Washington Watch: What Lies Ahead
With the inauguration of Donald J. Trump as the 45th President of the United States, the new administration and a Republican-controlled Congress began work on a number of key issues relevant to the electroindustry. Tax reform, repeal of the Patient Protection and Affordable Care Act (ACA), and infrastructure investment are three priorities that the White House and Congress are taking up in 2017.
Repeal of the Affordable Care Act
Immediately upon convening in January, the 115th Congress moved to repeal ACA through budget reconciliation, a process by which certain budget and tax measures can be expedited. Since reconciliation bills are not subject to filibuster in the Senate, repeal of the ACA can pass with a simple majority vote in both chambers. Final action is expected before March. A replacement for the ACA is in development for congressional approval later in the year.
Concurrent with ACA repeal, is pending legislation to repeal the medical device excise tax of 2.3 percent, which was enacted as part of the ACA in 2010. NEMA supports full repeal of the medical device tax.
President Trump and congressional Republicans, led by Speaker of the House Paul Ryan (R-WI), have championed the simplification of the U.S. tax code through comprehensive reform. Last year, Speaker Ryan released a tax reform blueprint, which is serving as a basis for discussion. Tax reform—similar to repeal of the ACA—is likely to be passed using by means of a budget resolution.
Key themes of the GOP plan include reducing the statutory corporate rate from 35 to 20 percent; providing for immediate expensing of investments (both tangible and intangible); preserving the last-in, first-out (LIFO) method of accounting; providing a research and development tax credit; eliminating various deductions and credits (in favor of the 20 percent tax rate); moving to a territorial tax system like other developed countries; and moving to a cash-flow tax approach for businesses, which reflects a consumption-based tax providing for border adjustments that exempt exports and tax imports. Some observers expect action by the August recess.
NEMA supports tax reform that encourages work, investment, research and development, and job creation.
An oft-repeated campaign promise of President Trump was to "transform America's crumbling infrastructure" through a $1 trillion program that "supports investments in transportation, clean water, a modern and reliable electricity grid, telecommunications, security infrastructure, and other pressing domestic infrastructure needs."
Details of what an infrastructure package might include or how it would be funded are still emerging. The Trump campaign website listed the use of tax credits to spur private investments in infrastructure as an option. Using revenues from tax reform (e.g., a tax on repatriated foreign earnings of U.S. companies) to fund infrastructure investment has been floated as a potential option since at least 2014; however, any use of tax revenue for purposes other than lowering the overall tax rate will face opposition.
Congressional leaders expect the Trump administration to spell out the shape, scope, and funding sources for infrastructure investment. The American Society of Civil Engineers estimated in 2016 that $3.3 trillion in infrastructure investment is needed through 2025, including $2 trillion in surface transportation, over $900 billion for electricity generation, transmission, and distribution, $157 billion for airports, $150 billion for water and wastewater, and $37 billion for inland waterways and ports.
Visit www.nema.org/policy to learn more about NEMA's priorities.