Testifying before Congress, members of the National Association of Home Builders (NAHB) urged representatives to preserve the mortgage interest tax deduction and Low Income Housing Tax Credit (LIHTC).
"Home building is an industry dominated by small businesses, so the idea of simplifying the complicated tax rules related to business has great appeal. At the same time, our industry remembers painful lessons from the 1986 Tax Reform Act, when the commercial and multifamily sectors experienced a downturn due to unintended consequences," said Robert Dietz, an economist.
Advocates of tax reform and deficit reduction have argued that eliminating one or both of the programs will contribute significantly to increased federal tax revenue.
Noting that 40 percent of tenants identify themselves as rent burdened – paying more than 30 percent of their annual income towards housing costs – according to the Census Bureau, builders argued that now is not the time to eliminate the LIHTC program as so many renters are in need of it.
On the mortgage interest deduction, builders told congressmen that homeownership is the backbone of the American middle class and that eliminating the tax break would make it unattainable for many citizens, particularly young buyers.
Actions that cool interest in the real estate market could have a negative effect on their entire U.S. employment market. According to the NAHB, building 100 single-family homes creates more than 300 full-time jobs and $8.9 million in federal, state and local tax revenues.
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