Hearing Aid Tax Credit, House Bill 1646, Senate Bill 1019: Interview with Andy Bopp, Director of Government Relations, HIA
Douglas L. Beck, AuD, speaks with Andy Bopp about the hearing aid tax credit, Bush tax cut, Hearing Aid Assistance Tax Credit Act, and more.
Academy: Hi, Andy. Thanks for your time this morning.
Bopp: Hi, Doug. My pleasure.
Academy: Andy, you and I had a recent discussion about the Hearing Aid Assistance Tax Credit Act (U.S. House of Representatives Bill # 1646, U.S. Senate Bill # 1019), and you had some very interesting thoughts and perspectives on that, which I’d like you to share with the readers.
Bopp: Sure, I’d be happy to.
Academy: Okay, great. Let’s start with a brief review as to the history and the status quo to get everyone up to speed, and then we’ll get into the developing issues. I would like to recommend the readers review the Academy’s Web page on this topic or the Hearing Industries Association’s (HIAs) dedicated Web site for the Hearing Aid Assistance Tax Credit to get the latest information and details on this topic. In addition, HIA has played a pivotal role by organizing their 25 members (who manufacture hearing aids, components, and batteries) as well as professional, patient, and parent groups into an informal coalition to get the word out, gather support, and identify and endorse congressional “champions.”
Bopp: That’s right. The HIA has played a pivotal role, but so, too, has AG Bell, the Academy, HLAA, and others—and the work has clearly paid off in a massive team effort that has been getting stronger every year. As you know, the two legislative bodies (the House and the Senate) have been working on passing the Hearing Aid Tax Credit for six years. There are 117 cosponsors in the House, and 9 in the Senate—so it’s been building over the years. In addition, Doug, as you know, if it doesn’t pass, it has to be re-introduced every two years and that’s happened now three times, but each time we get more momentum. In fact, this year, we gathered our core sponsors a year earlier than the last time. Therefore, the bottom line is the Hearing Aid Assistance Tax Credit is essentially a bipartisan bill and support is growing—although it has yet to pass.
Academy: And the bipartisan nature of the bill is critically important to its success, particularly in these divisive times.
Bopp: Exactly. You probably recall that it all started when Rep. Jim Ryun (R-KS) first introduced the bill in late 2003 with support from Rep. Carolyn McCarthy (D-NY). Rep. McCarthy took the lead when Rep. Ryun lost his seat in 2006, and she has been supported by Rep. Vern Ehlers (R-MI) to maintain the bill’s bipartisan focus.
Academy: Very good. However, even with bipartisan support, it has yet to have enough support and then once there is enough support, the bill would have to be attached to something bigger and more substantial?
Bopp: Right. In the cosmic scheme of things, the Hearing Aid Assistance Tax Credit Act is relatively small—when one considers the total workings, dollars, and impact of the Congress, and so this would be “piggy-backed” onto something much more significant, once the support is there and the timing is right.
Academy: Okay, I understand…and so then, speaking of the timing being right?
Bopp: Right, well as you know, the United States has a major issue with short- and long-term deficit spending and the gravity of the situation is becoming more apparent daily. However, here’s the interesting part—the Bush tax cuts of 2001 and 2003 are set to expire at the end of 2010—that means that Congress is almost certain to consider major tax reform legislation in the coming year. In fact, once the Bush tax credits expire, the average wage earner will see significant changes.
Academy: Can you give me some examples?
Bopp: Sure. The Bush tax cuts of 2001 lowered individual income tax rates from 15, 28, 31, 36, and 39.6 percent to 10, 15, 25, 28, 33, and 35 percent, while also increasing the child tax credit from $500 to $1,000 and doing other things. Tax provisions in 2003 cut the top capital gain tax rate from 20 to 15 percent, and cut the top rate on dividends from 35 to 15 percent. All of these cuts and others are set to expire at the end of 2010.
Academy: Okay, so the bottom line is we’re going to see tax increases, even if Congress doesn’t pass any new tax legislation.
Bopp: That’s right. Therefore, if Congress does nothing, taxes will automatically increase in 2011. So the tax rates from 2000 will be back, and they were higher for all wage earners.
Academy: And of course, the United States is totally cash-strapped. I cannot imagine the Congress passing legislation that continues the Bush tax cuts as the government needs the revenues, but I also cannot imagine them passing additional new taxes…so what are the options?
Bopp: Well that gets us to the issue that some of the Bush tax cuts will likely be continued, but other provisions will likely expire. Further, Congress is likely to provide other forms of tax relief as part of their major tax package. Such tax relief is likely to be for provisions that help constituents without adding significantly to the short- and long-term federal deficit.
Academy: And so the House’s Hearing Aid Tax Assistance Tax Credit bill helps children and seniors, although the Senate version helps all ages…but nonetheless, it’s still relatively inexpensive and allows the politicians to pass something positive, from which they can pound their chests and say, “look what I’ve done for you!”
Bopp: That’s how it looks. It allows Congress to provide a targeted tax break to millions of Americans with hearing loss on a bi-partisan basis, without having a huge impact on the federal budget.
Academy: Andy, what is the anticipated cost of the bill, per the Congressional Joint Tax Committee?
Bopp: They gave it a $300 million annual price tag, just a few years ago, back in 2004.
Academy: And so that $300 million price may be up to $310 or $320 million if they pass it in 2010, and it goes into effect by 2011, but compared to the trillions of dollars we’re tossing around—that’s cheap.
Bopp: Right. In addition, of course, it can all change…but it does seem like the “perfect wave” is coming together.
Academy: This is amazing in some respects. Not just in the reality of how things get done (or don’t get done!) in Washington, but with respect to the image of this bill six years ago as being too expensive and the politicians weren’t likely to pass it back then because it cost too much. However, with our current situation the bill looks relatively cheap—even though it’ll almost certainly cost more than its original Joint Tax Committee score.
Bopp: Yes, that’s pretty much the status. In Congress, timing is everything. A bill that seems quite expensive when considered on its own can be viewed from a different perspective when compared to the enormous cost of extending or discontinuing major tax provisions that impact all Americans. Remember also that the House and Senate would each have to pass their own versions of tax reform, and then the two versions would be merged for the President to sign into law. That is when Congress would determine whether the tax credit applied only to children and older Americans or to everyone. Cost factors were crucial in the early determination by House champions to cover only some Americans to lower the cost of the bill to the government.
Academy: So if the country doesn’t go broke first, this could be great!
Academy: Your prediction?
Bopp: I’m optimistic! Major tax legislation is not likely before the November elections, but I predict that major tax reform will be very high on the agenda of the new Congress in January 2011. This gives the broad hearing health coalition and our congressional champions the best opportunity to pass the hearing aid tax credit since its first introduction.
Academy: Okay, Andy, thanks for your time. This is a very exciting time and I appreciate your logic and analysis.
Bopp: My pleasure.
Andy Bopp is the director of government relations for the Hearing Industries Association (HIA).
Douglas L. Beck, AuD, Board Certified in Audiology, is the Web content editor for the American Academy of Audiology.