Tag: Business SALT

Tax Talks Intensify as House Republicans Race Toward Memorial Day Deadline

Posted on by abigail_grenadier

House Republicans wrapped up a pivotal week in their drive to finalize a sprawling reconciliation package aligned with President Donald Trump’s domestic agenda. But deep internal divides over tax priorities, energy incentives, and offsets­—coupled with new demands from the President—have added a new layer of complexity.

Busy Week on Capitol Hill

  • House Republicans faced a flurry of high-stakes meetings this week as they worked to finalize a massive reconciliation package before the self-imposed Memorial Day deadline. (Politico, May 5)
  • Speaker Mike Johnson privately told Republicans on Thursday that they would only be able to pay for $4 trillion in tax cuts, versus the $4.5 trillion they had targeted to enact the president’s sprawling tax demands. (PoliticoPro, May 8)
  • The House Ways and Means Committee tentatively plans to begin marking up the tax portion of the reconciliation package next Tuesday. (Tax Notes, May 9)
  • A high-level “Big Six” meeting convened on Wednesday, led by Secretary Scott Bessent, to align House, Senate, and White House tax priorities.
  • Speaking this morning, Senate Majority Leader John Thune noted another new tax proposal now on the table. “The President has proposed expensing for factories, for domestic manufacturing, which would be very stimulative.” (CNBC, May 9)
  • Meanwhile, during a private call with Speaker Johnson on Wednesday, President Trump reportedly urged the Speaker to include a new 39.6% tax rate for high-income earners and reform of carried interest tax rules—further complicating an already difficult path forward. (NBC News, May 8)

  • However, President Trump said Friday that GOP lawmakers should “probably not” raise taxes on the wealthy, though he acknowledged he would accept such a measure, as Republicans continue to negotiate the final details of the bill. (The Hill, May 9) (NYT, May 9)
  • House Ways and Means Chair Jason Smith (R-MO) is scheduled to meet with the President today to discuss the tax package. (Politico, May 8)

Carried Interest

  • Among his new requests to Speaker Johnson this week, President Trump revived his long-standing call to eliminate the carried interest tax “loop hole.” (Politico, May 9)
  • 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. 
  • Current tax rules recognize that risk-taking can take many forms other than just invested cash. The rules allow entrepreneurial risk-takers to earn income on appreciated assets at rates that align with outside investors and limited partners.
  • Senate Leader Thune defended the current treatment of carried interest this morning on CNBC’S Squawk Box, “I’m not a fan of taxing carried interest … these are the people out there investing and creating jobs.” (CNBC, May 9)

Business SALT

  • A key priority of The Roundtable (RER) and the real estate industry is preserving the full deductibility of business-related property taxes. The deductibility of business-related state and local income and property taxes emerged as a key issue early in the tax debate as lawmakers looked 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.
  • State and local property taxes are an ordinary and necessary business expense for commercial real estate owners.  On average, property taxes represent 40% of the operating costs of U.S. commercial real estate, a greater expense than utilities, maintenance, and insurance costs combined.  (RW, April 11) 

Potential Challenges Ahead

  • The week saw intense negotiations behind closed doors, with unresolved disagreements over SALT, clean energy tax credits, and offsets threatening to delay progress.
  • SALT: Negotiations around the state and local tax (SALT) deduction cap remained deadlocked despite numerous meetings over the past week. (The Hill, May 8)
  • The Energy and Commerce Committee faces internal GOP friction over Medicaid reductions, balancing fiscal hawks demanding significant cuts against moderates worried about political fallout. (Politico, May 1)
  • In response to the new $4 trillion budget in tax cuts,  Rep. Ron Estes (R-KS), said Wednesday that he expects a number of tax provisions to be temporary, with some extended for four, six or eight years. (PoliticoPro, May 8)
  • Bessent and Senate Majority Leader Thune, have said they are targeting July 4 to pass President Trump’s “big beautiful bill.”

