Author: abigail_grenadier

What’s Ahead: Reconciliation Talks on Capitol Hill

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Congress will return to Washington next week with an ambitious agenda—kicking off markups for a sweeping reconciliation package that would enact the President’s legislative agenda and could shape the fiscal and tax landscape for years to come. (CBS, April 24)

Markup Schedule

  • The Judiciary, Homeland Security, and Armed Services Committees are expected to lead the process starting the week of April 28. These panels have jurisdiction over spending on border security and defense and are tasked with allocating $110 billion, $90 billion, and $100 billion respectively under the House budget resolution. (Politico, April 17)
  • The Energy and Commerce Committee is targeting May 7 for its markup. The committee is required to find $880 billion in savings, which may involve changes to Medicaid, electric vehicle mandates, and other policy areas. (Punchbowl News, April 23)
  • The Financial Services Committee is set to vote on April 30 on its share of the reconciliation package, which must include a minimum of $1 billion in cuts over 10 years. (PoliticoPro, April 23)
  • Speaker Mike Johnson (R-LA) and Senate Majority Leader John Thune (R-SD) have expressed a shared goal of advancing the reconciliation package by Memorial Day.
  • “We are pushing it very aggressively on schedule, as you said, to get it done by Memorial Day,” Johnson said this week, citing the need to tame stock market instability.
  • Johnson also said he and House Majority Leader Steve Scalise (R-LA) had a conference call with the 11 House GOP committee chairs on Wednesday to discuss the next steps for Trump’s “big beautiful bill.” (PoliticoPro, April 23)

Tax Policy

  • Tax legislation will be a cornerstone of the reconciliation package as lawmakers prepare to extend the major tax provisions from the Tax Cuts and Jobs Act (TCJA) that are scheduled to expire at the end of 2025. (PoliticoPro, April 14)
  • The House Ways and Means Committee is eyeing a potential two-day markup session on May 12 and 13. (PoliticoPro, April 24)
  • House GOP leaders, including Ways and Means Committee Chair Jason Smith (R-MO), are scheduled to meet Wednesday with blue-state Republicans to discuss the personal SALT deduction cap.
  • The meeting marks a key moment in resolving one of the most politically sensitive issues in the tax bill. While most Republicans support maintaining the current $10,000 cap, several GOP lawmakers from high-tax states have threatened to oppose the package unless the cap is raised to at least $25,000. (Punchbowl News, April 25)
  • As policymakers prepare the first major tax bill since 2017, The Roundtable (RER) and the real estate industry are focusing heavily on preserving the full deductibility of business-related property taxes. The deductibility of business-related state and local income and property taxes has emerged as a central issue as lawmakers look for ways to pay for new tax provisions.
  • A cap on the deductibility of property taxes paid by U.S. businesses could have devastating consequences for commercial real estate owners, developers, and investors nationwide, reversing the benefits of the 2017 tax bill and raising effective tax rates on real estate to 1970s-era levels near 50%.  (RW, April 11) 
  • State and local property taxes represent 40% of the operating costs of U.S. commercial real estate, a greater expense than utilities, maintenance, and insurance costs combined.  RER urges its members to weigh in with Members of Congress against restrictions on deducting state and local property taxes.
  • Other important issues for real estate in the current tax discussions include: tax parity for pass-through businesses, potential tax increases on carried interest, preservation of the opportunity zone tax incentives, and a possible expansion of the low-income housing tax credit.  (Bloomberg, April 21)

Potential Challenges Ahead

  • The reconciliation effort faces serious political hurdles, particularly regarding spending cuts and revenue-raising provisions.
  • House Republicans have a narrow majority, and leadership must secure support from nearly every member of their caucus. Proposed cuts to Medicaid and SNAP could generate pushback from moderate Republicans, while debates over “payfors” continue to divide lawmakers.
  • The House and Senate are also operating under different reconciliation instructions, which could further complicate aligning final legislation.

