News of the Day

Harley-Davidson, up against spiraling costs from tariffs, will begin to shift its production of motorcycles that are bound for Europe from the U.S. to factories overseas.

The European Union began on Friday to roll out tariffs on American imports like bourbon, peanut butter and orange juice. The EU tariffs on $3.4 billion worth of U.S. products come in retaliation to the duties the Trump administration has imposed on European steel and aluminum.

Harley-Davidson Inc. sold almost 40,000 motorcycles in the European Union last year. The revenue the company generated from those sales was second only to that generated in the United States, according to the Milwaukee company.

The motorcycle maker said in a regulatory filing on Monday that EU tariffs on motorcycles it exports from the U.S. have jumped by between 6 percent and 31 percent. That raises the cost of each motorcycle by $2,200 on average.

“Harley-Davidson maintains a strong commitment to U.S.-based manufacturing which is valued by riders globally,” the company said in prepared remarks. “Increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe. Europe is a critical market for Harley-Davidson.”

Harley-Davidson said it’s trying to avoid raising its prices to avert “an immediate and lasting detrimental impact” on sales in Europe. It will instead absorb much of the higher costs, at least in the short term. Company officials said they expect the cost for the rest of the year to run from $30 million to $45 million.

Harley-Davidson said it could take anywhere between nine and 18 months to complete its plan to move some of its production operations from the U.S. to factories overseas.

The company is already struggling with declining sales. In January, it said it would take its operation in Kansas City, Missouri, and move it to a plant in York, Pennsylvania. U.S. motorcycle sales peaked at more than 1.1 million in 2005 and dropped quickly during the recession.

Asked about Harley’s decision Monday, Gov. Scott Walker talked about tariffs in general but did not specifically discuss the company’s situation.

“The ultimate goal, if we could get there, is no tariffs or if anything few tariffs on anything,” said Walker, a Republican. “That’s what I’m going to push for, ways that we can get to a level playing field then we don’t have this tit for tat on any number of products out there.”

On Thursday the Supreme Court’s 5-4 ruling, which did not split along ideological lines, overturned the 1992 decision and said states can tax internet sales.

Yesterday, The U.S. Supreme Court handed down its anticipated decision in South Dakota v. Wayfair.

The case challenges South Dakota’s application of its sales tax to internet retailers who sell into South Dakota but have no property or employees in the state. At issue is the case Quill Corp. v. North Dakota from 1992, which set the property or employees standard for sales taxes using the Court’s (debated) dormant commerce clause power to restrict state taxation of interstate commerce.

Drumroll…South Dakota won. The Court laid out why South Dakota’s law is no burden to interstate commerce but made clear that more complex or overreaching laws would be. This was not too surprising, as during oral argument the justices expressed such frustration with the issue that it’s easy to see why they wouldn’t want this to be just the first of many cases. Better to articulate the rule well here.

As Justice Kennedy’s opinion states:

That said, South Dakota’s tax system includes several features that appear designed to prevent discrimination against or undue burdens upon interstate commerce. First, the Act applies a safe harbor to those who transact only limited business in South Dakota. Second, the Act ensures that no obligation to remit the sales tax may be applied retroactively. S. B. 106, §5. Third, South Dakota is one of more than 20 States that have adopted the Streamlined Sales and Use Tax Agreement. This system standardizes taxes to reduce administrative and compliance costs: It requires a single, state-level tax administration, uniform definitions of products and services, simplified tax rate structures, and other uniform rules. It also provides sellers access to sales tax administration software paid for by the State. Sellers who choose to use such software are immune from audit liability. See App. 26–27. Any remaining claims regarding the application of the Commerce Clause in the absence of Quill and Bellas Hess may be addressed in the first instance on remand.

The majority opinion, which twice cited the Tax Foundation’s brief, was authored by Justice Anthony Kennedy, joined by Justices Clarence Thomas, Samuel Alito, Ruth Bader Ginsburg, and Neil Gorsuch. Justice Thomas concurred to write that he should have joined the Quill dissent in 1992. Justice Gorsuch concurred, joining the majority in full and adding that he questions Commerce Clause doctrine. Four justices (Chief Justice John Roberts, Justice Stephen Breyer, Justice Sonia Sotomayor, and Justice Elena Kagan) dissented, agreeing that the Court got it wrong before but arguing that Congress should fix it.

