Urge Your Members of Congress to Support the Housing Credit and NMTC in Tax Extenders
The House, Senate and White House have begun negotiations on legislation to extend dozens of expired tax provisions, which the goal of passing a tax extenders bill by December 11. One of the main issues they are debating is whether and which tax extenders will be made permanent.
The Senate Finance Committee approved a two-year tax extenders bill this summer, which would extend the minimum 9 percent Low-Income Housing Tax Credit (Housing Credit) rate for new construction and substantial rehabilitation, establish a minimum 4 percent Housing Credit rate for the acquisition of affordable housing and extend the New Markets Tax Credit (NMTC) on a temporary basis. The House has instead considered expired tax provisions individually for permanent extensions. Congressional and administration leaders are currently considering how to combine the two approaches – extending some provisions temporarily and others permanently.
Now is the time to make the case to your members of Congress that if any tax extenders are made permanent, minimum Housing Credit rates and the NMTC should be among them. Both provisions are critical to low-income families and communities, and have strong bipartisan support.
Key Housing Credit messages:
- Minimum 9 and 4 percent Housing Credit rates should be extended permanently. Minimum Housing Credit rates must be extended for at least two years in order to have any practical benefit. A retroactive extension of minimum credit rates for 2015 only would not benefit developments for which the credits have already been awarded.
- Minimum Housing Credit rates make the development of affordable housing more predictable and financially feasible. With the ‘floating rate’ in effect, there is 15 – 20 percent less Housing Credit equity available for any given affordable housing development, creating financing gaps that are increasingly difficult to fill. Use the ACTION Campaign’s new Housing Credit rate fact sheet to help explain the need for minimum Housing Credit rates.
- Minimum Housing Credit rates provide significant benefit for minimal cost. The Joint Committee on Taxation estimates that the minimum 9 and 4 percent rate extensions included in the Senate Finance Committee-passed tax extenders legislation would cost only $5 million over 10 years.
Key New Markets Tax Credit messages:
- The NMTC is needed in order to attract private investment to some of the most distressed communities throughout the country. The NMTC has financed over 4,700 projects serving a wide variety of community needs, such as job training centers, factories, grocery stores in former “food deserts,” small business loan funds, charter schools and health care centers. More than 70 percent of these investments have been made in communities that exceed the federal requirements for distress indicators.
- The NMTC should be made a permanent part of the tax code. Despite its success, the NMTC is a temporary program. Without an extension, hard hit communities will be deprived of billions of dollars in financing for important projects.
- The NMTC delivers a strong return on investment. The tax revenue that NMTC investment generates actually offsets the cost of the program to the federal government. Between 2003 and 2010, the cost to the federal government to generate more than $20 billion in NMTC investments was $5.2 billion. During that same period, the jobs and businesses financed with NMTC capital generated $5.3 billion in federal tax revenue.
- The NMTC is a proven job creator. The NMTC is responsible for creating or retaining nearly 750,000 jobs since its inception. Last year alone, it was responsible for creating nearly 40,000 jobs.