Private Financing Tool Rejected in House Tax Bill

Freight Stakeholders Pressure GOP Leadership for Change
Kevin Brady
Andrew Harrer/Bloomberg News

Tax breaks designed to help the private sector finance infrastructure projects were not included in a Republican tax overhaul bill President Donald Trump would consider by the end of the year.

The Republican-led tax-writing Ways and Means Committee shot down Nov. 8 a push by a Democrat that would have ensured that tax breaks for private activity bonds remain in the massive legislation.

The amendment Rep. Suzan DelBene (D-Wash.) offered during the bill’s markup hearing was rejected along party lines three days into the bill’s consideration. Ways and Means kicked off its markup Nov. 6. The legislation is expected to reach the House floor by the week of Nov. 13.


TT File Photo

Senate leaders indicated they would proceed with their version after House passage.

Private activity bonds are key for financing public-private partnerships. Private firms and nonprofit groups access the bonds to proceed with municipal projects. The tax bill managed by Ways and Means Chairman Kevin Brady (R-Texas) would do away with the exemption for private activity bonds.

More than 100 lawmakers support DelBene’s effort. In a recent letter, lawmakers called on House leaders to not do away with the deduction on tax-exempt municipal bonds.

“Municipal bonds are a lifeline to local communities looking to expand a hospital or repair their infrastructure,” said Rep. Randy Hultgren (R-Ill.). “These tools of ‘fiscal federalism’ allow municipalities to raise their own funds tax-free, using their own expertise and avoiding the heavy bureaucracy of the federal government. We should preserve this Main Street financing tool for municipalities intimately connected to the needs of their communities.”

Freight stakeholders also are pressuring GOP leadership about the bonds.

The American Association of Port Authorities has urged Republican tax authorizers to ensure they maintain private activity bonds in the tax reform bill.

“By eliminating the tax exemption for private activities bonds, ports will need to offer higher yields, which will result in additional costs,” AAPA President Kurt Nagle said in a letter to House Republican leaders.

The group also asked for reforms to the harbor maintenance tax, the permanent extension of the wind energy production tax credit and increased funding for the multimodal freight network.

In a Nov. 2 letter to Congress, American Trucking Associations President Chris Spear stressed an overhaul of the U.S. tax code would benefit motor carriers if it were to lower rates on business income, broaden the base to make it more equitable and simplify the code.

“Lowering the corporate rate will free up cash to invest in newer, safer, cleaner and more efficient equipment while also helping carriers pay drivers more and make necessary investments in workforce development,” Spear said. “Broadening the tax base to allow such rate reductions will eliminate special tax breaks enjoyed by industries that are more heavily dominated by large business entities than trucking.”

During a recent trip to Harrisburg, Pa., Trump argued a tax package would bolster wages across the industry.

“We want lower taxes, bigger paychecks and more jobs for American truckers and for American workers,” Trump said. “When your trucks are moving, America is growing. Do you agree? That is why my administration has taken historic steps to remove the barriers that have slowed you down. America first means putting American truckers first.”

Administration officials have indicated the president will turn his focus to infrastructure funding after the tax reform measure reaches his desk. Several Democrats are criticizing the tax package for not addressing infrastructure funding concerns.