The Atlantic: Democrats’ Biggest Threat in 2018

I spoke with Ron Brownstein of The Atlantic about GOP tax cuts and the midterm elections:

The comparable risk for Democrats this year is that they will be caught in an endless succession of Trump-centered battles—both cultural (guns, immigration) and personal (Russia, White House chaos)—and fail to effectively challenge the GOP claim that its tax-cut plan is benefiting average families. Republicans expect that if voters believe the party is putting more money in their pockets, even many people recoiling from Trump’s performance will still vote to maintain GOP control of Congress.

That’s why so many Republican strategists believe that talking up the tax plan is the key to avoiding a worse-case scenario this fall. “For Republicans, it’s absolutely the most important thing,” said Liam Donovan, a GOP lobbyist close to the party’s congressional-campaign strategists. “There are other things they can’t control—this is something they can.”

Republicans have largely succeeded in convincing the American people that the new tax law is good for the economy in the abstract. But the extent to which it will be an electoral winner–or meaningful mitigator–depends on voters appreciating the direct impact on their paycheck and their families. In that regard they still need to close the sale.

You can read the full piece here.

Continue Reading

The Lobby Shop Episode #39: What’s in Our Wallet? Balancing a National Budget

From the passage of the 2018 budget deal to the President’s FY19 budget proposal announcement, there has been a lot of talk in Washington about federal money and where it should go. Josh and Liam sit down with two lobbyists who have significant experience in this complicated area of government, Ed Krenik and John Lee, to discuss the political context for these events, how they differ, and what they mean for policy going forward.

Continue Reading

ENR: Tax Reforms a Big Deal for Small, Midsized Builders

I spoke with John Gregerson of the Engineering News-Record about the impact of the Tax Cuts and Jobs Act on the construction industry:

Following numerous proposals, TCJA eventually implemented a 20% tax deduction on qualified business income pass-throughs. Those results could prove significant, given that “pass-throughs account for up to 75% of U.S. builders,” notes Liam Donovan, a [Principal at Bracewell LLP and consultant] for Washington, D.C.-based Associated Builders and Contractors.

But the deduction cannot exceed the greater of 50% of the W2 wages of the business or 25% of W2 wages, in addition to 2.5% of the cost of property used in the business, Donovan says. When the dust settles, the provision reduces the effective top tax rate on business income to 29.6% for many smaller firms.

For many industry firms, expiration of the pass-through deduction in 2026 is a potential concern.

“TCJA implemented several sunset provisions on individual tax rates, the pass-through deduction included, to limit the scope of the legislation to $1.5 trillion,” Donovan says. “The administration has indicated it would like to extend the pass-through deduction, but, in the meantime, the provision creates uncertainty. As a result, some pass-throughs may want to run the numbers to determine whether it makes sense to reorganize as C corporations, given the permanency of their 21% tax rate.”

You can read the full piece here.

Continue Reading