The New Tax Overhaul Could Hurt You and Your Community
Since the recent housing crisis, homeownership has become increasingly more difficult for many families to achieve. This has resulted in more families turning to renting a home rather than buying one. If you’ve been looking for a place to rent, you’ve probably found that rental homes and apartments are harder to find and that you have to pay top dollar for the places you do find. This situation is creating an affordable housing crisis in our nation. Households that are cost burdened (paying more than 30% of their gross annual income on housing) are on the rise. The new tax overhaul bills recently passed by the House and Senate are making matters worse.
The proposed changes to the tax code will have a negative impact on the creation of affordable housing for families and individuals, especially vulnerable households like disabled veterans, single-parent households, and those in recovery. Both versions of reform proposed by our House of Representatives and those by the Senate have language that undercuts our ability to provide affordable housing and economic development.
The House version of tax reform eliminates all private activity bonds including multifamily bonds. This is important because these bonds fund over 50% of the affordable housing created in this country. Lowering the tax rate from 35% to 20% reduces Housing Tax Credit pricing which will reduce the funds available from investments by corporations into affordable housing projects by around $2 billion annually. Together these actions could reduce the number of affordable housing units produced by nearly 1 million homes in the next ten years. The changes also eliminate the public-private partnerships that fund the New Markets Tax Credit and Historic Tax Credit Program. This means $14 billion in development financing for low-income neighborhoods (where these investments are needed most in 2018/2019) will vanish.
The Senate version of tax reform lowers the corporate rate the same as the House version, eliminates foreign investments in the Low Income Tax Credit Program. This effectively takes out between up to 25% of the money invested in the program.
The impact on affordable housing is clear. Worse still, this legislation will lead to lost jobs.
If Congress moves forward on this tax cut, 1 million homes will be eliminated. With this, upwards of a million jobs in the construction trades will be eliminated as well. This means plumbers, electricians, HVAC technicians, carpenters, and other skilled workers won’t be needed to build and maintain these homes
You can help!
Please contact your legislators and express your concerns about funding the vital resource that is affordable housing. Please encourage your legislators to:
- Preserve private activity housing bonds
- Exempt housing tax credits from Base Erosion and Anti-abuse Tax (BEAT) to encourage affected institutions to invest in America
- Keep LIHTC basis boost at 30%
- Keep New Markets Tax Credit and the Historic Tax Credit
You can find the contact information for Ohio Congressional Delegation here: http://bit.ly/2jgo0iI