economic development

The latest news and legislative activity affecting economic development

July 11, 2019
Legislative Updates

Democrats’ Tax Credit and Extender Package
House Democrats are advancing their first substantial tax package since taking control of the House. At a June 20 markup, the Ways and Means Committee approved bills to aid lower-income workers, repeal an unpopular provision in the 2017 tax overhaul, renew expired tax breaks, and provide relief to disaster victims. 


The measures omit a corporate income tax rate increase Democrats have considered. The 2017 tax law (Public Law 115-97) set the rate at 21%. The package’s price tag tops $100 billion, but Ways and Means Chairman Richard Neal (D-MA) said he’s committed to finding more offsets. 

Worker and Family Benefits
H.R. 3300 from Chairman Neal would expand the earned income, child, and child and dependent care tax credits, and direct payments for them to U.S. territories. 
The measure would make several changes to the earned income tax credit. It would:
• Lower the minimum age to claim the credit for childless individuals to 19, instead of 25, and raise the limit to age 66, instead of 65. The maximum childless credit would be $1,464, instead of $529, according to a summary from House Ways and Means Committee Democrats. Changes would be in effect for 2019 and 2020. 
• Allow individuals with children who don’t have the identification required by the credit, such as a valid Social Security number, to claim the childless credit.
• Treat individuals who are married but separated as unmarried when claiming the credit. Individuals couldn’t file joint returns and would have to meet other requirements. 
• Modify the treatment of investment income when determining credit eligibility. 
• Make payments to U.S. territories for a portion of the cost of their earned income tax credits. 

The measure would make the full amount of the child tax credit —as much as $2,000 per child — refundable for 2019 and 2020. Currently as much as $1,400, indexed for inflation, is refundable, meaning it can be claimed on a return even if it exceeds tax liability. Refundability wouldn’t be based on the current formula that incorporates individuals’ earned income or Social Security tax payments. The credit income limit of $200,000 for individuals or $400,000 for joint filers would remain.

Retirement Savings Overhaul
Individuals would have more flexibility to save for retirement and unrelated businesses could offer joint retirement plans under H.R. 1994, the Setting Every Community Up for Retirement Enhancement Act. The measure, introduced by Chairman Richard Neal (D-MA) would allow individuals to temporarily withdraw money from their retirement accounts following a birth or adoption, and would modify contribution limits and mandatory minimum distribution requirements for older Americans. It would also allow 529 education savings accounts to be used for apprenticeship fees and student loans. Most provisions would apply to plan years beginning after Dec. 31, 2019. The rule for floor debate would automatically modify the bill with a manager’s amendment from House Ways and Means Chairman Richard Neal (D-MA).


Relative to the committee-approved bill, Neal’s amendment:
• Adds provisions to address an unintended effect of the 2017 tax overhaul (Public Law 115-97) that resulted in a tax increase on military survivor benefits and certain other income received by children. 
• Removes provisions that would have allowed 529 education savings accounts to be used for homeschooling and more elementary and secondary school expenses. 
• Increases penalties for failing to file retirement plan information.

Senator Sanders’ Plan toTax Stock, Bond and Derivatives Trades

Democratic presidential candidate BernieSanders (I-VT) plans to introduce legislation that would impose a tax ontrades of all stocks, bonds and derivatives in the U.S., a move he says wouldhelp curb Wall Street speculation and help finance his campaign promise toprovide tuition-free college and cut student debt. Sanders has been promoting afinancial transactions tax since his run for the Democratic nomination in 2016.The plan he’s offering would apply a 0.5% tax rate for stock trades, a 0.1%rate for bond trades, and 0.005% for derivatives transactions.

May 31, 2019
Legislative Updates

Fixing 2017 Tax Law

The House Ways and Means Committee plan to hear members’ priorities during a hearing on June 4th. The agenda will likely include expired tax breaks, an issue that lawmakers will need to address before they can fix errors in the 2017 tax law. A lot of Ways and Means members remain interested in technical fixes, including addressing the “retail glitch.” That error in the 2017 law prevents restaurants and retailers from immediately writing off the costs of interior improvements. A preliminary draft of provisions for House legislation extending temporary tax breaks would renew the expired breaks through 2019 while tweaking the estate tax exemption. The draft document would let the estate tax exemption that went into effect after passage of the 2017 Republican tax law expire at the end of 2023 instead of at the end of 2025. The 2017 law expanded the exemption to $11.18 million per person, from $5.49 million. The estate tax change would bring in the government $25 billion, which would be enough to pay for the temporary tax breaks. A bill resembling the draft would be considered dead on arrival in the Senate, where Republicans are unlikely to entertain any change in the estate tax exemption.

In addition, U.S. Senate Finance Committee Chairman Chuck Grassley (R-IA) and Ranking Member Ron Wyden (D-OR) just announced the formation of several bipartisan taskforces to examine temporary tax provisions that expired, or will expire, between December 31, 2017 and December 31, 2019 – a total of 42 provisions. The taskforces will be charged with examining tax policies within workforce and community development, health, energy, business cost recovery, and a combined group consisting of individual, excise and other temporary policies. A separate taskforce will examine whether there is a core package of tax relief provisions that should be available when natural disasters strike. AdvaMed is working to shape the health task force’s efforts regarding the Medical Device Tax as this still has not been permanently eliminated and is just on hold until the end of 2020.

