|Tax reform is the big debate in Washington, and the stakes are high. Certain components of the proposals would sideline and limit the mortgage interest and real estate tax deductions — two major factors in determining the costs and incentives of homeownership. Other elements of the proposals would provide reductions in small business and corporate tax rates and, due to NAHB advocacy efforts, protect the business interest deduction for real estate development firms.
Side-by-side, the Senate plan is much better for housing. It offers more generally favorable treatment for S Corps and LLCs due its rate schedule and more usable 17.4% pass-through business income deduction, while also protecting important affordable housing policies like the LIHTC and the tax-exempt bond program.
Change is also coming for monetary policy. Federal Reserve Governor Jerome Powell has been nominated to replace Federal Reserve Chair Janet Yellen, whose term ends in February. Powell is an excellent choice for the housing sector and will likely maintain the Fed’s current approach to monetary policy with gradual interest rate increases and balance sheet reductions.
Given current market challenges — highlighted by recent reports concerning ongoing labor shortages, declining housing affordability and lagging single-family construction — tax reform and monetary policy should promote economic growth while recognizing the important role the housing industry plays in the overall economy.
–NAHB Chief Economist Robert Dietz
U.S. Department of the Treasury Secretary Steven Mnuchin testified before the House Financial Services Committee, assuring members that housing finance reform remains a priority for President Donald Trump’s administration.
Read more at HOUSINGWIRE
The House Appropriations Committee’s spending bill for 2018, which came out last week, keeps the popular Energy Star program but drastically reduces its funding, according to a report on the committee’s proposal that was released on Monday.
Read More at DWM
The federal government’s budgeting process for 2018 continued this week as congressional committees worked on appropriations bills that will be voted on this fall. As expected, many of President Trump’s budget requests did not make the cut, including the steep 31-percent reduction in funding for the Environmental Protection Agency (EPA).
Read more at DWM