Trump Administration Releases Tax Reform Proposal with Limited Details

On April 26, the Trump Administration released a one-page proposal outlining its high-level principles for tax reform. A linchpin of the plan is to reduce the corporate tax rate from 35 to 15 percent, consistent with proposals President Trump made during the campaign.

Other corporate tax proposals include a territorial tax system to “level the playing field” for American companies, a one-time repatriation tax on trillions of dollars held overseas and the elimination of tax breaks for unspecified “special interests.” The Administration also proposes making significant changes to the individual side of the tax code, including a doubling of the standard deduction that prompted immediate criticism from the real estate industry.

The Administration’s plan does not mention the Housing Credit or Housing Bonds, and it is unclear how many tax credits and deductions will be targeted for repeal under the proposal to “eliminate tax breaks for special interests.” A recent poll from Harvard’s Center for American Political Studies (CAPS) and Harris Insights & Analytics shows that 74 percent of voters are in favor of keeping the Housing Credit in tax reform, giving it the most support of any corporate tax deduction or credit among those polled.

Democrats in Congress have criticized the plan and appear unlikely to work with the Administration on tax reform, suggesting that the likeliest path for tax reform is through the budget reconciliation process. Budget reconciliation allows legislation to pass the Senate on a partisan basis with only a simple majority instead of 60 votes. However, the budget reconciliation process is governed by rules that may preclude it as a vehicle for the Administration’s tax plan in its current form. Anything passed through budget reconciliation cannot raise deficits outside of a ten-year budget window, and while the cost of the Administration’s plan is not yet known, estimates range between $3 trillion and $7 trillion over ten years.

Republicans on the Hill generally supported the President’s goal of cutting taxes and simplifying the tax code but also voiced a variety of concerns. Unlike the House plan, which offsets $1 trillion in lost revenue through its controversial border adjustment proposal, the Trump proposal does not include major revenue offsets. Even using dynamic scoring, which considers future economic growth in the scoring process, it would be very difficult, if not impossible, to fit the current proposal into the confines of budget reconciliation, or to gain sufficient political support among fiscally conservative Republicans.

While the release of the President’s tax reform proposal serves as an “opening bid” for what the Administration would like to see in tax reforms, the timeline for tax reform is still likely to take many months and is highly unlikely to emerge in accordance with the Administration plan.  In addition, the one-page plan leaves many details unaddressed. Treasury Secretary Steven Mnuchin recently suggested that the timeline for the President signing tax reform will take longer than the initially ambitious August goal.

Throughout May, the Trump Administration will hold listening sessions with stakeholders to receive feedback on the proposal. At this time, it is not yet known when the Administration will release a more detailed tax plan. The House is also continuing to translate its tax reform blueprint, released last summer, into legislation, and plans to hold tax reform hearings over the coming months. The Senate has not yet announced its own formal process, but is very unlikely to accept either the House or Administration’s plans without significant changes.

New Poll Finds Strong Public Support for Housing Credit in Tax Reform

A new poll from Harvard’s Center for American Political Studies (CAPS) and Harris Insights & Analytics shows that 74 percent of voters are in favor of keeping the Low-Income Housing Tax Credit (Housing Credit) in tax reform – giving it the most support of any corporate tax deduction or credit among those polled.  

This strong demonstration of public support for the Housing Credit comes at a critical time as Congress and the Administration move forward in the tax reform process. The Administration has announced that it will release a tax reform proposal as soon as Wednesday, and the House Ways and Means Committee is preparing to begin hearings on tax reform in the coming weeks.

The poll also found that just under half of voters support cutting the corporate tax rate from 35 percent to 25 percent, but are more inclined to support corporate tax reform that would bring foreign profits back to the U.S. and fund infrastructure investments in the U.S..

More Than 2,000 Organizations and Businesses Urge Support for Tiberi-Neal Bill to Strengthen the Housing Credit

Over 2,000 organizations and businesses from across the nation are calling on Congress to support the Affordable Housing Credit Improvement Act (H.R. 1661), bipartisan legislation introduced by Representative Pat Tiberi (R-OH-12) and House Ways and Means Committee Ranking Member Richard Neal (D-MA-1) to strengthen the Low-Income Housing Tax Credit (Housing Credit).

The letter submitted on behalf of the ACTION Campaign urges Congress to support the Tiberi-Neal bill, which includes provisions to provide states with additional flexibility, make the financing of affordable housing more predictable and streamlined, facilitate Housing Credit development in challenging markets like rural and Native American communities, increase the Housing Credit’s ability to serve extremely low-income tenants, and support the preservation of existing affordable housing. The legislation also contains important provisions that would support development of rental homes using the Housing Credit coupled with multifamily Housing Bonds, which currently provide critical financing to roughly 40 percent of Housing Credit apartments.

The Tiberi-Neal bill was introduced with 16 original co-sponsors, of which 13 are members of the House Ways and Means Committee. Since the bill was introduced, several additional members have joined as co-sponsors, signaling strong bipartisan support for the Housing Credit in a year that Congress hopes to achieve comprehensive tax reform.

The Tiberi-Neal bill is companion legislation to the Affordable Housing Credit Improvement Act of 2017 (S. 548), introduced by Senator Maria Cantwell (D-WA) and Senate Finance Committee Chairman Orrin Hatch (R-UT) earlier in March. The ACTION Campaign previously sent a letter to Congress on behalf of over 2,000 organizations and businesses in support of the Cantwell-Hatch bill. While the House version does not include the 50 percent cap increase on Housing Credit allocation authority that is included in the Senate version, the House bill does include the roughly two-dozen other provisions to strengthen the Housing Credit that are included in the Cantwell-Hatch bill. The ACTION Campaign fully supports the House bill and will continue to advocate for a cap increase in any tax legislation that moves forward in Congress.