Retirement Savings Overhaul
Individuals would have more flexibility to save for retirement and unrelated businesses could offer joint retirement plans under H.R. 1994, the Setting Every Community Up for Retirement Enhancement Act. The measure, introduced by Chairman Richard Neal (D-MA) would allow individuals to temporarily withdraw money from their retirement accounts following a birth or adoption, and would modify contribution limits and mandatory minimum distribution requirements for older Americans. It would also allow 529 education savings accounts to be used for apprenticeship fees and student loans. Most provisions would apply to plan years beginning after Dec. 31, 2019. The rule for floor debate would automatically modify the bill with a manager’s amendment from House Ways and Means Chairman Richard Neal (D-MA).

Relative to the committee-approved bill, Neal’s amendment:

  • Adds provisions to address an unintended effect of the 2017 tax overhaul (Public Law 115-97) that resulted in a tax increase on military survivor benefits and certain other income received by children.
  • Removes provisions that would have allowed 529 education savings accounts to be used for homeschooling and more elementary and secondary school expenses.
  • Increases penalties for failing to file retirement plan information.

Senator Sanders’ Plan to Tax Stock, Bond and Derivatives Trades

Democratic presidential candidate Bernie Sanders (I-VT) plans to introduce legislation that would impose a tax on trades of all stocks, bonds and derivatives in the U.S., a move he says would help curb Wall Street speculation and help finance his campaign promise to provide tuition-free college and cut student debt. Sanders has been promoting a financial transactions tax since his run for the Democratic nomination in 2016. The plan he’s offering would apply a 0.5% tax rate for stock trades, a 0.1% rate for bond trades, and 0.005% for derivatives transactions.

April 30, 2019
Legislative Updates

Support Startup Jobs, Innovation and Small Businesses

Senators Murphy (D-CT) and Toomey (R-PA) announced the introduction of the Helping Angels Lead Our Startups (HALOS) Act, legislation that would support small businesses by removing burdensome restrictions from individuals who want to invest in startups and help create jobs. In order to secure capital to grow their businesses, entrepreneurs commonly attend “demo days” or conferences that allow them to showcase their business in front of angel investors and venture capitalists. It is estimated that angel investors provide 90 percent of outside equity to help grow these startups. Due to recent burdensome regulations, angel investors have been deterred from attending demo days, which harms economic growth. The HALOS Act would preserve important investor vetting processes without forcing startups to jump through unnecessary hoops to get the investments they need to grow and create new jobs.


Senate Tax Extender and Disaster Tax Bill

Almost 30 temporary tax provisions would be renewed through 2019 and disaster victims would receive tax benefits under S. 617, which was sponsored by Senate Finance Committee Chairman Grassley (R-IA) and Ranking Senator Wyden (D-OR). It would allow filers to use the tax breaks on their 2018 returns if it’s enacted by the April 15 filing deadline. If enacted after the deadline, taxpayers could file amended returns to claim the breaks. This legislation is still pending in the Senate.


TRANSPORTATION


Ivanka Trump Has Big Role in Infrastructure Talks, Hoyer Says

House Majority Leader Steny Hoyer says President Trump’s daughter Ivanka is playing a large role in infrastructure talks, giving him optimism about reaching a bipartisan agreement.

“Ivanka Trump is playing a significant role in all of this. That gives me hope,” Hoyer said at the House Democratic retreat in Leesburg, VA. Hoyer of Maryland says there have been a number of meetings on infrastructure and the president has discussed a $1 trillion plan. Funding source for plan still under discussion, Hoyer says, adding he favors increasing gas tax. House Transportation Committee Chairman Peter Defazio says plan is to complete bill by end of July, says White House hasn’t indicated what funding source it would support.


Pelosi’s Broad $1T Infrastructure Bill

Speaker Nancy Pelosi (D-CA) wants at least a $1 trillion investment in a range of infrastructure needs — from roads and bridges, to airports and schools, to broadband and clean water. “This has always been bipartisan until recently. But now hopefully again it will be nonpartisan and it will be at least $1 trillion,” Pelosi told the North America’s Building Trades Union at their annual Washington event.

Transportation Secretary Elaine Chao, who would have programs under her jurisdiction for any infrastructure legislation, recently appeared before the House Transportation-HUD appropriations panel. In addition to questions about whether or not she’d support a gas tax and just how committed the administration is to infrastructure when the Transportation budget keeps facing cuts, Chao faced a certain grilling on the Gateway tunnel and bridge project spanning the Hudson River.

President Donald Trump’s request for $21.4 billion in FY20 discretionary funding for the Transportation Department would be $5 billion less than the FY19 enacted levels and included cuts to funds for Amtrak’s Northeast Corridor that would benefit Gateway.


Lawmakers Eye Summer for Surface Bill Action

The Senate committees tasked with writing a new surface transportation authorization are hard at work and eyeing a timeline for committee action by July or ideally before August recess, according to the heads of the Environment and Public Works Committee. Chairman John Barrasso (R-WY) and ranking member Tom Carper (D-DE) are working on a six-year bill that focuses on just highways, roads and bridges, Barrasso said. Though the current authorization does not run out until Sept. 30, 2020, Barrasso and Carper are moving swiftly to do their part, noting the challenge of paying for whatever they authorize.