The following letter is from Donna Reichle of the National Association of Home Builders, in response to Lew Sichelman's Tax Cut Bill Ignores Housing ( House Air Pollution Health Smoke Fire Safety Carbon Monoxide Expert Advice ) article, published Wednesday May 28th, 2003:
NAHB disagrees that the $350 billion tax cut package signed into law by President Bush on May 28 contains nothing for housing.
The bill was never intended to be a Christmas wish list for housing or other special interests groups. Far more significant in scope, it was designed to move our nation's lagging economy forward by stimulating consumer spending and capital investment. This effort is beneficial to all segments of the housing industry.
Reducing tax rates across the board, substantially cutting the capital gains rates and enabling small businesses to write off $100,000, rather than $25,000, for purchasing equipment are all provisions that will create jobs and enable America's housing industry to continue leading the way back to full economic prosperity.
Before we deplore the absence of tax credits related to homeownership or energy conservation, it should be pointed out that both are alive and well in Congress. More than 100 members have sponsored homeownership tax credit bills H.R. 839, S. 198 and S. 875, and home energy tax credits are included in a House-passed energy bill, with similar measures pending in a Senate bill.
On the matter of a proposed deduction for mortgage insurance premiums, two errors need to be corrected. First, the Senate approved this provision, not the House. Second, NAHB did not oppose this provision. In fact, we sent a letter to House-Senate conferees specifically noting our support for it.
On the issue of the Low Income Housing Tax Credit, the news is better than you suggest. For several months, NAHB worked tirelessly with the Bush Administration and congressional leaders on both sides of the aisle to ensure that the tax credit was not inadvertently harmed by the elimination of the double taxation of corporate dividends. The final bill that emerged from Congress last week actually creates a new incentive for corporations to invest in the credit.
Because the provision to reduce tax rates on dividend income is calculated strictly at the shareholder level, purchasing tax credits increases corporate earnings that can be used to distribute more dividends. The increased dividends are then taxed at the reduced capital gains tax rates, which are substantially lower than the ordinary income tax rates that applied to dividends prior to the signing of the bill into law.
We believe fervently that the tax cuts now underway will help restore economic vitality for this country in fairly short order. It is short-sighted, to say the least, to suggest that this means nothing for housing. For an industry whose fate is so intricately linked to economic growth, renewing the prospects for employment and business investment means everything
Staff Vice President, Media and Public Relations
National Association of Home Builders
Public Affairs, Advocacy Area