Changes Tax Credit Program Could Result in Significant Cuts in Affordable Housing Production and Jobs Tied to Creating Housing
A February 2, 2018 New York Times opinion piece, “The Affordable Housing Crisis is About to Get Worse” highlights the precarious position of the federal Low-Income Housing Tax Credit (Tax Credit) program.
“Many of the worst effects of the tax bill President Trump signed in December could take years to emerge. But the damage to the federal tax credit program that finances nearly all affordable housing built in America is already painfully evident. Unless Congress rescues this crucial program, a quarter million fewer affordable units will be built over the next 10 years, deepening an already serious crisis.”
The Low-Income Housing Tax Credit has historically enjoyed bipartisan support. It is a win-win for corporations and low-income households. The Tax Credit allows corporations to invest in low-income housing while reducing their tax liabilities.
Since the Tax Credit program began over 30 years ago, it has created about 3 million affordable rental homes. But this still does not meet the demand across the country for affordable housing.
We know from the Harvard Joint Center for Housing Studies 2017 report that about 11 million families, about a quarter of all renter households, spend more than half of their income on housing.
These families who pay such significant portions of their income on rent, constantly make very difficult choices between the everyday essentials that many of us take for granted.
Will they pay for food, childcare or healthcare and then what will they do when an unexpected expense puts thin in danger of eviction?
“The pressure on low-income renters has worsened for other reasons as well. In recent years, higher-income people who once would have bought homes have turned to renting, driving up housing costs for poor and working-class families. The declining value of low-income housing tax credits will make all of this worse. It started last year, when President Trump and congressional Republicans made clear that they intended to dramatically lower the corporate tax rate, giving companies less reason to worry about tax liabilities.”
It is critical that New Jersey’s congressional delegation and the rest of their colleagues in Congress act to “bolster the tax credit program.” We cannot let the new tax law “cut affordable housing by 235,000 units over the next 10 years and cost the country jobs.” The Senate has a bill that would make a difference in the Tax Credit program.
“By increasing the number of housing credits by half – and making several common-sense regulatory changes – the bill would create more than 400,000 affordable units than would otherwise be possible.”
“The bill has broad support. But there is a clear danger of it falling through the cracks as Congress makes its way toward a messy budget agreement. That would be the wrong outcome for needy Americans and the country as a whole.”