This past week, as the U.S. Senate Finance Committee chaired by Utah Sen. Orrin Hatch deliberated on the Republican tax reform bill, the senator came in direct conflict with committee member Democrat Sen. Sherrod Brown of Ohio. Brown said he was “sick and tired of the rich getting richer” because the bill favors them.
Hatch erupted blasting at Brown with, “I came from the poor people and I have been working my whole stinking career for people who don’t have a chance, and I really resent anybody saying I’m doing it for the rich.”
Hatch was right to say he has worked for those with less, at least sometimes.
He has done so directly upfront and behind the scenes too. For example he joined with the late Sen. Ted Kennedy in setting up the Children’s Health Insurance Program (CHIP) which has been tremendously successful and he still supports it. He has also been a steady and quiet supporter of various federal housing and community development programs which have served the moderate and low income for many years. And, on requests of Hatch for help on small but important legislative items helping the poor he has often answered without fanfare.
Hatch has been helpful to the poor outside of the Senate as well. Over three decades ago, Hatch endorsed a holiday fund raising letter for Crossroads Urban Center that went out to thousands of people. That letter helped raise much-needed funding for the Crossroads food pantry and thrift store.
Now with the Republican push for something, anything, to do with tax reform the question is there again: Will Hatch help the poor in some way? We shall see.
The full Senate will start its process on the tax reform bill when they reconvene after Thanksgiving next week. Hatch will have another opportunity to help the poor. Sure, there is plenty Brown and others can and should challenge Hatch on in the tax bill, but there is a major housing piece there that Hatch can make a big difference on.
The Senate version of the tax reform bill preserves the Low Income Housing Tax Credit which over time has helped build and/or preserve thousands of low and moderate income rental housing units in Utah and across the country. The bill also keeps the Private Activity Bonds and New Market Tax Credits which are all critical for low-income units.
The House version tax reform bill which has already passed keeps the housing tax credit but none of the other provisions in the Senate bill. Most importantly, however, both bills reduce the corporate tax rate from 35 percent to 20 percent. If the tax rate is so dramatically reduced it makes the current housing tax credit a much weaker and less attractive investment. In effect killing our most effective lower income housing efforts.
So there are two challenges for Hatch and in them lie his opportunity to help yet again. First, he has to make sure the Senate bill keeps the parts which make the tax credit as effective as it has been in the past. This means everything in the Senate bill must be included in the House version. As chair of the Senate Finance Committee, he is in a strong position to make that happen.
Second, what about the tax rate question? What can be done about that? A proposal has been made by the national accounting firm Novogradac & Company, experts in tax credit financing. If the corporate rate is reduced they recommend adjusting how the credit is calculated. If adopted, this would restore the housing tax credit investment value and with it the potential for over a million housing units over the next 10 years. If the correction, or something like it, does not happen, low- and moderate-income housing will be woefully wounded.
Hatch may not be in the Senate a year from now. This may be one of his last opportunities to make a difference for those in need. He has done it before.
Can he and will he do it again? Our hopes on this relatively small part of the controversial tax reform bill ride with him.
Timothy Funk is director of Community Housing Advocacy project at the Crossroads Urban Center, Salt Lake City