Waiting in the receiving area of Sen. Barbara Boxer’s office, I was puzzled as to why so many of the stops on the “Go Metro” map on the wall had the same names as the stops in my home of Los Angeles. Peering closer, I noticed the “L.A.” in the corner. Duh. I wasn’t looking at a map of Boxer’s adopted home of Washington D.C. I was looking at a map of her home state of California.
All of the Congress members whose offices we visited on PBA (Professional Beauty Association) Lobby Day displayed mementos of their home state or district. My home Rep. Dana Rohrabacher (parts of Long Beach) had mounted surfboards. Rep. Mike Thompson (Napa) had a bottle-shaped award from the Wine Institute. In the midst of the hectic craziness that is Capitol Hill — intermittently ringing bells announcing impending votes, advisors and aides scurrying by in suits, a shuttling underground tram reserved for Congress members and their guests — these pieces of office decor are constant reminders of the real reason these representatives and senators are here: to speak for the people, like us, who live back home.
It was May 25, and I was on Capitol Hill to connect with members of Congress and share my personal experiences (since I regularly talk to salon owners as part of my job at NAILS) to shed light on the just-introduced Small Business Tax Equalization and Compliance Act. Together with a team of volunteers mobilized by the PBA, we were here to get more Congress members to co-sponsor and vote for the bill.
The Small Business Tax Equalization and Compliance Act (also known as FICA Tax Credit Legislation, S. 974, and H.R. 1957) was introduced in the Senate on May 12 and the House on May 24. FICA stands for Federal Insurance Contributions Act, and if you’re a salon owner or salon employee in the United States you’re paying FICA taxes. (If you’re self-employed, you’re paying SECA, Self-Employment Contributions Act, taxes, which would be unchanged by this legislation.)
As a salon owner, you pay 7.65% in FICA taxes on all employee income, including the wages you pay and customer-paid tips. The employee (for example, the individual nail tech) pays the other 7.65%. What this bill would change is the part of salon owner-paid FICA taxes that covers tip-income. If the bill passes, that portion of FICA taxes would be credited back to the salon owner when she filed her taxes. She would still pay FICA taxes on the wages that she directly pays her employees, but the tip income that the owner never personally sees would no longer be her tax burden. She would get a dollar-for-dollar credit back on the FICA taxes for the reported tip income.
Obviously, that would be a huge windfall for salon owners, who could reinvest the money back into their salons. The PBA estimates the average salon owner would get back $11,000. (The exact credit for a specific salon depends on the number of employees, so for a one- to two-person nail salon, the credit will be less.) Also, the PBA says, it would likely increase accurate tip reporting. Perhaps most importantly, it would level the playing field between the restaurant industry and the salon industry. The restaurant industry has had this tax credit since 1993, which gives restaurant owners a dollar-for-dollar tax credit (now known as the 45(b) tax credit) on the employer’s share of FICA taxes paid on tip income above the minimum wage. Employers in the salon industry aren’t eligible to receive the 45(b) tax credit, even though their employees too earn a large portion of their income through tips received directly by employees, not by the salon.
The negative aspects of the bill (which we also had to address with Congress members) include causing the government to lose tax revenue, and still not having a completely level playing field as there may be other industries that rely on tip income that still would not be getting a FICA taxes credit.
The bill is touted as bipartisan. As of press time, it was co-sponsored by one Republican and one Democrat in the Senate, and three Republications and one Democrat in the House. This is the third time the bill has been introduced, but the bill has never been voted on because it’s too small to pass on its own. Small bills like this have to be tacked on to larger bills, I learned, to be voted on. In this case, it would need to be part of a larger tax bill or a small business bill.
