As CHC members who recently visited Washington, DC can tell you, the atmosphere on Capitol Hill is frenetic.  What was supposed to be an orderly process to address the key campaign promises made by President Trump and congressional Republicans has not so subtly come off the rails.  With the turmoil surrounding repealing and replacing the Affordable Care Act (ACA) in full display, one might think the entire legislative agenda is at risk.  But let us not get ahead of ourselves -- tax reform remains a priority for both Republicans and Democrats.  And while the ACA debate has dominated the recent news cycles, work on the tax code overhaul has continued with the Administration becoming more engaged in the reform conversations.

We still expect the Ways and Means Committee to reveal the statutory language and details of the House Republican tax reform blueprint released last year.  The robust debate surrounding the proposed Border Adjustment Tax (BAT), a key component of the blueprint, continues to escalate.  While the Trump Administration has yet to show its hand on this provision, we are beginning to see signals where the Administration may differ with the House blueprint.  Specifically, Treasury Secretary Steven Mnuchin recently indicated that President Trump believes carried interest should be taxed as ordinary income and may not support eliminating the deduction of corporate interest.  This is just the beginning.  As more of the House proposal comes to light, the debate will liven -- so get ready for a fun ride.

As for the LIHTC, we continue to have discussions with the House Ways and Means and Senate Finance Committees, the Joint Committee on Taxation, and recently, key advisors on the National Economic Council (NEC) and the Domestic Policy Council in the White House.  We are happy to report that these conversations have gone well, and the positive comments about the LIHTC conveyed by senior NEC staff were encouraging.  But we still have work to do.  Nothing is certain until the proposals are made public, hearings are held, tax reform is voted on in the House and Senate and signed by the President.  So the work of educating Members of Congress is ongoing.  It is worth noting the quote from the communications staff of the House Ways and Means Committee in a March 21st Wall Street Journal article entitled,  Tax Overhaul Threatens Affordable Housing Deals:

"Ways and Means Republicans believe the low-income housing tax credit is important and they are working through how this credit will fit in our next system."

There is more good news for the LIHTC with the recent introduction in the Senate and House of the Affordable Housing Credit Improvement Act of 2017.  Key provisions in the Senate version of the bill,  S. 548, include a 50% LIHTC cap increase, a permanent minimum 4% floor and a provision that allows properties to rent up to 80% of AMI as long as the property itself averages 60% AMI. The House version of the bill,  H.R. 1661, does not include the 50% cap increase and the provision eliminating the basis reduction for housing credit projects that claim certain energy efficiency tax incentives is more narrowly crafted in the House bill. 

It is our hope that these bills will be included as part of the tax reform discussions. Our job now is to secure House and Senate cosponsors for the two bills, and we encourage you to continue to engage members of the California delegation and ask them to sign onto the legislation.