House Speaker Paul Ryan and Ways and Means Committee Chairman Kevin Brady today unveiled the tax policy plank of a six-part House GOP policy agenda that would overhaul the tax code and affect important housing tax provisions.
Responding to the plan in an official statement, NAHB Chairman Ed Brady acknowledged the House GOP leadership for attempting to set a bold vision, but cited major concerns regarding key housing tax provisions. He pledged to work with Congress to ensure that any tax reform efforts recognize that housing is a key driver to ongoing economic growth.
Here is Brady’s full statement:
“If the goal of the blueprint is to grow the economy and incentivize investment, then the biggest investment most Americans make, the purchase of a home, should be reflected in our nation’s tax priorities. Although the plan attempts to set a bold vision, the blueprint makes fundamental structural changes to the tax system that will dramatically reduce the number of itemizers, effectively eliminating the value of the mortgage interest deduction for middle-class Americans.
“Equally troubling, the plan fails to see the need to maintain one of the nation’s most successful anti-poverty programs, the Low Income Housing Tax Credit. Moreover, it fails to address the fate of two other vital housing tax incentives: like-kind exchanges and the capital gains exclusion for the sale of a home.
“Many in Congress have looked back to the tax reform efforts in 1986 as a guide forward for today. And there are some important lessons to remember from that experience. First, it is possible to achieve those low rates and maintain strong incentives for housing. But we also saw for commercial and multifamily real estate the perils of significant tax policy changes. Most economists agree that the changes in the 1986 Act led to a crisis in commercial and multifamily real estate. How housing is dealt with in tax reform will shape the economy moving forward. Housing can be a key engine of job growth that this country needs.
“NAHB believes that lower rates, simplification, and a fair system will spur economic growth and increase competitiveness. And that’s good for housing, because housing not only equals jobs, but jobs means more demand for housing. To foster that virtuous cycle for economic growth, we believe strongly that Congress must look upon changing the homeownership tax incentives with caution. All it takes is a 1% decline nationwide in home prices to wipe out $220 billion in household wealth, and we have all experienced first-hand the damaging economic effects of falling home prices during the Great Recession.
“Though Speaker Paul Ryan and Ways and Means Committee Chairman Kevin Brady have put forth a GOP tax reform blueprint aimed at putting economic growth at the forefront of the agenda, the plan ignores the importance of housing as a primary source of wealth, security and social stability. We look forward to working with Congress to ensure the next generation tax code recognizes that housing is a key driver to economic recovery and ongoing economic growth.”