GOP tax plans could worsen housing affordability crisis
Proposed changes to corporate tax rates, and tax credits for the construction of below-market housing, could worsen the nation's affordability crisis, the Wall Street Journal reports.
Why it matters: A recent report from Freddie Mac estimates that America's stock of housing that is affordable for low-income Americans fell by 60% between 2010 and 2016.
- The problem is concentrated in cities with the highest-paying jobs, like New York, Seattle, and San Francisco.
- The lack of affordable homes in America's most economically vibrant areas is reducing economic mobility, because workers cannot afford to move to cities with higher-paying jobs.
Both the House and Senate tax bills, by lowering the corporate tax rate from 35% to 20%, would automatically reduce the uptake of the affordable housing credit, because lower rates make tax credits less valuable.
- The House bill goes further, eliminating a tax break on bonds used to finance affordable housing projects.
- The Journal cites a report by Novogradac & Co., an accounting firm specializing in real estate, that predicts if the House bill passes, the U.S. economy would create 1 million fewer affordable housing units over ten years.