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Analysis: House tax reform would drastically cut state's affordable production, preservation

Posted on November 15, 2017

BOSTON --- An analysis by the Massachusetts Housing Partnership in conjunction with the state’s key housing agencies shows that the House tax reform bill currently under consideration would reduce the production and preservation of affordable housing in Massachusetts by approximately 69 percent.  The overall impact of the two proposals is summarized below:

Both the House and Senate tax reform bills would reduce the amount that private investors pay for federal housing tax credits by reducing the corporate tax rate to 20 percent.  That change alone would sharply reduce the effectiveness of the Federal Low Income Housing Tax Credit, a program with strong bipartisan support that has been the primary means of producing and preserving affordable housing in the U.S. since 1987.  The House bill would have a much more extreme impact by eliminating tax-exempt “private activity bonds” that are sold to private investors to finance affordable housing.  Housing developments financed by those bonds are also eligible for federal tax credits, without which the developments would not be economically feasible.  As shown in the following analysis, the House bill would reduce housing production and affordable housing preservation in Massachusetts by more than two-thirds while eliminating more than 3,000 recurring construction jobs:

This analysis was developed in collaboration with the Massachusetts Department of Housing and Community Development, which allocates Federal Low Income Housing Tax Credits in the Commonwealth, and with MassHousing and MassDevelopment, the two quasi-public state agencies authorized to issue tax-exempt bonds for housing.

For more information contact Mark Curtiss, MHP’s Managing Director, at mcurtiss@mhp.net, or Senior Lending Analyst Anne Lewis at alewis@mhp.net.