On September 27, the White House and top GOP leaders released their tax reform outline entitled "Unified Framework for Fixing Our Broken Tax Code." We are very pleased that the framework includes the Low Income Housing Tax Credit (LIHTC) as one of two credits (R&D) maintained in the tax code. Through the incredible advocacy work of CISHA, a coalition of state independent affordable housing associations that CohnReznick pioneered in 2014, and with the support of the Action Campaign (rental housing action.org), we are not in legislative limbo at this time.
We remain vigilant on a number of other issues - there are a number of provisions that affect affordable housing including the expensing provision, the deductibility of business interest and the status of private activity bonds which are not referenced in the framework. There is also concern for multi-family owners who could lose the property tax deduction making properties financially challenged.
The framework released is the first volley towards an aggressive push to pass a reform plan with a very short legislative calendar for 2017. There will be continued debate over the plan once the House and Senate tax writing committees review the revenue effects of the plan. Revenue neutrality remains a goal of Senate Finance Chairman Orrin Hatch, whose focus is clearly on the international reforms contained in the outline.
The next step is for the House and Senate to agree on a unified budget resolution with instructions for tax reform. With the ACA repeal now seemingly off the table, the focus on Capitol Hill will be on tax reform and passing a budget. The House may vote on its version of the budget next week. It is unclear when the Senate will complete its work on the budget but when it does the two chambers will have to reconcile both proposals so the Senate may include reconciliation instructions for tax reform.
The timing of our advocacy work is in a very different landscape than in previous years. Unlike the tax reform discussion draft published by then Ways and Means Chairman David Camp in 2014, in which the 9% credit was included, today we are moving forward on the 9% credit and Housing Bonds with both a House and Senate LIHTC improvement/increase bill with 101 House co-sponsors and 19 Senate co-sponsors, in synch with tax reform. This will be pivotal because Congress believes a 31-year program like the LIHTC should be upgraded.
As the budget process moves forward, the House Ways & Means and Senate Finance Committees will begin their work on the tax reform framework, a process that promises to be animated, passionate and adversarial. Our industry will be engaged in this process as we ensure that the LIHTC is amended and expanded to meet the frameworks endorsement as a tax incentive that has proven to be effective in promoting policy goals important in the American economy.