For more information, see the:

The ACTION Campaign Circulates Sign-On Letter in Support of Tiberi-Neal Legislation

Representative Pat Tiberi (R-OH-12) and Ways and Means Committee Ranking Member Richard Neal (D-MA-1) recently introduced the Affordable Housing Credit Improvement Act (H.R. 1661), bipartisan legislation to strengthen the Housing Credit.

The Tiberi-Neal legislation is the House companion to S. 548, introduced by Senator Maria Cantwell (D-WA) and Senate Finance Committee Chairman Orrin Hatch (R-UT) earlier in March. While the Tiberi-Neal bill does not include the 50 percent cap increase on Housing Credit allocation authority included in the Senate bill, it does include the roughly two dozen other provisions to strengthen the Housing Credit. This includes strengthening the Housing Credit by providing states with additional flexibility, making the financing of affordable housing more predictable and streamlined, facilitating Housing Credit development in challenging markets like rural and Native American communities, increasing the Housing Credit’s ability to serve extremely low-income tenants, and supporting the preservation of existing affordable housing. See our bill summary for a full list of provisions in H.R. 1661.

The ACTION Campaign will be submitting a letter to Congress demonstrating our strong support for the Affordable Housing Credit Improvement Act.

Read the letter and sign on to support the Tiberi-Neal legislation. The deadline for signing on to the letter is Friday, April 7.

All existing ACTION Campaign members will be included in the letter, so if you are already an ACTION Campaign member you do NOT need to sign on. However, we encourage you to share the letter with your networks to help us show broad support for the Housing Credit. 

If you have any questions or wish to remove your organization from the letter, contact Emily Cadik at ecadik@enterprisecommunity.org by the April 7 deadline.

Representatives Tiberi and Neal Introduce Legislation to Strengthen Housing Credit

Yesterday Representative Pat Tiberi (R-OH-12) and Ways and Means Committee Ranking Member Richard Neal (D-MA-1) introduced the Affordable Housing Credit Improvement Act of 2017 (H.R. 1661), a bipartisan, comprehensive bill to strengthen the Low-Income Housing Tax Credit (Housing Credit). The bill is companion legislation to S. 548, which Senator Maria Cantwell (D-WA) and Senate Finance Committee Chairman Orrin Hatch (R-UT) introduced earlier this month

In addition to Representatives Tiberi and Neal, there are 16 other original co-sponsors, 13 of which are Ways and Means Committee members: Carlos Curbelo (R-FL-26), John Faso (R-NY-19), John Katko (R-NY-24), Mike Kelly (R-PA-3), Patrick Meehan (R-PA-7), Erik Paulsen (R-MN-3), David Reichert (R-WA-8), James Renacci (R-OH-16), Jason Smith (R-MO-8), Earl Blumenauer (D-OR-3), Joseph Crowley (D-NY-14), Danny Davis (D-IL-7), Gregory Meeks (D-NY-5), Bill Pascrell (D-NJ-9), Linda Sanchez (D-CA-38), and Mike Thompson (D-CA-5).

The House bill would provide increased flexibility, simplify program requirements, make the financing of affordable housing more predictable and streamlined, support the preservation of existing affordable housing, and facilitate Housing Credit development in challenging markets, like rural and Native American communities, and for hard-to-reach populations, including those with extremely low incomes. The legislation also contains important provisions that would support development of rental homes using the Housing Credit coupled with multifamily Housing Bonds, which currently provide critical financing to roughly 40 percent of Housing Credit apartments.

The primary difference between the House and Senate bills is that the House bill does not include the 50 percent phased-in Housing Credit cap increase that is part of the Senate bill. However, it takes significant steps to strengthen the Housing Credit, and ACTION fully endorses this critical legislation. ACTION will continue to encourage the inclusion of a cap increase in any final tax legislation that advances through Congress. 

The ACTION Campaign thanks Representatives Tiberi and Neal and the other original co-sponsors for their leadership and support of the Housing Credit. With tax reform likely to move forward in 2017, this strong bipartisan expression of support for the Housing Credit is extremely significant. ACTION looks forward to continuing to work with the House, Senate and Administration to protect, strengthen and expand the Housing Credit in tax reform, and urges the inclusion of the Tiberi-Neal provisions in the House’s forthcoming tax reform legislation. 

“The Low-Income Housing Tax Credit is a vital and effective tool to address the affordable housing crisis in America,” Representative Tiberi said in a statement. “Since 1987, Ohio has used the LIHTC Program to facilitate the development of over 100,000 affordable rental housing units. It is a great example of how the private sector can work with government to help families, individuals and seniors find a safe and decent place to live and call home. I look forward to working with Congressman Neal and the rest of the Ways and Means Committee as we reform our tax code to ensure that this incentive to provide affordable housing remains strong.”

“The Low-Income Housing Tax Credit is a powerful tool for leveraging private investment for affordable housing," said Representative Neal. "I’m pleased to once again be teaming with my colleague, Pat Tiberi, to further strengthen the Housing Credit program – and I call on my colleagues to support these commonsense reforms."

