With so much rancor and noise coming out of Washington, DC, it is an unexpected pleasure that the LIHTC industry is continuing to advocate for the LIHTC and bond programs without being included in the fray. Our conversations with the tax writing staffs in both the House and Senate have proceeded with no speedbumps to date and we remain optimistic that the LIHTC will be included in the tax reform proposal currently under consideration by the House Ways and Means Committee. As part of this process, our industry ad-hoc working group is working with the Committee staff on the potential future structure of the LIHTC program so that it continues to be an effective incentive for the production and rehabilitation of affordable housing across the country.
As for everyone’s favorite question regarding timing of tax reform, the House leadership continues to target an early August deadline for action. While many believe this timeline is very aggressive, it would be a mistake to dismiss it in the current political climate.
House Ways and Means Committee members and staff have been doggedly working on drafting a proposal while continuing ongoing conversations on specific elements of the House plan – including the controversial border adjustment provision. This proposal moves toward a cash-flow tax approach for businesses that would focus on where goods and services are consumed, not where they are produced. Border adjustments would exempt exports from the tax base, but would not allow a deduction for imported goods or services. While acknowledging the challenges border adjustments may pose to some industries, the House leadership, including Ways and Means Chairman Kevin Brady(R-TX), has not budged on the provision as they view it as a domestic job creator and economic engine. It is also the revenue generator they are counting on which will allow them to lower the corporate tax rate.
While the action seems to be focused on the House, Senate Finance Committee Chairman Orrin Hatch (R-UT) said the Committee hopes to have a tax reform proposal to discuss in the “near future.” He also suggested that a tax reform bill that can get through the Senate will almost surely look different than the House-passed bill. The Finance Committee tends to move more slowly and traditionally tries to be bipartisan in its approach to passing legislation, so it will be interesting to see how this dynamic affects the timing of tax reform.
As far as our affordable housing agenda, Senator Maria Cantwell (D-WA) has indicated she will be reintroducing her LIHTC legislation again this year with Chairman Hatch joining her once again as the lead Republican sponsor. We are hopeful that our House champion, Congressman Pat Tiberi (R-OH) will offer similar legislation in the Ways and Means Committee.
Stay tuned.
