Last week, leadership of the Trump Administration, House Ways and Means Committee and Senate Finance Committee issued a "Unified Framework for Fixing Our Broken Tax Code," which proposes to lower the corporate tax rate to 20 percent and eliminate "numerous" corporate tax expenditures. The Low-Income Housing Tax Credit (Housing Credit) is one of only two corporate tax expenditures the framework explicitly proposes to retain, noting that it is a tax incentive that has “proven to be effective in promoting policy goals important in the American economy.” Its inclusion in the framework is a testament to the program’s track record and the need for additional resources to address our nation’s vast and growing shortage of affordable housing. This support for the program comes as the House version of the Affordable Housing Credit Improvement of 2017 (H.R. 1661) surpassed 100 co-sponsors last week, with 48 Republicans and 54 Democrats joining the bill to preserve and strengthen the Housing Credit.
The framework is silent on the tax exemption for private activity bonds, which provide critical financing to more than 40 percent of Housing Credit developments in the form of multifamily Housing Bonds, nor does it mention the New Markets Tax Credit (NMTC), which is essential for attracting private capital and jobs to the nation’s most distressed communities. It does, however, indicate that "while the framework envisions repeal of other business credits, the committees may decide to retain some other business credits to the extent budgetary limitations allow." Learn more about the tax reform framework in Enterprise’s blog post.
This initial proposal may be changed significantly as the House and Senate tax-writing committees work out details and attempt to reach a consensus, and the coming weeks and months will be critical for advocates to make the case for the Housing Credit, Housing Bonds and NMTC. As Terri Ludwig, President and CEO of Enterprise Community Partners, and Ed Brady, President of Brady Homes Illinois and immediate past chairman of the National Association of Home Builders, write in The Hill, tax reform should be an opportunity to strengthen what’s working, which means not only recognizing the value of retaining the Housing Credit “but seizing upon this moment to build a stronger housing policy for the future.”