infrastructure , explaining “ those of us who use our nation ’ s roads , highways , and bridges have a responsibility to help pay for them .” Taxing carbon emissions is another funding approach that has been suggested .
Another hurdle to overcome is the gap between the Republican and Democratic visions of an infrastructure plan . Many on the left envision a comprehensive package that encompasses climate risk and green job creation policies while some on the right envision a slimmer package . Nevertheless , after a March 4 infrastructure meeting with Biden , Secretary of Transportation Pete Buttigieg , and members of the House Transportation and Infrastructure Committee , Ranking Member Sam Graves ( R-MO ) was optimistic in an interview with The Hill explaining , “ I thought it was good , it seemed to be productive . The president was very engaged and very open .” Both sides seem receptive to compromise .
The ASCE 2021 Infrastructure Report Card
Infrastructure Category
Grade Aviation D + Bridges Dams Drinking Water C- Energy C- Inland Waterways D + Levees Ports B- Public Parks D + Rail Roads Stormwater Transit D- Overall C-
Source : American Society of Civil Engineers
NAR ® is an active member of the U . S . Chamber of Commerce and Bipartisan Policy Center ’ s Build by the Fourth of July infrastructure coalition that currently has over 310 members . These coalition members represent an array of organizations , from the National Wildlife Federation to the National Bankers Association , which could signal an infrastructure package might finally be in reach . “ A bipartisan package is going to be bigger in scope than many on the right would initially prefer ,” Neil Bradley , chief policy officer at the U . S . Chamber of Commerce , explained in a recent New York Times article .
C D
D
B D D
A FUTURE FOR INFRASTRUCTURE
“ It ’ s also going to be narrower in scope than many on the left would prefer .”
TAXATION Changes in tax policy could also be on the table this year . Biden has proposed raising the corporate tax rate to 28 percent , after being lowered to its current 21 percent after the 2017 tax bill , to fund the administration ’ s infrastructure proposal . When asked about a possible wealth tax , Treasury Secretary Janet Yellen took that possibility off the table explaining that a wealth tax has “ been discussed but it is not something that President Biden has come out in favor of . I think it is something that has very difficult implementation problems .” The Biden administration has also suggested raising the capital gains rate on long-term gains for earners making over $ 1 million a year .
The capital gains treatment of carried interest could also be facing scrutiny . The Tax Cuts and Jobs Act of 2017 mandated that for carried interest to qualify for long-term capital gains treatment , investments must be held for three years . While President Biden has not explicitly proposed altering the treatment of carried interest , when asked about it , Yellen responded that “ I think it is something that certainly deserves to be on the list of things to look at .” Raising the capital gains rate for investors making over $ 1 million annually would also effectually alter the preferred tax treatment of carried interest for those earners . In February , a group of House Democrats introduced the Carried Interest Fairness Act of 2021 , which would require carried interest to be treated as ordinary income instead of a capital gain .
Some good tax policy news for commercial real estate is that a group of bipartisan Congress members introduced legislation to make permanent the Section 199A 20-percent deduction for qualified pass-through business income . The passthrough deduction is intended to give businesses organized as S corporations , partnerships , and sole proprietorships tax parity with often larger corporations that received a tax cut in 2017 . The deduction is currently set to expire in 2025 , though the Main Street Tax Certainty Act would make this deduction permanent . CCIM Institute joined a letter to congressional leaders in support of this legislation detailing how the impacts of the pandemic on small businesses make this deduction even more critical .
CANNABIS BANKING LEGISLATION Sixteen states and the District of Columbia have legalized adult recreational use of marijuana , and yet cannabis businesses still sometimes struggle to access capital and other financial services because marijuana remains an illegal substance at the federal level . In April , the House of Representatives passed the bipartisan Secure and Fair Enforcement ( SAFE ) Banking Act , which would provide a safe harbor to banks , insurance companies , and other financial institutions that serve cannabis businesses in states where marijuana is legal . Access
Raising the capital gains rate for investors making over $ 1 million annually would also effectually alter the preferred tax treatment of carried interest for those earners .
to capital can be a constraint for both the businesses and the real estate owners who host them . In addition , many insurance companies are not willing to underwrite cannabis businesses .
Advocates of the SAFE Banking Act are cautiously optimistic it could see movement in the near future . Senate Banking , Housing , and Urban Affairs Committee Chairman Sherrod Brown ( D-OH ) indicated his support if the legislation is coupled with drug sentencing reform . In an interview with Politico , Ranking Member Pat Tommery ( R-PA ) also expressed his support , “ I am sympathetic to the idea that people who are involved in [ the ] cannabis industry — in an entirely legal fashion , in the state in which they operate — ought to be able to have ordinary banking services .”
Congress is facing myriad policy demands to assist the country in fully recovering from the pandemic . With infrastructure the next priority of the Biden administration , a bipartisan effort in enacting a comprehensive bill could invigorate the economy and provide the much-needed infrastructure improvements that would benefit all Americans .
Elizabeth Vincent Government affairs consultant with experience in CRE
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