IRA & Energy Tax Credits

  • Since budget negotiations began, Republican leadership has suggested repealing some or all of the Inflation Reduction Act’s (IRA) clean energy tax credits as a way to reduce federal spending. However, several GOP lawmakers have advocated preserving specific provisions that benefit their constituents. (Reuters, April 21)
  • In a recent letter to Leader Thune, four Senate Republicans urged a more selective approach to scaling back the IRA’s tax provisions. Additionally, 21 House Republicans expressed their support for maintaining energy incentives that benefit both traditional and renewable energy sectors in a March letter to House Ways and Means Chair Jason Smith (R-MO). (Newsweek, April 21)

RER at the Forefront

  • This week, RER President and CEO Jeffrey DeBoer appeared on the special webcast  “Real Recession Risk or Temporary Distraction?” hosted by Marcus & Millichap President and CEO Hessam Nadji. DeBoer joined Moody’s Analytics Chief Economist Mark Zandi to discuss recession risks, inflation, and the broader impact of trade and tax policy in Washington. (Watch)
  • DeBoer was also a keynote speaker at the University of Wisconsin-Madison’s James A. Graaskamp Center Spring Board Conference earlier this month, where he shared his insights on how the Trump administration’s economic agenda, regulatory changes, tariffs, and tax policy are impacting commercial real estate.

RER will continue to monitor developments closely as Congress advances a package that could have far-reaching implications for commercial real estate, business taxation, and economic growth.

New Report: Carried Interest Tax Hike Threatens Jobs, Innovation, and Housing

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A new report released this month warns that proposed tax increases on carried interest could significantly harm the U.S. economy, increase the federal deficit, and jeopardize millions of jobs.

Report Findings

  • “This report is a testament to the importance of backing up policy recommendations with sound calculations and analysis before making decisions that would affect so many American workers, small businesses, and industries,” said Dr. Swenson. (One-Pager)
  • The report warns that increasing taxes on carried interest would result in:
  • Higher Federal Deficit: Raising taxes on carried interest could cost the U.S. government up to $70 billion in lost revenue over the next decade.
  • Job Losses: Real estate, venture capital and private equity partnerships support an estimated 32 million American jobs. The private sector could lose an estimated 1.23 million jobs as businesses lose access to a critical tool for attracting capital and securing investment.
  • Global Competitive Disadvantage: The proposed tax increase would raise the U.S. tax rate on many businesses and investments to 40.8% – higher than China, Canada, and numerous European countries, discouraging foreign and domestic investment.
  • Worsening Housing Crisis: Higher taxes could exacerbate the current housing shortage, stalling construction at a critical time when the U.S. needs 5.5 million new units to meet demand.
  • Declining Innovation: Removing the tax incentive alignment between entrepreneurs and investors would shift investments away from high-risk opportunities, particularly in high-tech and biotechnology industries.
  • Lost Retirement Earnings: Public pension funds supporting over 34 million workers could lose up to $520 million annually as they’re forced into lower-yielding investments.

Industry Response

  • Industry leaders reiterated the report’s findings and warned of the harmful economic consequences of increasing taxes on productive, job-supporting investment. (Press Release, April 8)
  • Since carried interest and its tax treatment first emerged as a controversial political issue in 2007, RER has consistently opposed legislative proposals to tax all carried interest at ordinary income rates. (Axios, March 24 | NYT, March 8)
  • President Trump revived calls to close the “carried interest tax deduction loophole” earlier this year during meetings with Republican lawmakers, framing it as a potential revenue offset. While he hasn’t mentioned it publicly in recent weeks, the issue remains part of broader GOP tax discussions. (Politico, April 25)
  • In March, a coalition of 17 national real estate organizations wrote to congressional leadership urging preservation of current law on carried interest, highlighting that taxing all carried interest as ordinary income would raise taxes on 2.2 million real estate partnerships and nearly 9.7 million partners, potentially stalling new housing, infrastructure, and redevelopment projects. (RW, March 28)
  • Jeffrey DeBoer, President and CEO of RER: “The new study by Professor Swenson is further evidence that recharacterizing this long term ‘carried interest’ capital gain as ordinary income would penalize entrepreneurs, slow housing production, and reduce investment in long-neglected neighborhoods. Construction costs and the risks of real estate development continue to rise and financing remains challenging.  Now is not the time to raise taxes on U.S. real estate,” DeBoer said. (Press Release, April 8)

With the House having approved a $5.3 trillion budget resolution, tax legislation is now on the horizon. This timely study provides critical data on the potential consequences of changing carried interest tax treatment.

