House Ways and Means Committee Members Darin LaHood (R-IL) and Carol Miller (R-WV) recently called on Treasury Secretary Janet Yellen to withdraw a proposed IRS rule that would expand the reach of the Foreign Investment in Real Property Tax Act (FIRPTA) of 1980. The policymakers’ request followed a letter by The Real Estate Roundtable and 14 other real estate trade organizations that urged congressional tax-writing committees to oppose the FIRPTA proposal. (Letter to Yellen, July 28 and Industry coalition letter, March 1)
Retroactive Rewrite for REITs
- Under current law, shareholders of domestically controlled REITs are not subject to FIRPTA, a statutory regime that subjects foreign investors to capital gains tax on their U.S. property investments.
- The proposed IRS Look-Through Rule would no longer treat a taxpaying U.S. C corporation that has ownership shares in a REIT as a U.S. person—if more than 25% of the owners of the C corporation are foreign. If enacted, the new rule would trigger FIRPTA capital gains, retroactively, on REITS and investment structures used for decades when planning real estate and infrastructure investments.
Congressional CRE Concerns
- Reps. LaHood and Miller asked Treasury and the IRS to reverse course and withdraw the proposed regulation, stating in their letter, “The proposed regulation’s retroactivity is severely burdensome and is already having a chilling effect on foreign investment, which has been a vital contributor to the economic health of the U.S. commercial real esate market. If Treasury decides to move forward with this proposal, it is imperative that the retroactivity provisions are removed.”
- The letter also noted the proposed change would limit access to capital at a time when the CRE market is showing signs of destablization. The House taxwriters added, “We fear this proposal could worsen the commercial real estate outlook and harm the many Americans who rely on these crucial investments in their communities.”
Additionally, The Roundtable, Nareit, American Investment Council, Managed Funds Association, and ICSC submitted comments to Treasury in February in opposition to the proposed look-through rule. The organizations wrote that the regulation would “reverse decades of well-settled tax law, severely misconstrue the statute, and contradict Congressional intent.” (Letter to Treasury, Feb. 27)
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The Real Estate Roundtable and 16 other trade organizations weighed in this week against a proposed IRS rule that would expand the reach of the Foreign Investment in Real Property Tax Act (FIRPTA) of 1980.
- On December 29, Treasury and the IRS released proposed regulations that would redefine what constitutes a domestically controlled REIT and impose capital gains taxes, through FIRPTA, on investment structures that taxpayers have used for decades when planning real estate and infrastructure investments in the United States.
- For purposes of FIRPTA and the exemption for domestically controlled REITs, the proposed look-through rule would no longer treat a taxpaying U.S. C corporation (that is a shareholder of a REIT) as a U.S. person if more than 25% of the owners of the C corporation are foreign. The result would be that many REITs previously exempt from FIRPTA would be thrust, retroactively, into the discriminatory tax regime.
- On Monday, The Roundtable, Nareit, American Investment Council, Managed Funds Association, and ICSC submitted detailed comments to Treasury urging withdraw of the proposed look-through rule. The organizations wrote that the rule would “reverse decades of well-settled tax law, severely misconstrue the statute, and contradict Congressional intent,” as well as potentially “impair real estate’s access to foreign capital at a critical economic juncture and undermine foreign investors’ confidence in the stability and predictability of U.S. tax rules.” (Letter to Treasury, Feb. 27)
- On Wednesday, The Roundtable and 14 other real estate trade organizations wrote to the congressional tax-writing committees asking Members of Congress to encourage the Treasury Department and IRS to withdraw the rule, which could put property value, jobs, and communities at risk unnecessarily. (Letter to congressional tax committees, March 1)
- Treasury’s regulatory package also included favorable final rules regarding the FIRPTA foreign pension fund exemption and a helpful proposal related to real estate investments and the tax exemption for foreign governments.
The principal drafters of the Treasury comment letter were Roundtable Tax Policy Advisory Committee (TPAC) members David Levy (Weil Gotshal) and David Polster (Skadden), as well as Nickolas Gianou (Skadden). TPAC members also met virtually with Treasury officials on February 15 to discuss the proposed regulation. TPAC will remain active and engaged with the administration on this issue as the process unfolds.
