FEDERAL INSIGHT By Andy Fishburn The Political and Policy Outlook I Today, the tax reform topic du jour is to try to accomplish business-only tax reform, which is increasingly described as affecting everyone from the largest corporation to the smallest independent contractor who currently pays taxes through the individual tax code. N LATE JANUARY, ELFA’s Executive Committee received a presentation that provided a retrospective and prospective politi-cal and policy outlook. As we get ready to enter the heart of the legislative season, this article will provide that perspective to the broader ELFA membership. Election Politics The elections of 2014 were nothing but bad news for Democrats; Republicans overwhelmingly took control of the Senate, increased their majority in the House, won more governorships and took control of additional statehouses. Republicans took advantage of a non-Presidential year electorate, which has favored Republicans in recent years, and, more important, harnessed wide-spread malaise about the President’s policies to achieve electoral success. The Republicans’ electoral successes over the course of the past three elec-tions are overshadowed by an inability to break through in the Presidential elections and underperforming in the Senate elections of 2010 and 2012. It’s revealing to note that if Republicans were to win every electoral vote from a state represented by a Republican gov-ernor in the 2016 presidential election, they would win the presidency 329– 209, only three votes short of President Obama’s margin against Mitt Romney, generally viewed as all but a landslide. Today the question is can Republi-cans turn their electoral success into a governing coalition that shows the 2016 electorate that they deserve to control the House, the Senate and the Presi-dency? Right out of the gate, the Re-publicans passed a stalled terrorism risk insurance bill and the President signed it into law, the House took up a widely popular bill to define full-time employ-ment as a 40-hour work week for health care purposes, and the Senate took up a provocative, but very popular, bill to authorize the construction of the Key-stone XL pipeline. These efforts were all a part of a larger effort to hit legislative singles and doubles rather than win the game in the first inning. Affordable Care Act At the same time, some in the Repub-lican caucus are fans of the home run derby. Ironically, on Groundhog Day the Republican House voted to repeal the Affordable Care Act, something they’ve tried to do more than 50 times in whole or part in the past two years. This was done with no evidence that the votes are there to override the looming presidential veto. This lends credence to both arguments on whether Wash-ington can be functional again. Tax Reform This dynamic is present across the policy realm, and the tax-writing world is no exception. There is widespread agreement that the tax code is severely outdated, overly uncertain from year to year, and that it’s holding back the broad-er economy. However, that’s where the agreement ends, and while the new lead-ership of the tax-writing committees are saying all the right things about moving forward on comprehensive tax reform, there are fundamental interparty and in-traparty disagreements about tax reform at both the macro and micro levels. Today, the tax reform topic du jour is to try to accomplish business-only tax reform, which is increasingly de-scribed as affecting everyone from the largest corporation to the smallest independent contractor who currently pays taxes through the individual tax code. While these discussions have led some to be more optimistic, the history of H.R. 1 is fresh in everyone’s mind. H.R. 1 was, of course, former House Ways and Means Chairman Dave Camp’s attempt at comprehen-sive tax reform, which was formerly introduced in the waning days of the past Congress. This bill showed all the gory details of how you broaden the tax base in order to lower tax rates. When the bill was first revealed last year, there was not a single member of Congress who endorsed it, and the reaction can only be characterized as the sound of one hand clapping. For these reasons many believe that the closest that the country will come to tax reform is some form of interna-tional tax change that will allow U.S. corporations to bring cash back to the United States, which, at present, cor-porations are reluctant to do due to the U.S. taxes that they would owe. Many proposals are tying these international tax proposals to increased funding for infrastructure investment across the United States, a topic that is of great interest to many ELFA members. The coalition represented by those who want to invest more in infrastructure and those who want to bring trapped cash home to be invested domestically is a powerful one and with the highway trust fund schedule to expire later this spring, this is an idea worth watching. Also, on the brighter side of things, the House has already begun work ex-tending tax provisions that expired at the end of last year, such as expanded expensing under Section 179 of the tax code. While the endgame is not near on these, it does appear that the tax-writing committees have heard the collective displeasure with their wait-ing until the middle of December to pass these provisions last year. ■ For more information, please contact Andy Fishburn , ELFA Vice President of Federal Government Relations, at afishburn@ elfaonline.org. 48 MARCH/APRIL 2015 EQUIPMENT LEASING & FINANCE MAGAZINE