Cantwell Warns the GOP Tax Bill Will Harm Affordable Housing Efforts, Leave Working Families in the Rain
Senator to GOP tax-writers: don’t let down working families by failing to address the nation’s affordable housing crisis
WASHINGTON, D.C. – Today, U.S. Senator Maria Cantwell (D-WA) dialed up her fight to expand Americans’ access to affordable housing. At what was likely the only meeting of the House-Senate Conference Committee to reconcile the GOP tax bills, Cantwell urged her Republican colleagues not to abandon their constituents by using the tax bill to strip out or undermine the country’s most successful programs for creating and rehabilitating affordable housing.
Multiple provisions in the House and Senate tax legislation would eliminate or substantially weaken the two most effective vehicle for creating affordable housing: the Low-Income Housing Tax Credit (LIHTC) and Private Activity Bonds (PABs).
In the conference committee hearing, Cantwell noted the large bipartisan group of senators who are on record supporting an expansion of affordable housing. “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,” said Cantwell. “As many as 800,000 fewer units [of affordable housing] will be built over the next ten years because of this House language.”
Earlier in the day, Cantwell laid out just how high the stakes are if Republicans’ tax bill fails to address the country’s affordable housing crisis. At a speech before the Bipartisan Policy Center (BPC) earlier today, Cantwell spoke to a BPC report indicating that a lack of access to affordable housing has negative health consequences for low- and middle-income Americans.
The LIHTC contributes to 90% of the new affordable housing units built in the U.S., far surpassing any other federal affordable housing program. PABs are the primary vehicles state and local governments use to finance affordable housing projects.
Senator Cantwell has applied relentless pressure on her Republican colleagues and the White House to address the mounting affordable housing crisis in their tax legislation.
A full transcript of Senator Cantwell’s remarks is below.
Senator Cantwell: The House and Senate bill severely undermine the means by which we build affordable housing for working class families in America.
The Low Income Housing Tax Credit was part of the 1986 act and had bipartisan support. Senator Hatch and I believe we should be expanding the affordable tax credit. Nine members of the Finance Committee, including five Republican members are co-sponsors of the bill. In fact, four Republican co-sponsors of the Affordable Housing Tax Credit expansion are sitting on this conference committee, as well as three democratic co-sponsors. 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.
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 rebuilding after the hurricanes.
Under the House proposal, the tax-exempt status for private activity bonds would be eliminated, including for multi-housing bonds, which would account for about half of all the housing production under the Low Income Housing Tax Credit.
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. If it is the case, preserve the housing credit. According to an estimate, as many as 800,000 fewer units will be built over the next ten years, because of this house language.
Now, the Senate has problems, as well. Obviously, we want to make sure that our colleagues understand that investors who currently are able to deduct losses generated in the investment as a result of the limit on the rents to make sure that housing is affordable. Affordable housing projects do not earn returns for their investors like private real estate, so reducing the top rate does not provide a benefit, and will not increase an incentive. It is because the tax deduction investors take under the proposal will be worth considerably less at 20% compared to the 35% rate. The result is investors will pay less for the given credit, and we estimate as about $2 billion less, or 200,000 units, about a 15% reduction.
As well as the BEAT erosion, trying to focus on foreign corporations. We believe that there are those who are investing along with JPMorgan Chase and Citigroup that account for $1.5-2 billion of investment annually that also will be reduced, making about 10 to 15% less available for investment and affordable housing.
These three things taken together will probably, if all impacted the way this bill is written, reduce by 50% the amount of affordable housing when we need to be going in the opposite the direction. I yield to my colleague.
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