Biden could see as a big win for him, it would keep jobs in the auto industry.”

With less subsidies for fossil fuels however, he noted states like Pennsylvania would feel a stronger impact because of the proliferation of coal and fracking gas, so such trends might not be as popular in the Keystone state.

“Sometimes we underestimate just how passionate people feel about climate on both sides,” he said.

Overall

Overall, however, the panelists didn’t see huge sweeping changes in any direction.

With an evenly balanced legislature, it may be difficult to get any major legislation passed, and like Trump, Biden may have to rely on executive orders to make some changes.

Even expected tax increases should be tempered, said Johnson.

“You’re going to see a lot of loopholes being closed and he’ll be quite aggressive,” Johnson said. “But, I don’t see congress having the stomach for a huge tax increase.”

Bill would tighten scrutiny of new homes

Legislation introduced by state lawmakers earlier this year could increase costs for homebuilders by adding fees in an effort to boost protections for buyers of new homes.

The bill, H.B. 879, was introduced by state Rep. John Galloway (D-Bucks) with support from four other state legislators. If it becomes law, it would increase accountability of builders for defects in new homes.

State lawmakers referred the bill to the Consumer Affairs Committee on March 25. It has not moved forward for a vote since then.

The legislation was inspired by numerous Bucks County residents who have complained their homes have deteriorated to the point of becoming structurally unstable even with normal amounts of rain and snow, according to a press release from Galloway.

Efforts to reach the lawmaker were unsuccessful. Consumer advocates have praised the proposed law.

“We have handled hundreds of construction-defect cases that this proposed legislation attempts to address,” Jennifer Horn, founder and managing partner at the law firm Horn Williamson of Philadelphia, said in a statement. “While the legislation is imperfect, it provides new, much-needed consumer protections to homeowners hurt by fraudulent business practices and residential construction that does not comply with building codes.”

For example, the bill explicitly requires all new homes to comply with the International Residential Code and the Uniform Construction Code, she said. Current law does not expressly require that new homes must be built in accordance with building codes.

While the legislation’s aim is to protect consumers, some feel it could saddle builders with rising costs.

“You might as well kiss the new home business goodbye,” said Rick Koze, president of Kay Builders in Lower Macungie Township. “I think you are making the cost of home ownership unattainable.”

Koze said he is already paying fees for home inspectors and believes they should see any problems before a home is completed.

“What am I paying that for if people aren’t checking the quality of construction?” Koze said.

Koze said permitting and inspections comprise 15 percent of the cost of building a home. That figure used to be 5 percent. Homebuilders must follow the national residential building code, which the federal government updates every three years, he said.

“Between the codes and the inspections and the cost of other regulatory permits, nobody’s going to build homes,” Koze said.

Homebuilders are already constrained, particularly when it comes to finding skilled workers in areas like plumbing and electrical work, he said.

“The supply/demand imbalance means we have to pay more for these services which means higher home prices,” Koze said. “To add more regulatory costs such as the proposed bill further decreases affordability.”

One solution could be to add an exterior inspection to replace one of the numerous inspections of a new home’s interior, he said. That could catch exterior defects earlier.

“The interior inspections are overkill,” he said. “Maybe they should take one or two of those and put them outside.”

‘Growing pains’

The proposed legislation would regulate home construction contracts and provide for the registration of certain homebuilders. In addition, it would add penalties; establish a guarantee fund that builders would pay into and provide for notification of defective or faulty building materials or products.

“Any time we can give added protections to consumers, it’s worth it,” said Rebecca Price, an attorney with Norris McLaughlin in Allentown. She represents both consumers and contractors.

The bill would put more onus on contractors to make the consumer aware of defects in products, even if contractors are not responsible, and bring additional reporting requirements for builders, Price said.

It establishes a 30-year period for when the contractor would be responsible for notifying the consumer of a defect. There is no requirement in current law for builders to warn, or notify homeowners of defects.

“For example, we have seen hundreds of homes that have defective windows that fail no matter how they have been installed,” Horn said. “The builder, who is the sole installer of these defective windows, and the window manufacturer, are both aware of this serious defect. Neither entity has notified homeowners who have these defective windows installed in their homes, that every time it rains, these windows are causing water damage. H.B. 879 would change that.”

Additionally, builders would have to keep track of what homes they built and of the products or materials they used, including dates, over a 30-year period, Price said. From a record-keeping standpoint, that would create some logistical issues. If a homebuilder goes out of business during that period or if the property sells within that 30-year period, it would create issues that legislators would have to address, she added.

The bill also establishes a fund into which builders would pay fees associated with complying with the law.

“I wouldn’t expect it to be a substantial increase to the cost of homes,” Price added. But, she said of the proposed bill: “I think there will be some growing pains for contractors if it passes.”

Deadline approaching for REAL ID compliance

Are business travelers or government contractors ready for REAL ID?

Without a REAL ID, valid U.S. passport or military identification, individuals – including business employees or contractors doing work for the government – won’t be able to board federally regulated commercial airline flights, access secure government buildings, enter nuclear power plants or gain entry to military installations.

You have until Oct. 1, 2020 to comply.

“I don’t think people are prepared for it,” said Saleem Mawji, an attorney and principal at Norris McLaughlin PA, a law firm in Allentown.

While some employers have been proactive about REAL ID compliance by offering assistance, resources and reminders, others are leaving it up to individuals to make sure they have the proper identification to do their jobs, Mawji said.

A driver’s license had long been considered the de facto ID in the U.S. But that changed with the REAL ID Act, enacted in the wake of the terrorist attacks of Sept. 11, 2001. The act is a phased enforcement program aiming to create standardized identification across the country, according to the Department of Homeland Security.

States were asked to follow certain standards for the IDs they issued, largely affecting driver’s licenses. In 2012 Pennsylvania lawmakers approved legislation declining to participate in the REAL ID program, said Alexis Campbell, press secretary for the Pennsylvania Department of Transportation in Harrisburg.

State legislators repealed the 2012 legislation in 2017, making REAL ID an option for residents, rather than a state mandate. As a result, Pennsylvania residents will be able to pay $30 to have their existing non-commercial licenses upgraded to a REAL ID, plus a renewal fee (see sidebar).

No exceptions

PennDOT has spearheaded a push to promote REAL ID ahead of the Oct. 1, 2020 deadline, with efforts to educate the public, business travelers and government contractors, Campbell said.

Nonetheless, Mawji said most people probably aren’t thinking about REAL ID and the impact it could have on their ability to do business with the federal government, as military contractors or to board commercial flights for business trips.

As an attorney, he’ll be required to show a valid U.S. passport or a REAL ID to enter secure federal buildings during the course of his work.

“There aren’t any exceptions,” Mawji said.

Gary Warren, president and principal of Valley Forge Captive Advisors said because many of his firm’s employees already use passports to travel domestically and internationally, REAL ID isn’t a major business concern yet.

Valley Forge Captive Advisors is a commercial insurance broker and risk management company in King of Prussia.

But for those without passports or who do not fly regularly, REAL ID would make air travel easier, said Jennifer Schwarz, marketing communications coordinator for McConkey Insurance & Benefits in York.

“We’ve received a lot of calls from our clients about it, and there’s a lot of confusion around what it means,” Schwarz said.

Some businesses that require employees to travel on company time are reimbursing their passport or REAL ID costs, she said.