House Speaker Paul Ryan (R-Wis.) and the House Republican Task Force on Tax Reform released a blueprint for tax reform June 24 as part of Ryan’s “A Better Way” campaign, which seeks to establish a clear and unified Republican agenda around six main policy areas: poverty, tax reform, health care, national security, federal regulations and constitutional authority.
Written as a blueprint rather than legislative language, the tax component reiterates the long-held Republican goal of lowering tax rates for individuals and businesses. The 35-page plan highlights several of House Republicans’ priorities for potential tax reform efforts in 2017. In particular, the top corporate tax rate would be lowered from 35 percent to 20 percent.
For individuals, the current seven tax brackets would be consolidated into three, with the top tax rate set at 33 percent.
Additionally, the plan would repeal the alternative minimum tax, which limits the tax benefits of various deductions such as those for tax-exempt municipal bond interest and the estate tax.
To achieve a simpler tax code, the plan calls for the elimination of all itemized deductions except for the mortgage interest and the charitable contribution deductions.
The deduction for state and local taxes — property, income and sales — would presumably be on the chopping block. The blueprint does not provide any specifics on the treatment of tax-exempt municipal bond interest.
Bonds are critical tools for counties. They have increasingly borne the cost of infrastructure and public improvements. Between 2003 and 2012, states and local governments financed $3.2 trillion in infrastructure investment through these bonds alone.
In general, the release of the House tax reform blueprint met with mixed reviews, even by Senate Republicans. Although intended to lay the groundwork for tax reform in 2017, the success of the plan will hinge on whether Republicans control the White House and Congress after the November elections.
NACo will continue to monitor developments but urges counties to keep explaining the importance of municipal bonds to members of their congressional delegations.
Additionally, counties should urge their representatives to join the Congressional Municipal Finance Caucus led by Reps. Randy Hultgren (R-Ill.) and Dutch Ruppersberger (D-Md.).
For more information, contact Mike Belarmino at email@example.com or 202.942.4254.Hero 1