A new president. An energized Congress. An aggressive approach to legislative reform. We have seen these themes dominate newspapers for the past month. In addition to the new administration, much has been made about legacies – that of the outgoing president and those of presidents past that are invoked for comparison’s sake.
The Historic Tax Credit Coalition (HTCC) and MacRostie Historic Advisors are asking that historic tax credit advocates take action TODAY to contact key representatives and voice their support for the federal historic tax credit program. As outlined in the letter below from John Leith-Tetrault, Public Policy Advisor for the National Trust Community Investment Corporation (NTCIC), the time is now to act as House Republicans begin meetings on December 14 to discuss their plan for comprehensive tax reform.
For those of us watching the Presidential race in the context of its likely effect on tax reform, we may look back on Saturday, October 1, 2016 and say that was the day the political forces for sweeping tax code changes took a turn. As the world now knows, Saturday was when the New York Times published its storydetailing how Donald Trump took a $916 million loss on his 1995 taxes and may not have paid any federal income taxes for 18 years. Trump says—and this really gets to the heart of this as a political issue beyond the election—that taking such a loss is perfectly legal. Business people use real estate depreciation, net operating losses, and any manner of other deductions and credits in the tax code as a matter of course. However, to the legions of Trump voters (and Bernie Sanders supporters for that matter) who are hurting economically but who nevertheless pay taxes, the idea of a billionaire paying NO TAXES for years can’t help but feed populist anger and have a political impact beyond the election…regardless of who wins.
Before this weekend, the political tea leaves seemed to indicate that Trump, who proposes to lower the corporate tax rate to 15%, would need to eliminate all tax preference items (including the historic credit) from the code. If former House Ways and Means Chairman Dave Camp’s 2014 discussion draft for tax reform—which pegged the corporate rate at 25%--eliminated nearly all “community investment” credits from the code, then it’s hard to imagine a rate of 15% not doing that and more.
Hillary Clinton—while not taking a formal position on the historic credit but supporting the Low Income Housing and New Markets credits—has a history of supporting urban focused programs and policies consistent with Democratic Party orthodoxy. Many have assumed that while generally supporting incremental tax reform, a Clinton administration would be inclined to keep economic development incentives in the code.
After the New York Times bombshell, however, all bets about a selective, incremental approach to tax reform may be off the table. A sizeable chunk of people in the country are hurting and angry, and sweeping tax code changes that more fairly balance the burden by eliminating “loopholes” may be the perfect way for a Trump or Clinton administration to address that anger.
Main Street seems to be on a lot of people’s minds. We are encouraged to “shop small” by American Express and the National Main Street Center on the Saturday after Thanksgiving in ads with fall foliage-lined streets. Political candidates evoke “Main Street” to show their support for small business ownership.
Two weeks ago, the National Trust for Historic Preservation (NTHP) held a tax credit summit. The main topic? 50(d). Representatives from the IRS attended the summit and the good news was that there was no bad news; the bad news was that there was no good news.