An invitation to defend the LIHTC

From our publisher, Andre Shashaty:

The debate on tax code changes will get rolling July 31 when the Advisory Panel on Federal Tax Reform appointed by President George W. Bush issues its report.

Meanwhile, in Congress the chairmen of the tax-writing committees were moving quickly to set the overall direction of the tax debate. At press time, House Ways and Means Committee Chairman Bill Thomas (R-Calif.) was preparing to hold the first of a series of hearings on tax reform. Senate Finance Committee Chairman Charles Grassley (R-Iowa) is expected to follow Thomas’ lead and begin consideration of tax law changes before the Bush administration submits a plan.

For the low-income housing tax credit (LIHTC) industry, the big concern is that major tax law changes could reduce the credit’s appeal to investors, or even eliminate the program.

Washington insiders don’t think Bush has much chance of pushing through a major tax code overhaul, such as implementing a flat tax, but the housing industry is working to educate Congress to make sure the credit remains safe.

On the downside, a renewed effort to eliminate taxes on corporate dividends is viewed as very likely. Bush was forced to back off from a similar proposal two years ago, but a new effort could deter tax credit investors.

On the upside, there’s broad political support for repealing or indexing the alternative minimum tax, which would actually help make tax credits more valuable to some investors.

Given the early start on reform plans in the House, and the already pending Bush proposal to extend current tax breaks, it’s possible a tax bill could be considered in September, but major changes would be unlikely until 2006.

For more information, go to http://taxreformpanel.gov.

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If you want to help defend the LIHTC, send your comments to the reform panel. For advice on what to say, contact Francine Friedman of Hunton & Williams, where she is legislative counsel to the Affordable Housing Tax Credit Coalition.

Also write to your congressional representatives and tell them about the value of the tax credit projects you help produce in their district or state.

“Your readers cannot possibly overestimate how important it is for them to contact people in Washington,” said David Gasson, executive director of the Housing Advisory Group, which advises and educates members of Congress and the administration on housing policy, and specifically on low-income housing tax credits.

For more information, call Gasson at (617) 624-8900.