DC Councilmember Charles Allen introduced an amendment to the Budget Support Act on Tuesday that would modestly increase income taxes on individuals earning at least $250,000 to fund a local version of low-income housing tax credits (LIHTC). LIHTC is a federal tax-based means of subsidizing affordable housing production and renovation.
The "District of Columbia Low-Income Housing Tax Credit Clarification Amendment Act of 2020" would supplement the Housing Production Trust Fund (HPTF) with an additional source of dedicated financing, enabling the Department of Housing and Community Development (DHCD) to award city-financed tax credits for affordable housing.
The tax increases break down as follows:
- For individuals who earn $250,000-$350,000, the marginal tax rate would rise from 8.5% to 8.75%, adding $125 to the tax bill for someone earning $300,000.
- For individuals who earn $350,000-$1 million, the marginal tax rate would rise from 8.75% to 8.95%, adding $550 to the tax bill for someone earning $500,000.
- For individuals who earn over $1 million, the marginal tax rate would rise from 8.95% to 9%, adding $1,800 to the tax bill for someone earning $1.5 million.
The additional revenue would total $7.25 million in Fiscal Year (FY) 2021 and around $12-13 million annually in FYs 2022-2024. The DC LIHTC funds awarded would not exceed 25% of any federal LIHTC funds awarded to the same project.
While there were expectations earlier this year that the Housing Production Trust Fund would benefit from an automatic infusion of surplus funds, the pandemic has erased that surplus and created a backlog of projects expecting HPTF dollars. A report by the Coalition for Nonprofit Housing and Economic Development, undisputed by DHCD, notes that the $100 million budgeted in the HPTF in FY 2021 has already been awarded, making it unlikely that any additional projects will be awarded funds in 2021 or 2022 unless more funds are allocated.
Councilmember Kenyan McDuffie introduced a DC LIHTC bill in 2013, although financing was tied to "available funds" rather than to a specific revenue source; DHCD did not use the $1 million the Council budgeted as a pilot in 2017.
Update: The amendment failed by a vote of 8-5 in the Committee of the Whole on Tuesday morning.
Thumbnail photo by Ted Eytan.
This article originally published at http://dc.urbanturf.com/articles/blog/dc-councilmember-proposes-tax-on-high-income-earners-to-fund-affordable-hou/17036
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