Last December’s tax overhaul, the largest in three decades, is in the books. But the work of a tax lobbyist is never done, and industry groups continue to flock to Capitol Hill in an effort to tweak the code.
The first quarter of 2018 didn’t see the frenzy of tax lobbying that happened late last year as Congress put the finishing touches on the trillion-plus-dollar legislation. But according to disclosure reports due last Friday, industry groups either left out of the tax bill or smarting from a particular provision are keeping up the effort.
“The hope six months ago was, and this was what a lot of offices thought, that kind of everything in the tax world would be touched by tax reform, but it didn’t hit every facet,” said Emily Naden, director of federal affairs at Building Owners and Managers Association International.
House Ways and Means Chairman Kevin Brady has pledged to work on a permanent fix to 26 expired tax provisions, collectively known as extenders, that Congress regularly renews but didn’t address in the tax overhaul. The first step was to hold a March 14 hearing where industry groups came to the Ways and Means Tax Policy Subcommittee to defend their tax break. Subcommittee Chairman Vern Buchanan followed up the hearing with a Members’ Day on April 18, in which lawmakers went before the subcommittee and made their case for particular provisions.
Congress renewed many of the extenders retroactively for tax year 2017 in a February budget bill, but Brady has signaled he wants that to be the final time. Some, if not many, of the extenders are likely to be scrapped or phased out. But outside groups haven’t slowed down their lobbying push.
Biofuel producers are once again defending the expired $1-per-gallon tax credit for biodiesel and the $1.01-per-gallon subsidy for next-generation biofuels, along with breaks for ethanol equipment and biofuel plants.
The National Biodiesel Board—which is calling for Congress to extend the credits for biomass and renewable diesel for at least another year—posted $490,000 in lobbying expenditures for the first part of 2018, up from $312,000 a year prior. Revenue reports from two lobbying firms show the Advanced Biofuels Association, which is seeking a multiyear phase-out of the biodiesel tax credit, spent at least $90,000 on lobbying on issues including the tax extender. That’s unchanged from the same period a year ago.
Naden’s organization has been pushing to preserve a tax deduction for energy-efficient commercial buildings. The Building Owners and Managers Association International saw a slight boost in first quarter spending, to $121,000 from $110,000 in the same period last year.
It’s unclear when the committee will act on extenders, though some analysts say it might not come until the lame-duck session.
The final version of the tax bill included a 1.4 percent tax on investment income for colleges and universities, largely from their endowments. The provision covers institutions with more than $500,000 in endowment assets per full-time student and would hit about 28 wealthy colleges and universities, though earlier versions would have captured some 250 institutions.
It’s not small change, either. Harvard University, which has the country’s largest endowment at about $37 billion, could have to pay an additional $43 million in taxes annually, the university’s provost has said, according to The Harvard Crimson.
Harvard posted $160,000 in lobbying spending in the first quarter, equal to the same period last year, and listed the endowment tax as an issue on which lobbyists worked. Princeton University also listed the provision as a lobbying issue, and other affected schools such as Stanford University, University of Notre Dame, and Duke University listed taxes as a lobbying issue more broadly.
Some 48 university presidents sent a March letter to lawmakers urging them to repeal the provision. Republican Rep. Bradley Byrne and Democratic Rep. John Delaney have introduced the Don’t Tax Higher Education Act, which would scrap the language, though there is no indication the measure will advance soon.
With lawmakers pushing the tax overhaul through Congress so quickly, analysts expected errors to crop up. Tax writers have already fixed one oversight, which would have given an unintended tax break to members of agricultural cooperatives, but the real-estate industry, retailers, and restaurateurs are calling for a tweak of their own.
One issue is an error in the tax bill that would essentially bar them from fully writing off property improvements over a 15-year period, instead putting them in the default period of 39 years.
“That is an enormous loss for a lot of people,” Naden said. “And what’s happening now is that’s not something that can be rectified come tax time. When leases are coming up, we have to go under what we know the current tax regime to be.”
In the Senate, there are not many chances left this year to move tax bills, but one option is the upcoming measure to reauthorize the Federal Aviation Administration. Congress did a six-month reauthorization in the March omnibus spending legislation, meaning it will expire Sept. 30. An FAA reauthorization measure would have a tax title, making it an enticing option for GOP lawmakers looking to advance tax technical corrections before the midterms.
Not all Republicans are on board with the idea of adding tax provisions, though. Sen. John Thune, chairman of the Commerce, Science, and Transportation Committee and a senior member of the Finance Committee, said Tuesday he’d rather Congress pass a clean FAA bill.
“I would hope that the tax title in that bill is used to deal with the aviation taxes that we normally have to handle in an FAA bill and that we don’t end up having a lot of other unrelated, ancillary tax issues brought up,” Thune told reporters. “Now, there’s no guarantee once you get it on the floor that won’t happen.”