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Trump, Congress, and the Outlook for Tax “Reform”, Muni Bonds, and other Washington Issues November 3, 2017 Chuck Samuels, Mintz Levin (NAHEFFA) Mike Rock, American Hospital Association Matt Hamill, National Association of College & University Business Officers MASSDEVELOPMENT

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Page 1: Trump, Congress, and the Outlook for Tax “Reform”, Muni ... · Trump, Congress, and the Outlook for Tax “Reform”, Muni Bonds, and other Washington Issues November 3, 2017

Trump, Congress, and the Outlook for Tax “Reform”, Muni Bonds, and other Washington Issues

November 3, 2017Chuck Samuels, Mintz Levin (NAHEFFA)

Mike Rock, American Hospital Association

Matt Hamill, National Association of College & University Business Officers

MASSDEVELOPMENT

Page 2: Trump, Congress, and the Outlook for Tax “Reform”, Muni ... · Trump, Congress, and the Outlook for Tax “Reform”, Muni Bonds, and other Washington Issues November 3, 2017

Trump Aiming to Match Reagan’s 1986 Tax Reform Success

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Tax Reform Has Momentum

June 2016: House GOP

BlueprintApril 2017:

Trump Tax Plan

August 2017: Senate

Democrats Statement of

Principles

September 2017: Unified

Framework Released

Page 4: Trump, Congress, and the Outlook for Tax “Reform”, Muni ... · Trump, Congress, and the Outlook for Tax “Reform”, Muni Bonds, and other Washington Issues November 3, 2017

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What’s Next? Ambitious, but not impossible scenario

October 2017: House/Senate approve FY18

Budget Resolution

November 2017: House marks up bill week of November 6, then Senate follows

December 2017: House/Senate to conference tax

reform bills

Can they reach consensus?

Page 5: Trump, Congress, and the Outlook for Tax “Reform”, Muni ... · Trump, Congress, and the Outlook for Tax “Reform”, Muni Bonds, and other Washington Issues November 3, 2017

Tax Cuts and Jobs Act (H.R. 1)

Exemption for PABs Eliminated

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Subtitle G – Bond Reforms SEC.3601. TERMINATION OF PRIVATE ACTIVITY BONDS

Interest on newly issued PABs would be included in income and thus subject to tax, effective for bonds issued after 2017.

The provisions would not apply to any previously issued bond.

Page 6: Trump, Congress, and the Outlook for Tax “Reform”, Muni ... · Trump, Congress, and the Outlook for Tax “Reform”, Muni Bonds, and other Washington Issues November 3, 2017

Other tax-exempt bonds and charitable provisions in the

Tax Cuts and Jobs Act (H.R. 1)

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Impact of Repeal and Replace Efforts?

Infrastructure?

Trump Factor

Freedom Caucus?

Sen. Schumer, Rep. Pelosi & the Dems

Key Challenge for GOP…. Governing!

Tax “Reform”

Landscape

Page 8: Trump, Congress, and the Outlook for Tax “Reform”, Muni ... · Trump, Congress, and the Outlook for Tax “Reform”, Muni Bonds, and other Washington Issues November 3, 2017

Proponents of Tax Reform are Optimistic

• GOP Desperately Needs a Win.• Health care was emotional – tax reform is intellectual. Is that true? • Controversial Border Adjustment Tax (BAT) nixed.• Broad bipartisan agreement that tax code needs updating.

But significant challenges remain….

• Tax reform is hard. • Limited legislative days left in 2017.• Can the White House lead? • Where is the tax reform plan?

Page 9: Trump, Congress, and the Outlook for Tax “Reform”, Muni ... · Trump, Congress, and the Outlook for Tax “Reform”, Muni Bonds, and other Washington Issues November 3, 2017

Democrats demand bipartisan tax reform after healthcare failure

1% pays• Democrats said

that they would not sign a law that gives tax breaks to the 1% of wealthiest Americans. They urged Republicans to work for the middle class

45 Democratic senators co-signed a letter with demands

Deficit neutral• Democrats’

final demand was that the reform not add to the deficit, and that deficit reductions would not harm Medicaid, Medicare and Social Security

Regular order• Democrats are

demanding that Republicans respect procedure and avoid pushing tax reform through Congress by using reconciliation

Page 10: Trump, Congress, and the Outlook for Tax “Reform”, Muni ... · Trump, Congress, and the Outlook for Tax “Reform”, Muni Bonds, and other Washington Issues November 3, 2017

• Placed a surtax on tax-exempt bond interest earned by high income taxpayers

• Congressional leaders and White House said to be reviewing Camp proposal for ideas as fallback

Camp 2014 Tax Reform Proposal

Page 11: Trump, Congress, and the Outlook for Tax “Reform”, Muni ... · Trump, Congress, and the Outlook for Tax “Reform”, Muni Bonds, and other Washington Issues November 3, 2017

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Gang of Six leading tax reform on Capitol Hill – Who matters

Speaker Paul Ryan (R-WI)“There is not another thing we

can do in Congress – that will do more to grow this economy, lift

wages, help people get a raise….than doing tax reform.

