Congress Passes Budget Resolution, Sets Stage for Tax Reform
Last week, Congress passed a budget resolution for fiscal year (FY) 2018 that paves the way for tax reform legislation to be accomplished through reconciliation, a legislative tool that allows the Senate to pass legislation with 50 votes. The budget resolution also allows the federal deficit to increase by $1.5 trillion over the next ten years to account for reduced revenue resulting from proposed decreases to corporate and individual tax rates. The budget resolution passed narrowly in both the Senate (51-49) and the House (216-212), with Democrats in unanimous opposition and several Republicans voting against it over several objections, including the increase in deficit spending and the potential for the state and local tax deduction to be eliminated in tax reform.
Republican leadership hopes to pass tax legislation before the end of the year, but several other contentious issues – including funding the government after the continuing resolution expires on December 7 and passing additional disaster recovery resources – will also require lawmakers’ attention in the few remaining weeks of the calendar year.
House Ways and Means Chairman Kevin Brady (R-TX-8) is expected to release the text of his committee’s tax reform bill on November 1, followed by a markup in the committee the week of November 6 and a vote on the House floor the week of November 13. The Senate is expected to follow closely behind the House, with a markup of a tax reform bill expected in the Senate Finance Committee the week of November 13.
The coming weeks will be critical for Low-Income Housing Tax Credit (Housing Credit) and New Markets Tax Credit (NMTC) advocates to make the case for retaining and strengthening these programs in tax reform. The ACTION Campaign recently sent a letter to Congress and the Administration on behalf of 2,150 organizations thanking Republican leadership for recognizing the value of the Housing Credit in their tax reform blueprint, and urging lawmakers to protect and modernize our affordable housing delivery system during tax reform. The ACTION Campaign is specifically calling on Congress to:
- Retain the Housing Credit and the tax exemption on multifamily Housing Bonds,
- Enact the Affordable Housing Credit Improvement Act (H.R. 1661 and S. 548), and
- Make adjustments to the Housing Credit to ensure its production potential is not negatively impacted by other changes in tax reform.
The NMTC Coalition also sent a letter to Congress last month on behalf of more than 2,100 organizations urging Congress to expand and make the NMTC permanent in tax reform. The NMTC will expire at the end of 2019 unless Congress reauthorizes the program. The New Markets Tax Credit Extension Act of 2017, introduced by Representatives Tiberi (R-OH-12), Reed (R-NY-23) and Ranking Member Neal (D-MA-1) in the House (H.R. 1098) and Senators Blunt (R-MO) and Cardin (D-MD) in the Senate (S. 384), would provide an indefinite extension of the NMTC, increase the annual NMTC allocation and index the allocation to inflation, and provide Alternative Minimum Tax (AMT) relief to NMTC investments.
The tax reform process will move quickly so now is the time for all Housing Credit and NMTC advocates to urge your representatives to support these critical affordable housing and community development tools in tax reform. For more advocacy resources in support of the Housing Credit and NMTC, visit the ACTION Campaign and NMTC Coalition websites.