For more information, see the:

Cantwell & Hatch Reintroduce Affordable Housing Credit Improvement Act with Support of Over 2,000 Businesses and Organizations

Today Senator Maria Cantwell (D-WA) and Senate Finance Committee Chairman Orrin Hatch (R-UT) introduced the Affordable Housing Credit Improvement Act of 2017 (S. 548), a comprehensive bill to expand and strengthen the Low-Income Housing Tax Credit (Housing Credit).

In addition to Senators Cantwell and Hatch, there are eleven other original co-sponsors: Senate Finance Committee Ranking Member Ron Wyden (D-OR), as well as Senators Susan Collins (R-ME), Dean Heller (R-NV), Lisa Murkowski (R-AK), Todd Young (R-IN), Charles Schumer (D-NY), Michael Bennet (D-CO), Cory Booker (D-NJ), Patrick Leahy (D-VT), Jeff Merkley (D-OR), and Brian Schatz (D-HI). The legislation is very similar to the comprehensive version of the Affordable Housing Credit Improvement Act (S. 3237), introduced by Senators Cantwell and Hatch in 2016, with minor modifications

More than 2,000 organizations from all fifty states signed on to an ACTION Campaign letter in strong support of this legislation.

The Affordable Housing Credit Improvement Act would increase Housing Credit authority by 50 percent, taking a meaningful step towards addressing our nation’s vast and growing affordable housing needs. “The affordable housing crisis is exploding all across the country. We are facing pressures from all sides: demand for rental housing has increased by 21 percent, but we are building units at the lowest rate since the 1970s,” Senator Cantwell said in a statement. “If we do not act to increase the Low-Income Housing Tax Credit – our best way to build new affordable homes – by 2025 over 15 million Americans could be spending half their income on rent. This is unacceptable.” Senator Cantwell also released a new report detailing the growing affordable housing crisis and the need to expand the Housing Credit. 

The Bipartisan Policy Center also recently reaffirmed its endorsement of a 50 percent expansion, calling the Housing Credit “the nation’s most successful rental production program, with a 30-year track record.”

The legislation would also strengthen the Housing Credit by providing states with additional flexibility, making the financing of affordable housing more predictable and streamlined, facilitating Housing Credit development in challenging markets like rural and Native American communities, increasing the Housing Credit’s ability to serve extremely low-income tenants, and supporting the preservation of existing affordable housing. The legislation also contains important provisions that would support development of rental homes using the Housing Credit coupled with multifamily Housing Bonds, which currently provide critical financing to roughly 40 percent of Housing Credit apartments.

For more information, see the:

 

Tax Incentives for Affordable Housing Included in Senate Democrats’ Infrastructure Proposal

Senate Minority Leader Chuck Schumer (D-NY) announced yesterday that Senate Democrats will seek to advance a $1 trillion infrastructure package in 2017, which will include proposals to increase investments in affordable housing to create “places for people to live, work, and thrive.” Citing the 11.4 million households that pay more than half of their income monthly on rent and the $26 billion backlog for repairing our nation’s public housing, the proposal is clear that investing in housing is a critical component of rebuilding the nation’s infrastructure.

The “Blueprint to Rebuild America’s Infrastructure” proposes to spend $100 billion to “Revitalize America’s Main Streets,” which would create 1.3 million new jobs over ten years by investing in cities, towns, and rural communities. Possible solutions to address the nationwide affordable housing crisis include “expanding existing tax incentives and other affordable housing federal programs,” suggesting an opportunity to expand and strengthen the Housing Credit.

President Trump has identified infrastructure as a top priority for his Administration, though housing investments are not part of the Administration’s initial infrastructure priorities list.

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.

Housing Credit Receives Bipartisan Support as Congress Considers Cabinet Nominees

On January 12, Dr. Ben Carson appeared before the Senate Banking Committee for consideration to serve as HUD Secretary. Though the Housing Credit is not under HUD’s jurisdiction, it was raised numerous times in a positive light given its significant role and successful track record in providing affordable housing to our nation’s low-income families.

Dr. Carson expressed strong support for public-private partnerships, and specifically cited the Housing Credit as a successful example of the private sector’s role in affordable housing. “We’ve got a lot of very talented people in this country in the private sector… You know the Low-Income Housing Tax Credit is an excellent example – it’s overseen by the Senate Finance Committee – but that has allowed an enormous number of places to be renovated,” Dr. Carson said. “I want to study those programs that are working so we can multiply them across the country.”

He also elaborated that government must provide the motivation for the private sector to make such investments, saying, “they have to obviously be incentivized in order to do that – the big stumbling block is the initial capital in order to get it done,” and noted that the private sector must “realize a return on that capital investment.” Securing initial development capital and ensuring a return on investments, the two principles to which Dr. Carson refers, are foundations of the Housing Credit model and are important considerations as Congress considers tax reform legislation.

Senate Banking Committee Chairman Mike Crapo (R-ID) indicated his strong support for the Housing Credit during the hearing as well. “While the Low-Income Housing Tax Credit is under the Finance Committee’s jurisdiction,” Chairman Crapo said in his opening statement, “it is very important to the U.S. housing market. It provides essential capital to underserved communities and provides key financing for small and rural affordable housing developments.”

On January 19 Steven Mnuchin appeared before the Senate Finance Committee for a hearing to consider his nomination to serve as Treasury Secretary. Comprehensive tax reform was raised by Mnuchin and members on both sides of the aisle as a top priority, and there was bipartisan interest in bringing American profits back to the U.S. from overseas and eliminating loopholes that allow American businesses to avoid U.S. tax laws. Though there was little discussion of specific tax reform proposals, several Republican members called for significant reductions in corporate tax rates and simplification of the tax code in order to make U.S. businesses more competitive, and numerous Democrats called for a commitment to preserve tax expenditures that benefit low- and moderate-income families and promote fairness through the tax code.