This is it. This is a game changer for our economy.”

Rep. Kevin Brady (R-TX)“The American public is genuinely divided on whether Obamacare

works for them or not. But there is no one out there defending the current

tax code. There is no one saying ‘woohoo, let’s have more of this

complexity, and cost, and special loopholes for some. They really want it

simplified.”

Sen. Mitch McConnell (R-KY)“Tax reform is what we are

about. If there is anything that unifies Republicans, it is tax

reform…We have been looking for this opportunity for years. We now have a president who will

sign it.”

Sen. Orrin Hatch (R-UT)“Anyone with experience with the Senate Finance Committee knows that we are not

anyone’s rubber stamp. If a bill – particularly on something as consequential as tax

reform – is going to pass in this committee, the members of the committee will have to be involve din putting it together. I have no

desire to exclude any of my Democratic colleagues from this discussion, and I’m not determined to report anything by a party-

line vote.”

“Treasury Secretary Steve Mnuchin“It took Ronald Reagan over two years on a bipartisan basis to get tax reform done. If we get it done this year, it will be extraordinary.”

“National Economic Advisor Gary Cohn“Why am I here? I am here just for this

reason. Think about the opportunity I am involved in with President Trump to rewrite

the tax code. This is a once in a lifetime opportunity.”

Page 12: Trump, Congress, and the Outlook for Tax “Reform”, Muni ... · Trump, Congress, and the Outlook for Tax “Reform”, Muni Bonds, and other Washington Issues November 3, 2017

“Comprehensive tax reform is the challenge before us. The current code is unnecessarily complex, anti-competitive and picks winners and losers. America is on the verge of its first comprehensive tax code overhaul in a generation.” – David Kautter, Assistant Secretary of the Treasury for Tax Policy

Other Key Leaders on Tax Reform

“There is room for bipartisan tax reform, but it must be fiscally-responsible and it must not come at the expense of hard-working Americans.” – Rep. Nancy Pelosi (D-CA), Democratic Leader, House of Representatives

“There is a real potential for bipartisan support on tax reform. The best tax reform is bipartisan tax reform aimed at helping the middle class.” – Sen. Chuck Schumer (D-NY), Minority Leader, U.S. Senate

“My DNA is in the mayor’s office and I know how we used tax-exempt bond financing. It worked quite well." – Rep. Richard Neal (D-MA), House Ways and Means Committee

Page 13: Trump, Congress, and the Outlook for Tax “Reform”, Muni ... · Trump, Congress, and the Outlook for Tax “Reform”, Muni Bonds, and other Washington Issues November 3, 2017

What is the muni bond / PAB community doing?

• Pro-actively engaging with Capitol Hill contacts to advocate for protecting and maintaining tax-exempt municipal bonds, particularly PABs and 501(c)(3) bonds

• Continuing to work the Trump Administration at various levels to defend municipal bonds.

• Supporting the work of other stakeholder groups and coalitions.

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Other Issues • Revival of Bank Qualified / Infrastructure

• HQLAs

• MMF

• MSRB MA Guidance

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American Hospital Association

• Nearly 5,000 member hospitals, health systems, and other health care organizations

• 270,00 affiliated physicians, 2 million nurses and other caregivers

• 43,000 health care leaders in professional membership groups

• All ownership types

• State and metropolitan hospital association partners

American Hospital Association

Page 16: Trump, Congress, and the Outlook for Tax “Reform”, Muni ... · Trump, Congress, and the Outlook for Tax “Reform”, Muni Bonds, and other Washington Issues November 3, 2017

ACA repeal lessons learned• White House never had a plan

GOP never expected to win the election

• Presidential leadership Never publicly “campaigned” for plan on merits…”mean bill” Not familiar with details Threats

• Failure to engage stakeholders• Lack of “regular order”

Top-down approach by congressional leadership Free-lance effort

• Medicaid became another “third” rail• Plan unpopular with “Trump

demographic”• Blatant politics

ACA Repeal Lessons Learned

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Marketplace StabilityOther Pressing Business

• Government Funding• CHIP• Marketplace Stability• Medicare Extenders

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National Association of College and University Business Officers

•More than 1,900 college and university members across all sectors of higher education

•81 Massachusetts members

•Primary audience on campus are the “chief business officers,” who often carry the title of V.P for Finance and Administration or its equivalent, and those staff that report up to this position

•Advocacy, research and professional development are core association activities

Page 20: Trump, Congress, and the Outlook for Tax “Reform”, Muni ... · Trump, Congress, and the Outlook for Tax “Reform”, Muni Bonds, and other Washington Issues November 3, 2017

Significant Trends in Higher Education

•Enrollment demographics•Increased competition for state resources•Tuition sensitivity among the public•Rising rates of institutional financial aid•How long will the economic model last?

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Questions?

Chuck Samuels

[email protected]

(202) 434-7311

Mike Rock

[email protected]

(202) 626-2325

Matt Hamill

[email protected]

(202) 861-2529