Senate Continues Negotiations over Tax Reform with the House
The Senate returned from its Thanksgiving recess on Monday with a total of 15 working days to accomplish major legislative priorities including tax reform before the year’s end.
Prior to leaving Washington for the Thanksgiving recess, the Senate Finance Committee reported its version of the Tax Cuts and Jobs Act out of committee on a party-line vote of 14 – 12. The Senate is continuing negotiations and is expected to vote on a modified version of its bill later this week.
The House passed its version of the tax reform bill before adjourning by a vote of 227 – 205. All Democrats and 13 Republicans voting against the House tax reform bill. Congressman Tom MacArthur voted in favor of the tax reform bill. The other eleven members of NJ’s congressional delegation voted no.
There are significant differences between the House and Senate bills, which can be resolved in two ways – either through a conference committee, or by having the House vote on the Senate-passed version of the bill to avoid a conference committee and finalize tax reform more expediently.
At this point it is not yet clear which path the GOP will pursue, although a decision will likely be impacted by the outcome of the Senate’s vote later this week.
The Senate Finance Committee’s bill is markedly better for affordable housing and community development than the House bill.
The Senate bill:
retains the Low-Income Housing Tax Credit (Housing Credit);
preserves the tax-exemption on multifamily Housing Bonds;
preserves the New Markets Tax Credit (NMTC) through 2019.
However, no changes have been made that would address the impact of the lower corporate rate on the Housing Credit. Without this change, the Senate bill would reduce the future supply of affordable homes by over 200,000 units in the next decade.
While the House bill would also retain the Housing Credit, it would eliminate both Housing Bonds and the NMTC. This elimination would have a devastating effect on the ability to build and preserve affordable housing and revitalize distressed communities.