Legislative Chess

From our own John Zipperer, who is out in Chicago at AHF Live:

The recent announcement of radical tax-reform proposals – including the deep-sixing of the low-income housing tax credit – by a presidential tax panel provided fodder for some of the politically connected affordable housing experts at AHF Live: The 2005 Tax Credit Developers’ Summit. David Gasson of Boston Capital told the attendees in downtown Chicago that the task force essentially had impossible marching orders: brainstorm tax reforms without worrying about the political impact, and any changes must be revenue-neutral. Well, they decided to do away with the alternative minimum tax (AMT), which left them with more than $1 trillion they needed to make up somewhere else, so they began whacking at everything in sight. Bye-bye LIHTC.

The good news is that the panel’s recommendations exist in a separate world of reality best reserved for science fiction. Gasson said the Congressional staffers he’s met with told him, “That’s the president’s panel with the president’s parameters. Those aren’t our parameters.” In other words, Congress will do what it darn well wants to, especially in light of the reality of President Bush’s low public opinion ratings and the other distractions facing his administration and the Republican leadership in Washington.

However, Gasson said that in the next year and a half, he does expect some sort of a tax reform package to come before the House Ways and Means Committee. The AMT is one likely candidate for some sort of curtailment, and there could be some tinkering with the basic tax rates, too. Luckily, he said, tax credits are currently in very high regard in Washington, D.C., so they’re not likely to be on the chopping block.

Jim Tobin of the National Association of Home Builders added that, despite current Washington politics, he expected President Bush to announce something tax-reform-related in his State of the Union.