Tax Reform Clears Senate; Key Planning Issues Still at Stake
The U.S. Senate voted last week to approve comprehensive tax reform legislation. The Senate bill was adopted 51–49.
The Senate's action comes a week after the House of Representatives passed its tax bill. Congressional leaders are hoping to complete work on the legislation before the end of the year.
The House and Senate bills differ in some key respects, particularly in the treatment of several existing tax credit and bond provisions used for a variety of infrastructure and economic development projects. APA President Cynthia Bowen, AICP, previously issued a statement on behalf of APA outlining critical issues for planning in the legislation.
The next step in the process will be a conference committee to reconcile differences between the two measures. Conferees from both parties were formally named this week.
Because the Senate needs to pass the legislation using a procedure known as budget reconciliation, any negotiations on a final compromise will have to account for the upper chamber's budget rules.
Additionally, some supporters in the Senate conditioned their vote on action related to other pressing issues, such as bipartisan health care fixes.
Comparing House and Senate Tax Bills
| Issue | House Bill | Senate Bill |
|---|---|---|
| Historic Tax Credit | Eliminates | Maintains; 20% over 5 years; eliminates for pre-1936 non-historic rehabilitation |
| Low Income Housing Tax Credit | Maintains | Maintains |
| New Markets Tax Credit | Eliminates | Maintains; 2018–19 Rounds |
| Advance Refunding Municipal Bonds | Eliminates | Eliminates |
| Private Activity Bonds | Eliminates | Maintains |
| State and Local Tax Deduction | Modifies; Deduction capped at $10,000 for Property Tax | Modifies; Deduction capped at $10,000 for Property Tax |
| Mortgage Interest Deduction | Modifies; Capped at $500,000 | Maintains (Current cap at $1m) |
APA's Analysis
APA has urged Congress to maintain support for critical infrastructure, housing, and local development finance tools.
As the conference committee begins its work, APA supports Senate-adopted language on the New Markets Tax Credit and Private Activity Bonds.
APA supports the Senate language on the Historic Tax Credit compared with the elimination proposed by the House. However, even the Senate language will weaken this important tool for economic and community development. Because both bills proposed eliminating advance refunding of municipal bonds, negotiators should at least make accommodations for communities seeking to refinance already issued bonds.
APA supports the inclusion of the Low Income Housing Tax Credit in both bills.