
State & National Updates Archives for 2017-11
Eye on the Economy
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Tax and Monetary Policy Impacts on Housing
Tax and Monetary Policy Impacts on Housing
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
Senate Tax Reform Bill a Better Starting Point
November 13, 2017 |
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Inside Washington |
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NAHB continues to fight for a homeownership tax credit. |
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Measure would provide certainty to small businesses. |
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Tool manufacturers suggest products to help builders comply. |
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