At least one tax break has bipartisan support, as Republicans gear up to simplify the tax code.
Senators from both parties praised the Low-Income Housing Tax Credit at a Senate Finance Committee hearing Tuesday, with members calling to expand the break rather than limit it.
The credit applies to developers that build units for low-income individuals. It totals nearly $9 billion a year, and the Department of Housing and Urban Development credits it with yielding 100,000 new units of housing for poor people annually.
Although it is a major component of the federal government’s housing efforts, the credit faces two threats in tax reform: One is that lawmakers might eliminate it to pay for lower tax rates. The other is that successful tax reform that lowered rates would hurt the value of the credit — lower tax rates would mean the tax credit saves less money for investors.
Yet it has support from key senators.
“It’s a good program, it’s passed the test of time,” said Sen. Johnny Isakson, R-Ga. “And if we don’t do it, I can’t think of any other way to get capital flowing — private capital flowing — to generate the housing necessary to house the American people.”
Committee Chairman Orrin Hatch, who will be responsible for drafting tax reform legislation in the Senate, has introduced legislation with Sen. Maria Cantwell, D-Wash., that would expand the housing tax credit to create more units.
That bill, the Affordable Housing Credit Improvements Act of 2017, has support from low-income housing groups, who have said that it could help maintain the worth of the tax credit even if Congress lowers tax rates. On Tuesday, the National Association of Homebuilders also called on Congress to pass the bill.