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On December 28, Treasury and the IRS released new tax regulations affecting foreign investment in U.S. real estate.
- Among the changes, a proposed rule would repeal a long-standing private letter ruling that foreign investors have relied on when structuring inbound investments.
- Under current law, shareholders of domestically controlled REITs are not subject to the Foreign Investment in Real Property Tax Act (FIRPTA)—a statutory regime that subjects foreign investors to capital gains tax on their U.S. property investments.
- The proposal, if finalized, would expand the reach of FIRPTA by denying a REIT’s status as domestically controlled if a U.S. corporate shareholder of the REIT is foreign-owned. In other words, the rule would look through a domestic C corporation that owns the REIT, even if the C corporation is a U.S. taxpayer that pays U.S. income tax.
- The proposed regulation surprised foreign investors and real estate fund managers who have relied on a 2009 IRS private lettering rule, which held that a domestic C corporation that owns shares in a REIT is a U.S. owner for purposes of determining whether the REIT is domestically controlled.
- The proposed rule appears to conflict with policies underlying FIRPTA-related ownership attribution changes enacted in the 2015 PATH Act. As a practical matter, the tax consequences of the proposal are retroactive because they would apply to existing investments made years ago. (Weil Tax Alert and Skadden Insights)
Additional Provisions & Regulations
- Other provisions in the proposed regulations are more favorable. For example, they include rules that allow a sovereign wealth fund to preserve the tax exemption applicable to foreign governments if the fund has only a minority, non-controlling interest in a U.S. real estate business.
- Simultaneously, Treasury also released final regulations last month related to the FIRPTA exemption for foreign pension funds, which the Roundtable worked to enact in 2015. The final regulations are largely positive and should facilitate even greater investment in U.S. real estate by qualified foreign pension funds.
The Real Estate Roundtable’s Tax Policy Advisory Committee (TPAC) has created a working group to develop formal comments and respond to the recent Treasury releases.
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Testifying before the House Ways and Means Committee on the President’s FY 2021 budget, Treasury Secretary Steven Mnuchin was questioned this week on the Foreign Investment in Real Property Tax Act (FIRPTA) and addressed potential steps he could take to encourage greater real estate investment from abroad. (Watch 2:35 video of March 3 exchange with Mnuchin)
- During the hearing’s Q&A with Secretary Mnuchin, committee member Kenny Marchant (R-TX) noted a recent letter that he and other GOP taxwriters sent to the Treasury Department urging a reevaluation of FIRPTA and related IRS guidance (Notice 2007-55).
- The congressional letter, led by Ways and Means Republican Devin Nunes (R-CA), encourages Treasury to withdraw section two of the IRS Notice, which effectively imposes U.S. capital gains tax on the liquidating distributions of domestically controlled real estate investment trusts (REITs). Often, when a foreign investor is a minority partner in a U.S. real estate or infrastructure investment, the joint venture employs a domestically controlled REIT structure.
- The 16 signatories of the February 20 letter wrote, “repealing the IRS Notice will restore the intent of Congress with respect to the tax law governing liquidations, provide parity to investors, and increase direct foreign investment in U.S. commercial real estate and infrastructure in every corner of the nation.”
- During the hearing, Rep. Marchant called attention to the letter – and noted the IRS guidance applies FIRPTA to previously untaxed transactions involving domestically controlled REITs.
- Mnuchin responded that the Feb. 20 letter prompted a briefing at Treasury this week – and that he shares the concerns the letter raises about FIRPTA. “[I]t makes no sense that we discriminate against foreign investors,” Mnuchin said. “But in my mind, anything we can do legally to encourage those investments we will do. So thank you for the letter. We are reviewing it. It is at the top of my list,” he added. (Watch 2:35 video of Marchant and Mnuchin)
- During another Ways and Means tax hearing last month, Rep. Marchant said, “FIRPTA is an outdated, discriminatory law. It applies to no asset class other than real estate and infrastructure … Economic studies indicate repealing FIRPTA could drive $65 to $125 billion in new investment.” (Watch video of Feb. 11 FIRPTA exchange). Rep. Marchant is lead sponsor of the bipartisan Invest in America Act (H.R. 2210), a bill that would repeal the entire FIRPTA law.
