The House of Representatives and Senate Finance Committee Pass Different Versions Of The "Tax Cuts and Jobs Acts of 2017"

NIGA Member Tribes

Chairman Ernest L. Stevens Jr.
Jason C. Giles, Executive Director
Danielle Her Many Horses, Deputy Executive Director/General Counsel

The House of Representatives and Senate Finance Committee Pass Different Versions Of The "Tax Cuts and Jobs Acts of 2017"

November 17, 2017

To:

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Re:

Date:

Congress is making an end of the year push to pass major tax reform legislation.  Indian Country has been hard at work for decades seeking Tribal specific tax reform provisions that will amend the tax code to treat Tribal governments fairly and on par with State and local governments. There are discrete tax code changes that will treat Tribes equitably and allow Tribes to pursue economic growth without the threat of IRS or State overreach. Unfortunately, neither the tax reform bill passed by the House of Representatives, nor the bill proposed by the Senate Finance Committee, include any of the Tribal tax provisions that would help spur economic growth in Indian Country and provide individual tax relief to our tribal citizens.

The House passed their version of the Tax Cuts and Jobs Act on November 16, 2017 by a party line vote of 227 - 205 (13 Republicans voted no-most from NJ, NY, and CA - but also Rep. Walter Jones (R-NC)).  The House bill does not include any Tribal tax provisions.  The House Bill presents a unique threat to Indian Country because it increases the federal deficit by more than $1.5 TRILLION (the current national debt is over $20 Trillion).  Past deficit cycles have shown that Indian Country suffers the most when the Federal Government reduces its spending in the face of large deficits.  This will lead to significantly reduced budgets for the BIA, IHS, and other tribal programs.   

The Senate Finance Committee is considering their own version. Committee Chairman Sen. Orrin Hatch (R-UT) released a revised version of the bill yesterday morning, and no Republican member of the Committee is offering amendments.  The day long markup concluded after the Committee considered dozens of amendments from Democrats.  Each Democrat amendment was rejected by a party line vote of 12-14.  

For Indian Country, the Senate version includes one (1) small tax policy change: it would add portions of Senator Cantwell's Low Income Housing Tax Credit (LIHTC) bill.  Section 401 is somewhat positive for tribes as it forces state qualified allocation plans (QAPs) to address the housing needs of Indians- (but it should be amended to more precisely address the full housing needs on Indian lands, not just state qualified plans).  

Several other important provisions were excluded from the Senate Bill.  Sec. 402 is excluded. It would designate Indian Country as "difficult development areas", which receive additional points for selecting federal projects.  The Senate bill also does not include sections 101 (50% increase in LIHTC allocations), 201 (income-averaging - which would help tribes since reservations have some of the lowest per capia income rates), and 309 (50% basis boost for projects serving tenants at or below 30% AMI).

The only other Indian affairs-related provision in the Senate bill is a provision for Alaska Native Corp. settlement trusts.   

The Senate Finance Committee bill-like the House bill-focuses on individual and corporate tax rate cuts. The corporate cuts will be permanent, and the individual income tax cuts will expire in 10 years.  

The Senate bill adds in a provision to eliminate the ACA's individual mandate.  The Senate Finance Committee added this to help offset the deficit increases by more than $380 billion.  The Congressional Budget Office (CBO) estimates it will cause more than 13 million individuals to lose their health care insurance.

The Senate and House are in recess Thanksgiving week, and the full Senate will return on Monday, November 27th to begin debate on the Senate Finance Committee's version of the Tax Cuts and Jobs Act.  The prospects of Senate passage are a tossup at this point.  However, this presents an opportunity for Tribal Governments to weigh-in on the Senate version of the Tax Bill and insist on inclusion of important Tribal tax provisions.  Even if the Senate version passes without the Tribal amendments, Indian Country will still have an opportunity to advocate for their inclusion at the joint House and Senate Conference that will resolve differences in the bills.

