Country / Language

Legislative Update


2/19/14

The following article was distributed as part of the Affordable Housing News and Views - Winter 2014 newsletter.

by Bob Moss, CohnReznick Principal and National Director of Governmental Affairs

The polar vortex that has provided a hefty taste of winter across our nation this year descends on Capitol Hill this week. Tax Reform efforts in 2014 will also have to face the big chill as Ways and Means Chairman David Camp watches his Senate Finance counterpart, Senator Max Baucus, leave for China. For guys from Northern Michigan like Camp, however, a rather large snowstorm of legislative delays, government shutdowns, and year-end budget agreement battles have not deterred his desire to put forth a reform proposal. Last year, his committee held hearing after hearing on tax reform, and he is still adamant that his reform proposal should see the light of day, even as this goes to press. 

From the get go, his intent has been to simplify the tax code. Camp jokes the code “has more words than the bible with none of the good news.”  He has made it clear that creating a territorial-based tax system and reducing Corporate Tax rates from 35% to 25% will help our economy grow and especially help small businesses. While House Republicans largely agree with Camp on reform, they are split on the issue of timing.  Many are still not quite sure who the winners and losers are in his proposal, and with looming mid-term elections many of them would like to bury the proposal in a snow bank and wait for 2015, denying election opponents any campaign fodder. Other House Republicans, including some in leadership, are more offensive-minded and would like to put forth proposals geared toward job creation and economic expansion. 

So where does that leave programs like the Low Income Housing Tax Credit and New Markets Tax Credit?

Enter the New Chairman of the Senate Finance Committee, Senator Ron Wyden (D-OR). While he is much closer to the Democratic leadership than his predecessor, he has reached across the aisle for years to create legislation in a variety of policy areas with Senators Rand Paul (R-KY), Lisa Murkowski (R-AK), Marco Rubio (R-FL), Johnny Isakson (R-GA), and Rep. Paul Ryan (R-WI).  It makes sense that Wyden and Camp see eye to eye on tax reform, right? Hold the snowplow.

Senator Wyden simply wants to shovel the walk by passing the tax extenders provisions that expired 12/31/13, then go on to Tax Reform in 2015. That is not exactly the Camp plan. Many folks in DC feel that Chairman Camp has undertaken the most thorough and serious review of the tax code in many years. A tax code that even Chairman Wyden calls a “dysfunctional mess.”  I know Michiganders well as I am one of them. Despite the wide-spread doubts that reform can proceed in 2014, do not look for Camp to give up this fight as he is determined in his last year as Ways and Means Chairman to put his stamp on the tax code.

But let’s say that Chairman Camp introduces his proposal and it gets buried by mid- term snow banks. The Chairman will likely be under increased pressure to address the expired tax provisions and work with Senator Wyden to produce a tax extenders package.

This scenario could produce a sweet smelling spring for us just about the time the cherry blossoms bloom again in DC.

First we win if the LIHTC and NMTC are included as preferences in the Camp proposal.  It proves that both programs met the litmus test of being expenditures that do not game the system, and provide economic activity that would not otherwise occur in our country. Tax reform is certain to heat up again in 2015, with either Rep. Paul Ryan (R-WI) or Rep. Kevin Brady (R-TX) at the Ways and Means helm. The Camp proposal will likely be the framework for future tax reform proposals so the inclusion of the LIHTC and NMTC would put us in good position in the 2015 version of tax reform.  Second, we win when this winter is a memory, and when Chairman Camp finally turns toward extenders action, and we see both the 9% fixed rate for 2014 and the NMTC return.  I don’t know about you, but I can’t wait for spring.

Bob Moss is a CohnReznick Principal and National Director of Governmental Affairs. Bob leads the Firm’s federal and state government relations efforts, particularly in the area of affordable housing. He can be reached at bob.moss@cohnreznick.com or 617-648-1406.


This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

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