Though Neither the Housing Credit nor Housing Bonds were mentioned during the hearing, these topics were included in questions for the record submitted by several Finance Committee members. Ranking Member Ron Wyden (D-OR) and Senator Maria Cantwell (D-WA) asked for Mnuchin’s position on the Housing Credit specifically, and Senator Dean Heller (R-NV) asked what the Administration would do to encourage the development of affordable housing, but Mnuchin only committed to reviewing the Housing Credit and other affordable housing programs without expressing support for specific programs. Senator Sherrod Brown (D-OH) asked about specifically about private activity bonds, to which Mnuchin responded, “private activity bonds are a valuable way to incentivize private investment in America’s infrastructure” and suggested that “there are areas where we can improve private activity bonds, including changing volume caps for certain types of projects.”

New Congress Begins Work on Tax Reform

Comprehensive tax reform is a top priority for the 115th Congress and incoming Administration.  The House has already begun its work to develop tax reform legislation based on the A Better Way tax blueprint that House leadership released last year, and may even release a draft in the coming weeks.  In order to reduce top corporate tax rates from 35 to 20 percent, as called for in the blueprint, the blueprint indicates that the majority of corporate tax expenditures would be eliminated, with only one - the research and development credit - expressly retained and several explicitly targeted for repeal. The draft was silent on the Housing Credit as well as on multifamily Housing Bonds, which account for more than 40 percent of Housing Credit production annually.

In December, Republican members of the House Ways and Means Committee held a meeting to discuss specifics for translating the blueprint into legislation. During the meeting key Republicans on the committee voiced support for preserving the Housing Credit in tax reform. While this suggests that the Housing Credit remains in a strong position as the committee works to translate its tax reform proposal into legislation, it is important that ACTION remain vigilant in its advocacy efforts. Moreover, Housing Bonds and the 4 percent Housing Credit remain particularly vulnerable. The Ways and Means Committee is currently resolving outstanding issues related to tax reform through a working group process and is aiming to release a discussion draft in the coming weeks, followed by a period for public comment before holding a mark-up.

Prior to the December meeting, the ACTION Campaign sent a letter to Congress with 2,000 signatories urging the prioritization of the Housing Credit and Housing Bonds in tax reform. The ACTION Campaign also grew its campaign membership from 1,300 to roughly 1,800 organizations through this sign-on effort, demonstrating strong support for the Housing Credit as a result of robust mobilization efforts by ACTION members.

The Senate has not released any comprehensive tax reform proposals, but Senate Finance Committee Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) were original co-sponsors of legislation to expand the Housing Credit in the 114th Congress, and have both expressed their continued support for the program.

We encourage all ACTION Campaign members to reach out to your members of Congress and encourage them to protect, strengthen and expand the Housing Credit and Housing Bonds as they consider tax reform legislation. Visit our advocacy toolkit for a new sample letter and talking points for the 115th Congress to help make your case.

Several new members have also joined the committees that oversee tax legislation. Senator Bill Cassidy (R-LA), who signed onto both S. 2962 and S. 3237, has joined the Senate Finance Committee, along with Senator Claire McCaskill (D-MO).

The House Ways and Means Committee welcomes six new members: Representatives Dave Schweikert (R-AZ-5), Jackie Walorski (R-IN-2) and Carlos Curbelos (R-FL-26) in the Majority, and Brian Higgins (D-NY-26), Terri Sewell (D-AL-7) and Suzan DelBene (D-WA-1) in the Minority.

We urge ACTION members represented by any of these new committee members to reach out to your Senator or Representative and emphasize the importance of protecting, expanding and strengthening the Housing Credit and Housing Bonds in the 115th Congress.

2,000 Organizations and Businesses from Across the Nation Urge Support for Low-Income Housing Tax Credit

2,000 organizations and businesses are calling on the incoming Congress and Administration to prioritize the Low-Income Housing Tax Credit (Housing Credit) as they consider reforms to the nation’s tax code and investments in the nation’s infrastructure. The letter submitted on behalf of the ACTION Campaign urges policymakers to: 1) ensure that the Housing Credit and Housing Bonds are held up as positive examples of the power of the tax code to improve communities by maintaining their viability under tax reform; and 2) expand and strengthen the Housing Credit to increase the availability of safe and affordable housing and revitalize local economies. 

The House is currently working to draft comprehensive tax reform legislation based on the principles outlined in Speaker Paul Ryan’s A Better Way tax reform blueprint, released this summer. The blueprint indicates that it would "generally eliminate special-interest deductions and credits in favor of providing lower tax rates for all businesses and eliminating taxes on business investment," and does not specify how it would treat the Housing Credit and Housing Bonds. Since the release of the blueprint, the Ways and Means Committee has been collecting feedback. It could release legislation as soon as late January.

The Senate is expected to introduce its own version of comprehensive tax reform in 2017 , though it is not as far along in the process as the House.

The ACTION Campaign’s letter sends a powerful message to Congress and the next Administration demonstrating the broad support at the national, state and local level for protecting and strengthening the Housing Credit and Housing Bonds.

