Sen. Maria Cantwell (D-Wash.) made it clear that the tax reform proposals would devastate affordable housing production.
“The House and Senate bills severely undermine the means by which we build affordable housing for working-class families in America,” said Cantwell as the conference committee on the tax reform bills began its discussions Wednesday.
When the different proposals are taken together, they would reduce affordable housing production by 50%, she said during her introductory remarks.
Cantwell noted that the low-income housing tax credit (LIHTC) was enacted as part of the 1986 tax reform bill with bipartisan support. “Sen. (Orrin) Hatch and I believe that we should be expanding the affordable tax credit,” she said, referring to the Affordable Housing Credit Improvement Act (S. 548) that the lawmakers introduced in March.
Four Republican and three Democratic co-sponsors of the bill sit on the conference committee.
“Yet, the tax bill before us today goes in the opposite direction, with potentially crippling impact on our nation’s most important program for building and preserving affordable housing,” she said. “Nearly 20 million Americans are in this crisis of affordability. Look at what’s happening now in the states of Texas and Florida as they face the crisis of building after the hurricanes.”
The House bill eliminates private-activity bonds, which account for about half of all the production under the LIHTC program, Cantwell said. If housing bonds are repealed, roughly 800,000 affordable homes would not be built over the next 10 years, according to an analysis by Novogradac & Co.
"I keep hearing justifications for getting rid of the bonds because some people don't like the activities that they support, but tell me which ones of you don't support that for housing," Cantwell said. "If it is the case, preserve the housing credit."
Early reports indicated that bonds will be saved in a final bill. However, key affordable housing industry representatives remained cautious. They were still waiting to see the bill late Wednesday.
"There are positive signs today that private-activity bonds would be included in the proposed conference agreement," said Bob Moss, principal and national director of governmental affairs at CohnReznick. "There is still much to be done by JCT (Joint Committee on Taxation) to score the final agreement, which is scheduled to be released later this week and to be reviewed according to the Byrd rule."
Moss said he expects the Senate will vote first next week, and, if passed. the House will follow.
The Senate bill retains the tax-exemption status for the bonds, but it still includes several provisions that would negatively impact affordable housing. Like the House bill, it lowers the top corporate tax rate to 20%, a move that would reduce the tax benefits associated with the LIHTC and could reduce investment in the program.
Other Democrats on the conference committee criticized the Republican proposals as well as the process. Before the committee began its meeting, there were reports that Republicans had come to an agreement on a consensus tax bill.
“The American people are witnessing a master class in how one political party, relying on secrecy, distortion, and brute force, can muscle an unpopular, deficit-exploding corporate giveaway to passage,” said Ron Wyden (D-Ore.), ranking member of the Senate Finance Committee. “This is the ultimate betrayal of the middle class. It doesn’t give middle-class Americans the tax cuts they deserve now, and it takes away Medicare and Social Security later.
“News just broke that Republicans have reached a final agreement. So let’s understand that what’s happening today is a sham,” Wyden continued. “This is an obvious attempt to lend credibility to a baseless Republican talking point about following regular order. But nobody should mistake this conference for a serious debate—not when Republicans and special-interest lobbyists have already wrapped up the real talks in secret.”
Democrats asked for a delay on a vote on tax reform until Doug Jones, the Democratic senator-elect from Alabama, is sworn in. However, Republicans ignored the request Wednesday.
