Copyright: Tupungato
The House Ways and Means Oversight Subcommittee convened a hearing on “Expanding Housing Access to All Americans” on Wednesday, July 14, 2021. The hearing featured academics, economists and practitioners involved in community development and home building.
The hearing examined affordable rental and for sale housing. Witnesses made the case that the lack of affordable housing can be traced to the fact that the supply of housing has failed to meet demand in the wake of the financial crisis of 2008. The current supply-demand imbalance has intensified challenges of housing access and affordability for many Americans. Members expressed support for improving measures that have been key for the multifamily industry such as the LIHTC, New Markets tax credits and Opportunity Zones. The Members and Witnesses focused their comments on the inherent inequities in the nation’s national housing policy. A common theme centered on how current tax policy has favored the accumulation of generational wealth largely by white, middle to upper class homeowners while suppressing wealth accumulation for others.
Further, several of the participants raised the possibility of reimagining our current system of tax credits and deductions to improve housing equity. Lilian Faulhaber, Professor of Law, Georgetown University, raised the possibility of reimagining our current system of tax credits and deductions and whether the goals of improved housing equity would be better served by direct subsidies administered by the Department of Housing and Urban Development or another appropriate agency.
There was broad acknowledgement that regulatory compliance is a significant cost for developers along with costs related to labor shortages and the escalating costs of building materials and supply chain disruptions for building components and appliances. Members observed that production of multifamily housing was the solution to addressing housing shortages in urban areas that are heavily cost-burdened, yet local policies can create barriers to these developments.
The Ways and Means Committee will be integral as Congress and the Administration work to craft an infrastructure package; and specifically, in identifying how that package will be paid for. NMHC believes that the infrastructure legislation represents a critical opportunity to address the nation’s growing housing demand and meet our housing affordability challenges.
Infrastructure and housing are linked in significant ways. The development and rehabilitation of housing is directly dependent on the availability and condition of transportation and other infrastructure assets. However, we continue to be concerned about some of the proposals being considered to finance the cost of the infrastructure legislation that would undermine housing production and preservation such as limiting taxpayers’ ability to defer gain that is reinvested in property of a like-kind; doubling the tax rate on long-term capital gains; taxing unrealized capital gains at death; and taxing carried interest as ordinary income.
NMHC and NAA will continue to educate Congress on the importance of retaining the various tools in the tax code that have aided the industry in building and preserving apartment communities. Our testimony submitted for the record can be found here.