The letter also urges the enactment of the Affordable Housing Credit Improvement Act, which was introduced by Senator Maria Cantwell (D-WA) and Senate Finance Committee Chairman Orrin Hatch (R-UT) this summer and has strong and growing bipartisan support. Sixteen Senators have now signed onto support at least one of the two versions of the legislation – S. 2962 and S. 3237 – with Senators Dean Heller (R-NV), Cory Booker (D-NJ) and Brian Schatz (D-HI) joining this week.

Deadline Extended: Sign On and Share to Support the Housing Credit

Thank you to the many ACTION Campaign members who have activated your networks to sign onto our letter urging the Trump Administration and Congress to prioritize the Housing Credit and Housing Bonds as they consider reforms to the nation’s tax code and investments in the nation’s infrastructure. As a result of these efforts, more than 300 organizations and businesses have joined the ACTION in the past four days, and we have grown the campaign to over 1,600 members.

To continue this momentum, we have extended the deadline for this sign-on letter until Wednesday, December 7.

If you haven’t already, we encourage you to read the letter, sign on and share the letter with your networks.

All existing ACTION Campaign members will be included in the letter, so if you are already an ACTION Campaign member you do NOT need to sign on. Click here for the latest list of ACTION Campaign members and signatories.

If you have any questions or want to remove your organization or business from the letter, contact Emily Cadik at ecadik@enterprisecommunity.org before the December 7 deadline.

Sign On to Urge the New Congress and Administration to Support the Housing Credit

With undivided Republican control in Washington, the likelihood of the next Administration and Congress advancing legislation that could impact the Housing Credit has increased substantially.  Specifically, Congressional Leaders and President-elect Trump have all said that tax reform will be a priority for them in 2017.  Many members of Congress and the President-elect have also stated support for infrastructure legislation, which may move on its own or as part of tax reform.  These present the potential for threats to the Housing Credit and Housing Bonds as well as the chance to advance ACTION’s Housing Credit priorities.  Read more about the legislative landscape for the Housing Credit in 2017.

The ACTION Campaign is calling on the Trump Administration and Congress to prioritize the Housing Credit as they consider reforms to the nation’s tax code and investments in the nation’s infrastructure. Specifically, we are calling on the Administration and Congress to:

  1. Ensure that the Housing Credit and Housing Bonds are held up as positive examples of the power of the tax code to improve communities by maintaining their viability under tax reform, and
  2. Expand and strengthen the Housing Credit to increase the availability of safe and affordable housing and revitalize local economies.

Read the letter and sign on. The deadline for signing on to the letter is Friday, December 2. 

All existing ACTION Campaign members will be included in the letter, so if you are already an ACTION Campaign member you do NOT need to sign on. However, we encourage you to share the letter with your networks to help us show broad support for the Housing Credit. 

If you have any questions or want to remove your organization from the letter, contact Emily Cadik at ecadik@enterprisecommunity.org before the December 2 deadline.    

The Legislative Landscape for the Housing Credit in 2017

The outcomes of the November elections have increased the likelihood of legislation that could have a major impact on the Housing Credit in 2017. With Republican control of the White House and both chambers of Congress, there will be fewer obstacles to enacting major legislation than under the divided government of the past six years. In this environment, there will be both opportunities for and threats to the Housing Credit.

In his acceptance speech, President-Elect Donald Trump said that investing in America’s infrastructure will be a top priority for his administration. Any infrastructure legislation will likely include tax provisions to repatriate foreign earnings, which would help offset the costs of domestic spending to promote growth and renewal. The ACTION Campaign will make the case that the Housing Credit should be expanded and strengthened in any infrastructure legislation, given the tangible and significant impacts of Housing Credit development for residents, communities and local economies.

Infrastructure legislation could move on its own or as part of a larger tax reform agenda, which could pose threats to both the Housing Credit and tax-exempt multifamily Housing Bonds.  With Republicans in control of Congress and the Presidency, tax reform stands a better chance of enactment than it has in decades. 

In June 2016, the House Tax Reform Task Force released a tax reform blueprint, “A Pro-Growth Tax Code for All Americans,” as part of House Speaker Paul Ryan’s (R-WI-1) “A Better Way” agenda. The blueprint did not lay out a detailed legislative framework, but rather the guiding principles that the House will consider as it develops tax reform legislation. In order to reduce top corporate tax rates from 35 to 20 percent, the blueprint indicates that the majority of corporate tax expenditures would be eliminated, with only one expressly retained and several explicitly targeted for repeal. The draft was silent on the Housing Credit as well as on multifamily Housing Bonds, which are responsible for financing more than 40 percent of Housing Credit production annually. Since its release, the House Ways and Means Committee has been collecting feedback and working to translate the blueprint into legislative text, which will be introduced as soon as January 2017 and will serve as a starting point for tax reform negotiations with the Senate and the White House.

President-Elect Donald Trump’s tax plan would go farther than the House blueprint in lowering the top corporate tax rate from 35 to 15 percent. Like the House blueprint, it would eliminate nearly all tax expenditures in order to achieve this rate reduction, and is silent on the issues of the Housing Credit and Housing Bonds.

In the Senate, no comprehensive tax reform proposals have emerged, but the Housing Credit is in a strong position in the Senate Finance Committee. Both Senate Finance Committee Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR), who will be very influential in shaping tax reform, are original co-sponsors of legislation to expand the Housing Credit.

The ACTION Campaign will continue to make the case that the Housing Credit and Housing Bonds are indispensable parts of our nation’s tax code and should be retained, expanded and strengthened in tax reform. Our work to educate members of Congress and their staff about the impact of the Housing Credit locally and the affordable housing needs that still remain has never been more critical.

