It will take some time for the dust to settle around what by all accounts is a stunning victory for President-elect Donald J. Trump and Senate Republicans, but it remains as important as ever for the affordable housing industry to solidify and increase congressional support for the LIHTC.
While tax reform had been seen by many as unlikely in the next Congress, the Republican presidential victory and retention of both bodies of Congress has made it a real political possibility. A unified government will enable Republicans to move comprehensive tax reform through the Senate using the process known as budget reconciliation, which cannot be filibustered.
What this means for affordable housing could largely depend on the bandwidth of the new administration to focus more closely and quickly on the details of tax reform. We have already seen President-elect Trump modify his tax plan during the campaign to more closely track that of the House Blueprint on Tax Reform, which might suggest that House Speaker Paul Ryan (R-WI) and House Ways and Means Committee Chairman Kevin Brady (R-TX) could guide the passage of a plan that President Trump could sign. Because the current tax reform blueprint reduces the individual and corporate income tax rates and eliminates many tax expenditures – including the housing credit – there is still work to be done. We have been working with our House champion Pat Tiberi (R-OH) on shoring up support for the LIHTC and educating Members who have been cool to the credit. We have received indications that there is support for the credit, but at this time, there is no guarantee that it will be preserved in the House tax reform plan.
On the Senate side, the credit has important support from Finance Committee Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR), as well as from Senator Chuck Schumer (D-NY) who is expected to become the new Senate Minority Leader. These influential Senators have cosponsored bipartisan LIHTC legislation introduced by our champion Senator Maria Cantwell (D-WA) that expands and improves the credit. Housing Advisory Group members have been working hard to add additional cosponsors to the Cantwell legislation.
At the same time, the industry is monitoring other opportunities to improve the credit. If, as many anticipate, comprehensive tax reform is not viable in 2017, there is a possibility that Congress might tackle a more limited tax package focused on international taxes. In addition, both congressional Democrats and President-elect Trump have expressed support for addressing the nation’s crumbling infrastructure. There is some thought that a package with international tax reform and infrastructure improvements could garner bipartisan support and reach the President’s desk for his signature. The infrastructure piece might provide an opportunity to include improvements to the LIHTC.
As we reported earlier, we also have been looking at the lame duck as a possibility to move some of the Cantwell LIHTC improvements as part of a package to fund the government beyond December 9. However, given the election results, that is looking less likely. In fact, many predict that very little will happen before the 114th Congress concludes. Republicans need only wait two months to move past a potential Obama veto on their priorities, suggesting that there will be a short term spending deal in December that kicks the can into 2017 and gives Republicans the ability to move their own priorities into law without Democratic obstruction.
We will continue to do all we can to look for any LIHTC opportunities, and will be carefully monitoring the year-end spending package as a potential vehicle. We are working with the industry and the ACTION campaign in the ongoing efforts to educate Members of Congress about the credit, and your assistance in this regard has been invaluable. Please continue to take every opportunity to meet with your elected officials and show them the properties in their districts and states.