Congressional Republicans Pass Budget Resolution, Move One Step Closer to a Final Tax Bill 

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This week, House Republicans approved a major budget framework that moves President Trump’s tax and spending agenda closer to the finish line and set the stage for Congressional Committees to “mark up” the key details in May—including tax cuts, revenue raising provisions, and spending reductions.  

State of Play

  • Despite tight margins, on Thursday House Speaker Mike Johnson (R-LA) was able to corral his caucus into passing a new budget resolution that was approved by the Senate over the prior weekend, bringing the president’s goal of “one big beautiful bill” closer to fruition. (WSJ, April 10)
  • Senate Republicans adopted a budget resolution on Saturday morning after an all-night voting marathon. Senate Republicans unveiled their 70-page budget blueprint last Wednesday.  It lays out a fiscal framework for implementing Trump’s border security, defense, energy and tax priorities. (CBS News, April 9)
  • The budget outline punts many of the hard decisions for lawmakers to hammer out later in the tax-cut negotiations. That could lead to a standoff between the House and Senate at the end of the process, where several Senators are resistant to large cuts in safety-net programs while House conservatives are seeking significant deficit reduction. (Bloomberg, April 10)

Next Steps and Implications for CRE

  • Lawmakers in the House and Senate now turn their attention to “marking up” their respective Committee instructions, as provided in the budget resolution.  The House and Senate instructions do not align, so their differences will have to be resolved later in the process.
  • The budget resolution allows the House Ways and Means Committee to pass a tax cut of up to $4.5 trillion, using a current law budget baseline.   The resolution allows the Senate Finance Committee to pass a $1.5 trillion tax cut, but assumes a current policy baseline in the Senate.  The practical effect of the current policy baseline is to increase the size of the Senate tax cut to $5.3 trillion.

  • On the spending side, the budget resolution directs the House Committees to identify at least $1.5 trillion in spending cuts.  The spending reductions for the Senate Committees are de minimis ($4 billion spread across four committees).
  • Besides tax cuts and spending reductions, the resolution calls for increased spending on the military ($150 billion), along with another $175 billion for border security and immigration enforcement work. (Politico, April 10)
  • The debt limit fight will also shape the legislative timeline. House and Senate Republicans have different reconciliation instructions for increasing the nation’s borrowing authority. (Punchbowl News, April 11)
  • Through meetings, outreach, and aggressive advocacy efforts, The Roundtable and the real estate industry continue to urge lawmakers to reject a revenue proposal to limit the deductibility of state and local business-related property taxes as part of the tax bill.  The proposal could have a devastating impact on property values, rents, the health of the financial system, local communities, and consumer prices.
  • In addition, members in both chambers continue to raise concerns about repealing clean energy tax credits from the Inflation Reduction Act (IRA) as part of the upcoming budget reconciliation bill. This week, four senators sent a letter to Senate Republican Leader John Thune warning that a full repeal would undermine investment, hurt businesses, and threaten jobs. (Punchbowl News, April 11) (RW, March 14)
  • At our Spring Roundtable Meeting, House Ways and Means Chairman Jason Smith (R-MO) engaged with RER members, acknowledging their concerns about proposals to change the treatment of business SALT and carried interest. He emphasized the importance of using data to inform policy discussions and commended RER for its impactful work educating policymakers on the issues.

As the budget process enters its next phase, RER will continue to advocate for key real estate priorities and inform members on policy updates from Capitol Hill and their impact on the industry. 

The White House Pauses Tariffs on Global Partners While Escalating Tensions With China

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Global markets, Wall Street and Main Street all watched this week as we entered a “new dawn” of American trade and commerce. The impacts on industry—including real estate—have been mixed and continued volatility is anticipated.

