House Speaker Paul Ryan Delivers Speech on Tax Reform
House Speaker Paul Ryan (R-WI) recently delivered a speech on his vision for tax reform at the 2017 National Association of Manufacturers (NAM) Summit. He indicated his hopes to see a comprehensive tax reform bill passed by the end of 2017. “Our goal is to get it done by the end of the year,” Speaker Ryan said. “We think it is very much doable.” Such legislation, he said, would eliminate many deductions, exemptions, exclusions, and credits, and use savings from reforms to cut rates for businesses and individuals.
Although Speaker Ryan didn’t get into specifics, he emphasized that they would prioritize permanent rather than temporary changes and comprehensive reform for individuals and businesses. “Temporary reforms will only have a negligible impact on employment and economic growth,” he said. Under Senate rules, permanent tax cuts could not be passed through the reconciliation process that requires only a majority vote and would require the bipartisan support necessary to garner the 60 votes needed to overcome a filibuster. He also didn’t rule out the Trump administration’s desired 15 percent corporate tax rate, saying “it’s actually possible.”
If efforts to enact corporate tax reform are successful, the implemented changes may affect the amount of LIHTC equity that can be raised and the number of affordable rental apartments that can be built or preserved. A recent review of corporate tax reform on the LIHTC market by Novogradac & Co., a public accounting firm that does extensive work with the LIHTC industry, found that “lowering the top corporate tax rate from 35 percent could lower the investor equity price per credit by as much as $0.17.” According to the same study, such a shift in pricing could reduce the amount of equity available to build affordable rental housing by as much as $2.2 billion or more. With $13 billion in equity raised in 2015 for LIHTC projects, a reduction of this magnitude could result in as many as 16,000 fewer affordable rental homes constructed or preserved each year.