Tax Reform Expected to Take More Precedence

May 18, 2015

The improving federal budget picture and a recent spike in tax revenue could energize lawmakers who are considering making changes to the tax code, a former Democratic staff director of the Senate Committee on Finance said Wednesday during the REALTORS® Legislative Meetings and Trade Expo in Washington, D.C.

"As the budget gets better, it makes the prospects for tax reform more viable," Russell W. Sullivan, now an attorney with McGuireWoods LLP, told NAR’s Federal Taxation Committee, noting that federal tax receipts in April were at a record level.

Another factor that could spur Congress to change the tax code is corporate tax rates in the U.S. being higher than they are in other developed countries, which has caused many companies to move outside America, Sullivan said. Just as states compete with each other to attract employers, the nation needs to give incentives to businesses to stay in the United States instead of going to other countries, he said.

In addition, the fact that proposals to change the tax code are already being circulated is "facilitating the kind of discussion that is necessary for senators and representatives to hear from their constituents [about the] type of tax reform [they] might support," Sullivan said.

Ray Beeman, a former tax counsel to the Republican staff of the tax-writing House Committee on Ways and Means, who spoke at the same session as Sullivan, added that Congress views changing the nation’s tax structure as a way to accelerate the economy, a priority for lawmakers. "Tax reform continues to be viewed as something that can push growth up," he said.

If Congress doesn't pass tax legislation before the presidential election, it wouldn’t be surprising if the new occupant of the Oval Office pushes for changes quickly after taking office, said Beeman, now a principal with Ernst & Young.

"Regardless of who wins the White House, if I'm on the transition team” and looking for something to accomplish in the first 100 days, "I don’t know why [I wouldn't] pick tax reform," he added.

NAR supports changes to the tax code that promote economic growth but opposes altering the rules that incentivize ownership and investment in real estate.

—Sam Silverstein, REALTOR® Magazine