Act now: House plans to vote tomorrow on #taxreform
Federal tax reform is moving ahead at full steam. Here’s a rundown of how the House and Senate bills impact affordable housing and community development — and what happens next.
This Thursday, the U.S. House of Representatives plans to vote on H.R. 1, the Tax Cuts and Jobs Act.
This bill would deal a major blow to affordable housing development — and therefore the health, wealth, and stability of communities across the country — if passed in its current form. Over the next 10 years alone, H.R. 1 would eliminate nearly 1 million affordable rental homes, over 1 million jobs, and nearly $100 billion in business income nationwide, according to analysis by Novogradac & Co.
The House bill undermines affordable housing and community development by:
- Eliminating tax exempt private activity bonds, which have been essential to the creation of more than 15,000 units of affordable housing in Minnesota over the past decade. If the bill passes Thursday, the 779 units in Minnesota awarded funding this October are at risk of not being constructed or rehabilitated — obliterating $140 million in development activity.
- Directing savings from sensible changes to the mortgage interest deduction to billionaires and corporations rather than investing in affordable homes for low and moderate income Americans.
- Scrapping the Historic Tax Credit, which has renovated more than 40,000 structures and leveraged $117 billion in private investment over the past 25 years.
- Reducing the corporate tax rate without modifications to the Housing Tax Credit, which will negatively impact the value of the 9% Low Income Housing Tax Credit (LIHTC). Novogradac & Co. estimates the net result will be $1.2 billion fewer dollars in equity annually.
- Instituting an alternative inflation measure that will decrease inflation adjustments in LIHTC allocations and, over 10 years, result in the loss of 8,200 affordable rental homes, according to Novogradac & Co. analysis.
There’s still time to speak up and tell your Representative that you won’t accept a tax reform bill that deepens the affordable housing crisis. Your voice is important. Rep. Erik Paulsen (R-MN) voted yes for the bill in the Ways and Means committee — and no Minnesota Congressperson is a no vote on any roll call list.
- Rep. Erik Paulsen | DC: (202) 225-2871 | MN office: (952) 405-8510
- Rep. Tom Emmer | DC: (202) 225-2331 | MN office: (763) 241-6848
- Rep. Jason Lewis | DC: (202) 225-2271 | MN office: (651) 846-2120
The U.S. Senate is working to finish markup of their version of the Tax Cuts and Jobs Act by the end of the week. According to Majority Leader Mitch McConnell, the Senate will vote on the bill after Thanksgiving.
Because the Senate bill preserves private activity bonds, it’s less detrimental than the House bill overall. However, it still severely exacerbates the affordable housing shortage and undermines the affordable housing sector. According to Novogradac & Co. analysis, the bill would reduce affordable rental housing production by nearly 300,000 homes over the next 10 years, and therefore, result in the loss of more than 330,000 jobs and nearly $30 billion in business income. Minnesota alone would lose 4,550 affordable rental homes, more than 5,000 jobs, and more than $400 million in business income.
The Senate bill undermines affordable housing and community development by:
- Reducing the corporate tax rate by 15% without modifications to the 9% Low Income Housing Tax Credit (LIHTC), which could result in a loss of $1.8 million in equity annually — and therefore, the loss of approximately 200,000 affordable rentals nationwide over the next 10 years, according to Novogradac & Co. In addition, some affordable homes developed using LIHTC post-tax reform would likely serve higher incomes to compensate for the loss in equity.
- Modifying the deductions LIHTC properties can take related to interest and depreciation — a move that would eliminate more than 50,000 affordable rental homes over 10 years.
- Instituting — like the House bill — an alternative inflation measure that will decrease inflation adjustments in LIHTC allocations and, over 10 years, result in the loss of 18,700 to 19,900 affordable rental homes.
Call these Senators to speak up for tax reform that invests in affordable housing and strong communities. They’ve expressed reservations regarding the proposed reforms and need to hear from you now.
- Sen. Susan Collins (ME) | DC: (202) 224-2523
- Sen. Bob Corker (TN) | DC: (202) 224-3344
- Sen. Jeff Flake (AZ) | DC: (202) 224-4521
- Sen. James Lankford (OK) | DC: (202) 224-5754
- Sen. Lisa Murkowski (AK) | DC: (202) 224-6665
- Sen. John McCain (AZ) | DC: (202) 224-2235
- Sen. Klobuchar (MN) | DC: (202) 224-3244
- Sen. Franken (MN) | DC: (202) 224-5641