Bill Overview
Title: To amend the Internal Revenue Code of 1986 to create a safe harbor for certain perpetual trust funds.
Description: This bill creates a safe harbor for certain perpetual trust funds. It excludes from the definition of investment property under arbitrage provisions any fund created and controlled by a state and established pursuant to its constitution or state law if on a specified date, substantially all of the assets of the fund consist of nonfinancial assets and the assets are used only to support specifically designated essential governmental functions.
Sponsors: Rep. Doggett, Lloyd [D-TX-35]
Target Audience
Population: State governments managing perpetual trust funds
Estimated Size: 50
- The bill pertains to perpetual trust funds controlled by state entities, meaning it is not directly impacting individual taxpayers or citizens in general.
- This involves funds established pursuant to state constitutions or laws, indicating it mainly affects states and their management of trusts.
- Perpetual trust funds are structured to last indefinitely and are usually used to fund governmental functions like education, infrastructure, or health services.
- The bill provides a 'safe harbor' under tax regulations, potentially easing administrative and financial constraints on states managing these funds.
Reasoning
- The policy is primarily about removing certain tax constraints related to state-managed perpetual trust funds. It doesn't directly affect individuals but may have an indirect impact on citizens depending on how states decide to allocate additional resources made available through the trust funds.
- The individual states are the primary stakeholders; thus, direct impact on individuals is expected to be minimal. Any potential positive effects on individual wellbeing will likely be generalized and longer-term.
- Therefore, interviews may include individuals who work at state agencies, individuals involved in managing or advising on governmental budgets, or citizens indirectly affected through improved state services funded by the trust allocational shifts.
- Still, a significant portion of the population will likely not be immediately aware of or directly feel the day-to-day impacts of the policy.
Simulated Interviews
State Government Budget Analyst (New York)
Age: 45 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 3/20
Statement of Opinion:
- This policy provides a great chance to better fund education without the usual financial constraints.
- It could simplify the funding process and free up money for essential educational improvements if handled properly.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Nonprofit Director (California)
Age: 33 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 2/20
Statement of Opinion:
- Perpetual trust funds receiving tax relief could mean more funds available for public health ventures.
- It may not shift my organization’s daily operations but could improve long-term financing options.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
State Parks Manager (Texas)
Age: 50 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 3/20
Statement of Opinion:
- The policy's indirect benefits could reach natural resource conservation via increased state budgets.
- I expect marginal improvements in fund availability for long-term projects.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Public School Teacher (Michigan)
Age: 42 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- Direct impact might not be visible, but improved budget management suggests possible future benefits.
- I'd like to see direct classroom improvement outcomes attributable to this policy, but skeptical for immediate effects.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 5 |
Healthcare Policy Analyst (North Carolina)
Age: 29 | Gender: other
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 3/20
Statement of Opinion:
- Perpetual funds and tax relief will have limited short-term impact; key is how states use any 'freed-up' resources.
- Could influence health funding and priorities, but is contingent upon efficient state actions.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Retired Public Worker (Florida)
Age: 60 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 4/20
Statement of Opinion:
- Safeguarding trust funds is wise, but real impacts are determined by actual state decisions post-policy.
- Retirees linked to state health or pension funds might see indirect benefits.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
State Government Financial Advisor (Georgia)
Age: 37 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 2/20
Statement of Opinion:
- Of strategic interest to my work, as tax relief may simplify planning and allocations.
- Hopeful for more streamlined operations and sustainable financial forecasting.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Retired Financial Consultant (Illinois)
Age: 65 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 3/20
Statement of Opinion:
- It's going to make a complex tax environment simpler for states managing trust funds.
- The policy's benefits depend on careful state-level policy maneuvering thereafter.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Graduate Student of Public Policy (Washington)
Age: 24 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 4/20
Statement of Opinion:
- It's an interesting case for my studies; direct effects depend on broader fiscal policy strategies.
- Important for future state revenue stability analyses, might inform infrastructural development funding.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Urban Planner (Nevada)
Age: 55 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 2/20
Statement of Opinion:
- Expecting indirect benefits for urban planning, contingent on state's initiative utilizing the flexibility.
- The trickle-down benefits might better support state infrastructure improvement.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 5 |
Cost Estimates
Year 1: $10000000 (Low: $5000000, High: $20000000)
Year 2: $10000000 (Low: $5000000, High: $20000000)
Year 3: $10000000 (Low: $5000000, High: $20000000)
Year 5: $10000000 (Low: $5000000, High: $20000000)
Year 10: $10000000 (Low: $5000000, High: $20000000)
Year 100: $10000000 (Low: $5000000, High: $20000000)
Key Considerations
- The policy primarily impacts state governments managing perpetual trust funds, rather than directly affecting individuals or businesses.
- The potential reduction in oversight and reporting burden could lead to more efficient financial management by states.
- The ambiguity in estimating the number of funds affected and related state compliance adjustments remains an area of uncertainty.