President Trump’s plans to hit China with $200 billion more in tariffs is roiling global markets, angering business groups and putting lawmakers on edge in an important election year.

Trump doubled down on Tuesday, telling a group of business leaders it is time for the U.S. to get tough on China for its unwillingness to change aggressive and unfair trade policies.

“We’re going to get smart, and we’re going to do it right,” Trump told the National Federation of Independent Business in Washington.

Trump said China could still reach out to make a deal, but he saw no signs that would happen.

“We have no choice with China, it’s time folks, it’s time,” he insisted.

Trump’s comments come after he directed U.S. Trade Representative Robert Lighthizer on Monday to identify $200 billion worth of Chinese goods for a 10 percent import tax.

Business groups, which have expressed open frustration with Trump’s trade policies, called on lawmakers to quickly intervene and take more oversight on tariff decisions.

The National Foreign Trade Council (NFTC) was one of a wide range of business groups — from footwear to bankers, oil and automakers — blasting the threatened tariffs and calling for greater congressional control over Trump’s trade policies.

“We strongly believe that, in order to change the current path that the administration has chosen to take on trade, Congress must reassert itself and oversee our country’s trade policy, especially the use of unilateral tariffs,” said Rufus Yerxa, president of the NFTC, in a letter to trade lawmakers signed by more than 60 of the group’s members.

The National Retail Federation also urged lawmakers to act to prevent a trade war. President and CEO Matthew Shay said the tariffs “threaten to sap the energy out of the strong U.S. economy just as most Americans are starting to enjoy the benefits of historic tax reform.”

The Department of Labor (DOL) has issued a final rule that expands consumer availability of association health plans (AHPs) starting on September 1, 2018.

The rule comes months after President Trump and the DOL proposed executive changes that allow consumers, employer groups, and contractors to sponsor AHPs, which may be more affordable but offer fewer consumer protections than plans compliant with the Affordable Care Act.

AHPs are not required to provide the essential health benefits (EHBs) package included in the ACA. The plans have been intended to provide less expensive options for small businesses, regional collectives, and industry groups that may not be able to purchase insurance through the public exchanges.

Secretary of Labor Alexander Acosta believes the final rule will allow more families and employee groups to purchase affordable health plans and avoid rising costs in the individual market.

Under the rule, only a “bona fide group or association” can create an AHP.  The rule prohibits payers from developing AHP offerings. Providers and related healthcare professionals would also be prohibited from establishing an AHP as a bona fide group. However, the rule does allow payers and related organizations to consult or help develop AHPs by providing claims administration, formulary guidance, and provider network design.

AHPs can also only be formed if there is a “commonality of interest” among individuals looking to form a group. A commonality would include individuals who have similar geographical locations and professions, for example. AHPs can not discriminate enrollment against individuals if they meet commonality requirements.

In a DOL example, if an association offers benefits to restaurant employees in a specific area, then it cannot exclude the employees of a certain restaurant if the business’s employees have higher-than-expected care costs.

DOL also stated that an individual’s health conditions and their part- or full-time employment status cannot be used to discriminate against plan members. States will have discretion around limiting AHP enrollment in relation to other non-health factors.

“States maintain significant authority to impose additional rating rules on insured AHPs through regulation of the underlying insurance policies obtained by AHPs to fund the benefits they provide, and may also impose similar requirements for self-insured AHPs,” DOL said.

The final rule effectively allows AHPs to be separate from the ACA health exchanges and operate as an independent market. DOL said removing AHPs from the ACA market will allow the plans to scale and provide affordable benefits.

“AHPs’ flexibility to offer products and premiums that more closely align with their members’ preferences is a significant benefit for those members,” DOL said.

“That flexibility also frees AHPs from some regulatory overhead, and may enable some AHPs to achieve the scale necessary for administrative efficiency and market power. States retain discretion to regulate AHPs. For these reasons, this final rule does not subject AHPs to the ACA’s individual and small group market rules.”

