Infrastructure is dominating focus on Capitol Hill but it may take until the end of the year before a bill is ultimately passed, a key Washington insider said on Wednesday at the NBAA virtual Aviation Tax & Regulatory Compliance Seminar.
Helping to kick off the two-day event, Dave Olander, who leads the tax practice for Capitol Counsel and formerly served as tax counsel for the House Ways and Means Committee, said “Infrastructure is where it is at. It is the issue.” Olander added that Congress is at a pivotal juncture on the issue, but recent negotiations haven’t shown promise that a bipartisan agreement can be reached in the near term.
“It feels like we are headed toward a Q4 exercise where at the end of the year there is going to be a reckoning,” to get the bill completed, he said. Democrats will either have to compromise or “go at it alone” using procedural maneuvers such as reconciliation.
Reconciliation could also affect certain tax initiatives supported by Democrats, such as an increase in the corporate tax rate or international taxation, Olander said. However, he doesn’t see a sweeping tax package this year affecting some other taxes of importance to business aviation, such as equipment expensing. “I don’t see an immediate prospect for that” since it doesn’t need to be addressed at this time, he said, and added, “It’s going to take every bit of oxygen out of the room to just get to an outcome [on an infrastructure package].”
Meanwhile, Scott O’Brien, senior director of government affairs for NBAA, outlined the association’s legislative initiatives, including pursuing a blender's credit for sustainable aviation fuel (SAF). Calling environmental issues “a real threat for our industry” with incidents such as flight-shaming occurring, O’Brien said it was important for the industry to move toward sustainability and underscore those efforts.
Working with a broad aviation coalition, NBAA has been encouraging the incorporation of a SAF blender's tax credit of up to $2 per gallon for 10 years if certain performance standards are met, he said. “[We] believe that will be a game-changer and really increase how much sustainable fuel we see at the FBOs and bring down the price.”
While doubtful that such a measure could pass on its own, the aviation groups are hoping to see this included in a tax portion of the infrastructure proposal, O’Brien said. Olander was optimistic about progress on that front, saying, “It is very much part of the discussion right now,” as part of the green energy/green jobs portion of infrastructure.
Also, NBAA is hoping to seek a measure, again as part of the infrastructure proposal, to provide an authorization for $25 million in grant projects to facilitate the use of electric advanced air mobility, with funding coming later down the road.
O’Brien additionally said that NBAA is focused on working with regulators on taking a more “rational, reasonable approach” surrounding enforcement filings.
In addition to the session surrounding Capitol Hill, the two-day tax seminar is focusing on a number of topics, from exports and FAA registry overhaul to dry-leasing, federal excise taxes, aircraft deductions, and personal use of aircraft.