Defending Low Income Housing Tax Credits
Around the world, countries are working to reduce their deficits and get their spending under control.
It's no different here in the United States.
Debt talks have been on-going for months, and though political parties agree about what needs to be done, they can't find common ground with regards to how it should be done.
We need fewer expenditures, but whose budgets should be cut? And by how much? These are the questions of the day.
Senator Tom Coburn (R-OK) recently released a budget proposal called "Back in Black," that contains his answers to these important and difficult questions.
However, his answers have gotten the attention - and invoked the anger - of a prominent coalition.
Coburn's proposal suggests cutting several programs the Senator deemed either wasteful or unnecessary.
Among them was the Low-Income Housing Tax Credit program.
The Affordable Housing Tax Credit Coalition has issued a formal response to Senator Coburn's criticisms of the LIHTC, and is encouraging members of related industries to sign on in support of the response.
The Coalition's response is a point-by-point rebuttal of Senator Coburn's reasoning for wanting to eliminate the LIHTC program; reasoning the coalition refers to as "faulty.
" In addition, the Coalition states that much of the information used by Coburn is also faulty.
For example, in his budget proposal, Senator Coburn cites a study that was conducted in the state of Missouri and found the LIHTC program to be inefficient.
However, that study was conducted on the state's program, not the federal program, and is not an accurate representation of how the federal program is run.
While it may be true that, in Missouri's LIHTC program, only 35 cents of every dollar is spent on housing development and construction, at the federal level, prices paid for low-income housing tax credits are as high as 85 to 90 cents per dollar.
Senator Coburn also stated that the tax credits do not directly benefit housing residents, because the tax credits are paid to private investors.
However, what Coburn's proposal failed to mention is that the tax credits are awarded to investors who agree to help fund affordable housing projects, which is what enables owners to set lower rents.
While the tax credit money may not flow directly to housing residents, there is still a direct benefit: low-income housing tax credits equal private investment, which equals affordable rental costs.
While the Senator's proposal states that the LIHTC program has done little to increase the nation's affordable housing stock, a study conducted by Harvard University's Joint Center on Housing Studies deemed it the "most successful federal affordable housing production and preservation program in the nation's history," as cited in the Affordable Housing Tax Credit Coalition's formal response.
In addition, the National Association of Home Builders conducted a study in 2010, which found that each 100-unit housing project funded with Low-Income Housing Tax Credits created 122 construction jobs and 30 long-term jobs.
The Coalition's response goes on to refute the Senator's statement that the LIHTC program is "duplicative.
" In his proposal the Senator claims that the LIHTC program is redundant, because there are other programs that provide the same investment opportunities and encourage development of affordable housing.
But another report by the Harvard Joint Center found that the LIHTC program is a necessary tool that encourages investment by the private sector in a way that is not achieved by any other program.
In his proposal, the Senator also claims that eliminating the LIHTC program would save the country about $57 billion over ten years.
What his proposal does not state is that we will only enjoy that high level of savings if repeal the LIHTC program is made retroactive - meaning that investors would be forced to pay back any money they have ever received from the program.
Even if the program were eliminated, making it retroactive is highly unlikely, as it would place a nearly insurmountable financial burden on the very sectors that we're now turning to for job creation and economic growth.
We need solutions to our spending and deficit challenges, but not just any solution will do.
We need solutions based on fact, not biased opinion, and that contain actionable items rather than "best of" scenarios that are untenable.
It's no different here in the United States.
Debt talks have been on-going for months, and though political parties agree about what needs to be done, they can't find common ground with regards to how it should be done.
We need fewer expenditures, but whose budgets should be cut? And by how much? These are the questions of the day.
Senator Tom Coburn (R-OK) recently released a budget proposal called "Back in Black," that contains his answers to these important and difficult questions.
However, his answers have gotten the attention - and invoked the anger - of a prominent coalition.
Coburn's proposal suggests cutting several programs the Senator deemed either wasteful or unnecessary.
Among them was the Low-Income Housing Tax Credit program.
The Affordable Housing Tax Credit Coalition has issued a formal response to Senator Coburn's criticisms of the LIHTC, and is encouraging members of related industries to sign on in support of the response.
The Coalition's response is a point-by-point rebuttal of Senator Coburn's reasoning for wanting to eliminate the LIHTC program; reasoning the coalition refers to as "faulty.
" In addition, the Coalition states that much of the information used by Coburn is also faulty.
For example, in his budget proposal, Senator Coburn cites a study that was conducted in the state of Missouri and found the LIHTC program to be inefficient.
However, that study was conducted on the state's program, not the federal program, and is not an accurate representation of how the federal program is run.
While it may be true that, in Missouri's LIHTC program, only 35 cents of every dollar is spent on housing development and construction, at the federal level, prices paid for low-income housing tax credits are as high as 85 to 90 cents per dollar.
Senator Coburn also stated that the tax credits do not directly benefit housing residents, because the tax credits are paid to private investors.
However, what Coburn's proposal failed to mention is that the tax credits are awarded to investors who agree to help fund affordable housing projects, which is what enables owners to set lower rents.
While the tax credit money may not flow directly to housing residents, there is still a direct benefit: low-income housing tax credits equal private investment, which equals affordable rental costs.
While the Senator's proposal states that the LIHTC program has done little to increase the nation's affordable housing stock, a study conducted by Harvard University's Joint Center on Housing Studies deemed it the "most successful federal affordable housing production and preservation program in the nation's history," as cited in the Affordable Housing Tax Credit Coalition's formal response.
In addition, the National Association of Home Builders conducted a study in 2010, which found that each 100-unit housing project funded with Low-Income Housing Tax Credits created 122 construction jobs and 30 long-term jobs.
The Coalition's response goes on to refute the Senator's statement that the LIHTC program is "duplicative.
" In his proposal the Senator claims that the LIHTC program is redundant, because there are other programs that provide the same investment opportunities and encourage development of affordable housing.
But another report by the Harvard Joint Center found that the LIHTC program is a necessary tool that encourages investment by the private sector in a way that is not achieved by any other program.
In his proposal, the Senator also claims that eliminating the LIHTC program would save the country about $57 billion over ten years.
What his proposal does not state is that we will only enjoy that high level of savings if repeal the LIHTC program is made retroactive - meaning that investors would be forced to pay back any money they have ever received from the program.
Even if the program were eliminated, making it retroactive is highly unlikely, as it would place a nearly insurmountable financial burden on the very sectors that we're now turning to for job creation and economic growth.
We need solutions to our spending and deficit challenges, but not just any solution will do.
We need solutions based on fact, not biased opinion, and that contain actionable items rather than "best of" scenarios that are untenable.
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