Housing groups: GOP tax plan could hurt hurricane rebuilding efforts
Housing groups in Texas and Florida are warning that the House GOP tax bill could hurt post-hurricane rebuilding efforts in the U.S., because the measure eliminates a critical infrastructure financing tool.
In a letter to House Speaker Paul Ryan (R-Wis.) on Monday, the organizations raised concern over a provision that would eliminate the deduction on tax-exempt private activity bonds (PABs), which are issued for private projects and have been used to finance a wide range of infrastructure projects around the country.
“This bill, as currently written, would make it significantly more difficult to repair and rebuild affordable housing in areas affected by Hurricanes Harvey and Irma,” the Florida Housing Coalition and the Texas Affiliation of Affordable Housing Providers wrote. “We strongly urge you to not hold a vote on the bill until this issue is fully addressed.”
Under the House GOP tax plan, interest on newly issued private activity bonds would no longer be tax-exempt. Eliminating the program would save $38.9 billion, according to a summary sheet.
Across the Capitol, however, the Senate’s tax bill would preserve the tax exemption for private activity bonds.
The bonds, which have long been a major resource for public-private partnerships, were expected to play a crucial role in rebuilding damaged infrastructure in Texas and Florida following hurricanes Harvey and Irma.
“While we know you have been strongly supportive of disaster recovery efforts, eliminating PABs would be a step backward,” the housing groups wrote to Ryan. “You will be putting vital resources at risk at a time when they are needed to repair and rebuild homes of those affected by Hurricanes Harvey and Irma.”
Ending the preferential tax treatment of private activity bonds has also drawn the ire of transportation advocates more broadly. They say it would undermine President Trump’s infrastructure bill, which is supposed to rely on public-private partnerships.
Nearly two-thirds of core infrastructure investments in the United States are financed with municipal bonds.
Even though the bonds have bipartisan support, the House Ways and Means Committee rejected an effort to restore the bonds during a committee markup of the bill.
But housing groups are hoping that highlighting the bonds’ role in rebuilding efforts could help ensure that they are included in the final version of the Republican tax plan.