The possibility of comprehensive tax reform being passed within in the next year was a key topic at the 2017 NMHC Spring Board Meeting. Given the challenges the industry faced in the aftermath of the last time tax reform was passed in 1986, industry leaders, along with NMHC, are intent on making sure everything possible is being done to protect and promote the industry in a potential tax reform package later this year or in 2018.
A panel discussion featuring experts Joe Mikrut and Jacob Triolo from Capitol Tax Partners, Steven Wilber from PricewaterhouseCoopers and NMHC’s Matthew Berger offered some new insight into potential tax reform efforts.
NMHC’s Berger kicked off the session by noting that NMHC has been on Capitol Hill on a near daily basis, making the industry’s case on tax reform and outlining our priorities. However, to further protect and promote the industry, NMHC began partnerships with Capitol Tax Partners and PWC to provide additional research and political expertise on behalf of the industry.
PWC’s Wilber provided an in-depth review of the House GOP Blueprint, the only plan currently being considered with a substantial level of detail. However, the GOP Blueprint will not be the final plan, given that both the White House and Senate are also expected to unveil more detailed outlines.
However, PWC’s analysis was unable to come to a broad determination as to whether the House plan was an obvious positive or negative for the multifamily industry. Rather, the takeaway was that it would most likely depend on how many assets and organization holds in its portfolio, for how long and how they typically structure deals.
Capitol Tax Partners added that, while the original timeline for tax reform was that there would be a bill through the House Ways and Means Committee by May, that deadline has now gone by the sideline. What’s more, today there are even more obstacles than originally expected.
The Senate is currently considering the American Health Care Act (AHCA) and different options to soften some of the cuts by the House. Furthermore, Congress will be facing the debt limit in September and will need to extend a Continuing Resolution. There are also a variety of other bills, including an important one on flood insurance, that need to be handled before the end of the year.
Therefore, it is difficult to see a mechanism that can move tax reform before 2018. More realistically, there will be legislation that moves tax reform through the House by September and through the Senate possibly by the end of the year. However, this is still a fairly optimistic horizon. Healthcare reform needs to be passed before tax reform can move. In addition, reconciliation would need a 2018 budget. However, support for such a budget will be a politically fraught fight on its own.
The discussion concluded by noting that it is still far too early to guess at what the final outcome of tax reform may be. The industry needs to continue to meet with lawmakers and make the case for our core principles.
More information on NMHC’s approach and perspective on tax reform can be found here.