What The New Tax Bill Means For Housing
As many of you probably already know, the new tax bill recently passed Congress, which may unfortunately have some detrimental impacts to affordable housing and nonprofits like WHC.
While the bill itself is finalized, everyone is agreed that the tax cuts are not yet fully funded. This means that there will likely be future cuts to programs such as Medicaid, Medicare and many of HUD’s programs. This has already evidenced itself in President Trump’s budget (which will be modified as it goes through the House and the Senate). Experts estimate the bill could “reduce federal funding for subsidized housing in the state by 20 percent, translating to roughly $500 million a year of projects and 4,000 new units lost.” (Mercury News).
In addition, housing programs that were funded via tax incentives are going to be negatively affected. “Private activity bonds,” which have for years helped low-income families get affordable housing, will lose their tax exempt status. Bonds like these help keep construction costs down on the housing, which allows companies to charge less money to rent or buy. By losing their tax exempt status, contractors will be forced to charge more, making housing even less affordable. While the efficacy of such programs has been challenged, with no replacement programs or increased funding to existing programs, the negative effect on affordable housing can not be denied.
Unintended effects on programs funded via tax incentives will also include tax credit programs like the Low Income Housing Tax Credit. This program while still in place will raise less money for projects utilizing such funding in that with lower corporate tax rates, the value of the credits being sold will also be lower. There is offsetting reduction to construction costs making it even harder to finance affordable housing construction.
The tax bill may also negatively affect nonprofits like WHC. Due to the increase in the individual exemption and limitations of other deductions many people will no longer be itemizing their deductions, making it less appealing for taxpayers to give more to nonprofits throughout the year. This is especially true for many people who may simultaneously be paying higher taxes. What will happen to donations to nonprofits like ours, where homelessness may not be at the top of taxpayers’ lists for giving?
Continuing to make your support of WHC (and other local charities making a difference in our community) a priority will allow us to continue to provide housing to those most in need (people who have experienced homelessness). Help us fight for affordable housing for low-income residents. Help us help people who society often forgets. Safe, dignified, quality housing should be available to everyone.