Vermonters weigh federal tax reform proposals

By: Leslie Black-Plumeau

When the Senate and House released their initial tax reform proposals last week in Washington, Vermont's Congressional delegation went to work to protect valuable resources that are part of the tax code, such as private activity bonds and housing tax credits.  Tax programs are responsible for most affordable housing developed in Vermont in the past 30 years.

Although revisions are ongoing, both bills as they stand now would likely result in a 15% reduction in the funds the federal low-income housing tax credit generates for affordable rental housing development.  A number of other provisions in the bills would also impact the availability of funds for housing.  

Last Friday, Congressman Peter Welch, VHFA’s Executive Director Sarah Carpenter and partners from Vermont’s business, non-profit and government sectors discussed implications of the recent tax reform proposals.  Carpenter explained that using tax incentives to promote affordable housing was originally a product of president Ronald Reagan’s massive tax reform of 1986. “Congress at the time wanted to move away from government appropriations to tax incentives for housing,” she said. “It’s drawn a tremendous amount of private capital into real estate investment.” 

In 2016 alone, tax credits and proceeds from tax-exempt private activity bond financing created  approximately $35 million in equity for creating and rehabilitating 530 much-needed affordable apartments for low-income Vermonters across the state. Only about a quarter of the 77,000 renter households in Vermont have housing they can afford, with rents that consume 30% or less of income.