Despite the gridlock in Congress, tax reform is alive and moving forward, according to watchful members of the affordable housing industry.
“Everyone wants to lower corporate tax rates,” said Bobby Rozen, a partner at Washington Council Ernst & Young and a member of the Bipartisan Policy Center Housing Commission.
Although many expect that it will take a while to work through the hefty issue, both sides of the aisle are committed to tax reform. The effort recently got a surprise boost thanks to an Irish pub.
Senate Finance Committee Chairman Max Baucus (D-Mont.), House Ways and Means Committee Chairman Dave Camp (R-Mich.), and other lawmakers recently gathered in a Washington, D.C., bar to break the ice.
The group is looking at holding meetings around the country to build public support for tax reform, said Rozen at the National Council of State Housing Agencies’ Housing Credit Connect conference in San Francisco.
The industry has to be engaged now even if tax reform isn’t completed this year, added Richard Goldstein, a partner at Nixon Peabody.
Even if an initial bill fails to get enacted, it is still important because it would be the starting point for the next discussion about tax reform, he said.
Affordable housing advocates are still looking for a champion in the Senate after the recent departure of Maine’s Olympia Snowe, said Bob Moss, senior vice president at Boston Capital.
Tax reform is making many people nervous. They fear that the low-income housing tax credit (LIHTC) could get eliminated along with other tax expenditures.
Even if the LIHTC program remains intact, other changes to the tax code could trigger a loss of equity for affordable housing, said Michael Novogradac, managing partner at Novogradac & Co. The accounting firm recently analyzed the possible effects of tax reform on the LIHTC program.
In other news this week, Sens. Bob Corker (R-Tenn.) and Mark Warner (D-Va.) introduced the Housing Reform and Taxpayer Protection Act, which calls for dissolving Fannie Mae and Freddie Mac within five years of the bill’s passage and establishing the Federal Mortgage Insurance Corp. (FMIC), which would be modeled after the FDIC.
The multifamily guarantee business of Fannie and Freddie would be transferred to the FMIC.
Several affordable housing organizations quickly responded with a letter calling for the legislation to be strengthened.