Recap

  • Monday marked the first full week of economic activity since President Trump’s “Liberation Day” announcement on Tuesday, April 2, which featured a baseline 10% tariff on all imports with higher, targeted reciprocals for specific countries. (CBS News, April 2; Roundtable Weekly, April 4) 
  • Markets rebounded on Wednesday after President Trump said he would pause some —but not all—of his sweeping tariffs. Trump offered a 90-day reprieve on the reciprocal tariffs he had imposed on dozens of countries, including global partners such as Japan and the EU. (Axios, April 9)
  • On Thursday, the White House announced the overall tariff imposed on most goods imported from China now stands at 145 percent (after stating the day before that the levy on Chinese goods was 125 percent). Stocks again tumbled at the announcement,  (WSJ, April 9; BBC, April 10) 

Implications for CRE

  • Real estate stocks were not immune to what many are calling the “whipsaw” in prices stemming from to-the-minute changes in tariff policies. (Real Deal, April 9) 
  • The pause on the 20 percent reciprocal tariff on EU imports eases the burden for the costs of glass, with many firms relying on Portugal and other EU manufacturers as the primary supplier of this material—especially as glass-and-steel skyscrapers have become the preferred choice for builders. (Commercial Observer, April 4)
  • Wednesday’s pause was an encouraging development for the real estate industry. However, higher tariffs on imported Chinese steel and aluminum will raise structural material costs, increasing expenses for developers and complicating efforts to address the housing shortage. (Roundtable Weekly, Jan. 24 | Nov. 27)
  • CRE investors and developers must also still contend with the tariffs that remain in place and potential announcements of new tariffs in the future. The ultimate strategy and intended outcome behind the Trump administration’s trade policies remain unclear. 

As trade negotiations continue, RER will continue to raise concerns about the negative impact that uncertainty in tariff policy is having on construction costs, particularly in the affordable housing sector.

Trump Executive Orders Push Energy Dominance Agenda

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President Trump issued executive orders this week for a policy agenda to develop domestic energy supplies, ensure grid reliability, and meet increased electricity demands driven by artificial intelligence (AI).  (AP News, April 8)

Grid Reliability Executive Order (EO)

  • It states that America’s leadership in technological innovation “depends on a reliable supply of energy from all electric generation sources, particularly those secure, redundant fuel supplies that are capable of extended operations.” (Politico, April 8)
  • Building efficiency measures that yield energy savings are also key to relieving electricity grid constraints to accommodate more energy users. RER and a broad coalition of real estate organizations urged heightened focus on efficiency programs by voicing strong support for ENERGY STAR in a recent letter to EPA Administrator Lee Zeldin. (RW, April 4)

State Overreach EO

  • The EO on “Protecting American Energy from State Overreach” reflects the administration’s view that “American energy dominance is threatened when State and local governments seek to regulate energy beyond their constitutional or statutory authorities.”  (Axios, April 9)
  • Governors committed to reducing the use of fossil fuels and combat climate change within their borders said they were not “intimidate[d]” by the Trump order, signaling likely litigation. (E&E News, April 9; Reuters, April 9)
  • In February, RER submitted a letter to Congress requesting oversight of federal DOE grants that induce states and localities to require all-electric buildings and zero emissions “targets,” through onerous Building Performance Standards (BPS). (RW, Feb. 28)
  • RER’s peer reviewed 20-point policy guide for fair BPS mandates emphasizes that states and localities receiving federal grants should not levy fines on buildings that meet US-EPA and US-DOE high performance industry leadership standards. (RW, Oct. 11)

