This is a watershed moment for our country – and it’s bleak.
The Senate just rushed to passage an unconscionable, unjust, and grossly irresponsible tax bill. With this vote, Republicans in Congress are one step closer to providing massive, unpaid-for tax cuts for the ultra-wealthy and draining resources needed for other critical investments, including affordable housing.
Some of the contents and impacts of the Republican tax bill are still largely unknown, due to the rushed and secretive process. We know, from a sampling of the last-minute additions to the bill that have been revealed so far, that the bill includes plenty of big-donor stocking stuffers: a tax exemption for a single college with ties to Education Secretary Betsy DeVos, tax benefits for a single Republican mega-donor, and tax breaks for private jet owners.
Despite some uncertainty, one thing is clear: this tax bill will harm efforts to provide affordable homes to those most in need. The bill significantly lowers the corporate tax rate, and in doing so, it lowers the value of the Low Income Housing Tax Credit (Housing Credit) and the equity available from it. This is one of several ways that the Senate bill will lessen the value of the Housing Credit. The bill also triggers a 2010 law that almost immediately forces sequestration cuts on some mandatory spending, including a 6.6% cut to the vital national Housing Trust Fund, a program dedicated to building and preserving rental homes for the lowest income seniors, people with disabilities, and families with children struggling to get by. Taken together, the result will be fewer affordable homes built and preserved at a time when, according to NLIHC’s research, we face a shortage of 7.4 million affordable homes for extremely low income people.
The Republican tax bill also increases the debt by at least $1 trillion. Think about that one for a moment: $100 billion a year in lost revenue for the federal government. With an investment of half that amount, we could end homelessness and housing poverty once and for all by expanding rental assistance, the national Housing Trust Fund, deeply targeted Housing Credit apartments, public housing capital repairs, supportive services, and emergency financial assistance to help keep people housed. Increasing housing affordability would translate into improved health, lowered health care costs, higher educational attainment, and increased lifetime earnings for tens of millions of people in America. It would mean more jobs and more money in the bank to help families get through a financial emergency or to save for college or retirement. Instead, Republicans chose to spend $1 trillion on tax breaks to corporations and wealthy individuals. A full 62% of the benefits of the bill go to the top 1% of earners.
The increased federal deficits created by the Republican tax bill will lead to further cuts to federal investments down the line. Republican leaders have been transparent about their intent: next on the agenda is welfare reform, cuts to entitlement programs, and decreased federal spending. You can be sure that they will use the deficits created by this tax bill as a reason for demanding spending cuts.
Instead of passing a tax bill with benefits vastly skewed towards making the wealthy even wealthier at the expense of low and middle income people, our country should be making major investments in repairing and rebuilding homes and communities devastated by recent disasters and in solutions to the rental housing crisis impacting communities across the country. We should be taking steps to combat levels of income inequality not seen since the 1920s.
Through comprehensive tax reform efforts, the Senate could have enacted smart, modest reforms to the mortgage interest deduction – a $70 billion tax write-off that primarily benefits higher incomes households – to better serve homeowners of modest means and to generate savings that would be reinvested into affordable rental homes for people with the lowest incomes. It could have expanded investments in the national Housing Trust Fund and more deeply targeted Housing Credit developments. And it could have created new investments – like a renters’ tax credit – to help more families afford the roof over their heads so they would no longer have to choose between paying their rent and buying groceries, visiting their doctor, paying for medications, or saving for a rainy day.
Comprehensive tax reform could have been a once-in-a-generation opportunity to build more rungs on the ladder of opportunity by addressing one of the greatest barriers to economic success for families struggling to get by – the lack of decent, accessible and affordable homes for the lowest income people. Instead, the Senate Republican tax bill breaks the rungs that so many Americans rely on to get ahead and threatens to slash the safety net that catches us if we fall.
It’s not over yet - this misguided bill does not have to be turned into law. Over the next week, Senate and House appointed conferees will iron out differences between the two bills, and both the House and the Senate will then need to pass a final bill. Over the next several days, it is essential that you continue calling your members of Congress urging them to defeat the Republican tax plan and start work on a bipartisan bill.
At the same time, we must urge members of Congress to work towards lifting harmful spending caps and pass final appropriations bills. The current Continuing Resolution (CR) funding the federal government expires on Friday. The House has introduced a bill to extend the CR through December 22, but some conservative Republicans are threating to block an extension of a CR and the president seems to be encouraging a government shutdown which he has said he thinks would benefit him politically. House and Senate leadership must continue work on a longer term budget deal to lift the restrictive spending caps. We’ll work to ensure the caps are lifted with parity and provide equal relief to defense and nondefense spending. Congress is also writing its next disaster supplemental spending bill, which may be tied either to the next CR or a final spending bill/deal at the end of the year. We must continue urging Congress to provide adequate resources for low income people and communities impacted by recent disasters to fully recover and rebuild.
Stay tuned for updates and calls to action. Thank you for your dedication and continued advocacy. We have so much work to do.
Onward,
