The Push for Tax Reform:
Will Congress Act in 2013?
Panel
• Anne Urban, Urban Swirski & Associates, LLC
• Sandra Swirski, Urban Swirski & Associates, LLC
• Ellen Marshall, Marshall & Company
• Moderator – Susan Collet, SVP, Government
Relations, Bond Dealers of America
Principal Tax Reform Proposals
Proposal
Intent
Obama FY 2014 Budget
Limits the value of the tax-exempt for deductions and exclusions – including
the federal tax exemption for municipal bonds – to 28%. The cap may apply
to currently issued bonds and new issuances. The Administration also
released proposal to create a federal infrastructure bank and to create
America Fast-Forward bonds, described as direct pay bonds to be used
exclusively for financing critical infrastructure projects.
House Ways & Means
Committee
No formal proposal on tax treatment of municipal bonds released to date.
March 19, 2013 Committee hearing on state/local taxes produced positive
comments from both Republicans and Democrats on the effectiveness of
municipal bonds and the muni exemption. Overall goal of Committee tax
reform initiative is to reduce individual and corporate tax rates to 25%.
Senate Finance Committee
No formal proposal on the tax treatment of municipal bonds released to
date. However, the Senate Budget Committee’s FY 2014 Budget Proposal
includes a provision to cap the value of unspecified deductions and
exemptions at 28%. Committee “options paper” also suggests eliminating
private activity bonds.
Other
Legislative/Commission
proposals
Simpson-Bowles Commission – prospectively eliminates tax-exempt bonds.
Also eliminates private activity bonds.
Sen. Ron Wyden (D-OR), S. 727 (2011) – replaces tax-exempt bonds with taxcredit bonds with a 25-percent tax-credit to bondholders in lieu of interest.
Tax Reform Won’t Be Easy
Spending and Tax Revenue as Share of Economy
From 2012: assumed sequester took place and tax rates returned to Clinton-era levels
Primary House Taxwriters
W&M
Chairman
Dave Camp
(R-MI)
W&M
Subcommittee on
Select Revenues
Chairman Pat
Tiberi
(R-OH)
W&M
Subcommittee on
Select Revenues
Ranking Member
Richard Neal
(D-MA)
W&M Ranking
Member Sandy
Levin
(D-MI)
Bi-partisan Bill? Who is “Gettable”?
Rep. Joe Crowley
(D-NY)
Rep. John Larson
(D-CT)
Rep. Ron Kind
(D-WI)
Rep. Mike
Thompson (D-CA)
Rep. Allyson
Schwartz
(D-PA)
House Process
• Small Working Groups (February – May)
• 500+ Page Joint Committee on Taxation
Options Report (May 7)
• Chairman Camp Wants to Pass a Bill
Through His Committee by end of 2013
Primary Senate Taxwriters
Finance
Committee
Chairman Max
Baucus
(D-MT)
Senator Ron
Wyden (D-OR)
Senator Charles
Schumer (D-NY)
Finance
Committee
Ranking
Member Orrin
Hatch
(R-UT)
Senate Process
• Big Announcement
• Members-only Briefings Started in
February and ended June 20th
• Comprehensive “Options Papers”
Released to Public After Each Briefing
• Chairman Baucus Wants a Markup in Late
Fall
Joint Efforts
• Web Portal for Public Submissions:
https://taxreform.gov/
• “Max and Dave” Road Show Beginning in July
• Joint Hearings Through Rest of 2013
• Coordinated “Pre-Conference” Approach
Debt Ceiling To Hit Later Than Expected
The top blue line reflects the path of national debt excluding any payments from Fannie Mae and Freddie
Mac. Those agencies are required to pay a portion of the profits they’ve earned on assets since the financial
crisis to the Treasury, and those payments are expected to be made before the end of the year.
X-Factors
• Retirements and Term Limits
• Scandals and Distractions
• Campaign Season: Mid-Term Elections
November 2014