Photo courtesy of AmericanHort & AdobeStock

While Republicans were writing and passing their tax reform legislation, AmericanHort senior vice president Craig Regelbrugge was on Capitol Hill talking to leaders, working to understand the overhaul of the tax code, and advocating for aspects of the bill that matters for the horticulture industry.

“We devote a lot of time to developing and sustaining relationships,” Regelbrugge says. “We're hearing and we're talking to folks directly providing input getting feedback and then also through kind of more traditional sources.”

Below, Regelbrugge answers questions about AmericanHort’s focus, what the new tax bill means for industry members and more.

Nursery Management:
AmericanHort lobbied government leaders for a specific set of tax reforms, most notably protections for the cash method of accounting.
Photo courtesy of Hoffman Nurseries

What did AmericanHort lobby for when Congress was debating the tax bill?

Craig Regelbrugge: We've been focused on a relatively narrow subset of provisions of things that were in the bill that we were hoping would stay in the bill. For our industry, and particularly for the grower community in our industry, though not exclusively growers, the ability or the right to choose to use the cash method of accounting as opposed to accrual accounting is very important, particularly for nursery growers or people who are producing crops that have a multiyear production cycle. The ability to use cash accounting basically means that the growing inventory in the nursery is not considered to have any value for IRS purposes until it's ready to be sold.

Another example of something that we were paying attention to and working to preserve and improve on is the ability to expense investments in equipment. We were focused on every aspect of the bill, but we were paying very close attention to the things that matter the most to us.

NM: How does the estate tax – a tax on the transfer of a deceased’s individual estate – fit into AmericanHort’s goals for the tax bill? CR: We've long supported a full repeal of the estate tax. I think where we ended up, the doubling of the estate tax exemption [Editor’s note: An individual can now leave up to $11.2 million in a will without it being taxed] is a significant margin of protection to many of our businesses that are trying to pass along high-value assets.
The ability to expense investments in equipment was an important topic during visits with lawmakers.
Photo by Matt McClellan

NM: 
The corporate tax rate dropping to 21 percent is also something that has been much discussed, and its proponents say will spur growth in the U.S. Do you have a read on how that will affect the horticulture industry specifically?

CR: First of all, on the tax issues, I'm playing second fiddle here. Our primary staff met on the tax issues with [director of government affairs] Tal Coley, who joined our staff back in August. But we also must be smart about where we focus finite resources. We've chosen the tax base to affiliate with a broader group called Farmers for Tax Fairness, which is focused particularly on some of the agricultural aspects of tax reform and we buddied up with the coalition to have more bandwidth and more access. I'm not comfortable speaking as to how individual companies’ bottom lines are going to be affected. I think there are really two things to look at. We do have entities in the industry that are organized as corporations. For topline businesses, there’s rate reduction and some people may benefit. The alternative minimum tax is probably a significant factor on the corporate side.

NM: H-2B visa reform is something else AmericanHort is working on, but wasn’t addressed in the tax bill. Can you explain that issue is important to address for the industry?

CR: The H-2B visa relief that we seek [attached to] spending bills is by no means the preferred or optimal way to get it done. The simple reality is that there are very few moving legislative vehicles. When cap relief has been provided by Congress in the past, you know it's always happened on spending bills. We are supporting broader, what we would call, authorizing legislation that would make some of the changes that we seek permanent and that's really the right way to do it. But if there's no sort of broader immigration reform measure moving, then there really isn't a way to get the legs under those more specific components. We have labor challenges and shortages affecting really all aspects of the business, but they're most acute in the aspects of our industry that have high peak labor demands and require a specific amount of physical, manual labor. I think garden centers struggle with labor challenges, but the tools and solutions that the garden center is going to end up gravitating toward are likely to be different than the folks that are really affected by production labor shortages. That would be greenhouse and nursery growers, and the landscape companies who are doing design installation and potentially maintenance work. [Labor shortages] are a constraint on growth and we're all connected, so when a landscape company is short on crews to get jobs installed, then they're afraid to bid on new work. That affects the plant material supply pipeline. So, the greenhouse and nursery growers are going to end up holding product when they're ready to ship product and move it down the pipeline because the landscape company doesn't want to take the product on when they're behind and they don't have the labor to get stuff done. Part of our philosophy at AmericanHort is exactly that this is an interdependent, interconnected industry and all boats need to rise with the rising tide.

NM: AmericanHort worked to get people involved at Impact Washington, and since then, on the various issues affecting the horticulture industry. Have you found those efforts to be successful?

CR: It's an ongoing challenge. The reality we face is that a limited subset of folks in the industry, time and again, are the ones who understand that every decision that our government makes yields a winner and a loser. And if you're not on the playing field making your case, you're probably going to lose. Too few people in the industry are focused on what they're doing, and they're not taking the time when there's a crisis. It's easy. [Regarding] labor, we've got an active grassroots campaign going on right now to bring support for H-2B cap relief. We're getting a lot of traction and we've amplified our own voice as AmericanHort with our membership because of the partnerships we have with all the state organizations in the industry. We've been able to sort of leverage a broader voice and we're getting very good response I think, on the tax [issue]. On one hand, I think a lot of folks are cynical that their voice doesn't make a difference and they are shrugging their shoulders saying you know, “I'm just one person. How can I affect change?” On the other hand, we had 100 people in town for a legislative summit back in September and we spent a good deal of time doing House and Senate office visits. I really believe that those hundred people did a world of good because they visited several hundred offices and made the case as to what a change in policy on cash accounting would ultimately do to our industry. And there's nothing more effective than that personal, direct engagement by folks who are real world, running businesses, making payroll, [and] paying taxes. So, hopefully when people see that some good came out of this, they're going to pay a lot more attention next time.

For more:

AmericanHort.org

This interview was edited for style and clarity. Chris Manning is assistant editor at Greenhouse Management.