November 17, 2017

House Passes Tax Reform Bill, Senate Finance Committee Sends Tax Reform Bill to Floor

House and Senate tax reform bills

Yesterday the House passed its version of the “Tax Cuts and Jobs Act” by a vote of 227 - 205, with all Democrats and 13 Republicans voting against it. While the bill retains the Low-Income Housing Tax Credit (Housing Credit), the House made no changes to the bill during that would restore multifamily Housing Bonds or the New Markets Tax Credit (NMTC), both of which the bill eliminates. Nor were any changes made to sustain Housing Credit production in lower corporate rate environment. As written, this bill would reduce our future supply of affordable rental homes by nearly one million and limit our ability to revitalize distressed communities.

Yesterday the Senate Finance Committee also advanced its version of the “Tax Cuts and Jobs Act” out of committee on a party-line vote of 14 – 12. The Senate bill would retain the Housing Credit, Housing Bonds and the NMTC. The Senate bill also added several provisions to strengthen the Housing Credit, taken from the Cantwell-Hatch Affordable Housing Credit Improvement Act (S. 548). While no changes were made in the Senate bill that would address the impact of the lower corporate rate on the Housing Credit, bipartisan discussion around this issue suggests there is genuine interest in addressing this issue as the bill moves forward. However, without this change, the Senate bill would reduce the future supply of affordable homes by over 200,000.

A new manager’s amendment added to the Senate bill last night also included a provision that would restore the 20 percent historic rehabilitation tax credit, to be taken over five years. The original version of the Senate bill would have reduce the historic rehabilitation credit from 20 to 10 percent, and the House bill would repeal the credit.

There was also discussion during the Senate Finance Committee suggesting that Congress may take up a tax extenders package to extend the NMTC, energy credits and other credits that may not be dealt with in tax reform, potentially providing a further opportunity to strengthen key programs.

The House and Senate are now in recess until after Thanksgiving. During the week of November 27, the Senate plans to finalize negotiations and send its bill to the floor. While there may then be a conference between the House and Senate to resolve differences, it is also possible that the House will instead vote on a Senate-passed version of the bill in order to avoid a conference committee and finalize tax reform more expediently. Because the House passed its bill with a comfortable margin, while the Senate can only afford to lose two votes, the Senate will have significant leverage in negotiations. While the Senate bill is much more favorable to affordable housing, both chambers will continue to face pressure to eliminate tax expenditures to stay inside the $1.5 trillion limit allowed for tax reform, and nothing can be taken for granted.

This may be our last opportunity to influence the process before House and Senate leaders negotiate a final tax reform bill, and it is incumbent on us to continue to advocate to make sure that any final bill retains the Housing Credit, Housing Bonds, and NMTC, and leaves our affordable housing delivery system at least as strong as it is today.

Outreach to the Senate:

  • If you are represented by a Senate Finance Committee Republican, thank them for retaining the Housing Credit, Housing Bonds and the NMTC in the legislation, and for including in the bill additional provisions to strengthen the Housing Credit.

  • We urge everyone to also reach out to your senators, both on and off the Finance Committee and especially Republicans, and urge them to communicate to Chairman Orrin Hatch (R-UT) and Majority Leader Mitch McConnell (R-KY) their support for the Housing Credit, Housing Bonds and NMTC, and tell them to make sure they retain these programs in the final legislation as negotiated with the House. 

  • Also, urge your Senators to tell Chairman Hatch and Leader McConnell to make further changes to the legislation to sustain affordable housing production in light of the lower corporate rate.

Outreach to the House:

  • Thank House Republicans for retaining the Housing Credit, but tell them that the bill as written would have a devastating impact on affordable housing by virtue of eliminating Housing Bonds. If possible give them examples of properties in their districts that would not have been built without Housing Bonds, and explain the overall impact on your state (state by state impact numbers are provided in the Novogradac links below). 

  • Urge your Republican House members to communicate to Ways and Means Committee Chairman Kevin Brady (R-TX) and House Speaker Paul Ryan (R-WI) their support for retaining the Housing Credit and restoring Housing Bonds and the NMTC in any final legislation as negotiated with the Senate.

  • Urge your Republican House members to tell Chairman Brady and Speaker Ryan that Congress must sustain affordable housing production in light of the lower corporate rate.

See the ACTION Campaign’s Advocacy Toolkit for:

See the NMTC Coalition website for advocacy materials to support the NMTC.

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