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