- A similar letter was sent on December 18, 2019 to Secretary Mnuchin by a bipartisan group of 11 Senate Finance Committee Members led by Sen. Robert Menendez (D-NJ) – a longtime lead sponsor of FIRPTA repeal bills. Another bipartisan letter to Secretary Mnuchin urging repeal of the IRS Notice was signed by 32 Representatives of the House Ways and Means shortly before introduction of the Tax Cuts and Jobs Act of 2017 (TCJA). (Roundtable Weekly, Dec. 20, 2019)
Members of the Roundtable’s Tax Policy Advisory Committee (TPAC) have met with Treasury officials on multiple occasions to discuss the harm caused by IRS Notice 2007-55. Leading industry experts also convened on Oct. 30 at the National Press Club in Washington for an in-depth discussion the economic damage incurred by the IRS Notice. An industry coalition is scheduled to meet with officials in Treasury’s Office of Tax Policy next week to discuss the issue.
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Over three-quarters of the Republican Members of the House Ways and Means Committee on Feb. 20 urged Treasury Secretary Steven Mnuchin to remove tax barriers to foreign investment in U.S. real estate and infrastructure.
- The congressional letter, led by Representative Devin Nunes (R-CA), encourages Treasury to withdraw section two of IRS Notice 2007-55. The Notice, which relates to the Foreign Investment in Real Property Tax Act (FIRPTA), effectively imposes U.S. capital gains tax on the liquidating distributions of a domestically controlled REIT.
- Domestically controlled REITs commonly are employed in joint ventures where a foreign investor is a minority partner in a U.S. real estate or infrastructure investment. Prior to the Notice, a liquidating distribution from a domestically controlled REIT was treated as nontaxable sale of stock for tax purposes.
- The 16 signatories of the February 20 letter wrote that “repealing the IRS Notice will restore the intent of Congress with respect to the tax law governing liquidations, provide parity to investors, and increase direct foreign investment in U.S. commercial real estate and infrastructure in every corner of the nation.”
- The Ways and Means Republican letter comes on the heels of a high-profile exchange on the broader economic harm caused by FIRPTA at a recent Ways and Means tax hearing. At the hearing, Rep. Kenny Marchant (R-TX), said that “FIRPTA is an outdated, discriminatory law. It applies to no asset class other than real estate and infrastructure . . . Economic studies indicate repealing FIRPTA could drive $65 to $125 billion in new investment.” Rep. Marchant is lead sponsor of the bipartisan Invest in America Act (H.R. 2210), a bill to repeal FIRPTA altogether. (Watch video of Feb. 11 FIRPTA exchange)
- In conjunction with The Roundtable’s Tax Policy Advisory Committee (TPAC) meeting on January 29, Darin Mellott, Director of Americas Research at CBRE shared updated data indicating that foreign capital represented only 10 percent of total transaction volume between 2007 and 2019 – further evidence that FIRPTA weighs heavily on potential inbound investment. In other asset classes, such as manufacturing, foreign capital represents a much larger share of overall investment.
- A letter similar to the House Republican letter was sent by a bipartisan group of 11 Senate Finance Committee Members to Secretary Mnuchin on December 18, 2019. The December letter was led by Sen. Robert Menendez (D-NJ), a longtime lead sponsor of bills to roll back FIRPTA, and Sen. Johnny Isakson (R-GA). A bipartisan House Ways and Means Committee letter urging repeal of the Notice and signed by 32 Representatives was sent to Secretary Mnuchin shortly before introduction of the Tax Cuts and Jobs Act of 2017 (TCJA). ( Roundtable Weekly , Dec. 20, 2019)
Members of the Roundtable’s Tax Policy Advisory Committee have met with Treasury officials on multiple occasions to discuss the harm caused by IRS Notice 2007-55. Since 2017, Treasury’s regulatory agenda has focused on implementing the TCJA. With TCJA implementation nearly complete, The Roundtable is now urging Treasury officials to give the Notice the attention it merits.
