February 22, 2017
With the New Year came major changes in Washington, D.C., with Republicans now controlling the Legislative and Executive Branches for the first time since 2000. This shift in power means that big policy initiatives -- including comprehensive tax reform -- are realistically in play in 2017. Our latest legislative update for Jewelers of America Members reviews five issues that will impact the legislative landscape for the jewelry industry in 2017.

Jewelers of America's unparalleled leadership in government affairs keeps jewelers’ interests front-and-center in the nation’s capital on federal and state legislative issues that matter most to jewelry businesses. Our Legislative Action Center allows you to take action on these issues by directly contacting influential representatives. We’ve included quicklinks to the Action Center below, so you can help us be a strong voice on Capitol Hill in support of the jewelry industry’s needs.

2017 Tax Reform Blueprint: Border Adjustment Tax

The Republican-controlled Congress, in coordination with the Trump Administration, is committed to pursuing comprehensive tax reform in 2017. Jewelers of America supports numerous provisions within the House Republican Tax Reform Blueprint, such as providing the full and immediate write-off of business expenses, lowering the corporate tax rate and eliminating the estate tax. However, we are deeply concerned by the inclusion of a border adjustment tax, which will significantly harm jewelry manufactures and retailers and their customers. Currently, the majority of finished jewelry and the raw materials used to produce jewelry are imported into the United States duty free. The tax will significantly harm jewelry manufacturers, retailers and their customers, including jewelry consumers.

What Is Proposed

The proposal could impose a 20 % tax hike on imports -- including finished jewelry and mined materials used to produce jewelry, such as diamonds, gemstones and precious metals -- from overseas. Many House Republican lawmakers see the border adjustment tax as a critical revenue-raising option (an estimated $1.2 trillion over 10 years) to help pay for the more popular tax reform proposals included in the blueprint.

JA’s Response

Jewelers of America will actively fight the tax. JA has joined Americans for Affordable Products (AAP), a growing coalition of business and trade associations that represent millions of American jobs, to stop the border adjustment tax.

What’s Next

President Trump’s position on the tax is unclear, but he has also raised concerns, telling the Wall Street Journal that it is “too complicated.” JA’s legislative counsel, Haake Fetzer, informs JA that several key Republicans in the Senate – including Senate Majority Whip John Cornyn (R-TX) and Senate Finance Committee Chairman Orrin Hatch (R-UT) -- have voiced opposition to the border adjustment tax proposal. Additionally, Senator Hatch has indicated that the Senate will produce its own tax reform plan rather than defer to the House's blueprint.

Although House Republican leadership remains steadfast in its support for the provision, the strong pushback coming from very influential Senate Republican voices is very positive momentum for opponents of the border adjustment tax.

  • Take Action by contacting your representatives directly through our Legislative Action Center. 


Sales Tax Fairness

Jewelers of America continues to be a leading voice in support of sales tax fairness legislation that would level the tax playing field between traditional and online retailers. Last year, during several meetings on Capitol Hill, JA advocated in support of the Marketplace Fairness Act in the Senate and the Remote Transactions Parity Act in the House.

Predictions

As Congress considers tax reform and other major policy initiatives, we expect sales tax fairness to receive serious consideration. The measure is building steam as the courts are considering numerous state laws that could serve as a legal vehicle for the Supreme Court to reconsider its Quill decision of 1992, which determined remote sellers -- such as Internet retailers -- are not required to collect sales taxes for sales made to purchasers located in states where the seller does not have a physical presence. At the time of the decision, it was considered too difficult for remote sellers to collect and remit taxes to different jurisdictions, a factor that has changed significantly in the two-plus decades since the decision was made.

  • Take Action by contacting your representatives directly in support of sales tax fairness through our Legislative Action Center. 

“Cultured Diamond” & “Made in USA”

“Cultured Diamond” terminology

Last year, the Federal Trade Commission (FTC) was considering several revisions to its Guides for the Jewelry, Precious Metals, and Pewter Industries. These included the FTC suggestion to use the term “cultured” to describe synthetic diamonds, which Jewelers of America believes is deceptive to consumers.

JA’s Response
In private meetings with lawmakers throughout 2016, Jewelers of America actively advocated for Congress to put pressure on the FTC to eliminate this revision. JA continues to work with key lawmakers on the House Energy and Commerce Committee, which has policymaking and oversight authority over the FTC, and other Congressional supporters to implement a strategy for Congressional engagement with the FTC on this important issue.

  • Take Action and support the jewelry industry by contacting your representatives through our Legislative Action Center.

“Made in USA” terminology

Jewelers of America also supports efforts – led by the Richline Group – to challenge the Federal Trade Commission’s requirements regarding the label, “Made in USA.” The FTC is currently asserting that the point of origin of materials needed to manufacture jewelry is the only consideration when determining whether or not the jewelry can be labeled “Made in in USA.”

JA’s Response
JA believes this is misguided and that the FTC should update its standards for “Made in USA” to reflect the other factors related to jewelry crafted in America, such as origin of craftsmanship and design in line with the “substantial transformation” standard used by other U.S. agencies. The “substantial transformation” standard is cited in both the Buy American Act of 1933 and the American Recovery and Reinvestment Act of 2009.

Conflict Minerals Rule

The conflict minerals rule was incorporated into the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The rule requires publicly traded companies to conduct supply chain due diligence procedures and reporting regarding use of tin, tantalum, tungsten and gold from the Democratic Republic of Congo and surrounding countries.

Predictions

The rule will likely be challenged in 2017, with President Trump expected to issue an Executive Order that could suspend enforcement of the rule for two years, and Congress expected to consider legislation that would repeal parts of Dodd-Frank, including the conflict minerals rule.

Last-In, First-Out (LIFO) Accounting Method

Repeal of LIFO would deal a potentially fatal blow to companies in the jewelry industry that use the well accepted and long-standing method of accounting for inventory. For over a decade, Jewelers of America has won the battle against LIFO repeal.

Predictions

While the House GOP’s Tax Reform Blueprint currently preserves LIFO, pressure remains to repeal. Lawmakers on both sides of the aisle have looked to it as an attractive revenue raising option in the broader context of budget negotiations and tax reform.

  • Take Action by contacting your representatives directly about LIFO in our Legislative Action Center.
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