Earlier this week, the U.S. House of Representatives and Senate formed what is known as a “conference committee” to reconcile the differences between the tax reform bills recently passed by each chamber. Congressional leaders are on a fast track, hoping to complete this effort before the Christmas break. The decisions that will be made in the coming days could have disastrous consequences for desperately needed homes that are affordable. At this critical time, it’s vital that the voices of impacted voters be heard loud and clear.
Here’s our tax reform to-do list:
First, any final tax package must preserve the Low-Income Housing Tax Credit. With a 30-year track record, the Housing Credit is a highly successful public-private partnership that has helped support the construction and preservation of more than three million affordable rental homes. Fortunately, both the House and Senate bills preserve the Housing Credit, a position that must be reflected in the final conference package.
Second, Congress must maintain the income tax exemption for interest earned on private activity bonds, or PABs. Working together with the “4 percent” Housing Credit, PABs help finance more than half the affordable rental homes that are built and rehabilitated each year.
Eliminating the tax exemption for private activity bonds, as proposed in the House bill, and lowering the corporate tax rate (proposed in both bills) would lead to the loss of over 1 million affordable rental homes that otherwise would be built or preserved over the next ten years. The conference committee should reject this approach.
Third, a centerpiece of both the House and Senate bills is a significantly lower corporate tax rate. With a lower rate, Housing Credit pricing will likely drop, reducing the amount of private equity available to build and preserve affordable rental homes. The conference committee should look for ways to offset this impact. One possible solution: Increase Housing Credit authority by 50 percent, as proposed in the bipartisan Affordable Housing Credit Improvement Act of 2017 (S. 548 and H.R. 1661).
Finally, the House bill proposes to make a number of significant changes to the mortgage interest deduction, including reducing the amount of mortgage debt eligible for the deduction from $1 million to $500,000. The savings generated by these changes, potentially amounting to billions of dollars, should be specifically earmarked to help America’s lowest-income renter families.
The stakes could not be higher. As tax reform hurtles toward a final conclusion, it’s now or never to impact the process in Congress. It’s time to get to work.