Senators Ron Wyden (D-OR) and Dan Sullivan (R-AK), along with Representatives Jimmy Panetta (D-CA) and Mike Carey (R-OH), introduced in the U.S Senate and House of Representatives the “Workforce Housing Tax Credit Act,” a bill that would create a Middle-Income Housing Tax Credit. NLIHC strongly opposes the bill on the grounds that investing federal funds in middle-income housing is a misguided and wasteful use of scarce federal resources. NLIHC urges members of Congress instead to support reforms to the Low-Income Housing Tax Credit (LIHTC) and include such reforms in the end-of-year tax package currently being negotiated by Congress. Reforming LIHTC would improve the program to ensure it addresses the most pressing housing issue facing communities nationwide: the lack of affordable housing for extremely low-income people and those experiencing or most at risk of homelessness.
The “Workforce Housing Tax Credit Act” would create a new federal tax credit to incentivize developers to build and preserve market-rate apartments affordable to families earning 100% or less of the area median income (AMI). NLIHC strongly opposes the “Workforce Housing Tax Credit Act” and encourages our members, partners, and allies to reach out to their members of Congress to urge them to oppose the bill as well. Research shows that middle-income families comprise less than 1% of those facing significant housing challenges, while 92.5% of severely cost-burdened households have very low or extremely low incomes and would not be served by the new tax break for investors.
This new version of the proposal for a Middle-Income Tax Housing Tax Credit (MIHTC) comes at a time when homelessness is increasing in many communities, with more than half a million people experiencing homelessness on any given night, and millions more at risk. MIHTC would divert scarce resources to create a program that would serve fewer than 100,000 middle-income renters who are severely housing cost burdened while providing minimal benefit to the 11 million low-income families who pay more than half their income on rent. Additionally, reframing middle-income housing investments as “workforce housing,” as the bill does, is disingenuous because many extremely low-income people are in the labor force . According to findings in NLIHC’s Out of Reach, 10 of the 20 largest occupations in the U.S. – representing one third of the workforce – pay median wages less than the wage a full-time worker needs to earn to afford a modest one-bedroom apartment at fair market rent. Any bill that leaves out the lowest-paid members of the workforce cannot be described as a bill that supports “workforce housing.”
In a small number of communities, middle-income families do face high rents. However, rather than creating a new federal tax credit to incentivize the private market to build homes that it can already provide without a federal subsidy, Congress should look at other reforms that would more effectively and efficiently utilize federal dollars. For example, Congress should pass legislation incentivizing or requiring local and state governments to address restrictive zoning and land use policies that prevent the private sector from building homes and drive up the costs for all renters. Senator Wyden has introduced other proposals to create a Middle-Income Housing Tax Credit (MIHTC), including his “Decent, Affordable, Safe Housing for All (DASH) Act” (see Memo, 3/13), which NLIHC also opposed.
Take Action to Reform the Low-Income Housing Tax Credit (LIHTC)!
Top congressional leaders are working quickly to try to reach a bipartisan agreement before the end of the year to expand the Child Tax Credit and revive several expired business tax incentives. If a deal is reached, the tax package could also include resources to expand and reform the Low-Income Housing Tax Credit (LIHTC).
It is critical that Congress ensure that any new LIHTC resources included in a tax package can serve the millions of households experiencing or at risk of homelessness – those most harmed by our nation’s housing crisis. Make your voice heard! Tell Congress that any expansion of LIHTC must be paired with key bipartisan reforms to better serve America’s lowest-income and most marginalized households and renters living in rural and tribal communities.
While LIHTC is an important source of federal funding for affordable housing, it is rarely sufficient on its own to build or preserve homes affordable to households with the lowest incomes – those with the greatest, clearest needs. The majority (58%) of extremely low-income renters living in LIHTC developments who do not also receive rental assistance are severely cost-burdened, paying more than half their incomes on rent.
Because there are so few opportunities in 2023 and 2024 to expand housing resources at the federal level, it is critical that Congress ensure that these new resources are spent as effectively as possible to address the underlying causes of the housing crisis and to help those with the greatest needs.
Take Action!
Contact your senators and representatives – including those who serve on the Senate Finance Committee or House Ways & Means Committee – to urge them to ensure that any new LIHTC resources can reach households experiencing or at risk of homelessness.
Ask your members of Congress to pair any expansion of LIHTC with key bipartisan reforms, including:
- Expanding the Extremely Low Income (ELI) Basis Boost – for housing developments that set aside at least 20% of units for households with extremely low incomes or those experiencing homelessness, and
- Designating Tribal and rural communities as “Difficult To Develop Areas (DDAs),” which would make it more financially feasible for developers to build affordable homes in these areas.
All of these reforms are included in bipartisan legislation, the “Affordable Housing Credit Improvement Act,” (S.1557/H.R.3238), as introduced by Senators Maria Cantwell, Todd Young (R-IN), Ron Wyden (D-OR), and Marsha Blackburn (R-TN), along with Representatives Darin LaHood (R-IL) and Suzan DelBene (D-WA).
Take action! Ask your members of Congress to pair any expansion of LIHTC with three key reforms, which are included in the bipartisan “Affordable Housing Credit Improvement Act”: https://p2a.co/ZhQtlH2
Read Senator Wyden’s press release on the “Workforce Housing Tax Credit Act” at: https://bit.ly/3uQV3BJ
Read the text of the “Workforce Housing Tax Credit Act” at: https://bit.ly/41i8B5A
Read NLIHC’s fact sheet, “Middle-Income Housing Tax Credit: Wasteful and Misguided,” at: https://bit.ly/3Nkigmp