We will soon be circulating a sign-on letter to express this position to the incoming Congress and Administration, and ask that all ACTION members share this letter with your networks. In the meantime, we encourage you to reach out to your partners and ask that they join the ACTION Campaign.

New Fact Sheets Show Impact of Housing Credit in Every Congressional District

The ACTION Campaign’s district fact sheets, which show the Housing Credit’s impact in each congressional district and the affordable housing needs that still remain in every state, have been updated to reflect the most recent data available.

The data come from HUD’s LIHTC database through 2014, with economic impact multipliers from the National Association of Home Builders. The district fact sheets also include data on cost-burdened renters from the 2014 American Community Survey, and data from the National Low Income Housing Coalition’s 2014 Out of Reach report, showing how many hours a minimum wage worker in each state has to work in order to afford a modest two-bedroom apartment.

Our ACTION state fact sheets were also updated in September with 2014 data, showing that the Housing Credit has financed 2.9 million apartments nationwide, providing affordable homes to 6.7 million low-income families and supporting 3.25 million jobs. However, 11.4 million households still pay more than half of their income towards rent, and the average minimum wage worker has to work 91 hours per week in order to afford a modest-two bedroom apartment, underscoring the need to expand the Housing Credit.

See the Housing Credit’s impact in your state and congressional district.

Celebrating 30 Years of the Housing Credit

This Saturday marks the 30th anniversary of the creation of the Low-Income Housing Tax Credit (Housing Credit), our nation’s primary tool for encouraging private investment in affordable rental housing. On October 22, 1986, President Reagan signed the Tax Reform Act of 1986 into law, authorizing the Housing Credit with bipartisan support.

This bipartisan support has continued over the Housing Credit’s 30 year history. After its initial temporary authorization, the Housing Credit was made permanent and expanded under President Clinton, and strengthened under both President Bush and President Obama.

The Housing Credit’s Impact

Senator George Mitchell (D-ME), who helped to create the Housing Credit in 1986, has said that “the program is exceeding our expectations in every respect” and that even its supporters in Congress did not “envision that it would become the most successful affordable housing program ever created in this country.”

Since 1986, the Housing Credit has enabled the development of over 2.9 million apartments, providing affordable homes to roughly 6.7 million low-income families. The development of these apartments has supported 3.25 million jobs, and generated $310 billion in local income and $122 billion in federal, state and local tax revenues. See our updated fact sheets for more information about the impact of the Housing Credit in every state.

Looking Ahead to the Housing Credit’s Fourth Decade

Though the Housing Credit and other federal housing assistance programs have had a tremendous impact, our nation still faces vast and growing affordable housing needs. Over 11.4 million low-income households still pay more than half of their income on rent, leaving too little for other necessities like transportation, health care and food.

Earlier this year, Senator Maria Cantwell (D-WA) and Senate Finance Committee Chairman Orrin Hatch (R-UT) introduced the Affordable Housing Credit Improvement Act of 2016 to expand the Housing Credit by 50 percent and enact other provisions to further strengthen the program. This legislation is critical: while the affordable housing crisis has grown, the Housing Credit has not been expanded since 2000. ACTION will continue to work to expand the Housing Credit so that it can have an even greater impact going forward.

A Look Back at the Bipartisan Support for the Housing Credit

  • “Why shouldn’t the tax system be used for a socially desirable goal like housing low-income people in America?” – Former HUD Secretary Jack Kemp
  • “The [Bipartisan Policy Center’s Housing] Commission believes that the most successful, effective way to deliver governmental support for low-income housing has been the LIHTC program because it inspires competitive designs. It sets the bar high in terms of the quality of sites and locations. It draws private-sector techniques from design to management. It draws private-sector investment. It has rational ways to select what is the best.” – Former HUD Secretary Henry Cisneros
  • “The Low-Income Housing Tax Credit is our nation’s most effective program supporting the preservation and construction of affordable rental homes.” –Senator George Mitchell (D-ME)
  • “By building more affordable housing units across the United States, more people can have a shot at the American Dream.” – Senator Maria Cantwell (D-WA)
  • “We are creating certainty for developers to create construction and renovation jobs while increasing housing availability for more low-income families, veterans, seniors and individuals living with disabilities.” – Rep. Pat Tiberi (R-OH)
  • “With this legislation, we can help lift local communities across the country and ensure more individuals and families with limited means have better access to affordable housing.” – Senate Finance Committee Chairman Orrin Hatch (R-UT)
  • “I have long supported the Low-Income Housing Tax Credit and will push for its inclusion in any tax reform plan to be considered by Congress… The program has been particularly important in Kansas, where numerous projects have been put online in rural areas, for returning military personnel, and for veterans by using the low-income housing tax credit.” – Senator Pat Roberts (R-KS)
  • “It is vital we ensure access to this critical resource across the board for all our citizens wherever they may reside across our great state and nation.” –Senator Olympia Snowe (R-ME) 

New Fact Sheets Show Impact of Housing Credit in Every State

Our ACTION state fact sheets, showing the impact of the Housing Credit and the affordable housing needs that still remain in every state, have been updated through 2014, reflecting the latest data available.

The data come from the National Council of State Housing Agencies’ 2014 Factbook, with economic impact multipliers from the National Association of Home Builders and data on cost-burdened renters from the 2014 American Community Survey. For the first time, the state fact sheets also use data from the National Low Income Housing Coalition’s 2014 Out of Reach report, showing how many hours a minimum wage worker in each state has to work in order to afford a modest two-bedroom apartment.

