Print More

Speaking last Tuesday to the New York Housing Conference, Senator Chuck Schumer gave the crowd at the Sheraton music to go with their lunch: a proposal to double the Low Income Housing Tax Credit, the federal government’s largest affordable housing production effort.

“The credit has not only the support of housing advocates but also the backing of the very powerful real estate lobby who will also, in my opinion, get behind it,” said Schumer. “These people will be able to persuade many Republicans on the Finance Committee and in the Congress who wouldn’t normally vote for the expenditures.”

The tax credit program currently subsidizes the construction or preservation of 130,000 affordable housing units a year, including more than 4,300 in New York for 2003. Companies seeking to reduce their taxes can invest in the credit. The proceeds are then distributed by intermediary organizations to states and cities, which then pass them on to nonprofit and commercial housing developers. The Internal Revenue Service limits total investment in the tax credit to a maximum of $1.85 per state resident. Under Schumer’s proposal, Congress would double that, to $3.70.

Senate Democratic leadership recently appointed Schumer to the Finance Committee, an influential seat with power over Social Security, Medicare and Medicaid, welfare and other domestic spending, as well as the Internal Revenue Service, which administers the tax credit program. Among other posts, Schumer will remain on the Banking committee, which also deals with housing finance.

Schumer said he has identified potential Republican supporters of the proposal, although he declined to name any. Like any Democratic legislative proposal in the Republican-run Senate, the tax credit expansion now faces an uphill climb. “Competition for resources from tax policymakers is very broad and intense. Every industry in the country wants tax credits,” noted Buzz Roberts, director of policy for the Local Initiatives Support Corporation, which advised Schumer’s staff on the proposal and is one of the nation’s biggest Low Income Housing Tax Credit intermediaries. In October, President Bush signed off on $143 billion in new corporate tax breaks.

In addition, Bush has indicated that he wants to form a commission to reform the tax code. Last year, Congress considered changes to corporate taxes that could greatly reduce companies’ incentive to invest in the Low Income Housing Tax Credit, and affordable housing advocates remain concerned that such proposals could resurface.

Given the wide range of business the finance committee will be tackling in the next session—including measures to privatize Social Security—Roberts considers it no small gift that Schumer is there pushing housing as a priority. Said Roberts, “It’s terrific for housing and terrific for New York.”

Leave a Reply

Your email address will not be published. Required fields are marked *