APARTMENT ADVOCATE
NATIONAL APARTMENT ASSOCIATION / NATIONAL MULTIFAMILY HOUSING COUNCIL
Washington Update as Trump Takes Office
Tax reform is front and center on the congressional agenda, and there is a real chance it will become law this year. The last comprehensive tax reform legislation was the Tax Reform Act of 1986( TRA 1986) signed into law 30 years ago by President Ronald Reagan. We all remember how that bill devastated the industry for years, so it is imperative that we engage with policymakers to ensure a more positive outcome.
In the years since TRA 1986, legislation has changed the tax code-- mainly at the margins-- focusing on rate changes and other targeted provisions while comprehensive reform has eluded policymakers. The election of Donald Trump and continued Republican control of the Congress has changed the outlook for tax reform. Oneparty rule where reform is a priority for all of the key players has increased the odds that broadbased legislation can become law.
At this stage of the process, House Republicans are taking the lead on reform. While President Trump made a number of proposals during the 2016 campaign, it is House Republicans who have put forward the most detailed plan. Entitled“ A Better Way Forward for Tax Reform,” the House GOP released a“ blueprint” for reform last summer, which is the starting point for their internal discussions. The blueprint would:
• Reduce the top tax rate on LLCs, partnerships, S Corporations and other passthru entities to 25 percent from 39.6 percent;
• Tax capital gains, dividends, and interest at a maximum rate of 16.5 percent;
• Replace depreciation with immediate expensing of all investment except for land;
• Eliminate the deduction for business interest;
• Eliminate like-kind exchanges;
• Eliminate the Low-Income Housing Tax Credit; and
• Repeal the estate tax while retaining stepped-up basis for inherited assets.
It is important to note that while the blueprint appears to eliminate the LIHTC, there are good indications it may be put back into the House GOP proposal.
As the most developed tax reform product in circulation at the moment, the Blueprint is the centerpiece of conversation around tax reform. However, it is not yet legislation, and there could be significant changes made before an actual bill is introduced. Moreover, the White House and Senate still need to flesh out their own proposals. There is much time to go before a reform agreement is reached, if at all, and we can expect the details of any agreement to change several times along the way.
34 | TRENDS • FEBRUARY 2017 www. aamdhq. org