Nationwide, the Housing Credit has financed 2.9 million apartments, providing affordable homes to 6.7 million low-income families and supporting 3.25 million jobs. However, 11.4 million households still pay more than half of their income towards rent, and the average minimum wage worker has to work 91 hours per week in order to afford a modest-two bedroom apartment, underscoring the need to expand the Housing Credit.

Our district fact sheets will be updated with 2014 data in the coming weeks.

Senators Cantwell and Hatch Introduce New Comprehensive Bill to Expand and Strengthen Housing Credit

Yesterday Senator Maria Cantwell (D-WA) and Senate Finance Committee Chairman Orrin Hatch (R-UT) introduced the Affordable Housing Credit Improvement Act of 2016 (S. 3237), a comprehensive bill to expand and strengthen the Housing Credit. Senate Finance Committee Ranking Member Ron Wyden (D-OR) also joined as an original co-sponsor. See the ACTION Campaign statement thanking Senators Cantwell, Hatch and Wyden for their leadership in this effort to expand and strengthen the Housing Credit.

S. 3237 is comprehensive legislation that will make significant strides towards addressing our nation’s severe shortage of affordable housing. Not only would it raise the cap on Housing Credit allocation authority by 50 percent, but it would also make numerous programmatic modifications to strengthen and streamline the Credit, support the preservation of existing affordable housing, and facilitate Housing Credit development in challenging markets. 

This legislation builds on an earlier version of the Affordable Housing Credit Improvement Act (S. 2962), introduced by Senators Cantwell and Hatch in May 2016. Senators Cantwell and Hatch will continue to seek cosponsors for S. 2962, which already has strong bipartisan support, while also beginning to make the case for the reforms in this new legislation.

S. 3237 includes all of the provisions from S. 2962, which would:

  • Expand the annual Housing Credit allocation by 50 percent. This would make a meaningful step towards addressing our nation’s vast and growing affordable housing needs by enabling the creation or preservation of up to 400,000 new affordable homes over the next decade.
  • Make affordable housing financing more predictable and feasible by creating a permanent minimum 4 percent Housing Credit rate for acquisition and for Housing Bond-financed properties.
  • Permit income averaging within Housing Credit properties in order to preserve rigorous targeting while providing more flexibility and responsiveness to local needs.

S. 3237 also adds numerous programmatic modifications that will further strengthen the Housing Credit by:

  • Making Housing Credit administration more predictable and streamlined,
  • Supporting the preservation of existing affordable housing,
  • Facilitating Housing Credit development in challenging markets like rural and Native American communities, and
  • Increasing the Housing Credit’s ability to serve extremely low-income tenants.

See our bill summary and the bill text for a full list of provisions in S. 3237.

“The Housing Credit leverages private equity investment to create 100,000 jobs in our communities each year,” Senator Cantwell said in a statement. “Senator Hatch and I want to expand this proven economic development tool and job creation engine to provide even more affordable housing that America desperately needs.” The statement also notes that Senator Cantwell has partnered with ACTION on a national campaign to build support for expanding the Housing Credit.

“With this legislation, we can help lift local communities across the country and ensure more individuals and families with limited means have better access to affordable housing,” said Senator Hatch. “I applaud Senator Cantwell for her leadership on this issue.”

 

Bipartisan Leaders Call for Housing Credit Expansion

Former HUD secretaries Henry Cisneros and Mel Martinez, co-chairs of the Bipartisan Policy Center’s Senior Health and Housing Task Force, are calling for a substantial expansion of the Housing Credit to address the housing needs of our nation’s growing senior population. In an op-ed in Affordable Housing Finance, the former secretaries applaud Senators Maria Cantwell (D - WA) and Orrin Hatch (R – UT) for introducing legislation to increase Housing Credit resources by 50 percent, calling the credit “a critical source of financing for rental homes affordable to the nation’s lowest-income seniors.” The Affordable Housing Credit Improvement Act (S. 2962), introduced in May, would expand the annual Housing Credit allocation by 50 percent, phased in over five years, and enact other changes to make the program more streamlined and flexible.

A letter from Seattle Mayor Edward Murray and New York City Mayor Bill de Blasio, signed by an additional 20 mayors from across the country and from both parties, also calls on Congress to expand the Housing Credit by 50 percent, and urges swift passage of the Affordable Housing Credit Improvement Act. The letter follows a resolution passed by the U.S. Conference of Mayors in support of the Cantwell-Hatch bill, which specifically highlights the need for a permanent minimum 4 percent Housing Credit rate and the need to allow income averaging in Housing Credit properties as well as an expansion of the credit.

In addition, former Oklahoma Governor Frank Keating and former U.S. Representative Rick Lazio wrote an op-ed in Housing Wire last week calling for “far greater investment” in the Housing Credit. See our Advocacy Toolkit for more resources to promote the Affordable Housing Credit Improvement Act, including a bill summary, talking points and a new sample letter to senators.

House Republican Tax Reform Blueprint Silent on Housing Credit and Bonds

Today the House Tax Reform Task Force, led by House Ways and Means Chairman Kevin Brady (R-TX-8), released a tax reform blueprint, “A Pro-Growth Tax Code for All Americans,” as part of House Speaker Paul Ryan’s (R-WI-1) “A Better Way” agenda. The Tax Reform Task Force is one of six task forces charged with developing policy recommendations to serve as pillars of the House Republicans’ agenda.

