Sen. Coburn Proposes to Eliminate Low-Income Housing Tax Credits
Senator Coburn (R-OK) is a member of the Senate’s bipartisan “Gang of Six,” which spent months trying to reach a bipartisan agreement on a deficit-reduction plan. Those negotiations stalled in May when Coburn withdrew from the meetings over differences on entitlement spending. Coburn recently announced that he is rejoining the group after additional health care cuts were added to the group’s plan. The Gang of Six’s plan has not yet been publicly released and is separate from the Coburn plan that was released on July 18. Currently, the plan is receiving praise from senators in both parties.
The deficit-reduction plan that Senator Coburn himself offered proposes to achieve $9 trillion in savings over the next 10 years. No one expects this proposal to ever become law, but it can be seen as a call to action. According to a summary of the savings, $1 trillion would come from reforming tax expenditures; $4 trillion would be cut from discretionary spending, including $1 trillion from the Department of Defense; over $2.6 trillion would come from entitlement program savings; and $1.4 trillion in savings would come through interest payment reduction.
The plan includes department-by-department descriptions of proposed program cuts and reforms. In the section on reforming tax expenditures and ending special giveaways, the plan proposes to eliminate the Housing Credit at a savings of at least $57 billion over 10 years, arguing that the Tax Code should not be used to promote affordable housing, a function it says should be left to HUD. The plan characterizes the Credit as developing housing for upper low-income tenants who can afford the monthly rent payments instead of focusing on those who are more in need, such as the homeless.
The plan also proposes to eliminate the New Markets Tax Credit program, the Community Development Financial Institutions Fund, the Historic Preservation Tax Credit, and the Preservation Credit for Non-Historic Structures, characterizing them as duplicative of other federal grant programs such as the Community Development Block Grant, the National Community Development Initiative, and USDA’s Rural Development program.
In the area of discretionary spending, the plan proposes $88.73 billion in savings from HUD over the next 10 years. The plan calls for eliminating at least 12 HUD programs, including the HOME Investment Partnerships program (HOME) and NeighborWorks America, and reducing the cost of five others, including Section 202 Housing for the Elderly, Section 811 Housing for Persons with Disabilities, and the Community Development Block Grant program (CDBG).