The Senate Finance Committee advanced the Tax Cuts and Jobs Act on November 17, 2017, moving the tax reform legislation to the full Senate for consideration. The bill, originally introduced in October, marks the first effort in three decades to reform the Internal Revenue Code. Lawmakers have said its goal is to reduce taxes on the middle class, while growing jobs across the country. Several tax policy experts criticize the bill for its corporate tax cuts and a balloon plan they believe will ultimately cost the middle-class more in ten years. Of particular note is that the Senate version includes the retention of the following development tax credit programs:
- the new markets tax credit (NMTC) through 2019 in its current form without change
- interest-free private activity bonds in its current form, which bonding help finance more than 50% of affordable low income rental housing each year
- the 9% allocated low-income housing tax credit (LIHTC)
- the 20% historic tax credit (HTC) of qualified rehabilitation expenditures, with one change from current law: rather than claiming the HTC 100% in the year at placed-in-service as under current law, the HTC would be claimed ratably over 5 years instead of being. While the HTC would be retained, the ratable entitlement to the HTC over 5 years would reduce HTC pricing by an investor’s internal rate of return (time value) requirement.
The full Senate is expected to take up this bill after the Thanksgiving break.