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The Trump Administration on Monday released a $4.8 trillion budget for FY 2021 signaling policy priorities for a potential second term, followed by Senate and House committee hearings this week that focused on the proposal and tax-related issues – including FIRPTA repeal; correcting a drafting error affecting qualified improvement property (QIP); and expansion of the low-income housing tax credit. (Administration’s 2021 budget proposal and supporting budget materials)
- Initial budget proposals from the White House are useful only as a starting point for funding negotiations with Congress, which can produce a significantly different budget reflecting vastly different policy positions.
- The Administration’s FY 2021 budget proposal would also reverse a two-year deal negotiated with Congress last summer. While the August deal raised spending limits for both defense and domestic programs, this week’s proposed budget would cut domestic spending by six percent. (The Hill, Feb. 9)
- The proposed budget also includes the elimination of several energy tax incentives of importance to real estate, including:
* Repeal credit for residential energy efficient property placed in service after December 31, 2020.
* Repeal accelerated depreciation for renewable energy property —including solar energy, wind energy, biomass, geothermal, combined heat and power, and geothermal heat pump property; fuel cells; and micro-turbines—would range from five to 20 years. Qualifying properties would still be eligible for the bonus depreciation allowance included in the 2017 tax overhaul.
* Repeal energy investment credit for property where construction begins after December 31, 2020.
The White House budget, which would also devote billions to construct a border wall with Mexico and lead to a $966 billion deficit, was immediately rejected by House Speaker Nancy Pelosi (D-CA) and criticized by House Budget Committee Chairman John Yarmuth (D-KY). (Associated Press, Feb. 9)
- Republican Senate Budget Chairman Mike Enzi (WY) also weighed in with a Feb. 10 statement. “Presidents’ budgets are a reflection of Administration priorities, but in the end, they are just a list of suggestions, as the power of the purse rests with Congress. Bipartisan consensus will be necessary to bring our debt and deficits under control. I hope to work with my colleagues on both sides of the aisle to put our country on a more sustainable fiscal course.”
Administration officials appeared before congressional committees this week to testify about the budget proposal and face Q&A on other policy issues.
More congressional hearings on the budget and appropriations are scheduled after lawmakers return from next week’s congressional recess.
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This week, 11 Senators sent a bipartisan letter urging Treasury Secretary Steven Mnuchin to withdrawal section 2 of IRS Notice 2007-55, which applies U.S. capital gains tax to certain types of inbound real estate investment transactions that were previously treated as nontaxable under the Foreign Investment in Real Property Tax Act (FIRPTA). (Roundtable background on FIRPTA)
- Specifically, prior to the Notice, a domestically controlled REIT could sell its assets and liquidate, and the liquidation would be treated as a sale of stock (and a foreign investor in the REIT would not owe U.S. capital gains tax). This “sale of stock” treatment is consistent with how corporate liquidations are regularly taxed. The IRS Notice reversed the longstanding tax treatment of these transactions and took the position that a liquidating distribution of a domestically controlled REIT is a taxable sale of the underlying real estate assets.
- The letter, led by Sens. Johnny Isakson (R-GA) and Robert Menendez (D-NJ), notes, “This unintended tax burden discourages foreign investors from putting capital to work to create jobs and improve our communities.”
