CityNews Alert: Tax Debate in DC Threatens Local Government
The “Tax Cuts and Jobs Act" currently being debated in Washington includes several provisions of concern to local government. The impacts to local government are significant enough that CaliforniaCityNews is supporting a petition "Protect Our Middle Class" and encouraging local elected leaders to sign on.
CURRENT PLAN ENDANGERS CALIFORNIA'S STATE BUDGET AND LOCAL GOVERNMENTS
Any loss of revenue due to federal changes will drastically impact CA's budget and the budgets of state and local governments that funds billions in services related to education, transportation, health care, housing, and others should make everyone take a second look at how the Federal Tax proposal would impact the entire state, including its economic growth and productivity and quality of life.
As noted in a recent League of California Cities statement:
The SALT deduction reflects a longstanding partnership between the federal, state and local governments. It ensures that local governments are able to provide essential public services and infrastructure to our residents, including police, fire, roads, and schools. A recent report from the Government Finance Officers Association notes, that if the SALT deduction is eliminated it would “…result in job losses, reduction in spending on capital equipment and decrease in infrastructure investment.”
To ensure that taxpayers are not double taxed, local governments are able to maintain critical public services, and homeownership retains key incentives, the League of California Cities is continuing to urge Congress to maintain the full SALT deduction.
Bipartisan leaders of the US Conference of Mayors have also come out against the repeal of these deductions, quoted here in a recent edition of Marketplace:
Cutting the deduction could have “a significant adverse impact on the people of South Carolina and the people of America,” said Mayor Steve Benjamin, a Democrat representing Columbia, South Carolina and vice president of the U.S. Conference of Mayors. “If our taxpayers lose the deduction, we believe they’re going to be facing double taxation. This is not reform.”
Mayor Bryan Barnett, a Republican from Rochester Hills, Michigan and second vice president with the mayors conference, echoed the point. “This 'reform' is not a gift,” he said. “To a majority of people in my community, this is taking money out of their pocket and saying they are going to give them something back after they paid for it. It doesn’t make sense and it’s not real reform.”
TAX PLAN WILL HURT AFFORDABLE HOUSING
The Low-Income Housing Tax Credit plays a role in financing practically all new affordable housing construction in America. According to data provided by the U.S. Department of Housing and Urban Development (HUD), the program produced 2,402,484 low-income housing units between 1986 and 2016.
The House tax reform bill, dubbed the Tax Cuts and Jobs Act, proposes eliminating private-activity bonds, so while Low-Income Housing Tax Credits are explicitly retained in the bill, the elimination of the bonds would eliminate the 4-percent credit and likely lead to a precipitous drop in construction of low-income housing units produced by the program. These bonds contribute to 60-percent or more of the affordable rental housing built or renovated every year.
These are just a few of the impacts of the current proposal. Local Leaders are needed on record -- a vote is expected any minute.