Tax

Yesterday, the U.S. Senate is taking up historic tax reform legislation with the goal of voting for final passage of the bill by tomorrow. We expect a late night tonight which will likely creep over into the morning hours as the Senate considers numerous amendments to the proposal. The bill, titled the Tax Cuts and Jobs Act, has proceeded to this point in the upper chamber with only Republican support. Republican leadership in the Senate is moving the bill through a process known as "reconciliation" which allows for passage by a simple majority instead of the 60 votes that would normally be required. With Republicans holding a 52-48 seat edge in the Senate, they can pass the bill as long as defections are minimized and so far that has been the case. 

Senators Ron Johnson (R-WI) and Steve Daines (R-MT) have registered serious concerns with the bill's treatment of small and medium sized businesses. Both have agreed to vote to move the bill forward procedurally on the condition that the measure be altered to address these concerns before a vote on final passage. Specifically, changes are being considered to the way S-Corporations and other "pass through" entities are treated in the bill. The current language in the Senate bill would allow a tax deduction for pass throughs of 17.4 percent. This would bring the effective tax rate down to 32 percent, but higher than the 25 percent that was the goal of tax reform as outlined by leadership in September. What's more, a 32 percent rate is far higher than the 20 percent rate that is afforded to C-Corporations in the plan. Discussions are ongoing about raising the deduction for pass throughs to 20 percent and Sen. Johnson is pushing for a number even higher--closer to 27 percent. The situation is fluid, but we expect improvement in the way S-Corps and pass throughs are treated in the bill as Members are increasingly recognizing that these are the tax structures of choice for most of the job creators in the U.S. 

In terms of process, the Senate is on a glide path to pass the bill this week.  Assuming that occurs, a couple of different scenarios may unfold. One is that the House may simply take up the Senate-passed bill and send it to the President.  Alternatively, a conference committee may be formed to reconcile the differences in the House and Senate-passed versions. In either event, the President has vowed to sign whatever the Congress approves. 

As we have noted, renewable energy tax provisions will be absent from the bill, although there are amendments that have been filed for floor consideration, but these are not expected to pass. Earlier this month, it appeared that the BTU Act was well poised to be included in the Senate's tax reform plan. Senate Finance Committee Chairman Orrin Hatch had offered the BTU Act as an amendment to the tax bill that was being marked up in his committee. However, it was decided that all of the renewable energy tax credits under consideration would be packaged up and pursued through a separate legislative vehicle at the end of the year. Leadership determined that there were too many valid energy tax proposals that needed to be addressed but could not be shoe horned into a crowded tax reform package. One of the competing proposals is extending the investment tax credit for nuclear energy facilities, which is a high priority for Members in Southeastern states. The bottom line is we were discouraged that our proposal did not make it into the tax reform bill, but are encouraged by the support for the BTU Act among leadership and a commitment to passing the bill before the end of the year.   

Appropriations

Funding for the government expires on December 8, which is setting the table for quick Congressional action on another short term Continuing Resolution or CR to avoid a government shutdown. The current thinking is that Congress will pass a CR next week that will extend through December 22 to allow time for at least some of the FY 2018 appropriations bills to be bundled and passed. An area of focus for PFI is the Interior Appropriations bill, which includes language making permanent the biomass carbon neutrality language that we helped secure. The Senate's Interior bill also includes beneficial federal forest management language that will provide additional tools for the Forest Service to conduct needed project work on our federal forest landholdings. It is unclear at this point whether Department of Interior appropriations will make it into any omnibus bill that is fashioned or whether current funding will simply be extended into 2018.

Are there any topics that you'd like to see addressed at Breakfast & Biomass or at PFI's Annual Conference next year? We'd like to hear from you. Nominate speakers, suggest panels, experts, themes and ideas. The Conference Committee wants to be sure to reflect the preferences and needs of PFI membership as much as possible. 

Be sure to check our updated online calendar with information on many events happening during the remainder of 2017 and into 2018. Most important, mark your calendars for next year's PFI events! 

Breakfast & Biomass at the HPB Expo in Nashville, TN - March 8-10, 2018

PFI Annual Conference in Myrtle Beach, SC - June 24-26, 2018 

If our calendar is missing any events that you're planning to attend, please send an email to Carrie. 

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We'd like to connect and interact with PFI members and anyone else involved in pellet fuels production! 

Here's how you can help us build our online community:

1. Follow us on  LinkedIn and Facebook!
2. Encourage your colleagues and other business associates to follow us.
3. Send Carrie Annand news or other ideas to post on LinkedIn.

Have News to Share on Pellet Wire?

We'd love to feature your company's news in a future Pellet Wire! We want to be the first to know your company's recent developments to share them with the wider pellet fuels industry.

Please be in touch with Carrie Annand with information on your company's growth, job openings, promotions or other news. 

Join a PFI Committee

We welcome and encourage all interested PFI members to get involved in our committees. There are many opportunities to help steer the association. No matter where your expertise and interests lie, we have a committee that will suit you. Help us plan our next conference, shape our policy agenda, lead communications outreach or grow the PFI Standards Program. Visit PFI's website for more information. 

Upcoming Industry Events

March 8, 2018: HPB Expo

March 9, 2018: 2018 PFI Breakfast & Biomass

March 20, 2018: International Mass Timber Conference

April 16, 2018: International Biomass Conference & Expo

May 1, 2018: Heating the Midwest