- The group of Senators, which includes Senate Banking Committee Chairman Mike Crapo (R-ID) and the Democratic co-chair of the Senate Real Estate Caucus, Senator Ben Cardin (D-MD), requests that Treasury restore Congress’s intended treatment of liquidating REIT distributions, encourage increased foreign investment in U.S. real estate, and further spur job creation in the United States by reversing the IRS Notice. According to the Senators, “trillions of dollars in global capital are estimated to be available that could be invested in the U.S. real estate market. Our tax policies should welcome such investment, not discourage it.” (Senators’ letter, Dec. 18)
- In addition to Senators Isakson, Menendez, Crapo, and Cardin, the signatories included: Sen. Pat Roberts (R-KS), Sen. John Thune (R-SD), Sen. Debbie Stabenow (D-MI), Sen. Rob Portman (R-OH), Sen. Steve Daines (R-MT), Sen. Tom Carper (D-DE), and Sen. Tim Scott (R-SC). All eleven signatories are members of the Senate Finance Committee. A similar letter was sent in October 2017 by 32 Members of the House Ways and Means Committee.
- The Roundtable’s Tax Policy Advisory Committee (TPAC) Chairman Frank Creamer Jr. (FGC Advisors, L.L.C.), said, “The efforts of Senators Isakson, Menendez and the nine other signatories demonstrates the strong, bipartisan support for reducing the burden of FIRPTA on real estate jobs and investment.” Creamer added, “FIRPTA is an outdated law that imposes a discriminatory capital gains tax on foreign investors in U.S. real estate and infrastructure. It does not apply to any other asset class. Outside of complete FIRPTA repeal, Treasury could take a meaningful regulatory step and repeal IRS Notice 2007-55.”
- In April 2019, Representatives John Larson (D-CT) and Kenny Marchant (R-TX) introduced the Invest in America Act (H.R. 2210), a bill to repeal FIRPTA altogether. The Roundtable and 19 national trade organizations – representing every aspect of constructing, developing, financing, owning, and managing real estate and infrastructure in the United States – wrote to Ways and Means Committee Members and other key House lawmakers urging them to support the legislation. (Comment Letter, March 28).
President Trump in early 2017 directed the Treasury Department to review existing tax regulations to identify rules that are unnecessarily burdensome. Repeal of IRS Notice 2007-55 would represent another significant step toward reforming FIRPTA by reducing a tax regulatory burden.
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Leading industry experts convened on Oct. 30 at the National Press Club in Washington for an in-depth discussion on IRS Notice 2007-55, which levies discriminatory tax penalties on foreign investment in U.S. real estate and infrastructure. The panel detailed how the Notice subjects foreign owners of domestically controlled real estate investment trusts (REITs) to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) when the REIT liquidates, thereby suppressing capital investment and job creation in the real estate industry.
- The 2007 tax guidance from the IRS overturned long-standing practice that treated liquidating distributions and redemptions of REITs as sales of stock. Under Notice 2007-55, these transactions are now treated as taxable distributions and subject to a burdensome capital gains tax – affecting only foreign shareholders. In the 12 years since Treasury issued the Notice, there have been no clarifying regulations, which has created uncertainty among potential investors and deterred foreign investment in U.S.-based real estate and infrastructure.
- Panelists at the event, sponsored by Unibail-Rodamco-Westfield, included Ryan McCormick, Senior Vice President and Counsel for The Real Estate Roundtable (far right in photo above); John Jones, Vice President of Government Relations for Nareit; Kevin Klein, Director of Tax Policy for the Organization of International Investment (OFII); Darin Mellott, Director of Research, Americas at CBRE; and David Polster, Tax Partner at Skadden Arps.
- McCormick emphasized that FIRPTA is a tax burden that does not apply to any other asset class and noted that FIRPTA hurts the ability of the United States to attract outside capital for infrastructure improvements. Treasury could act on its own to remove much of the FIRPTA burden simply by withdrawing the IRS guidance. “Anything the Administration can be doing now to drive our economy forward and create jobs, they should,” said McCormick.
