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.