Most Americans knew that the Republican tax plan would be bad for us. That’s why we overwhelmingly did not support it. Yet, here we are in 2018 with a law that overhauls taxes in order to reduce taxes for the wealthy and for corporations while taxing the poor and middle class the hardest. That is most certainly not making America great—unless you have millions of dollars. Still, it gets worse. This law also means that the development of affordable housing will be impacted. And in a nation where homelessness is on the rise because rents are now sky-high, that isn’t exactly good news.
The last time that Congress approved a sweeping overhaul of the federal tax code, in 1986, it created a tax credit meant to encourage the private sector to invest in affordable housing. It has grown into a $9 billion-a-year social program that has funded the construction of some three million apartments for low-income residents.
But the Republican tax plan approved last month amounts to a vast cutback, making it much less likely that such construction will continue apace. Because the tax rate for corporations has been lowered, the value of the credits — which corporations get in return for their investments — is also lower. [...]
It works like this: State governments award credits to affordable-housing developers, who transfer them to corporations in exchange for equity in rental buildings whose units are set aside for low-income tenants. Corporations use the credits as a coupon against future taxes. Low-income housing tax credits are particularly popular among banks because affordable-housing investments help satisfy their obligations under the Community Reinvestment Act.
Thanks to the incredible greed of the Republicans, corporations now have no incentive to develop subsidized housing for people who desperately need it. That should be shocking. It would be in a lot of countries. But after all, this is America. And since our national culture is one in which people are so obsessed with wealth, fame. and getting as many material possessions as you can, it shouldn’t surprise us that conservative lawmakers and corporations are unconcerned with passing laws that will force people to live on the streets.
“It’s the greatest shock to the affordable-housing system since the Great Recession,” said Michael Novogradac, managing partner of Novogradac & Company, a national accounting firm based in San Francisco.
According to an analysis by his firm, the new tax law will reduce the growth of subsidized affordable housing by 235,000 units over the next decade, compounding an existing shortage.
Affordable housing is a crisis all over the country in major cities and their suburbs, and is particularly challenging on the West Coast. In Seattle, the homeless population increased by 44 percent in the last two years. And in Los Angeles and San Francisco, local lawmakers are looking at other ways to finance the construction of affordable housing developments. That’s an important step, but time is of the essence. We are in a housing crisis now and it will only get worse as corporations no longer build units that don’t make them any profit.
For now, there is little to suggest the rental burden will get better anytime soon. Over the next decade the younger half of the millennial generation will move into their 20s and 30s, adding to the pool of renters. Over that same period, more than a million units of affordable housing financed by low-income housing tax credits and other government programs are set expire and shift to higher rents, according to [Harvard’s Joint Center for Housing Studies.]
One result of the surge in higher-income renters is that units that policymakers politely refer to as “naturally occurring affordable housing” — run-down buildings where lower-income residents can afford an apartment without subsidy — are being pulled toward the higher end of the market.
Above all, let’s be clear about who this will impact: low-wage workers, people of color, young people—all of whom are more likely to be renters. We have more people renting now in America than in the last 50 years. It’s not a coincidence that the very people who are most marginalized in our society and less likely to have economic resources are the same folks who are now impacted by rising rents. This is exactly what structural inequality looks like. And it’s all being done in the name of “progress.” We can now safely add growing homelessness to the ways that this administration and Republicans have screwed the American people over. The 2018 midterm elections can’t come fast enough.