- Outright repeal of the outdated FIRPTA law is The Roundtable’s ultimate policy goal. In April 2019, Representatives John Larson (D-CT) and Kenny Marchant (R-TX) introduced the Invest in America Act (H.R. 2210), a bill to repeal FIRPTA altogether. The Roundtable and 19 national trade organizations – representing every aspect of constructing, developing, financing, owning, and managing real estate and infrastructure in the United States – wrote to Ways and Means Committee Members and other key House lawmakers urging them to support the legislation. (Comment Letter, March 28)
- Both Republican and Democratic lawmakers agree on the negative impact that the Notice continues to exert on infrastructure investments. In 2017, 32 bipartisan members of the House Ways and Means Committee wrote to Treasury Secretary Steven Mnuchin urging him to repeal the Notice. The lawmakers pointed to billions of dollars’ worth of investment that flowed to small and mid-sized communities when 2015 legislation eased some of the tax burden for foreign investors.
A report by the Rosen Consulting Group (RCG) estimated that FIRPTA repeal would generate an initial increase of between $65 billion and $125 billion in international investment in U.S. commercial real estate. This new level of activity would lead to the creation of 147,000 to 284,000 jobs throughout the economy and increase taxpayers’ income by $8 billion to $16 billion. (Unlocking Foreign Investment in U.S. Commercial Real Estate, July 2017)
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The Treasury Department yesterday issued proposed tax regulations clarifying the scope and operation of the foreign pension fund exemption from the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA). (Federal Register, June 7) The proposed rules appear to be overwhelming positive and likely to resolve most, if not all, of foreign investors’ remaining concerns.
The Treasury Department issued proposed tax regulations clarifying the scope and operation of the foreign pension fund exemption from the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA). (Federal Register, June 7) The proposed rules appear to be overwhelming positive and likely to resolve most, if not all, of foreign investors’ remaining concerns.
- FIRPTA imposes U.S. capital gains tax on the sale of a U.S. repeal property interest by a foreign investor. FIRPTA results in a discriminatory tax on foreign investment in US real estate and infrastructure that does not apply to any other asset class. The FIRPTA regime is an anti-competitive outlier that deflects global capital to other markets.
- With the strong support of The Real Estate Roundtable, Congress passed in 2015 the first major reforms to FIRPTA since its enactment in 1980. The changes included a new exemption from FIRPTA for qualified foreign pensions funds and doubled the amount a foreign interest may invest in a U.S. publicly traded REIT. (Roundtable Weekly, Dec. 18, 2015)
- After passage of the 2015 PATH Act, some questions remained regarding whether certain foreign entities and arrangements would qualify for the foreign pension fund exemption. The Roundtable encouraged Congress to clarify that the foreign pension fund definition covers a number of number of different arrangements, including: governmental, Social Security-type plans; plans established for the self-employed; multi-employer plans; plans sponsored by political subdivisions; and situations where an entity pools retirement assets from multiple pension plans.
- In March 2016, the Joint Committee on Taxation provided support for a broad interpretation of the FIRPTA foreign pension fund exemption with its “Blue Book” on tax legislation enacted in 2015. (Roundtable Weekly, March 18, 2016) In March 2018, Congress passed FIRPTA technical corrections legislation codifying many of The Roundtable’s recommendations. (Roundtable Weekly, Mar. 23, 2018; The Blue Slip, Mar. 2018)
- The newly proposed regulations adopt a broad view on what constitutes a qualified foreign pension fund. According to the regulations’ preamble, “[t]he Treasury Department and the IRS have determined that the purpose of section 897(l) is best served by permitting a broad range of structures to be eligible to be treated as a qualified foreign pension fund.” This sentiment is then extended in the proposed rules to a wide range of pension arrangements, including multi-employer and government-sponsored public pension funds, as well as retirement funds organized by trade unions, professional associations, or similar groups.
- Additionally, the proposed regulations confirm that entities wholly owned by multiple foreign pension funds can qualify for the exemption. Similarly, entities can qualify for the exemption indirectly through a chain of ownership. These were important clarifications for common foreign pension fund structures.
Building on the success of the PATH Act reform, The Roundtable and other stakeholders are encouraging Members of Congress to repeal FIRPTA entirely by passing the bipartisan Invest in America Act sponsored by Representatives John Larson (D-CT) and Kenny Marchant (R-TX). (Roundtable Weekly, Apr. 12, 2019) FIRPTA will be one of several tax topics discussed during The Roundtable’s Annual Meeting on June 11 in Washington, DC and at the Tax Policy Advisory Committee meeting on June 12.
