What to Expect from the New Administration Jonathan Eisen Senior Vice President, Government Relations International Foodservice Distributors Association

Overview Huuuuge Changes in Washington Opportunities and Challenges for Foodservice Major Learning Curve in the White House Big Issues to Tackle State and Local Activity Likely to Increase Aggressive Progressives

The Trump Administration The First Month Big priorities/Unclear Approach Executive Actions Slow Appointments Process Uniting Democrats

Congressional Agenda Congressional Review Act Obamacare Repeal and Replace Employer mandate? Supreme Court Filibuster future? Infrastructure Pay fors? Tax Reform Process

Obamacare Repeal and Replace Key to Trump and Republican Congressional Agenda FY 2017 Budget Allows for Reconciliation 51 votes in the Senate Policy Flashpoints Medicaid Expansion Subsidies v. Tax Credits Individual and Business Mandate Interstate Insurance Health Savings Accounts You Broke It, You Bought It

House Republicans’ Tax Blueprint Comparison of House GOP tax framework and current law Issue Current law House Republicans Corporate tax rate 35% statutory rate 20% statutory rate Corporate tax: International income Foreign profits are subject to US corporate tax when repatriated One-time 8.75% tax on liquid assets already overseas; 3.5% tax on money invested abroad Corporate tax: pass-through business income Taxed under the individual rate structure; maximum rate of 39.6% Taxed at a maximum rate of 25% Interest deductibility All interest paid during a tax year on business-related debts may be deducted as a business expense Interest expense can be deducted against any interest income, but no current deduction is allowed for net interest expense. Net interest expense may be carried forward indefinitely against net interest income Net operating loss Can be carried back to the two previous years or carried forward for the next 20 years Can be carried forward indefinitely, limited in any year to 90% of the net taxable amount for that year; carrybacks of net operating losses will not be allowed Border adjustment None Exports are tax-exempt, imports are taxed Alternative Minimum Tax (AMT) A second tax system, in which taxpayers compute both their regular income tax and AMT, paying the greater of the two Eliminate Alternative Minimum Tax Estate tax Top statutory rate of 40% applied under specified circumstances to transfers of wealth when a person dies Eliminate estate tax Source: National Journal, House of Representatives GOP, “A Better Way: Tax,” June 24, 2016.

A destination-based cash flow tax uses a border adjustment to exempt exports from domestic taxation Explanation of destination-based cash flow tax system Revenue from the sale of US goods to nonresidents (exports) would not be included in taxable income Cost of goods purchased from nonresidents (imports) would not be deductible from taxable income A destination-based cash flow tax is applied where a good ends up, rather than where it is produced. Essentially, cross-border transactions are ignored when calculating a corporation’s tax base. Source: National Journal, Kyle Pomerleau and Stephen J. Entin, “The House GOP’s destination-based cash flow tax, explained,” Tax Foundation, June 30, 2016.

Other Key Federal Issue Status Overtime NLRB Ambush election Joint employer Food Safety Modernization Act Menu labeling

Two Different Countries

Minimum Wage and Tip Credit

Trending Issues Impacting Operators State and Local Scheduling Advance notice Compensation for changes Paid Parental Leave Paid Sick Leave Ban the Box Credit History Worker Protections Franchisee/Franchisor Marijuana

Looking Ahead Trump’s long-term ambitions GOP window? Realigning government Enacting legislation Federal fiscal challenges GOP window? 2018 Senate election Energized progressives State and Local Democrats Tea Party of the Left?

Thank You! Jonathan Eisen Sr. Vice President, Government Relations International Foodservice Distributors Association jeisen@ifdaonline.org 703-532-9400