July 21, 2017

Congress Holds Series of Hearings on Tax Reform

With the fate of health care reform uncertain, Republican leaders in Congress have turned their attention towards comprehensive tax reform in hopes of achieving a legislative victory before the year’s end. While major differences within Congress are sure to complicate the tax reform process moving forward, a series of hearings over the last week in both chambers of Congress have focused on common themes, including how tax reform will help small businesses, middle class families and working individuals.

The House Ways and Means Tax Policy Subcommittee held two hearings, How Tax Reform Will Help America’s Small Businesses Grow and Create New Jobs, on July 13, and How Tax Reform Will Simplify Our Broken Tax Code and Help Individuals and Families, on July 19. Both of these hearings built on the principles for comprehensive tax reform outlined in the House GOP tax reform blueprint, “A Pro-Growth Tax Code for All Americans,” released last summer. While House Republicans emphasized the need for fairness for small businesses and simplification-related proposals to make tax filing easier for ordinary taxpayers, Subcommittee Ranking Member Lloyd Doggett (D-TX) and other Democrats emphasized their opposition to “net tax breaks for the wealthiest few.”

The Senate Finance Committee considered similar themes in their hearing on Comprehensive Tax Reform: Prospects and Challenges, held July 18, with Senators from both sides of the aisle discussing the need to lower the corporate rate to encourage job and wage growth, to provide greater fairness within the code and to sustainably (and permanently) reform the tax system through fiscally responsible and revenue-spurring changes. While all of the Senators on the Committee expressed the desire to legislate in a bipartisan manner, Democrats voiced concerns that GOP lawmakers were constructing legislation in secret and did not intend to hold hearings once a bill was drafted.

The Senate Finance Committee held a second hearing on July 18 to consider the nomination of David J. Kautter as Assistant Secretary for Tax Policy of the Treasury Department. Senator Maria Cantwell (D-WA), who introduced The Affordable Housing Credit Improvement Act (S. 548) to expand and strengthen the Low-Income Housing Tax Credit (Housing Credit), highlighted the critical need to meet the demand for more affordable rental housing in tax reform. “The tax credit drives 90 percent of affordable housing,” she noted, “so if you don’t increase it, we’re not going to increase the supply.” Kautter responded that, “from what I’ve seen [the Housing Credit] works pretty well” and expressed an interest in making the program “even more effective and efficient than it is today.”

See the full exchange between Senator Cantwell and David Kautter on the importance of investing in the Housing Credit.

Enterprise also submitted comments to the Senate Finance Committee this week in response to Chairman Orrin Hatch’s (R-UT) request for public comments on tax reform. Enterprise urges Congress to support the Housing Credit by advancing the Affordable Housing Credit Improvement Act of 2017 (S. 548), introduced by Senator Cantwell (D-WA) and Chairman Hatch (R-UT), to expand the supply of affordable housing. Enterprise also urges Congress to advance the New Markets Tax Credit (NMTC) Extension Act of 2017 (S. 384), introduced by Senator Roy Blunt (R-MO) and Senator Ben Cardin (D-MD), to promote economic development in our nation’s most distressed communities. 

While tax reform hearings are likely to continue for several months in both the House and the Senate, Congress will face increased pressure to provide more detailed tax reform proposals when it returns from the August congressional recess. The Administration is also expected to release a more detailed tax reform plan in September.

Enterprise will continue to advocate for the Housing Credit and NMTC as Congress considers reforms to our nation’s tax code. For advocacy resources on the Housing Credit visit the ACTION Campaign website, and for advocacy resources on the NMTC visit the New Markets Tax Credit Coalition website.