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GOP tax plans could worsen housing affordability crisis

Photo: Keith Srakocic / AP

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.
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