Construction Legislative Week in Review
www.agc.org July 9, 2015
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On the Inside
TRANSPORTATION
Senate May Take up Highway Bill Next Week
House Republican Introduces Gas Tax Increase Measure
TAX
Anticipated Committee Tax Reports Fall Short
Finance Committee Tentatively Schedules Tax Extenders Measure
CONGRESS
Following in Dadís Footsteps
TRANSPORTATION
Senate May Take up Highway Bill Next Week
 

Yesterday, Senate Majority Leader Mitch McConnell (R-Ky.) indicated that he wants the Senate to start work on a highway bill next week.  However, it is unclear whether the majority leader has identified a specific source of Highway Trust Fund revenue to pay for a multiyear transportation bill. 

McConnell has made it clear that a gas tax is off the table and he is also skeptical of using any type of tax reform to pay for a reauthorization bill.  However, other members of Congress see tax reform as a viable option. As previously reported, some members of Congress are considering using the repatriation of U.S. companies’ foreign earnings as a potential revenue source for a long-term surface transportation bill.  For example, two Bipartisan Senate Finance Committee Working Groups on Tax Reform released reports recommending using international tax reform and estimated that repatriation would provide an estimated $90-$100 billion necessary to fill the funding gap in the Highway Trust Fund. 

The situation in the Senate remains fluid.  AGC continues to monitor the situation on the Hill as we encourage Congress to act as quickly as possible in passing a fully funded, long-term reauthorization of federal highway and transit programs.

For more information, please contact Sean O’Neill at oneills@agc.org or (202) 547-8892. Return to Top

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House Republican Introduces Gas Tax Increase Measure
 

Rep. Tom Rice (R-S.C.) this week introduced the "Highway Trust Fund Certainty Act," legislation that would increase the federal motor fuels tax and provide an income tax credit to offset the cost of the increase to the average tax payer. Rice is a self- proclaimed conservative and his support for the motor fuels tax increase is significant. In a letter to other House members urging support for the bill Rep. Rice said, "As Congress has debated the Highway Trust Fund insolvency, two things have become clear: a user-fee system is the most reasonable and reliable, and there are no "silver bullet" revenue streams available."

The specifics of his proposal are as follows:

  • Motor fuels taxes (gasoline and diesel) increase 10.1 cents per gallon to increase HTF revenue  approximately $17 billion
  • The new motor fuels rate is indexed to 2014 CPI
  • The bill raises $115 billion in additional revenue over the 6 year period 2016-2021 (minus $11 billion for 2015 shortfall)
  • The bill raises $215 billion in additional revenue over the 10 year period 2016-2025
  • A maximum income tax credit of $133 is available to individuals with an earned income up to $74,950
  • The maximum income tax credit of $266 is available to joint filers with a combined earned income up to $149,900
  • The income tax credit begins to phase out at a rate of 1 percent and terminates at an earned income of $88,250 for individuals and $176,500 for joint filers
  • $11 billion is transferred into the HTF to cover the 2015 short fall and repaid to the Treasury from the additional revenue
  • Both the motor fuels tax increase and income tax credit are permanent

AGC will work in support of Rep. Rice's initiative.

For more information, please contact Brian Deery at deeryb@agc.org or (703) 837-5319. Return to Top

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TAX
Anticipated Committee Tax Reports Fall Short
 

On Wednesday, five Congressional tax reform working groups provided reports to Senate Finance Committee Chairman Orrin Hatch (R-Utah) and Ranking Member Ron Wyden (D-Ore.). 

The five groups provided little consensus. Four of the groups made no specific recommendations and only produced long descriptions of current law and or parsed various proposals that have already been offered. For instance, the infrastructure group proposed taxing unrepatriated foreign profits of U.S. multinationals to finance the Highway Trust Fund in the short term, and a vehicle mileage tax (VMT) to pay for roads over the long-term – a concept studied during a meeting by the House Ways and Means Committee a few weeks ago. The business group set four principles of business reform including a substantial corporate tax rate reduction and broader tax reform for all businesses. The next phase for the Finance Committee is unclear, as the panel must contend with how to address the Highway Trust Fund deadline looming at the end of the month.

For more information, please contact Brian Lenihan at lenihanb@agc.org or (202) 547-4733. Return to Top

Finance Committee Tentatively Schedules Tax Extenders Measure
 

Chairman Orrin Hatch (R-Utah) announced during a media interview that the Senate Finance Committee is scheduled to conduct a markup of a tax extenders package the week of July 13, which would put the Senate on track to take the first step in renewing the popular R&D credit, depreciation provisions and possibly all other expired AGC tax priorities. If the committee does act, the most likely scenario would be a two-year extension similar to S. 2260: Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act that the committee approved in 2014.

The earlier Congress acts on extenders, the more lawmakers appear to be giving up on bigger tax changes in 2015. Unfortunately, no Senate floor time has been prospectively scheduled to debate tax legislation – outside of provisions that raise revenue for the Highway Trust Fund.

Following the release of the anticipated reports from the Senate Finance Tax Working Groups on July 8, W&M Chairman Ryan said "Unfortunately comprehensive reform is not possible under a president who wants to raise taxes on families and job creators.” He has regularly alluded that reform would happen after the 2016. Since the beginning of the year, the House has been passing individual pieces of legislation to make selected tax provisions permanent. One additional AGC bill has been approved by the Ways & Means Committee and legislation to make permanent bonus depreciation is tentatively slated for committee action in July. Neither the House nor the Ways and Means Committee have begun to debate a short-term retroactive tax extenders package.

The tax extender legislation approved at the end of 2014 applied a retroactive extension for 2014 for the following AGC supported tax policies:

  • Section 179 maximum deduction limit of $500,000 with a $2 million phase-out
  • 50 percent bonus depreciation for qualified property
  • 15-year straight-line cost recovery for qualified leasehold improvements
  • Reduced 5-year holding period for S-corporation recognition for built-in gains tax
  • New Markets Tax Credit (NMTC)
  • Work Opportunity Tax Credit (WOTC) –  including qualified veterans
  • Research and Development tax credit
  • Renewable energy production and investment tax credits (PTC)
  • Energy efficient commercial buildings deduction under Section 179D

For more information, please contact Brian Lenihan at lenihanb@agc.org or (202) 547-4733. Return to Top

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CONGRESS
Following in Dadís Footsteps
 

Illinois state Sen. Darin LaHood (R) cruised to an easy special election primary victory on Tuesday in the vacant Peoria-anchored congressional district.  Rep. Aaron Schock’s (R) March resignation created the vacancy, which is the only unrepresented seat in the entire U.S. House. 

LaHood, whose father, Ray LaHood, represented the seat for 14 years before becoming President Obama’s Transportation Secretary, topped 69 percent of the vote against two weak GOP opponents who spent less than $50,000 combined on their campaigns.  Democrats officially nominated educator Rob Mellon, an Army Reserve officer who lost his party’s congressional primary in 2014.
 
LaHood will easily defeat Mellon, but must wait until September 10 for the next vote in what is an unusually long special election cycle.  His eventual victory will bring the House party division back to 247 Republicans – 188 Democrats, the spread generated on Election Night 2014.

For more information, please contact David Ashinoff at ashinoffd@agc.org or (703) 837-5013. Return to Top

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