Housing Credit Legislation and Tax Reform Update

The Affordable Rental Housing ACTION group, which CARH is and active participant and steering committee member, recently sent out an update on Housing Credit Legislation and Tax Reform update:

Housing Credit Legislation

Senator Maria Cantwell (D-WA) and Senate Finance Committee Chairman Orrin Hatch (R-UT) will soon be reintroducing the Affordable Housing Credit Improvement Act, their legislation to expand and strengthen the Housing Credit. The new legislation will be very similar to the comprehensive version of the legislation introduced in the last Congress, S. 3237, with several minor modifications.

The ACTION Campaign will be circulating a sign-on letter this week to build support for this important legislation in advance of its introduction. We encourage all ACTION Campaign members to help us expand our membership through this effort.

Representatives Pat Tiberi (R-OH-12) and Richard Neal (D-MA-1) are also planning to introduce legislation to strengthen the Housing Credit in the coming weeks, which will include many of the provisions from the Cantwell-Hatch bill.

Tax Reform Update

Though comprehensive tax reform remains a top priority for the new Congress and Administration, Republican leaders have encountered obstacles that could impact their intended schedule for enactment.

The House began to develop tax reform legislation several months ago based on the “A Better Way” tax reform blueprint that House leadership released last year, but the House still does not have consensus on some of the major pillars of reform. One significant obstacle is disagreement over the “border adjustment” proposal, which is a destination-based tax system intended to encourage manufacturing in the U.S. The proposal is estimated to raise over $1 trillion in revenue to help offset the impact of lower tax rates without adding to the deficit. But several key members of both the House and Senate have publicly opposed border adjustment because of its potential impact on retailers. Without it, Congress would need to identify another option to offset the revenue lost by lowering corporate and individual tax rates.

Until the debates over border adjustment and other major issues are resolved, it is unlikely that House Republicans will make final determinations on the treatment of other specific tax expenditures like the Housing Credit and Housing Bonds. Key Republicans on the Ways and Means Committee voiced support for preserving the Housing Credit in the House’s tax reform proposal at a committee meeting in December, which is a very promising early sign. But the December meeting was one of many discussions that will take place on the House’s tax reform plan, and we must remain vigilant in our support for the Housing Credit as tax reform advances. Moreover, Republican Ways and Means Committee members, to our knowledge, have not had a similar conversation about Housing Bonds, which finance approximately 40 percent of Housing Credit apartments annually. The last time the House considered a comprehensive tax reform proposal – led by former Ways and Means Chairman Dave Camp (R-MI) – the proposal would have done away with the tax-exemption on all private activity bonds, including Housing Bonds.

The Senate has not released any comprehensive tax reform proposals, and is not as far along in the process as the House. Senate Finance Committee Chairman Orrin Hatch (R-UT) has said that he does not expect the Senate to simply take up the House’s tax reform legislation, but instead will consider its own tax reform proposal. While both House and the Senate leaders have said that they aim to have a tax reform bill on the President’s desk by August, the disagreements over major tax issues – in addition to delays on other major issues like repeal of the Affordable Care Act – suggest that the tax reform process may take much longer.

Congress may also still consider infrastructure legislation, which the Trump Administration has indicated is a top priority. While the Senate Democrats’ infrastructure proposal would increase investments in affordable housing and would provide an opportunity to expand the Housing Credit, housing has not yet been a part of any Republican infrastructure proposals. The ACTION Campaign will continue to make the case that the expansion of the Housing Credit should be a critical component of any infrastructure spending package, considering the tangible and significant impacts that Housing Credit developments garner for residents, communities and local economies.



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