How the Tax Plan Hurts Housing
The proposed tax plan passed in the House poses a serious blow to affordable housing development, one of the linchpins to stability for young people overcoming homelessness and millions of others across the country who struggle to make ends meet.
The House bill, passed on Nov. 16, eliminates the New Markets Tax Credits program, which has been a huge spur to affordable housing development, including our new shelter in Alaska. The credits have helped create or retain hundreds of thousands of jobs in low-income communities, and helped build 100 million square feet of new construction in low-income communities. The current House bill would get rid of the program as well as already-approved funds for 2018 and 2019, while the Senate plan currently retains the credits.
The House plan also scraps Private Activity Bonds, which help finance low income housing. The loss of these bonds could mean “roughly 60,000 fewer affordable units are built or rehabilitated each year.”
The bill would make it more difficult for Covenant House and thousands of other charities to operate. Changes in rules for tax deductions and bequests will discourage charitable giving at the same time that increased deficits will force cuts in the social safety net.
Eliminating the estate tax, another provision in play in Congress, would by 2024 obliterate $7.8 billion in bequests to charity, according to the Center for American Progress. Economic news analyst Steven Rattner found that social service charities alone could lose $934 million in bequests if the estate tax is repealed.
In addition, raising the standard deduction on the nation’s tax forms would reduce from 30 percent to 5 percent the number of Americans who itemize their deductions – and who are most likely to make significant tax-deductible donations to charities. Discouraging people from itemizing, with other changes to the top tax rate, could slice charitable donations 63 percent, from $13.1 billion to $4.9 billion annually, according to the Lilly Family School of Philanthropy at Indiana University.
According to the Washington Post, “The GOP argues that middle-class people should end up giving more to charity since they will pay less in taxes.” I wonder if Congress is urging the ultra-rich, the main benefactors of the tax plan, to up their personal philanthropy as well.
The Senate’s plan, now under consideration, doles out tax cuts and benefits to people earning more than $100,000 a year, and will hurt poor and middle class people, starting with the poor first. Most Americans earning less than $75,000 a year will be worse off than they are today, according to the nonpartisan Congressional Budget Office.
Meanwhile, Congress has let two months pass without reauthorizing the 20 year old, bipartisan Children’s Health Insurance Program that protects NINE MILLION children.
Unfortunately, young people, including kids overcoming homelessness, don’t form their own PAC or vote in a block. They are too busy trying to survive, under the radar. A recent report that 10 percent of youth ages 18-25 become homeless each year barely made the national news.
I beg you to contact your Senators to keep our most vulnerable citizens in the foreground when they deliberate in the days ahead.