President Donald Trump and Democratic congressional leaders on Tuesday agreed to pursue a $2 trillion infrastructure package and meet again in three weeks to discuss possible revenue sources.
The Roundtable on April 29 submitted infrastructure policy recommendations to House Committee on Transportation and Infrastructure Chairman Peter DeFazio (D-OR) and Ranking Member Sam Graves (R-MO).
- House Speaker Nancy Pelosi (D-CA) said after the White House meeting, “We did come to one agreement: that the agreement would be big and bold.” Senate Minority Leader Chuck Schumer (D-NY) added, “… now it’s up to the president and the White House to tell us how they pay for it.” (Associated Press, April 30)
- Schumer stated in his Dec. 6, 2018 letter to the president there would be no deal on infrastructure without addressing climate change. Schumer wrote that one of the policies that should be included in any infrastructure package should, “Provide permanent tax incentives for domestic production of clean electricity and storage, energy efficient homes and commercial buildings …” (Schumer’s letter to President Trump and Washington Post op-ed).
- House Committee on Transportation and Infrastructure Chairman Peter DeFazio (D-OR) also attended the April 30 White House meeting. DeFazio’s committee held a Member’s Day hearing on the next day to share their infrastructure priorities. “While I continue to press my colleagues on the Committee on Ways & Means, House Leadership, the Senate, and the White House on a path forward on funding, this Committee must do its legislative work,” DeFazio stated in his opening remarks.
- The Roundtable on April 29 submitted infrastructure policy recommendations to DeFazio and Ranking Member Sam Graves (R-MO). Roundtable President and CEO Jeffrey DeBoer states in the letter, “We offer policy suggestions within your Committee’s jurisdiction to improve programs to repair and modernize the transportation and other systems upon which the U.S. economy depends. We also suggest targeted changes to the federal tax code, requiring coordination with the Ways and Means Committee, to help pay for our nation’s infrastructure deficit.” (Roundtable Infrastructure Policies letter, April 29)
- DeBoer emphasized the goal of the policies is to offer “a holistic approach to modernize our aging infrastructure [that] will create American jobs, boost economic growth, address climate threats, and improve the quality of life in all regions of the country.”
The Roundtable’s key suggestion to help pay for infrastructure is to repeal the Foreign Investment in Real Property Tax Act (FIRPTA) of 1980. Bipartisan FIRPTA repeal legislation ( H.R. 2210 ) was introduced in the House on April 10. (Roundtable Weekly, April 12)
The Roundtable’s key suggestion to help pay for infrastructure is to repeal the Foreign Investment in Real Property Tax Act (FIRPTA) of 1980. FIRPTA imposes a discriminatory layer of capital gains tax on foreign investment-a tax burden that does not apply to any other asset class. Repealing FIRPTA would serve as a market-driven catalyst to finance improvements in our nation’s infrastructure. Bipartisan FIRPTA repeal legislation (H.R. 2210) was introduced in the House on April 10. (Roundtable Weekly, April 12).
Other infrastructure policies detailed in The Roundtable’s April 29 letter include:
- A beneficial, 10-year cost recovery period for investments that improve energy efficiency performance in commercial and multifamily buildings;
- Proposals supported by Democratic and Republican administrations alike to streamline the permit process for infrastructure projects;
- An increase in the federal gas “user fee” in a responsible and sustainable manner;
- Revising IRS “volume caps” and other limitations on tax-exempt bonds;
- Improving the TIFIA loan program to encourage more public-private partnerships to finance infrastructure; and
- Reasonable federal-state cost share rules for grants to support mass transit projects of regional and national significance (like the NY-NJ Gateway program).
The Roundtable’s DeBoer discussed the role of public-private partnerships to develop infrastructure projects on CNBC’s Squawk Box in June 2017. (Roundtable Weekly, June 9, 2017)
Ways and Means Chairman Richard Neal (D-MA) has indicated he intends for his committee to consider an infrastructure bill soon.
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