Congress returned to Capitol Hill this week facing a tight window to deliver on a range of policy priorities ahead of its April recess. As discussions intensify, Roundtable advocacy efforts continue to focus on avoiding harmful limitation on the deductibility of state and local business-related property taxes. (Punchbowl News, March 28)

Tax Talks

• Congressional Republicans are navigating a range of considerations amid pressure from the White House to enact its tax agenda and from conservatives mindful of the deficit. (WSJ, March 26)

• If Senate Republicans succeed in using the baseline strategy, it would significantly alter the final instructions for the House and Senate tax committees.

• Under this approach, extending or making permanent many provisions from the 2017 tax cuts would effectively be cost-free. However, GOP deficit hawks may still need offsets for other elements of the tax package.

• “Business SALT” and potential restrictions on the deductibility of state and local property taxes as a possible revenue offset for the tax bill. (WSJ, March 25)

• State and local property taxes represent 40 percent of the operating costs of U.S. commercial real estate, a greater expense than utilities, maintenance and insurance costs combined. This tax change could reverse the benefits of the 2017 Tax Cuts and Jobs Act (TCJA) and Section 199A, potentially raising effective tax rates to 1970s-era levels near 50%. (Roundtable Weekly, Feb. 28; March 14) 

• RER continues to lead advocacy efforts surrounding business SALT. RER members and staff are actively engaging with Congressional leaders on Capitol Hill, and educating lawmakers on the potentially devastating impacts of the proposals under consideration.

• Earlier this month, RER and sixteen other national real estate organizations wrote to members of the House Ways and Means and Senate Finance Committees urging them to oppose any proposal that would cap or eliminate the deductibility of state and local business property taxes.  (Roundtable Weekly, March 14) (BisNow, March 13)

• RER members are proactively contacting congressional offices, reinforcing opposition to any legislation that would restrict or eliminate deductions for state and local business property taxes.

• All RER members are strongly encouraged to amplify this message to their representatives in Congress. Read more here.

State of Play – Budget

• Congressional Republicans are grappling with how to pay for President Donald Trump's multi-trillion-dollar tax-cut and immigration reform agenda. (Reuters, March 27)

• With GOP lawmakers eager to finalize a budget framework for the planned megabill, House Speaker Mike Johnson (R-LA) and Senate Majority Leader John Thune (R-SD) are signaling that they will move forward on the fiscal blueprint without first resolving major disputes over the offsets needed to extend Trump' s 2017 Tax Cuts and Jobs Act (TCJA). (Politico, March 26)

• Meanwhile, the Congressional Budget Office (CBO) has projected that the U.S. government may reach its statutory debt ceiling by August or September unless Congress and the president agree to raise or suspend the borrowing limit.

• Despite ongoing disagreements, an area of consensus has emerged: Speaker Johnson and Leader Thune are aligning around including a debt limit increase in the budget package—a move Senate Republicans had previously resisted. (Politico, March 26)

• Failure to act could lead to a default on debt, risking economic stability, market volatility and lower property values. (AP, March 26)

Both chambers are targeting the week of April 7 to finalize the budget resolution, which would enable the reconciliation process needed to advance their legislative agenda in the months ahead.