Tax Reform Moves to the Legislative Forefront

With last week’s failure by President Trump and House Speaker Paul Ryan to garner enough votes to pass legislation to repeal and replace the Affordable Care Act, both the White House and the GOP’s congressional leadership moved swiftly to shift the focus to tax reform. House Ways and Means chairman Kevin Brady (R-TX) said in a statement shortly after the Republican leadership’s healthcare bill had to be pulled that his committee was “moving full speed ahead with President Trump on the first pro-growth tax reform in a generation.” President Trump said on Friday that “we will probably start going very, very strongly for the big tax cuts and tax reform. That will be next.”

While comprehensive tax reform was always expected to be politically very difficult, the failure to pass the House leadership’s healthcare bill will make tax reform even more of a challenge because of the effect on the federal budget baseline. If enacted, the House healthcare bill would have reduced government expenditures by a trillion dollars over the next decade, so larger tax cuts could be provided while still ensuring the legislation would be “revenue-neutral” (not increase the deficit), because the resulting tax legislation would need to raise less in federal revenue.

NAIOP has been advocating for the interests of the commercial real estate industry in meetings with elected leaders and their staff. House Republicans have put forth broad plans that would have a profound impact on commercial real estate. These plans have raised questions as to the continuation of real estate like-kind exchanges, whether carried interests will be treated as capital gains, and whether interest payments on business debt would remain deductible. With House Republican leadership and the Trump White House aiming to have a tax reform bill enacted in 2017, the tax reform debate is expected to dominate the legislative agenda over the next few months.

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