In spite of the fact that a shortage of affordable homes in every state and major metropolitan area in the country has caused a national housing crisis, U.S. President Donald Trump has proposed tax cuts that will send a sharp blow to low-income housing financing. This could mean that existing and future low-income housing projects may be either delayed or killed.
The Low-Income Housing Tax Credit (LIHTC) serves as the most important resource for creating affordable housing in the U.S. today. It was created under the Tax Reform Act of 1986 and provides incentives for the development of affordable housing aimed at low-income Americans. These incentives exist in the form of tax credits that come from the federal government. The federal government awards these tax credits to state housing agencies, which then distribute them to affordable housing developers.
In addition, the Trump administration plans to cut more than $6 billion from the Department of Housing and Urban Development, eliminate the Community Development Block Grant Program and the Federal Historic Tax Credit program, according to Gilbert J. Winn, chief executive of Boston-based developer WinnCompanies.
Tax cuts will mean less funding for low-income housing projects from the federal government. Unless state housing agencies have other funding, which is unlikely, affordable housing developers may not receive enough funding to build low-income housing. Cities across the country are already struggling to supply enough affordable housing to help low-income families. The federal tax cuts are likely to make the situation worse.