Next page: Mobilizing and The Meetings
I’d heard of PBA Lobby Day before via press releases and media mentions, but I didn’t know many details about how the day unfolded. So when the PBA’s public relations representative asked me to tag along this year to learn how the lobbying process works (and to then share that knowledge with all of you), I was intrigued…and a bit intimidated. (I’m not as knowledgeable about politics as I am about nails!) Brad Masterson, vice president of Y Public Relations, assured me all of the lobbying would be done in a group and that I’d be well-prepped beforehand. I wasn’t necessarily expected to be an active lobbyist during the day, but I could attend all of the meetings with Congress members, take notes and photos as needed, and chime in when it felt right.
So, why does the restaurant industry have this tax credit and the salon industry doesn’t? A big reason is because the restaurant industry was better mobilized than we were. “Lobbyist” can have a bad connotation, but lobbyists tend to only make the news when they’re involved with something scandalous (like bribery). However, in its most basic form, a lobbyist is simply someone who makes her voice heard on topics that are important to her and, yes, tries to persuade Congress members (through means like constituent letters and data-filled charts) to vote either for or against particular pieces of legislation.
The PBA is making huge strides in mobilizing the salon industry. It’s been organizing Lobby Day for over seven years, which is a volunteer-based effort to educate Congress on the beauty industry. Even when there’s not pending beauty industry legislation, Lobby Day takes place. “It is important to make sure members of Congress know about our industry, people, and the economic impact we have regardless of whether there is legislation pending,” says Myra Irizarry, PBA’s manager of government affairs. Outside of Lobby Day, the PBA has also been involved with Interchange Fee Reform, the 1099 Repeal, the Gainful Employment Rule, and other government issues (which you can find out more about on www.probeauty.org/advocacy).
The PBA hired Venn Strategies, a government affairs firm that specializes in direct advocacy, to help with the lobbying efforts. The other participants — including salon owners, manufacturers, and distributors — are all volunteers.
The morning of our meetings with Congress members, I buttoned up a starched white shirt normally reserved for job interviews, then squeezed into a cab with Brad and others to the Longworth House Office Building on Capitol Hill, one of the buildings that houses House members’ offices.
It’s tradition to start the day with a prep meeting in the large food court. Here we got our small square PBA pin badges, plus larger rectangular “I Support the FICA Tax Credit” badges to help spread our message before we even opened our mouths.
I was impressed with how organized the PBA is. The night before at dinner, as part of Team CA-NV (California/Nevada) I’d gotten a folder filled with background info. It included photos and bios of all of the Congress members with whom my team had scheduled meetings, plus notes about whether the PBA had met with the person before. The team leaders’ folders included letters from salon owners in the Congress members’ constituency, which would serve as great leave-behinds.
Many of the participants were Lobby Day regulars. Several warned me that it is addictive. Once you realize your voice is being heard, you’ll come back year after year. These veterans offered advice and reassurance. “Congress members want to hear from constituents,” one veteran advised. “Make it personal to them. Say ‘My name is ___. I work for ___.’ and explain how the legislation will personally affect you. That’s what they’ll remember.” I watched a mock-meeting between Frank Zona, owner of Zona Salons, and Eric Schwartz, chief operating officer of OPI, in which Eric asked Frank questions about the bill, and Frank responded with well thought-out answers. For any questions for which we didn’t know the answers, we were advised to say we’d get back in touch soon with the answers, and Venn Strategies would follow up.
Two things that surprised me were 1) in many cases, we’d be meeting with staffers — not the Congress members themselves. These staffers have the ear of the member, we were told, and we shouldn’t be discouraged if we met with a staffer instead of the member. And 2) meetings wouldn’t necessarily take place in the Congress member’s office. Due to space constraints and other meetings, we may meet with staffers in the hallways (which turned out to be the case for my team’s first meeting). We were told not to take this personally either.
