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.