Democrats Introduce Several Tax Bills Focusing on Affordable Housing

Filed in Capitol Hill by on August 16, 2018 5 Comments

In the final days prior to the start of the traditional August congressional recess, Democrats in the House and Senate have put the spotlight on the affordable rental housing crisis by introducing a number of new bills.

Here is a brief summary of the legislation:

  • On July 19, Sen. Kamala Harris (D-Calif.) introduced the Rent Relief Tax Act (S. 3250), which would create a new, refundable tax credit for renters who pay more than 30% of their gross income on rent and utilities.  The bill has four Democratic cosponsors, none of whom sit on the Senate Finance Committee.
  • On July 26, the Assistant Democratic Leader in the House, Jim Clyburn of South Carolina, introduced the Restoring Tax Credits for Affordable Housing Act (H.R. 6542).  This bill would increase state Low Income Housing Tax Credit (LIHTC) allocations and modify the discount rate formula used to calculate the 9% credit rate.  The goal of this bill is restore the equity lost as a result of the lower corporate tax rate.  H.R. 6542 has 23 Democratic cosponsors, but none of them are on the tax-writing Ways and Means Committee.  Rep. Clyburn also cosponsored H.R. 1661, the Curbelo-Neal bill to strengthen the LIHTC, at the same time he introduced this bill.
  • On Aug. 1, Sen. Cory Booker (D-N.J.) introduced the Housing, Opportunity, Mobility, and Equity (HOME) Act of 2018 (S. 3342), which would also create a new refundable tax credit for renters.  The bill would also seek to require communities to adopt “inclusive zoning policies,” which would be of concern to NAHB.  NAHB does not support federal pre-emption of local or state land use authority.  S. 3342 has no cosponsors.

While none of these bills enjoy bipartisan support or even support of any Democrats on the tax writing committees, they show a growing focus among Democrats on affordable housing. It is notable that two of these three bills focus on creating a renters’ tax credit, an idea that has drawn criticism from the LA Times and the Tax Foundation, and by some estimates could cost $76 billion per year.

Unfortunately, renters’ tax credits do not address the fundamental problem driving the affordability crisis, which is lack of inventory. Nonetheless, NAHB will seek to leverage this newfound energy on affordable housing into action on H.R. 1661, the Curbelo-Neal bill, and S. 548, the companion Senate bill sponsored by Sens. Maria Cantwell (D-Wash.) and Orrin Hatch (R-Utah).

We anticipate that in the coming weeks, additional legislation will be introduced related to affordable rental housing.

For more information, contact J.P. Delmore at 800-368-5242 x8412.

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Comments (5)

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  1. Norman Hyman says:

    Unfortunately, one burden to affordable housing is the tariff on Canadian soft lumber. There is no good reason for such a tariff since Canadian soft lumber does not compete with a U. S. product. This tariff should be rescinded.

  2. Kim Shanahan says:

    Advocate for changes to Dodd/Frank that will allow local banks, who know local projects, builders and developers, the kind of freedom they enjoyed pre-2008. It wasn’t local banks and builders who over built prior to the collapse, it was the big publicly traded-builders, who got bailed out by the inventory-reducing tax credits for buyers. They also effectively eliminated local builder competition by getting baked-in to Dodd/Frank the end of local financing for speculative and infrastructure construction.

  3. David Koster says:

    At the risk of parsing words, the fundamental problem has NOTHING to do with the lack of inventory. It has EVERYTHING to do with why there is a lack of inventory. Demand for affordable and even first time move-up housing is huge, and yet builders aren’t building the homes to satisfy the demand. WHY? Norman and Kim have identified a couple of issues, but there are many more, including local zoning, and code requirements. The bottom line is that there is no profit in building an affordable product in many , if not most, markets. I believe that NAHB is well intentioned but I’m not sure NAHB really understands some of these “on the ground issues”. I hope I’m wrong, but I think “affordable housing, especially owner-occupied, single family detached, is gone forever in most markets. To be sure, there really isn’t a meaningful conversation about the truly fundamental problems.

  4. Denise Walsh says:

    It seems politicians come up with the least streamlined ideas requiring more oversight. Credits are a limited-time fix not quite relative to the rest of the economy and housing picture

    What would seem a better idea is to allow builders/developers to EITHER give affordable units in the communities they build OR put the same money into a fund that goes towards new permanent housing at affordable rates – ones that stand the test of time and once built offer a more streamlined management process then credits and vouchers.

    Or offer struggling towns to reap some type of reward for offering defunct or unused land to be repurposed by local builders or Re-zoned for builders to create affordable housing in areas where there is a void?

    • David Koster says:

      Great ideas Denise. Government credits are not the answer for either rental units or single family homes.

      Many middle markets have reasonably healthy economies, but are not creating large numbers of high income jobs. Blue collar and moderate income white collar jobs are being created and producing demand for housing. But local and state governments that get federal grants to rabidly enforce various environmental rules, and to follow ever expanding code requirements have meant that builders cannot build in the price points where buyers can afford to down payment and the monthly note. Buyers are left to pursue existing housing that are bid up to unaffordable levels.

      I meet with potential buyers almost daily who are excited about their future in an improving economy, but are frustrated when they find that their is no way they can afford the American dream of home-ownership that they believed was in their grasp.

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