The goals of the tax reform blueprint are to fuel job creation and create opportunity, make the tax code simpler and fairer, and improve the IRS’ customer service. The blueprint does not lay out a detailed legislative framework, but rather the guiding principles that the House will consider as it continues its work on tax reform.

In order to achieve the largest corporate tax rate cut in U.S. history – lowering the top corporate tax rate from 35 to 20 percent – the proposal would eliminate many corporate tax expenditures. “Today, the tax code is littered with special-interest deductions and credits that are designed to encourage particular business activity,” the blueprint states. “The blueprint generally will eliminate special-interest deductions and credits in favor of providing lower tax rates for all businesses and eliminating taxes on business investment.” Only one corporate tax expenditure is expressly retained – the Research and Development credit – and several are targeted for repeal. The draft is silent on the Low-Income Housing Tax Credit (Housing Credit), our nation’s primary tool for developing and preserving affordable housing, and is also silent on the issue of multifamily housing bonds, as well as all other bonds generally.

The Tax Reform Task Force describes the blueprint as “the beginning of our conversation about how to fix our broken tax code.” After the release of this proposal, the Ways and Means Committee will turn its attention to drafting tax reform legislation to reflect these principles, to be introduced in 2017. The process will include an “ongoing dialogue with stakeholders,” and the committee welcomes and encourages comments from the public.

ACTION will continue to make the case that the Housing Credit and multifamily housing bonds are indispensable parts of our nation’s tax code and should be retained and strengthened in tax reform.

Without the Housing Credit, there would be virtually no new affordable housing development at a time when our nation’s affordable housing needs have reached an all-time high. According to a report from Harvard’s Joint Center for Housing Studies released this week, the number of severely cost burdened renters – or those paying more than half of their income in rent – has reached a record 11.4 million. It is fundamentally uneconomic to develop homes that are affordable to our nation’s growing population of low-income renters without the incentive that the Housing Credit provides. Multifamily tax-exempt bonds (used with Housing Credits) are responsible for more than 40 percent of annual Housing Credit production, providing affordable housing to over 1 million families since 1986. The ACTION Campaign intends to submit comments to the Ways and Means Committee to express this position.

More information about the blueprint and instructions on how to submit comments can be found on the Ways and Means website.  

Recent Reports Document the Affordable Rental Housing Crisis and the Need to Expand the Housing Credit

The number of severely cost-burdened renters – those paying more than half of their income in rent – has reached an all-time high of 11.4 million households, according to the Harvard University Joint Center for Housing Studies’ (JCHS) newly released The State of the Nation’s Housing 2016. Rental demand has increased in recent years, with a net increase of 1.4 million renter households in the past year alone – the largest-ever single year increase. At the same time, rents rose by more than 3.6 percent in 2015, far outstripping the pace of inflation and growth in wages (just 1.2 percent), making rents increasingly unaffordable.

In order to afford rent, many low-income households face difficult choices, sacrificing basic needs like food and transportation to pay for housing costs.  The report finds that nearly one in five very low-income renters received utility shutoff notices or had their utilities shut off for nonpayment, one in five low-income families live in overcrowded apartments, and one in ten low-income families live in inadequate units. Unaffordable rents also put families at risk of eviction – a threat faced by over two million low-income families each year.

With apartments in the private market rapidly becoming more expensive, the need for affordable housing is at an all-time high. The affordable housing supply, however, has fallen far short. Another recently released report, the National Low Income Housing Coalition's Out of Reach 2016, found that for every 100 extremely low-income renter households, there were only 31 affordable apartments available. The share of eligible low-income households receiving rental assistance has also declined. Over the past 20 years, the share of income-qualified renters receiving federal assistance fell from 29 to 26 percent.

The finding that the number of severely burdened renters has reached an all-time high after declining for several years points to an alarming trend. Rental demand is expected to remain robust, and “without public subsidies,” the JCHS report predicts, “the cost of a typical market-rate rental unit will remain out of reach for the nation’s lowest income households.” In 2015, Enterprise partnered with the JCHS to further explore how many and what types of renters will be severely cost-burdened in the coming years in Projecting Trends in Severely Cost-Burdened Renters: 2015-2025. The report found that demographic trends alone will result in an 11 percent increase in the number of severely burdened renters to 13.1 million in 2025, and if rent gains continue to outpace income growth, the number could reach 14.8 million severely cost-burdened renter households.

The State of the Nation’s Housing report cites expanding the Housing Credit as one of several policies that could make significant strides towards meeting the affordable housing needs of low-income renters. “Current proposals to expand the Low-Income Housing Tax Credit program, as well as to reform the public housing and other rental assistance programs, may help broaden access to affordable housing for the nation’s most vulnerable households,” the report states. The JCHS notes that applications for the Housing Credit, our nation’s primary tool for financing new affordable housing, far exceed the supply.

The findings in these reports underscore the need for an expansion of the Housing Credit in order to make a meaningful dent in the shortage of affordable housing. Senator Maria Cantwell (D – Wash.) and Senate Finance Committee Chairman Orrin Hatch (R – Utah) recently introduced the Affordable Housing Credit Improvement Act of 2016 (S. 2962), which would expand Housing Credit authority by 50 percent.

We encourage ACTION Campaign members to reach out to their Senators and encourage them to co-sponsor the Affordable Housing Credit Improvement Act of 2016. In the early stages of our co-sponsor outreach, it is especially important to reach out to Republican Senators. To help make the case for this legislation, see our new talking points and bill summary, and use our state fact sheets showing the impact of the Housing Credit in every state as well as the affordable housing needs that still remain.