On behalf of his organization’s more than 1,500 members, Richard White, acting president and CEO of the American Public Transportation Association (APTA), recently issued two statements expressing concerns about the newly-introduced House and Senate GOP tax reform plans. While Republicans argue their efforts will simplify the tax code and benefit working class families, Mr. White believes the proposals lack a clear, stable federal commitment to vital infrastructure improvements and will fail to invite much-needed private investment and participation in transit projects.
Perhaps the most contentious overhauls, namely the elimination of Private Activity Bonds (PABs), appear in H.R.1, the House bill that was unveiled before its Senate counterpart. Tax-exempt bonds issued to attract private investment in public benefit projects, PABs, Mr. White notes, will prove vital as transit agencies across the country look to modernize their aging transportation infrastructure: “Preemptively removing PABs as a financing tool for infrastructure projects would undermine Congress’ stated goal of leveraging a $1 trillion investment in our nation’s infrastructure…. Instead, this provision would have a chilling effect on private sector investments in infrastructure projects.”
The House bill also fails to address the future solvency and viability of the Highway Trust Fund (HTF), a “glaring omission,” in the words of Acting President White. The HTF, which is set to lose funding in 2020, helps pay for important highway and public transportation improvements. Without ensuring the fund’s long-term sustainability, White argues, lawmakers jeopardize the country’s future economic growth and competitiveness.
Beyond these provisions pertaining to transportation investment, the House bill, APTA worries, will negatively impact working class families. Given that it eliminates the employer option to deduct the cost of providing employees with commuter tax benefits, the proposal will likely increase transit costs for those commuting to and from work.
Although slightly less controversial than its House counterpart, due mainly to the retention of PABs, the Senate’s tax plan includes some of the same worrisome proposals. Namely, the Senate’s bill fails to address the HTF’s long-term viability, eliminates important commuter tax benefits and deductions, and does not renew and extend environmentally-friendly tax credits for alternative fuels and related infrastructure.
In order to pass tax reform, the House and Senate must first iron out their policy differences and approve the same bill before seeking the president’s signature.