The Republicans of the House and Senate released the final version of their tax bill on Friday, Dec. 15, with the intention of voting it into law before the new year. The bill—titled the Tax Cuts and Jobs Act—has received numerous edits since it was originally introduced by House Means and Ways Committee Chairman Kevin Brady in early November. While many of its core reforms remain (reducing the corporate tax rate from 35 percent to 21 percent, doubling the income requirement for an estate tax, repealing the healthcare mandate), the future of affordable housing was spared from the fate that earlier drafts had sentenced it to.
In an early version of the bill, private activity bonds—which the government utilizes to fund infrastructure projects—were eliminated. Private activity bonds account for the majority of low-income housing unit development. The bill was also going to decrease rates in tax credits, which would make other development pathways much more expensive, and the development of affordable housing would potentially have stagnated.
According to Rachel Heller, CEO of the Massachusetts branch of the Citizens’ Housing and Planning Association, the state would have seen 30,000 fewer affordable homes over the next decade. This would have been on top of Massachusetts’ current shortage of 160,000 affordable homes, according to Heller.
The Senate later offered an alternative version of the tax bill in which both the private activity bonds cut and the tax credit decrease were removed. At the time, it was unclear to the public which version of the bill would make it to the final stage.
“While both versions of the tax reform plans will be devastating for so many people,” said Rachel Heller in a released statement, “the Senate plan preserves programs that are critical to affordable housing and community development and provides opportunities for individuals and families with low incomes to live in safe, healthy and affordable homes.”
The final draft revealed on Friday followed the Senate version’s path, keeping the repeals out. According to Novogradac & Company, a consulting firm, this could save almost 900,000 future affordable housing units throughout the United States in the next decade. The news comes as a relief to an already underperforming nation: according to a 2017 report by the Urban Institute, every county in the United States has an affordable housing crisis shortage.
Relief is especially evident in Boston, where a housing crisis has been steady for years. As rents continue to rise in every neighborhood, and as luxury development persists with political approval, residents have few options to turn to when they are priced out of their homes. Mayor Martin J. Walsh has stated a desire to build some 53,000 new housing units by the year 2030; only 6,500 of those units will be for low-income families. As of now, 22,000 units have been built, with less than 2,000 set aside for low-income families. Already, there is a massive disparity in what housing is being built and for whom in Boston.
While the most glaring threats to affordable housing development have been removed from the Tax Cuts and Jobs Act, it may still run into several hurdles. The massive corporate tax break that the bill proposes will maintain and extend the massive class disparity in the United States. By giving the owning class a greater cash flow and, as a result, stripping government of that wealth, public services will feel the impact. According to the Congressional Budget Office, the tax code would add $1.7 trillion to the nation’s debt over a decade.
While the House has to vote on the bill a second time after the Senate found it violated certain provisions, the bill is expected to pass once again after the changes have been made. President Donald Trump is also expected to sign it.