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 the package now, what might be in the final plan and what the implications might be.
Advocates for affordable housing in Maine are saying the package could be disastrous both for preserving the affordable housing that already exists and for efforts to build new homes.
Maine Things Considered Host Nora Flaherty interviewed Diane Yentel, president and CEO of the National Low Income Housing Coalition, in Portland Tuesday at a meeting of about 75 affordable housing organizations and advocates at the University of Southern Maine.
Flaherty: 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. How would this work, and is that something that would be felt more keenly in Maine than in other places around the country?
Yentel: The House and Senate tax bills would ultimately make the affordable housing crisis worse throughout the country and certainly here in Maine. The affordable housing crisis has reached new heights. It’s impacting most negatively the lowest-income people. Here in Maine, for every 100 of the lowest-income people there are just 46 homes that are affordable and available to them. So at a time when we really need increased investments to make homes affordable for those lowest-income people, we’re seeing tax bills that would make the crisis worse. In Maine it could mean a reduction of nearly 50 percent of affordable homes that are built or preserved over the next 10 years.
What is being done now to help meet the demand for low-income housing and how would this tax bill change that?
There are two specific ways that the tax bills could make the affordable housing crisis worse. One is immediate, 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. The House bill would eliminate the tax exemption on private activity bonds, which would essentially eliminate almost half of the production that’s possible through the Low Income Housing Tax Credit program. 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.
What reaction or response are you getting from members of Congress on your concerns?
It’s interesting being here in Maine right now, where U.S. Sen. Susan 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.
She could vote no on the reconciliation, for example.
She could vote no on the conference report that will come out over the next days or weeks.
Are there other specific concerns about the House and Senate bills?
It’s really the center of these tax bills, the significantly reduced corporate tax rate. 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. 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.
An argument that has been made for this tax bill is that 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?
What we’ve seen from economists’ studies, what we’ve seen from the state of Kansas, who 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.
What are you suggesting that organizations and members of Congress do in the next few weeks as this goes forward?
We have to do everything we can to defeat these harmful, regressive tax policies. This is a place where Sen. Collins has been a champion in the past on those very types of issues. We need her to vote no on this package and to bring other Republicans with her, so we can start over on a bipartisan tax bill that has a process, that allows for experts to analyze the impacts of the tax reforms and for the public to have some really key input. 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.
This interview has been edited for clarity.
This story was originally published Dec. 5, 2017 at 2:38 p.m. ET.