Roundtable Weekly -- January 24, 2020
House Democrats to Introduce Infrastructure Proposal
A proposal to improve the nation’s infrastructure and surface transportation will be unveiled by House Democratic leaders next week – as the House Ways and Means Committee considers how to pay for it during a Jan. 29 hearing on “Paving the Way for Funding and Financing Infrastructure Investments.” (Deloitte Tax News & Views, Jan. 17)
- Ways and Means Committee (W&M) Chairman Richard Neal (D-MA) and Transportation and Infrastructure Committee (T&I) Chairman Peter DeFazio (D-OR) will be tasked with considering how to offset the costs of a national infrastructure improvement effort and surface transportation bill. (BGov, Jan. 23)
- The Ways and Means Committee hearing will explore potential funding options, including raising the gasoline tax; expanding tax-exempt bonds; establishing a vehicle-miles traveled tax; and greater use of public-private partnerships (PPPs). The Congressional Budget Office reported this week that PPPs have accounted for only 1 to 3 percent of spending for highway, transit, and water infrastructure since 1990.
- The Roundtable submitted extensive comments on infrastructure policy to both committees last year. (March 20, 2019 W&M comments; April 29, 2019 T&I comments.)
- The nation’s largest financing source for roads, bridges, tunnels, and mass transit – the federal Highway Trust Fund (HTF) – expires on Sept. 30, the end of the government’s 2020 fiscal year.
- With HTF reauthorization considered a “must do” legislative priority during this election year, a transportation funding bill will likely become part of the broader infrastructure proposal, which could total $1 trillion or more.
- The Roundtable and more than 150 national trade associations also wrote to Senate Majority Leader Mitch McConnell (R-KY) and Senate Minority Leader Chuck Schumer (D-NY), on Sept. 30 to reauthorize the HTF before its scheduled expiration. (Roundtable Weekly, Oct. 4) Chairman DeFazio said his possible funding sources could incorporate federal gas tax revenues and a bonding proposal. (BGov, Jan. 17)
- In the Senate, four committees will play a role in crafting a long-term HTF package. Last summer, the Senate Environment and Public Works (EPW) Committee unanimously advanced a bill (S. 2302) that would authorize $287 billion over five years to repair and maintain the nation's surface transportation. (EPW Committee news release, July 30)
- Senate Majority Leader Mitch McConnell (R-KY) recently discussed with GOP committee leaders possible transportation and infrastructure agendas that could be advanced after the impeachment trial ends.
- Additionally, the Trump Administration on Jan. 9 proposed changes to federal environmental review requirements to speed major infrastructure projects such as highways, airports, tunnels and pipelines. (Roundtable Weekly, Jan. 10)
- The proposal by the White House’s Council on Environmental Quality (CEQ) to streamline the infrastructure approval process complements the similar, bipartisan efforts in the Senate to speed-up delivery for infrastructure projects. (Roundtable Weekly, Aug. 2)
Federal infrastructure efforts, and their vital importance to commercial real estate, are a focus of The Roundtable’s 2020 Policy Agenda, which will be discussed at the organization’s State of the Industry Meeting on January 28-29 in Washington.
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House Ways and Means Committee Signals Green Energy Tax Bill; Trump Administration Developing “Tax 2.0” Proposal
House Ways and Means Committee Chairman Richard Neal (D-MA) recently confirmed plans to advance legislation in 2020 that would expand and create new renewable energy and energy-efficiency tax incentives. “We talked about (the markup) this morning,” Neal told reporters on Jan. 14. He added, “We are scheduling events.” (BGov, Jan. 15 and Jan. 24)
- The starting point for green energy tax legislation in the Ways and Means Committee is likely a draft bill unveiled last November by Rep. Mike Thompson (D-CA), who chairs the Subcommittee on Select Revenue Measures.
- Rep. Thompson’s discussion draft of the Growing Renewable Energy and Efficiency Now (GREEN) Act would modify the enhanced deduction for energy-efficient commercial building property (section 179D);create an expanded tax credit for the developers of new, energy-efficient home (section 45L); and modify the tax credit for energy-efficient improvements to existing homes (section 25C). (Roundtable Weekly, Nov. 22) (Rep. Thompson news release with link to the GREEN tax draft legislation, Nov. 19)
- The Real Estate Roundtable and other real estate and environmental organizations are encouraging Members of Congress to consider an additional proposal that would incentivize existing buildings to purchase and install energy-efficient upgrades that reduce greenhouse emissions, generate taxpayer savings, and spur innovation and investment.
- Specifically, draft legislation under review would create a new category of energy-efficient qualified improvement property (E-QUIP) that is subject to an accelerated 10-year depreciation period. The E-QUIP benefit would apply to purchases of modern and energy-efficient HVAC, lighting, and building envelope improvements, such as energy-saving roofs and windows. (Roundtable Weekly, May 10)
Separately, President Trump on Jan. 22 said a substantial middle-class tax cut – referred to as “Tax Cut 2.0” – will be released within 90 days, during an interview with Fox Business' Maria Bartiromo at the World Economic Forum in Davis, Switzerland. (Reuters, Jan. 22)
- Treasury Secretary Steven Mnuchin told CNBC at the same conference, “The president has asked us to start working on what we call ‘tax 2.0,’ and that will be additional tax cuts. They’ll be tax cuts for the middle class, and we’ll also be looking at other incentives to stimulate economic growth.” (CNBC, Jan. 23)
- Larry Kudlow, director of the White House National Economic Council, told FOX Business' Liz Claman on Jan. 17 that "The president directed me to produce what we're calling 'tax cuts 2.0.’ It will be published sometime during the campaign, has a message for future Trump economic growth policies, particular emphasis on the middle class in his second term."
- A legislative path toward passage of individual tax bills in an election year is very narrow, but separate tax proposals by Congress and the White House could culminate in an end-of year compromise package.
Tax issues for 2020 will be a focus at next week’s Roundtable State of the Industry Meeting in Washington – both during the Jan. 28 business meeting and the Jan. 29 Tax Policy Advisory Committee (TPAC) meeting.
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