It is unfortunate that neither the House nor the Senate bill includes Indian Country's priorities for tax reform. Tribal Governments for decades have been seeking equal treatment under this Nation's tax laws and IRS regulations.  Unless these equitable shortcomings are addressed in the tax reform bills, NIGA urges your Tribe not to support either bill.

Please contact your Congressional delegations to urge them to vote NO on the Tax Cuts and Jobs Act unless meaningful tax provisions for Indian Country are included. A draft letter to your congressional delegation is attached for your consideration.  Particularly important in the Senate debate are: Senator Ron Johnson (R-WI) who has voiced his opposition to the bill "in its current form;"  Republican Senators Collins (R-ME), Corker (R-TN), Murkowski (R-AK), McCain (R-AZ), Flake (R-AZ), have all expressed skepticism about certain provisions in the Senate Bill.  This is an opportunity for Indian Country to request that its tax provisions be included as long the Senate bill continues to undergo revisions.

Please contact Danielle Her Many Horses, Deputy Executive Director at dhermanyhorses@indiangaming.org  if you have any questions or concerns with this alert.

 CLICK HERE TO DOWNLOAD THE MODEL LETTER

[INSERT TRIBAL LETTERHEAD]

[Date]

Re: [Tribe or Organization] Opposes the Tax Cuts and Jobs Act in the House and the Senate

Dear [Member Name]:

Our [Tribe/Pueblo/Nation] writes to oppose both versions of the Tax Cuts and Jobs Act-passed by the full House and the Senate Finance Committee, unless there are revisions to include the Tribal tax provisions detailed below.

Indian Country has waited more than a quarter century for Congress to address tax code provisions that treat tribes unfairly and hinder economic growth in Indian Country. Tax reform is a once in a generation opportunity to uphold the federal trust obligation by helping tribes build stronger economies, create jobs, and deploy critical infrastructure without fear of litigation or interference from the IRS or other agencies dealing with Tribal Governments.  State and local governments are not taxed by the IRS, and Tribal Governments are lawfully entitled to similar treatment under the Constitution and our Treaties.

It is deeply regrettable that neither the House nor the Senate bill includes Indian Country's priorities for tax reform. Unless tribal provisions are included, our Tribe cannot support the Tax Reform Bills currently being considered. Further, the federal deficit increase as a result of these bills will inevitably create pressure to cut federal programs and services that are extremely important to tribal communities. Deficit-financed tax cuts that lead to austerity budget cuts would affect all Americans but would disproportionately impact American Indians and Alaska Natives who rely on federal funding as part of the federal government's trust responsibility and treaty obligations. 

At a minimum, the Senate must consider on the floor and in conference adding the following amendments which were proposed but not included in the Senate Finance Committee bill: 

 

  • Hatch #7 - Makes permanent the Indian employment and accelerated depreciation tax credits that seek to provide investments for establishing businesses on Indian lands.
  • Hatch #17 - would add provisions of Sen. Maria Cantwell's LIHTC bill, S. 548.  Title IV of this bill forces states to address housing needs of Indian Country and amends the LIHTC program to include Indian Country as a high need area for these housing tax credits.
  • Hatch #20 - Would add S. 1935, the Tribal Tax & Investment Reform Act (Sen. Jerry Moran (R-KS)), which removes the "essential government function" test for tribal tax-exempt bonds, and provides parity for tribes re: the child adoption tax credit, treatment of tribal foundations/charities, and tribal  government pension plans.
  • Hatch #21- Would add S. 2012, the Tribal Economic Assistance Act (Sen. John Hoeven (R-ND)), which seeks to bring parity to tribal tax-exempt bonds, makes permanent the Indian employment and accelerated depreciation tax credits for Indian Country, improves the NMTC program to direct credits to Indian Country projects, and establishes a qualified Indian School Construction Bond escrow account.  

 Accordingly, [Tribe or Organization] opposes the House and Senate versions of the Tax Cuts and Jobs Act unless the aforementioned amendments are included. 

Sincerely,

[Tribal Leader/Tribal Council]