Senate Begins Marking Up Tax Bill with Significant Improvements from House Bill
Today the Senate Finance Committee will begin marking up its version of the “Tax Cuts and Jobs Act”, comprehensive tax reform legislation that the White House, House and Senate are hoping to enact into law by the end of the year. The Senate version, released last Thursday, contains notable differences from the House bill released the previous week. The Senate tax reform plan aligns with the House bill on the proposals to retain the Low-Income Housing Tax Credit, but rejects other proposals in the House bill that would severely damage affordable housing and community development programs. Most notably, the Senate bill preserves both the tax-exemption on private activity bonds (PABs) and New Markets Tax Credit (NMTC) allocation authority through 2019, two important and positive deviations from the House bill. However, neither bill makes any adjustments to the Housing Credit to insulate it from the proposed reduction in the corporate tax rate, a change that would lower the price investors are willing to pay for Housing Credits and therefore decrease the amount of equity that can be raised for affordable housing development. Absent any adjustments, the Senate bill would reduce affordable housing production by an estimated 267,000 to 293,000 units over ten years, the vast majority of which would result from the lower corporate tax rate.
Several amendments were filed that would make positive improvements to both the Housing Credit and NMTC. They include an amendment filed by Senate Finance Committee Chairman Orrin Hatch (R-UT) that would enact no-cost provisions from the Cantwell-Hatch Affordable Housing Credit Improvement Act (S. 548), and another filed by Senator Rob Portman (R-OH) that would permanently extend the NMTC. The Senate Finance Committee will be considering these and other amendments throughout the week, so now is a valuable time to contact Republican Senators on the Finance Committee and urge them to support the Housing Credit, Housing Bonds and NMTC as tax reform progresses, and to make adjustments to sustain affordable housing production in light of a lower corporate rate.
“A strong economy requires stable homes and thriving communities, and any pro-growth tax reform plan should support proven tools to provide these necessities – the Housing Credit and the NMTC,” Enterprise President and CEO Terri Ludwig said in a statement. “These programs work together to make well-designed homes affordable, support local economic development and connect residents to opportunity.”
Read an analysis of the Senate tax reform bill on Enterprise’s blog. You can also visit the ACTION Campaign website for more details, specific action items and advocacy tools to support the Housing Credit and Housing Bonds, and the NMTC Coalition website for materials to support the NMTC.
House Advances Tax Reform Bill without Needed Reforms
As the Senate begins marking up its tax reform bill, the House version of the “Tax Cuts and Jobs Act” is advancing to the floor this week after it was passed out of the House Ways and Means Committee last week on a party-line vote. The House version would retain the Housing Credit, which is a major achievement and testament to strong advocacy efforts. However, it would also eliminate the tax exemption on private activity bonds, including multifamily Housing Bonds, which provide critical financing to roughly half of all Housing Credit developments, and eliminate NMTC allocation authority after 2017. Like the Senate bill, the House bill also proposes a lower corporate tax rate without any offsetting adjustments to the Housing Credit. Coupled with the loss of Housing Bonds, the House bill could reduce the future supply of affordable rental housing by nearly one million units, according to Novogradac & Co. And eliminating the NMTC, a successful public-private partnership that attracts private capital to some of the nation’s most distressed communities, will hinder efforts to revitalize communities and promote economic opportunity.
Though the Ways and Means Committee considered amendments to reverse these harmful provisions, none were adopted. However, modifications can still be made before the bill goes to the House floor for a vote this week, and we encourage all stakeholders to reach out to Republican Representatives and urge them to share their support for the Housing Credit, Housing Bonds and NMTC with Chairman Kevin Brady (R-TX) and Speaker Paul Ryan (R-WI). Read an analysis of the House tax reform bill on Enterprise’s blog.