WASHINGTON – Amendments to a tax reform bill to restore advance refundings as well as expand the use of industrial development bonds and qualified zone academy bonds could be considered by the Senate Finance Committee this week.
These are among the many amendments filed by Senate Democrats who are outnumbered by Republicans on the committee 14 to 12. At least 355 amendments overall were filed by Monday afternoon, according to the committee's website. By filing them with the committee, members reserve the right to offer them, but that doesn't mean they necessarily will do so.
Sen. Ben Cardin, D-Md., submitted an amendment with Sens. Sherrod Brown of Ohio, Debbie Stabenow of Michigan, Maria Cantwell of Washington, Bob Casey of Pennsylvania, and Ron Wyden of Oregon that would maintain advance refundings while also making improvements to the low-income housing tax credit, the New Markets Tax Credit and enact the Historic Tax Credit Improvement Act.
Democrats also have filed amendments to either prevent or "snap back" a repeal of the federal deduction for state and local taxes. One amendment, sponsored by Wyden, Cardin and Sen. Robert Menendez of New Jersey, calls for the snap back if it leads to lower property values.
Another, sponsored by Wyden and Menendez, would trigger a snap back if state spending on police, fire and other emergency responders drops. Wyden, Menendez and Sens, Claire McCaskill from Missouri and Bob Casey from Pennsylvania, would snap back repeal of the SALT deduction if states cut school funding.
Cardin said eliminating the SALT deduction is "just plain wrong." He said the committee would be better off working on bipartisan legislation to encourage infrastructure investment.
The finance committee began its consideration of the tax reform outline proposed last week by Chairman Orrin Hatch, R-Utah with opening statements Monday from panel members. Hatch intends for the committee to continue working on the legislation for several days this week.
Democrats plan to bring only 12 to 15 of their amendments to a vote, but are skeptical any will pass.
"Based on what happened in the House, no," said Wyden, ranking Democrat on the committee, told reporters, referring to last week's across-the-board defeat of Democratic amendments in the House Ways and Means Committee. "I think what you'll see, is Democrats wanting the majority, the Senate Republicans, to in effect own up to what they are offering. If for example, they can't get those workers the $4,000 they are promising as a result of the corporate changes, then there ought to be some ways to ensure there's some accountability."
Wyden also said some of his colleagues may call for votes on infrastructure amendments because "they feel very strongly it would be a lot better to do than rewarding companies for doing business overseas."
During Monday's opening statements, Republicans pointed to an evaluation by the nonpartisan Joint Committee on Taxation that estimated the plan would cut taxes for households on average for every income tax bracket.
But Democrats responded that the tax cuts do not apply to all middle class families.
“This isn’t simplification of the tax code,” said Sen. Maria Cantwell, D-Wash. “It’s raising taxes on the middle class.”
Cantwell warned that the House version of the bill would terminate private activity bonds after this year and said PABs are important to the housing market.
The congressional Joint Committee on Taxation also estimates the Senate tax bill would increase the federal debt by $1.5 trillion over 10 years. The nonpartisan Congressional Budget Office released a letter late Monday estimating that the $1.5 trillion in new debt, along with debt service, would total $1.7 trillion. "As a result of those higher deficits, debt held by the public would increase from the 91.2 percent of gross domestic product in CBO’s June 2017 baseline to 97.3 percent," CBO said.
The House is expected to vote on its tax legislation later this week. The Senate Finance Committee is expected to complete work on the tax reform bill on Thursday.
The Senate proposal would not terminate private activity bonds, but Cantwell and Cardin were among the Democrats who urged enhancing the federal tax credits that are often paired with PABs.
Both the Senate and House proposals would terminate advance refundings after Dec. 31, generating an estimated $16.8 billion in revenue over 10 years, according to the congressional Joint Committee on Taxation. Thomson Reuters estimates advance refunding represented almost 27% of the municipal market last year.