IRA & Energy Tax Credits

  • Republicans on the House Ways and Means Committee are still struggling to find consensus on repealing clean energy tax credits from the Inflation Reduction Act (IRA). (PoliticoPro, May 7)
  • While some lawmakers push to repeal IRA subsidies to free up revenue, others— including a group of moderate Republicans led by Rep. Mariannette Miller-Meeks (R-IA) urged Chair Smith this week to preserve technology-neutral electricity tax credits. The letter warned that repeal could lead to a 10% rise in electricity costs by 2026. (PoliticoPro, May 8)

Fed and Trade Developments Add Pressure

  • Adding to the week’s complexity, the Federal Reserve held interest rates steady at 4.25%–4.5% for a third consecutive meeting, citing heightened risks from tariffs and overall economic uncertainty. Fed Chair Jerome Powell signaled no immediate plans for rate cuts, emphasizing caution amid market volatility. (CNBC, May 7)
  • On the trade front, the Trump administration unveiled a new U.S. and U.K. trade agreement, signaling a temporary pause in tariff escalation. (Axios, May 9)

Roundtable on the Road

  • This week, Roundtable on the Road was in Los Angeles, CA where RER Chair Kathleen McCarthy (Global Co-Head of Real Estate, Blackstone) and RER  President and CEO Jeffrey DeBoer gathered local RER members and friends for a timely discussion on Washington’s policy outlook. The conversation focused on reconciliation legislation, interest rates, and market conditions.

What’s Next

With key markups expected next week, Republican leaders face significant hurdles in reaching a consensus on a final package that preserves tax provisions, satisfies fiscal hawks, and delivers wins on energy and trade all before Memorial Day.

GOP Races to Shape Reconciliation Bill

Posted on by abigail_grenadier

The House returned this week from recess to begin critical markups, racing against Speaker Mike Johnson’s Memorial Day goal. With just over three weeks until the Memorial Day target for President Donald Trump’s ambitious reconciliation bill, GOP lawmakers are navigating contentious policy debates on tax, Medicaid, energy incentives, and spending cuts.  (Politico, May 1)

State of Play

  • On Monday, Treasury Secretary Scott Bessent held another “Big Six” meeting with Speaker Mike Johnson (R-LA), Senate Majority Leader John Thune (R-SD), Senate Finance Chair Mike Crapo (R-ID), House Ways and Means Chair Jason Smith (R-MO), and National Economic Council Director Kevin Hassett to discuss the GOP’s tax provisions in the bill.
  • Although Speaker Johnson is adamant about his Memorial Day goal, Secretary Bessent indicated July 4 might be the more practical timeline.
  • After a White House meeting between President Trump, Speaker Johnson, House Majority Leader Steve Scalise (R-LA) and key committee chairs, the GOP leadership decided to delay markups next week in the House Energy and Commerce, Ways and Means and Agriculture committees. (Punchbowl News, May 2)
  • The House Financial Services Committee voted along party lines Wednesday to approve its portion of the reconciliation package, with Chair French Hill (R-AR) expecting savings to surpass the $1 billion in cuts mandated by the congressional budget resolution.

Tax Policy

  • Business SALT: The Roundtable (RER) is still focusing heavily on preserving the full deductibility of business-related property taxes, as lawmakers look for ways to pay for new tax provisions.
  • Through meetings, outreach, and aggressive advocacy efforts, RER 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.
  • 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 Cuts and Jobs Act (TCJA) and raising effective tax rates on real estate to 1970s-era levels near 50%.  (RW, April 11) 
  • SALT: House Republicans left a high-stakes meeting with Speaker Mike Johnson on Wednesday without resolving their long-running internal dispute over the $10,000 SALT deduction cap.
  • Bonus Depreciation: President Trump said on Wednesday that Republicans are going to restore bonus deprecation for only four years. “Our big, beautiful bill, we may name it that actually, will include 100 percent expensing retroactive to January 20,” And we’re gonna make that expensing for a four-year-period at a full 100 percent.” (PoliticoPro, April 30)
  • The TCJA allowed businesses to fully deduct the costs of equipment and machinery, but bonus depreciation began phasing out in 2023, decreasing 20 percent annually and fully expiring at the end of 2025.

Carried Interest

  • The House Ways and Means Committee has privately indicated it’s not inclined to close the so-called carried interest loophole in the GOP’s sweeping tax package, though conversations are still ongoing. (PoliticoPro, April 29)
  • When asked about the proposal at a press conference, Speaker Johnson said that he didn’t want to get out front of the Ways and Means Committee but that “we’ve heard from interest groups around the country, and we want to do right by them.” (PoliticoPro, April 29)
  • Rep. Hill told Politico’s Morning Money last week that the policy “is a major source of economic growth, jobs, that impacts every community in the country — it’s not a loophole.” (Politico, May 1)
  • 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.
  • RER’s Ryan McCormick told Bloomberg this week that taxing real estate investors’ “sweat equity” at higher income rates would hit projects in low-income and high-risk areas hardest. He added that, small real estate entrepreneurs take on significant risk when developing low-income areas, and these investors face similar risks as long-term equity holders and should be taxed at the 20 percent capital gains rate—a point he said has resonated with lawmakers. (Bloomberg, April 29)

