A day after Republican leaders unveiled their tax proposal on Oct. 30, California Democrats penned a letter to the United States House of Representatives urging the legislature to sustain programs that helped subsidize approximately two-thirds of California’s low-income housing supply in recent years.
Under the GOP’s tax scheme, part of a tax credit program that offers tax reductions to companies if they invest in affordable housing projects will be eliminated, as well as a federal bond program which finances low-income housing developments.
Over the past 30 years, the two programs generated $32 billion to fund homes for low-income residents in California. In 2016 alone, both initiatives funded the construction and preservation of more than 19,000 low-income housing units.
“We cannot overstate the vital role these programs play in building and preserving affordable housing throughout the nation, but especially in California as we struggle with a housing crisis that is quickly metastasizing into a humanitarian and public health catastrophe,” stated California state treasurer John Chiang in the letter sent to Congressman Kevin McCarthy, Republican U.S. house majority leader.
The GOP’s tax plan will also indirectly hurt affordable housing efforts by reducing the corporate tax rate from 35 percent to 15 percent, claimed the letter. It said that if imposed, the new policy will give businesses less incentive to invest in the existing tax program, reducing the amount of funds to be used for low-income homes.
McCarthy spokesman Matt Sparks declined to comment about the letter authored by Chiang and signed by other Democrats namely: Senator Jim Beall, Assemblyman David Chiu, the executive directors of three housing organizations in California, and the president of the State Building and Construction Trades Council.