As Congress moves through the process of potentially passing a major tax reform package, we're still just starting to get a sense of what's in there - and what it might mean. Advocates for affordable housing in Maine are saying the package could be disastrous.
Diane Yentel is the president and CEO of the National Low Income Housing Coalition. She was in Portland Tuesday at a meeting of about 75 affordable housing organizations and advocates at the University of Southern Maine. Yentel spoke with Maine Things Considered host Nora Flaherty.
FLAHERTY: Diane, the Maine Affordable Housing Coalition is saying the House version of this bill could reduce the number of affordable homes created or preserved in Maine by nearly half, at a time when housing is less and less affordable for lower and middle-income Americans. How, in your estimation, would this bill make the housing crisis worse?
YENTEL: It would make the housing crisis worse immediately by reducing or restricting some key tools that are used for affordable housing development and preservation, specifically the Low Income Housing Tax Credit program, which is the largest production program for affordable homes in the country. That's an impact in Maine that would have the biggest overall impact of reduction of affordable homes. It would reduce by almost 40 percent the affordable homes that could be built over the next 10 years. The other way that the tax bills could really impact the affordable housing crisis is by increasing the deficits so significantly the Joint Center on Taxation, which is a nonpartisan committee that looks at impacts of tax bills, says that we would have an increased debt of over $1 trillion over 10 years. What that will mean over time will be a push to reduce federal spending, including key affordable housing and community development programs.
FLAHERTY: Are there other specific concerns about the House and Senate bills?
YENTEL: The third is - and it's really the center of these tax bills - is the significantly reduced corporate tax rate. So by reducing corporate tax rates from 35 percent potentially down to 20 percent that reduces the value of the Low Income Housing Tax Credit. And that means less equity available to build and preserve affordable homes. So that change alone, just lowering the corporate tax rate, and its impact on the Low Income Housing Tax Credit program could mean nationally 200,000 less affordable homes built or preserved over 10 years.
FLAHERTY: The arguments that have been made for this tax bill - that the policies therein, by encouraging investment, would ultimately reduce demand for these sorts of services because people would be getting more money in their pockets because there will be more jobs available. How do you respond to those sorts of arguments?
YENTEL: Well, I think what we've seen from economists' study is what we've seen from the state of Kansas - which tried something similar with its tax package - is that when corporations have their tax rates lowered to such a degree, it does not translate into better jobs, necessarily, more jobs, higher wages. What it translates into is bigger bonuses for people who work at the corporations and increased dividends for the investors.
FLAHERTY: I assume your organization and others have been lobbying in the Senate and House about these bills. What reaction are you getting, or what response are you getting, from members of Congress on your concerns?
YENTEL: Well it's interesting being here in Maine right now where Senator Collins has such leverage in these debates and has always been such a champion for affordable housing and community development programs. And for all programs that impact low-income people we were really disappointed to see her vote in favor of this Senate bill that can have such a negative impact on affordable homes. So we're really hoping that moving forward she reconsiders and recognizes the negative impact that this will have on her low-income constituents who are in desperate need of affordable homes.
FLAHERTY: What are you suggesting that organizations, and that members of Congress, do in the next few weeks as this goes forward?
YENTEL: Well, the first thing that we have to do is do everything we can to defeat these harmful regressive tax policies. And this is a place where Senator Collins, again, she has been a champion in the past on those type of issues. We need her to vote "no" on this package and to bring other Republicans with her so that we can start over on a bipartisan tax bill that has a process that allows for experts to to analyze the impacts of the tax reforms and for the public to have some really key input. And then also, in the meantime, if this tax package does move forward we need to ensure that we are not harming critical affordable housing and community development programs, that we are not eliminating private activity bonds or doing other things to reduce the value of the Low Income Housing Tax Credit at a time when these kinds of resources are critically needed.