As it turned out, all but one of my team’s meetings were with staffers. I was pleased with how genuinely interested these staff members appeared toward our concerns, giving us their undivided attention and not rushing us, and surprised by how personable they were, including asking us questions about our backgrounds. Each staffer furiously scribbled notes, and several asked astute questions and offered insightful observations. Anjelica Kelly, a legislative research assistant for Sen. Barbara Boxer, commented that it’s “one of the least polarizing bills.” Caitlin Callahan, scheduler for Congressman Joe Heck (Nevada’s 3rd district), sported bold pink nails and seemed to grasp the salon industry’s dilemma quickly. (She joked that the Congressman is scared to send her to the district because she’ll “disappear deep into one of Vegas’ spas.”) Kip Payne, legislative assistant for Rep. Dana Rohrabacher, paid keen attention when I told him the possible impact this legislation could have on my neighborhood’s salons. (With the guys, we were encouraged to remind them that barber shops would also benefit from this legislation.)
The one Congress member we met in person was Rep. Howard Berman, whose district includes OPI’s North Hollywood headquarters. Rep. Berman had lots of questions for us. He had several staff members in the meeting also, and we did our best to address all of their concerns. He was congenial, and even let me snap a photo of him with OPI’s Schwartz. It was exciting to meet a Congressman — I’ve been bragging about it even after returning to L.A.
Sometimes during Lobby Day, Congress members will agree on the spot to co-sponsor the bill. For our team, we didn’t have anyone agree that day (staffers typically have to check in with the actual member before committing), but hopefully once the members review the takeaways in more detail, they will agree to co-sponsor it.
After all of the meetings, we had a short break, during which our team sat in the gallery for the House of
Representatives (courtesy of Rep. Berman) to watch Congress in action, then we attended Welcome to Our World. Organized by the Professional Beauty Federation (www.probeautyfederation.org), Welcome to Our World is an annual event in which Congress members and their staffs are invited for an intimate look at the beauty industry in action — via free manicures, haircuts, make-up applications, and other beauty services. It was a busy event, with nails appearing to be the most popular service. The beauty professionals who work this event are volunteers who feel strongly about giving back to the industry.
The day was exhausting and fulfilling at the same time. We were on our feet all day, including in the hot humid air that is Washington D.C. in the late springtime. We had to go through security at every building. (Shoes don’t normally have to come off but my black heels had set off the metal detector at our first stop, so I resorted to taking them off each time.) But, honestly, it was such an amazing once-in-a-lifetime experience for me that I would encourage any salon owner, nail tech, manufacturer, or other beauty professional to participate. It’s important, it’s eye-opening, and why would you want to leave all of the law-making fun to Congress when you can be part of the process?
Next page: Our Busy Schedule and How to Get Involved
[PAGEBREAK]Our Busy Schedule
The PBA focused on setting up meetings with offices where either a Lobby Day participant had a constituent link or where the Congress member is on the Ways & Means Committee, which is the committee that advises the rest of Congress on tax-related legislation. This was Team CA-NV’s schedule for the day.
Lobby Day Advocacy Meeting, Longworth House Office Building
Meeting with office of Rep. Mike Thompson (D-CA), Cannon House Office Building
Meeting with office of Rep. Wally Herger (R-CA), Cannon House Office Building
Meeting with office of Rep. Joe Heck (R-NV), Cannon House Office Building
Travel to Senate
Meeting with office of Sen. Dianne Feinstein (D-CA), Hart Senate Office Building
Meeting with office of Sen. Barbara Boxer (D-CA), Hart Senate Office Building
Travel to House
Meeting with office of Rep. Howard Berman (D-CA), Rayburn House Office Building
Meeting with office of Rep. Dana Rohrabacher (R-CA), Rayburn House Office Building
Welcome to Our World, Cannon Caucus Room
Now: Contact your Congress member encouraging them to support the Small Business Tax Equalization and Compliance Act. Look up your Congress member and get a draft e-mail at www.probeauty.org/fica.
Ongoing: To attend PBA Lobby Day 2012, join the PBA at www.probeauty.org/join. Dues are about $115 for individuals (discounts available for multi-year memberships and for students), plus you’ll need to cover your trip expenses.
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