House Ways and Means Chair Proposes 25 Percent Tax Cap

During the ongoing debate regarding tax reform, House Ways and Means Committee Chair Dave Camp (R – Mich.) recently proposed cutting the top U.S. tax rate to 25 percent for both corporations and individuals. Camp’s proposal is in response to his position that existing tax code is seen as complex, costly and burdensome for both families and businesses.
 
Camp’s proposal is seen as progress in what will most likely be a multiyear year task to reform the tax code.  Meanwhile, House Ways and Means committee member Richard Neal (D – Mass.), believes that Camp’s proposal may face tough battles ahead. “As long as tax reform is offered in the abstract, everyone rallies to the cause,” Neal said. “When it becomes specific, people start to fall off.”

Many tax experts think that lowering tax rates to 25 percent might require Congress to uncover at least $2 trillion in new revenue over a decade if Republicans wish to offset the entire cost.  But aides believe the rate reductions would be achieved by reducing or eliminating tax deductions and credits. As it currently stands, top tax rates for corporations and individuals are set at 35 percent, although many people and businesses pay lower effective rates due to a range of deductions and other breaks.

One of NAIOP’s key priorities is to ensure that any tax reform takes into account the impact the legislation would have on commercial real estate in terms of any changes in capital gains tax levels. NAIOP supports tax code reform that maintains favorable capital gains tax rates for real estate, and makes permanent important provisions affecting commercial real estate development.

Houses Energy and Commerce Panel to Vote on Bill Focused on Greenhouse Gas Regulation

The House Energy and Commerce Committee has started the process of marking up a bill (H.R. 910) aimed at removing the current authority of the Environmental Protection Agency (EPA) to regulate  emissions of greenhouse gases from such immobile sources as power plants, oil refineries and manufacturing.

Debate focusing on the measure began March 14 and the measure is expected to pass through the committee with no major issues. The fate of the bill’s passage is less certain in the Senate.

While EPA has not directly proposed regulating commercial buildings as a point source for green house gases, commercial building energy consumption has become a key component of the ongoing debate over energy. Learn more about NAIOP’s position on energy.

Senate Passes Tax Compromise Extending Rates; Swift House Action Expected

By a vote of 81 to 19, the Senate today passed major tax legislation that would extend current tax rates, due to expire at the end of 2010, through the end of 2012, and which includes provisions important to the commercial real estate industry. The bill, a product of a compromise between the White House and the Senate Republican leadership, contains several elements pushed by President Obama, such as a 13-month extension of unemployment insurance, a temporary reduction in the Social Security payroll tax paid by individuals in 2011 and extensions of tax provisions from the American Recovery and Reinvestment Act. It also includes tax provisions that would set the estate tax levels at a 35 percent tax rate, with a $5 million per-person exemption level. In addition, the legislation includes a two-year patch for the alternative minimum tax (AMT).

Carried Interest Tax Increase Reintroduced as Part of Extenders Legislation; House Also Considering Provision

Senate Finance Committee Chairman Max Baucus (D-Mont.) has reintroduced legislation extending business tax provisions that expired at the end of 2009. The reintroduced legislation retains a provision opposed by NAIOP and its real estate allies that would dramatically increase taxes on carried interest compensation used by many partnerships, including real estate partnerships. Baucus attempted to add his revised legislation as an amendment to a small business lending bill that passed the Senate last week (see story below) but failed to garner the needed votes. In order to gain increased support for the legislation, Baucus deleted a provision that would have increased taxes on many Subchapter S corporations and which had been opposed in particular by Senators Olympia Snowe (R-Maine), Scott Brown (R-Mass.) and George Voinovich (R-Ohio). Baucus has promised to bring up the extenders bill again within a few weeks after some further modifications.

Senate Passes Small Business Lending Bill with Bonus Depreciation Extension

The Senate last week passed H.R 5297, the Small Business Jobs Act of 2010. The central feature of the bill is creation of a $30 billion lending pool for small community banks. According to the bill’s sponsors, the fund will provide leverage for up to $300 billion in new lending to small firms. Importantly, HR 5297 contains a NAIOP-supported provision that would extend 50 percent bonus depreciation for qualifying property through 2011. The bonus depreciation provisions had been included in earlier economic recovery legislation.

Retiring Senators George Voinovich (R-Ohio) and George LeMieux (R-Fla.) voted with the Democratic majority for HR 5297, enabling the Senate to proceed to a final vote on the legislation. The bill now moves to the House, where the Democratic leadership has indicated that they will quickly pass the Senate bill. A vote is expected later this week.

Congressional Leadership Calls for Moving Transportation Bills in September

On August 16, House Majority Whip Jim Clyburn (D-S.C.) called on Congress to pass major transportation reauthorization legislation that could help create hundreds of thousands of jobs. The previous transportation bill known as SAFETEA-LU was originally set to expire August 2009, but has been extended several times, most recently until December of this year.