IRA Energy Tax Credits

  • As the House Ways and Means Committee, prepares to markup its portion of the reconciliation bill in the coming weeks, House Ways and Means Chair Jason Smith (R-MO) has said the fate of the Inflation Reduction Act (IRA) is one of a few sticking points that the committee still has to figure out. (PoliticoPro, May 1)
  • Internal party divisions persist, highlighted by recent opposing letters from GOP lawmakers. Yesterday, Chair Smith received two letters from opposing House Republicans arguing their cases for full repeal of all energy tax credits under the IRA and preservation of the law.
  • The coalition of 26 House Republicans is urging GOP leaders to preserve electricity tax credits and protect the IRA’s transferability provision, which allows developers to finance clean energy projects by selling their tax credits. (PoliticoPro, May 2)
  • “Nothing is decided on the IRA,” said Rep. Vern Buchanan (R-FL), the number two Republican on Ways and Means. “The chips are on the table and a lot of that is going to happen next week.” (PoliticoPro, May 2)
  • In recent weeks, several Senate and House Republicans have written to leadership expressing their support for maintaining energy incentives that benefit both traditional and renewable energy sectors, and urging a more selective approach to scaling back the IRA’s tax provisions. (RW, April 25)

Challenges Ahead

  • The Energy and Commerce Committee faces internal GOP friction over Medicaid reductions, balancing fiscal hawks demanding significant cuts against moderates worried about political fallout. (Politico, May 1)
  • Majority Leader Thune (R-SD) highlighted the looming debt ceiling as a “hard deadline,” adding pressure to lawmakers juggling complex fiscal decisions.
  • Upcoming Treasury forecasts on the debt ceiling “X-date” could further adjust legislative schedules, as lawmakers await crucial financial projections.
  • Both House and Senate Republicans want to raise the debt limit in a budget reconciliation measure, something that President Trump has called for as well. (PoliticoPro, April 29)

White House Releases Budget

  • The White House on Friday released President Trump’s fiscal year 2026 budget request, outlining $163 billion in proposed reductions to federal spending that would start on October 1. (WSJ, May 2)
  • While presidential budgets outline an administration’s policy priorities, the figures rarely reflect the final appropriations determined by Congress. (Axios, May 2)
  • The FY2026 budget is expected to build on cuts already implemented by President Trump and adviser Elon Musk’s Department of Government Efficiency—most notably, reductions in the federal workforce. (AP News, May 2) The Trump proposal is already running into early resistance on Capitol Hill, including from Republicans. (Politico, May 2)
  • As reconciliation efforts progress, balancing the administration’s budgetary goals with legislative feasibility will be a challenge.

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.

What’s Ahead: Reconciliation Talks on Capitol Hill

Posted on by abigail_grenadier

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.

Lawmakers Weigh Tax Priorities as Roundtable Emphasizes Need to Protect Deductibility of Property Taxes

Posted on by Trey Jackson

Congress returned to Capitol Hill this week facing a tight window to deliver on a range of policy priorities ahead of its April recess. As discussions intensify, Roundtable advocacy efforts continue to focus on avoiding harmful limitation on the deductibility of state and local business-related property taxes. (Punchbowl News, March 28)

Tax Talks

  • Congressional Republicans are navigating a range of considerations amid pressure from the White House to enact its tax agenda and from conservatives mindful of the deficit. (WSJ, March 26)
  • If Senate Republicans succeed in using the baseline strategy, it would significantly alter the final instructions for the House and Senate tax committees.
  • Under this approach, extending or making permanent many provisions from the 2017 tax cuts would effectively be cost-free. However, GOP deficit hawks may still need offsets for other elements of the tax package.
  • “Business SALT” and potential restrictions on the deductibility of state and local property taxes as a possible revenue offset for the tax bill. (WSJ, March 25)
  • State and local property taxes represent 40 percent of the operating costs of U.S. commercial real estate, a greater expense than utilities, maintenance and insurance costs combined. This tax change could reverse the benefits of the 2017 Tax Cuts and Jobs Act (TCJA) and Section 199A, potentially raising effective tax rates to 1970s-era levels near 50%. (Roundtable Weekly, Feb. 28; March 14) 
  • RER continues to lead advocacy efforts surrounding business SALT. RER members and staff are actively engaging with Congressional leaders on Capitol Hill, and educating lawmakers on the potentially devastating impacts of the proposals under consideration.
  • Earlier this month, RER and sixteen other national real estate organizations wrote to members of the House Ways and Means and Senate Finance Committees urging them to oppose any proposal that would cap or eliminate the deductibility of state and local business property taxes.  (Roundtable Weekly, March 14) (BisNow, March 13)
  • RER members are proactively contacting congressional offices, reinforcing opposition to any legislation that would restrict or eliminate deductions for state and local business property taxes.
  • All RER members are strongly encouraged to amplify this message to their representatives in Congress. Read more here.