Expansion of AHPs could lead to mass migration by consumers from the individual health plan market to the AHP market. The DOL and the Congressional Budget Office estimate that nearly 400,000 individuals will seek to enroll in newly expanded AHPs.

Wisconsin has some of the lowest unemployment numbers the state has seen in decades.

But despite those numbers, there is also a low numbers of workers in the workforce says the Wisconsin Economic Development Corporation.

“We realized we needed to start attracting more workers to Wisconsin and the workforce shortage is real and it’s what we hear as the number one concern from businesses across the state. So we really needed to be more aggressive and talking about Wisconsin’s stories and the opportunities that are here,” said WEDC Deputy Secretary and COO Tricia Braun.

The WEDC is launching a $6.8 million campaign, in part, to encourage alumni to stay in Wisconsin after school.

The campaign will run through June 2019, and hopes to bring workers back to what Braun calls the best kept secret in the country.

The Legislature’s budget committee has approved splitting $67 million in new federal transportation money between a stretch of interstate near the site of Wisconsin’s Foxconn plant and other Wisconsin bridges and highways.

Under the plan approved Thursday, the state Department of Transportation will spend about $22 million of the new federal funding on the reconstruction of I-94 North-South in Kenosha, Racine and Milwaukee counties.

A state fund for highway and local bridge improvements would get about $38.6 million, while another $6.7 million would go to other state highway projects.

Construction on the I-94 expansion, which began in 2009, involves rebuilding existing lanes and adding a fourth lane in each direction from Milwaukee County to the Illinois state line.

In addition to the funding approved Thursday, Walker recently announced the state had won an additional $160 million in federal highway money for I-94 North-South.

The nonpartisan Legislative Fiscal Bureau said the project would still need additional state funding to be completed by 2021, the year discussed when the Foxconn bill was passed.

Health insurance costs have been increasing at the lowest rate in the past two decades.

The result?

The total costs for a typical family of four insured by the most common health plan offered by employers will average $28,166 this year, according to the annual Milliman Medical Index. That’s up from 2010, when the cost crossed $20,000. Just two years ago, it topped $25,000.

The estimate includes the average cost of health insurance paid by employers and employees, as well as deductibles and out-of-pocket expenses.

The Milliman Medical Index is great because it gives you a snapshot of what people covered by employer-sponsored insurance get and what that coverage costs,” said Melinda Beeuwkes Buntin, a professor and chair of the Department of Health Policy at Vanderbilt University Medical Center.

The index also estimates deductibles and other out-of-pocket expenses. The largest share of the total cost is the health insurance premium paid by employers.

Last year, the premium for the most popular health plan offered by employers — what is known as a preferred provider organization  — for family coverage was $19,481, according to the annual survey done by the Kaiser Family Foundation and the Health Research & Educational Trust. Employers paid $13,430 and employees paid $6,050 of the premium on average.

This year, the Milliman Medical Index increased 4.5%. That was only slightly higher than the 4.3% increase last year, the lowest increase in the 18 years that Milliman has compiled the index.

State lawmakers have taken away Eau Claire County’s ability to require companies to pay their workers more than minimum wage for contracts performed on behalf of the county.

The county’s Administration Committee is scheduled during its 2:30 p.m. Thursday meeting at the courthouse to discuss a proposal to repeal the county’s “living wage” ordinance.

That local law, which was approved in July 2016 by the County Board and went into effect on Jan. 1, 2017, required contractors to pay workers a salary equal or greater to the federal poverty level for a family of four. For 2017, that meant $11.68 an hour, compared to the federal minimum wage of $7.25.

Contracts impacted by the ordinance primarily perform work on behalf of the county’s Human Services Department.

Act 327, which was approved in March by the state Legislature and signed April 17 by Gov. Scott Walker, eliminated the state statute that allowed local governments to set a minimum wage for their contracts that are performed by companies.

A memo from county attorney Keith Zehms stated that the state’s action won’t change contracts signed while the local living wage ordinance has been in effect, but the county cannot enter new contracts with the living wage requirement.

Also in his memo, Zehms said the fiscal impact of repealing the living wage ordinance is unknown as businesses have been increasing pay anyway to remain competitive in the local job market.

After the Administration Committee makes its recommendation on repealing the local living wage ordinance, the County Board would then have the final vote.