Meanwhile, Sen. Richard Shelby, R-Ala., the ranking minority member on the Senate Banking Committee, has introduced a tax reform bill that would overhaul the current federal code and replace it with a 17% flat tax devoid of all tax credits.
Shelby’s bill, which also would eliminate the alternative minimum tax, is at odds with a tax reform bill sponsored by Sen. Ron Wyden, D-Ore., that would require all new munis to be tax-credit bonds.
The forest bond bills, which are similar, were introduced last week by Democratic Sen. Patty Murray and Republican Rep. Dave Reichert. The two legislators are trying to get the measures passed two years after similar legislation failed to gain traction.
The bonds would be exempt from the private-activity bond volume cap. State and local governments would issue them and loan the proceeds to nonprofit businesses for conservation projects.
Allocation of the bonds would be heavily weighted in favor of Oregon and Washington, which together would get 35% of the $3 billion. Bond proceeds could be used to finance the cost of acquiring forest land and any credit enhancement fees.
Nonprofit conservation businesses currently have limited options to acquire timberland. They may be able to get a federal appropriation for land or a municipality may sell tax-exempt debt on its own to buy land, said Dan Stonington, conservation policy director for Seattle-based nonprofit Cascade Land Conservancy.
“The current tool-set is limited for what the need is,” he said. The forest bonds offer “a way to create sustainable timber operations that continue to provide jobs and the timber flow.”
Reichert, a member of the House Ways and Means Committee, said in a statement that his bill provides “needed public-private partnerships” to harvest forests in a sustainable manner. He said the bill could conserve an estimated 2.2 million acres of forests, roughly three times the size of Rhode Island.
Rep. Mike Thompson, D-Calif., who represents the Golden State’s northern coast and is also a Ways and Means Committee member, has co-sponsored the House bill. Maria Cantwell, D-Wash., a member of the Senate Finance Committee, has co-sponsored the Senate bill along with Sen. Jeff Merkley, D-Ore., and Sen. Jeanne Shaheen, D-N.H.
Forest conservation may not be Shelby’s top priority, but his tax-reform bill could save some paper. His bill — the Simplified, Manageable, And Responsible Tax, or SMART Act — would collapse the federal income tax brackets into one, set at 17%. In addition to his proposed repeals of the AMT and tax credits, the bill also would eliminate estate and gift tax exemptions and income tax deductions not related to certain retirement savings.
Shelby’s flat-tax bill comes more than 15 years after he partnered with then-House Majority Leader Dick Armey in 1995 on a similar tax reform effort.
But Shelby’s bill runs counter to the one sponsored by Wyden, who, in addition to his tax-reform bill, is trying to generate interest for transportation-specific tax-credit bonds. Wyden plans to introduce a bill to create Transportation and Regional Infrastructure Project, or TRIP, bonds that would allow up to $50 billion to be issued over six years through an independent transportation finance corporation.