State of Play – Budget

  • Congressional Republicans are grappling with how to pay for President Donald Trump’s multi-trillion-dollar tax-cut and immigration reform agenda. (Reuters, March 27)
  • With GOP lawmakers eager to finalize a budget framework for the planned megabill, House Speaker Mike Johnson (R-LA) and Senate Majority Leader John Thune (R-SD) are signaling that they will move forward on the fiscal blueprint without first resolving major disputes over the offsets needed to extend Trump’ s 2017 Tax Cuts and Jobs Act (TCJA). (Politico, March 26)
  • Meanwhile, the Congressional Budget Office (CBO) has projected that the U.S. government may reach its statutory debt ceiling by August or September unless Congress and the president agree to raise or suspend the borrowing limit.
  • Despite ongoing disagreements, an area of consensus has emerged: Speaker Johnson and Leader Thune are aligning around including a debt limit increase in the budget package—a move Senate Republicans had previously resisted. (Politico, March 26)
  • Failure to act could lead to a default on debt, risking economic stability, market volatility and lower property values. (AP, March 26)

Both chambers are targeting the week of April 7 to finalize the budget resolution, which would enable the reconciliation process needed to advance their legislative agenda in the months ahead.

Real Estate Industry Urges Congress to Preserve Deductibility of Business Property Taxes

Posted on by Trey Jackson

As discussions continue between the House, Senate, and Administration on how to move forward with a tax and fiscal package, The Real Estate Roundtable (RER) and sixteen other national real estate organizations wrote to members of the House Ways and Means and Senate Finance Committees urging them to oppose any proposal that would cap or eliminate the deductibility of state and local business property taxes.  (Letter)

A cap on property tax deductibility could have devastating consequences for commercial real estate owners, developers, and investors nationwide.

Why It Matters

  • Republican lawmakers intend to enact a major tax and fiscal package this year, and they are under pressure to identify additional revenue offsets to finance a growing list of priorities.  Ways and Means Committee Republican Members have scheduled all-day, closed-door meetings next week to discuss the details of their tax plan.
  • Some lawmakers have raised “Business SALT” and potential restrictions on the deductibility of state and local property and income taxes as a possible revenue offset for the tax bill (Roundtable Weekly, Feb. 28)
  • Eliminating the business deduction for property taxes would be the equivalent of raising business owners’ property tax bills by roughly 40 percent, causing employers to owe federal tax on money that they do not have.
  • “Business taxes are fundamentally different from state and local individual income taxes.  State and local business taxes are an unavoidable expense, an inescapable cost of doing business,” said Real Estate Roundtable President and CEO Jeffrey DeBoer.  (Roundtable Weekly, Feb. 21)
  • DeBoer’s comments were echoed this week in analyses from the Tax Foundation and former Congressional Budget Office Director Douglas Holtz-Eakin.  (Tax Foundation, March 3; American Action Forum, March 6).
  • “Firms deduct the costs of generating income—wages, rents, capital costs, etc.—and CSALT is the recognition of those costs. Fully deducting those taxes is … necessary to correctly tax firms. Capping CSALT is professional malpractice,” said Holtz-Eakin.

Effects on CRE and the Broader Economy

  • The ripple effects of this proposal would extend far beyond property owners to impact the broader economy and housing affordability nationwide.
  • U.S. commercial real estate is valued at $18-$22 trillion, supporting 15 million jobs and generating $2.3 trillion in GDP annually.
  • This tax change could reverse the benefits of the 2017 Tax Cuts and Jobs Act (TCJA) and Section 199A, potentially raising effective tax rates to 1970s-era levels near 50%.
  • “A cap on the deductibility of property taxes paid by businesses, “would cause self-inflicted injury to the U.S. economy, including unnecessary job losses, higher rents for families and individuals, and other inflationary pressures,” DeBoer said this week.  “It would lower commercial property values and create new stresses in the banking system. It is a recipe for a recession.”
  • Additionally, the increased tax burdens could discourage new investment, deter housing development, and exacerbate the national housing crisis.