Tariffs and Energy

  • While the administration’s recent executive orders could bolster grid reliability, the potential for broad tariffs may introduce new costs and complexities undermining energy affordability and infrastructure investment. (PoliticoPro, April 8)
  • Tariffs on critical grid components could exacerbate supply chain shortages and drive up electricity prices. (CNet, April 4)
  • On Tuesday, U.S. Senators Bill Cassidy (R-LA) and Lindsey Graham (R-SC) introduced the latest version of the Foreign Pollution Fee Act (FPFA), a carbon tariff aimed at penalizing imported goods manufactured with higher CO2 emissions than domestic alternatives. (E&E News, April 9)  (Press Release, April 8)
  • Prospects for imminent passage of the FPFA are remote. Yet, the bill signals some interest by Republican Senators to tie climate policy to tariff policy where overseas manufacturers produce aluminum, cement, iron, steel, and glass with higher carbon emissions compared to like-kind U.S. manufactured products. (American Action Forum, April 8)  
  • RER submitted comments on the FPFA in January, raising concerns regarding the impact of a carbon tariff on affordable housing construction, rebuilding after natural disasters, and technical issues on calculating “indirect emissions” associated with product manufacturing. (RW, Feb. 7)

RER will continue engaging with policymakers to ensure federal actions promote reliable, affordable energy without unintended economic repercussions.

Spring Roundtable Meeting Highlights Tax and Trade, Housing, and Global Challenges Confronting Real Estate

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Industry leaders convened with members of Congress and senior administration officials at this week’s Spring Roundtable Meeting to address critical national policies impacting commercial real estate and the broader economy.

  • The timely discussions focused on housing supply and affordability, tax policy, regulatory reform, workforce development, grid reliability, infrastructure resilience, tariffs and trade relations, and immigration reform.

 

(L-R): Roundtable Chair Kathleen McCarthy (Global Co-Head, Blackstone Real Estate) and Roundtable President and CEO Jeffrey DeBoer

  • RER members underscored the importance of preserving vital tax provisions that incentivize investment and warned lawmakers that proposals to restrict the deductibility of state and local property taxes would cause self-inflicted injury to the U.S. economy, including unnecessary job losses and new, systemic risks to the banking system, pressure on rents for families and individuals, and other inflationary cost increases for American consumers.  (The Roundtable’s Spring 2025 Policy Priorities and Executive Summary)

Speakers & Policy Issues

Roundtable members engaged in policy issue discussions with the following guests:

  • Jonathan Martin (Politics Bureau Chief and Senior Political Columnist, POLITICO) offered a candid look at the political landscape and forecasted a competitive 2028 election cycle amidst shifting congressional dynamics.
  • The Honorable Scott Turner (Secretary, U.S. Department of Housing and Urban Development (HUD)) emphasized HUD’s mission of service, focusing on reducing regulatory burdens, increasing housing supply through public-private partnerships, and extending Opportunity Zones.
  • The Honorable Howard Lutnick (Secretary, U.S. Department of Commerce) discussed tariffs and how President Trump is seeking to use trade policy to reignite domestic manufacturing, restore U.S. superiority in critical industries, and advance U.S. national security. 
  • The Honorable Todd Young (R-IN) (Committees: Commerce, Science, and Transportation; Finance; Small Business and Entrepreneurship; Select Committee on Intelligence) focused on pro-growth tax policies, the need for reduce the deficit, and his initiatives aimed at housing supply and affordability.
  • The Honorable Mark Kelly (D-AZ) (Committees: Joint Economic Committee; Armed Services; Environment & Public Works; and Select Committee on Intelligence)discussed the intersection of national security and technology, emphasizing the need for grid reliability, innovation, and bipartisan immigration reform to support economic and housing needs.
  • The Honorable Bill Huizenga (R-MI) (Committees: Financial Services (Vice Chair); Foreign Affairs) shared his insights as Vice Chair on the House Financial Services Committee priorities, revitalizing community banking, affordable housing access, and insurance programs like the National Flood Insurance Program (NFIP) and Terrorism Risk Insurance Act (TRIA).
  • The Honorable Jason Smith (R-MO) (Chairman, House Ways & Means Committee; Chairman, Joint Committee on Taxation) reinforced his commitment to advancing a comprehensive, pro-growth tax package by summer, highlighting the essential input provided by RER on key issues such as business SALT deductions, carried interest, and real estate’s role in driving growth.

Next on The Roundtable’s meeting calendar is the all-member Annual Meeting, which will include policy advisory committee meetings on May 28-29 in Washington, DC.