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NAHB Shepherds Low-Income Housing Credit Through Tax-Bill Process

Consumers, businesses and investors will begin feeling the beneficial effects of President Bush’s tax-cut package this summer, and, thanks to some help from the nation’s home builders, the bill will be priming the economy for growth without any adverse consequences for the Low-Income Housing Tax Credit.

When the White House first proposed eliminating the double taxation of corporate dividends, NAHB went to work to help resolve concerns that unintended harm might befall the credit, which is a mainstay of the nation’s low-income housing policies.

Once negotiations over the legislation began, NAHB started working with the Administration and congressional leaders to shape the tax plan so that it would be beneficial for all sectors of the housing industry at the same time as it addressed the need for reinvigorating the country’s languishing economy.

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NAHB was the only housing organization invited to pull up a seat to the negotiating table. Throughout the process, which lasted for months, the association worked with the White House, Commerce Secretary Don Evans, Treasury Secretary John Snow and Sen. Charles Grassley (R-IA) and Rep. Bill Thomas (R-CA), the leaders of the tax-writing committees in the Senate and House.

NAHB provided expertise through economic research and analysis exploring ways to ensure that any final tax law would not undermine the effectiveness of the Low-Income Housing Tax Credit.

Under the law that was finally signed by the President this spring, the reduction in taxes on dividend income is calculated strictly at the shareholder level, and by purchasing tax credits corporations can increase their earnings and distribute more dividends. Those increased dividends are then taxed at the reduced capital gains tax rates, which are much lower than the ordinary income tax rates that apply to dividends today.

As a result, noted NAHB President Kent Conine, “we now have an economic stimulus plan that will ensure that all sectors of the housing industry continue to create the jobs and stimulate the economic growth that are needed to restore full prosperity for our nation’s families and businesses.”
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