Senate Tax Bill Retains Private Activity Bonds
A tax reform measure in the Senate would retain an infrastructure financing tool the private sector says helps advance big-ticket projects, while a similar House-passed bill would eliminate it.
Nearly two dozen groups advocating for greater investments in infrastructure support the financing tool, known as private activity bonds. House Republican leaders have been urged by the groups to support the bonds, which will be a subject of debate during tax policy negotiations between the House and Senate.
Senators on the tax-writing Finance Committee are marking up their legislation, while the House on Nov. 16 passed its version 227 to 205. Democrats did not vote for the measure, and 13 Republicans voted against it.
PASSED → The Tax Cuts & Jobs Act. #1182more #taxreform https://t.co/fRg2HoyXPI
— House Republicans (@HouseGOP) November 16, 2017
Right before the vote, Rep. Kevin Brady (R-Texas), chairman of the Ways and Means Committee, strongly urged his colleagues to support the bill.
“For too long, this broken tax code has put the needs of the people second — propping up Washington special interests at the expense of hardworking Americans. For too long, this broken tax code has rewarded companies for outsourcing American jobs instead of encouraging them to create jobs here at home. For too long, this broken tax code has eroded America’s economic leadership around the world. You know, this country used to be the standard-bearer worldwide for competitive tax systems. Not anymore,” Brady said.
Republican leaders from both chambers are aiming to finalize the tax legislation before the end of the year. President Donald Trump has said the tax code needs to be simplified, and that he would sign a Republican-passed overhaul into law.
“We’re going to make America globally competitive, again. Our corporate tax rate is 60% higher than our average competition. We’ll slash the corporate rate from 35% to no more than 20%. That’s truly one of the big things in the bill. What that’s going to do is create tremendous success for companies and jobs. It’s about jobs,” Trump said earlier in November.
American Trucking Associations President Chris Spear praised the House’s passage of the bill, noting that reforms would help motor carriers if they succeed at lowering rates on business income and simplify the code.
“We applaud the House for passing the first major tax reform legislation in three decades, a bill that will enhance the U.S. economy by encouraging business investment and producing good-paying American jobs,” Spear said. “As the employer of more than seven million American workers and an industry that moves seventy percent of the nation’s freight, the trucking industry knows full well how simplifying our nation’s onerous tax code will get our economy moving ahead at full speed.”
However, infrastructure groups representing highway construction firms, civil engineers and state departments of transportation warn that the House bill may hinder maintenance and modernization efforts for large-scale projects.
“Termination of this incentive for private sector financing would further constrain available funding for surface transportation,” the American Association of State Highway and Transportation Officials and other groups wrote Brady earlier in November. “The absence of [public activity bonds] could increase funding pressures across a state’s transportation plan, leading to the elimination or delay of all manner of planned projects, including those to be funded exclusively with public dollars.”
Transportation analysts, such as Baruch Feigenbaum of the nonprofit Reason Foundation, also agreed it was a mistake to eliminate the bonds.
“The Ways and Means Committee…needs to protect this valued tool for building infrastructure. If they don’t, they’ll have to tell the public that they’ve killed a key method to pay for President Trump’s infrastructure promises,” Feigenbaum said in published reports on Nov. 14.
A variety of businesses rely on tax-exempt private activity bonds to fund transportation, hospital, housing and school projects.
