Following the release of the president’s plan, Republican members of the House Ways and Means Committee met for an already planned two-day discussion over this past weekend to determine where members stand on tax reform. As we shared with you last week, committee chairman Brady (R-TX) wants any tax reform legislation produced by the committee to have the support of all Republicans on the committee, and this unusual weekend meeting was intended to gauge where his membership is on tax reform generally, but more specifically on the proposed BAT.
The sense coming out of the two-day meeting was that there wasn’t any significant opposition to the BAT among Republican members of the committee. There does seem to be a strong commitment to produce a unified plan, using ideas from the president’s proposal as well as ideas emanating from the Senate, before marking up legislative text. This is intended to avert the recent failures on repeal of the Affordable Care Act.
What does this mean for NAHEFFA? In short, now is the time for NAHEFFA to build upon the dozens of Capitol Hill meetings held during the spring conference, keeping the pressure on our allies and contacts on Capitol Hill, and ensuring that the Administration is forcefully lobbied on the importance of maintaining the status of non-profit tax exempt municipal bonds.
President Trump’s Tax Reform Proposal
The White House released on April 26 a proposal for tax reform. Although the one-page plan is extremely high-level, it does give us a sense of the path the Administration would like to see tax reform take in the coming months.
For business taxpayers, the proposal calls for:
- 15 percent business tax rate
- Territorial tax system
- One-time tax on earnings held overseas
- Elimination of tax breaks for special interests
For individual taxpayers, the proposal:
- Reduces the 7 tax brackets to 3 tax brackets of 10%, 25%, and 35%
- Doubles the standard deduction
- Provides tax relief for families with child and dependent care expenses
- Protects home ownership and charitable gift tax deductions
- Repeals the Alternative Minimum Tax
- Repeals the estate tax
- Repeals the 3.8% Obamacare tax
According to the White House, throughout the month of May the Trump Administration will hold listening sessions with stakeholders to receive their input and will continue working with the House and Senate to develop the details of a plan that can pass both chambers. ML Strategies will be working to have the interests of NAHEFFA members represented before the Administration throughout this process.
As noted, although the plan does not address non-profit tax exempt municipal bonds, it does reference the elimination of special interest tax provisions, so it is imperative that we continue to impress upon decision-makers the importance of nonprofit TEBs to communities across the nation.
Spring Conference Recap
As we continue to advocate for maintaining the tax exempt status of non-profit municipal bonds, we wanted to share some of the intelligence gathered by NAHEFFA members during spring conference congressional meetings. The relationships renewed or established during these visits, along with the information gathered, will play an important role in defending TEBs.
Highlights of Expressions of Support for Our Position
All of the meetings offered an opportunity for NAHEFFA members to brief their Members of Congress and/or their staff on our position. For some meetings, the Member and/or staff listened to the presentation, but did not express a firm position on TEBs; however, for some meetings we did hear that they are supportive. Those expressing outright support included Sen. Elizabeth Warren (D-MA), Rep. Jim McGovern (D-MA), Sen. Steve Daines (R-MT), Sen. Jon Tester (D-MT), Sen. Patty Murray (D-WA), Sen. Maria Cantwell (D-WA), Sen. Richard Blumenthal (D-CT), Sen. Chris Murphy (D-CT), Rep. Jim Himes (D-CT), Rep. Jason Smith (R-MO), Rep. Doug Lamborn (R-CO), Rep. Diana DeGette (D-CO), Sen. Tammy Baldwin (D-WI), Rep. Ron Kind (D-WI), Rep. Gwen Moore (D-WI), and Rep. Glenn Grothman (R-WI).
Select Insights from Members of Congress and Staff
- Staff for Sen. Ed Markey (D-MA) said that Senate discussions on tax reform are happening at only the highest level at this point, and predicted that Senate Finance Committee Chairman Orrin Hatch (R-UT) will operate independently and without concern for what the House of Representatives does on tax reform.
- Staff for Sen. McCaskill (D-MO) suggested that TEBs should be “one of the safer parts” of tax reform.
- Staff for Rep. Jason Smith (R-MO) suggested that President Trump could ultimately push for a simple tax rate cut to go along with an infrastructure package. This staffer also suggested that if the Affordable Care Act is not repealed the House will likely revisit the tax reform proposal from former Rep. Dave Camp (R-MI), the former chairman of the Ways & Means Committee; but that if the Affordable Care Act is repealed then TEBs are less likely to be touched in tax reform. Note that the Camp proposal eliminated our exemption.
- Staff for Sen. Michael Bennet (D-CO) seemed supportive in general, but said that the Senator “won’t take anything off the table” for the debate on tax reform, noting that their priority is that tax reform be revenue neutral.
- Staff for Sen. Ron Johnson (R-WI) indicated that the Senator is working on his own “out of the box” corporate and individual tax plan, with the belief that scrapping the current system has a better chance than fixing it.
- Staff for Rep. Ron Kind (D-WI) suggested that we will see a partisan tax reform bill this fall and then a bipartisan proposal next year, with the final outcome being a tax cut rather than reform.
Next Steps
The release of the Administration’s tax reform goals, following so closely to NAHEFFA’s successful spring conference and Hill visits, positions us well for the next phase of advocacy which will involve shoring up support with our congressional champions, continuing to engage with others on Capitol Hill who will play a key role in tax reform, and ramping up engagement with Trump Administration officials at the White House, the National Economic Council, and the Treasury Department.