Critical to Fund National Housing Trust Fund
The United for Homes campaign proposal to fund the National Housing Trust Fund with revenue raised by reforming the mortgage interest deduction can only happen in the context of larger tax reform legislation.
Both Senate Committee on Finance Chair Max Baucus (D-MT) and House Committee on Ways and Means Chair Dave Camp (R-MI) have indicated a commitment to advancing comprehensive tax reform in the fall. It is possible that both committees will unveil bills this fall.
Despite the continued interest and pressure coming from the Chairmen, the outlook for tax reform occurring in the 113th Congress remains unclear. Tax reform is not on the fall agenda for the House that Majority Leader Eric Cantor sent to the House Republican Caucus on September 6, 2013.
Senator Baucus has announced his retirement at the end of the current Congress, and Chair Camp will be term-limited out of the Chairman position at the end of the Congress. These changes lead many observers to argue that momentum is slowing for progress on tax reform to occur in the near future.
In addition to uncertainty about the amount of sway Chairs Camp and Baucus hold over Committee members, there also remain fundamental differences between the parties about whether tax reform should be revenue-neutral, and if not, for what purposes the revenues should be applied. Until these fundamental differences are reconciled, the path forward on comprehensive tax reform remains murky.
Prior to recess, Chair Baucus and Senate Committee on Finance Ranking Member Orrin Hatch (R-UT) solicited feedback from Senators on tax code priorities, an exercise commonly referred to as the “blank slate.”
The blank slate letters, which were due on July 26, were not required to be made public by the Committee, although some Senators elected to make them public anyway. While the Committee Chair and Ranking Member had requested very detailed submissions that included legislative language, nearly every submission that was made public was general in nature and simply outlined comprehensive tax reform priorities. The mortgage interest deduction was mentioned only in a few letters, and no letter made public to date made specific recommendations on where revenue raised from changes to the mortgage interest deduction should be applied.
Besides the mortgage interest deduction, the low income housing tax credit is also being reviewed within the context of tax reform. Housing advocates have been reaching out to House and Senate members, urging that the LIHTC be kept whole within any reforms to the tax code.