Call to Action

  • RER urges members to amplify this message to their representatives in Congress.
  • Given that U.S. businesses paid $1.1 trillion in state and local business-related taxes in 2023 (including nearly $400 billion in property taxes), the stakes are extremely high.

Next Steps

  • House and Senate Republicans remain divided on several key issues as they work to prevent a March 14 government shutdown and agree on the parameters of a larger tax and fiscal reconciliation bill. (USA Today, March 7)

The impasse centers on whether to pursue one big bill or a two-bill strategy, the size of spending reductions, how to deal with the debt ceiling, and the budget baseline that will determine the need for offsetting tax increases.  The impasse could push resolution of the tax issues into the second half of the year.

Major Tax and Fiscal Package Gains Momentum as House Passes Budget Resolution

Posted on by Trey Jackson

House Republicans’ effort to pass a massive tax and fiscal package received a jolt of momentum this week after a cliffhanger vote on the House floor Tuesday night. Passed by a narrow vote of 217-215, the House resolution would authorize $4.5 trillion in tax cuts, provided congressional committees can identify $2 trillion in spending reductions. 

House Budget Proposal

  • Under the deal negotiated with fiscal conservatives in the House, if congressional committees cannot agree on $2 trillion in savings, the size of the authorized tax cut will automatically adjust downwards.  If they can agree on more than $2 trillion in savings, the size of the authorized tax cuts would adjust higher. (House Committee Report, Feb. 18)
  • The House resolution also includes a controversial $4 trillion increase in the national borrowing limit, along with allocations of up to $200 billion for border security and $100 billion for defense funding. (Roll Call, Feb. 25; AP, Feb. 25))
  • Shortly before the vote, The Roundtable joined a broad business coalition urging Congress to pass the House budget resolution to prevent a looming tax hike on pass-through businesses.  (Letter, Feb. 24)

Next Steps

  • Both the House and Senate chambers must now align on a budget resolution before moving forward with a reconciliation bill detailing the spending cuts, tax reductions, and other measures.
  • Senate Republicans have expressed reservations about the House’s approach, particularly concerning the scale of spending cuts and the structure of tax extensions.
  • Senate leaders have already signaled they will push for changes to ensure the 2017 tax cuts become permanent, as the House plan may lack the fiscal room to do so while also accommodating President Trump’s proposed new tax breaks.
  • Senate Majority Leader John Thune emphasized the complexity of the task, stating, “It’s complicated. It’s hard. Nothing about this is going to be easy.” (The Hill, Feb. 27)

View from The White House

  • For weeks, the president has endorsed the House plan as the best way to achieve his top legislative priorities in one move, yet he has also signaled openness to the Senate’s alternative or a compromise blending both approaches.
  • “So the House has a bill and the Senate has a bill, and I’m looking at them both, and I’ll make decisions,” President Trump said at the White House on Tuesday. “I know the Senate’s doing very well, and the House is doing very well, but each one of them has things that I like, so we’ll see if we can come together.”

Revenue Offsets and Business SALT

  • Some lawmakers have raised “Business SALT” and potential restrictions on the deductibility of state and local property taxes as a possible revenue offset for the tax bill. 
  • Eliminating the business deduction for property taxes would be the equivalent of raising property tax bills on commercial real estate by roughly 40 percent. 
  • “Business taxes are fundamentally different from state and local individual income taxes.  State and local business taxes are an unavoidable expense, an inescapable cost of doing business,” observed Real Estate Roundtable President and CEO Jeffrey DeBoer last week.  (Roundtable Weekly, Feb. 21)
  • “Employers would owe federal tax on money that they do not have.  It would lead to insolvencies and foreclosures. It would cause self-inflicted injury to the U.S. economy, including unnecessary job losses, higher rents for families and individuals, and other inflationary pressures.  It is a recipe for a recession,” said DeBoer.
  • It remains an open question whether the House and Senate will use a “current policy” budget baseline that would not count the extension of the 2017 tax cuts as a revenue loss.  A current policy baseline could significantly reduce the pressure to identify spending reductions and revenue offsets. (PoliticoPro, Feb. 28)

Averting Government Shutdown

  • In addition to the tax and fiscal package, congressional leaders are under pressure to reach an agreement on current-year federal spending before a government shutdown on March 14.  A short-term stopgap bill will likely be necessary. (Axios, Feb. 27, CBS, Feb. 27)

Looking Ahead

The House budget resolution directs House committees to report their spending reductions and tax changes to the House Budget Committee no later than March 27, 2025.