President Trump said repeatedly during his campaign that he’d like to lower the corporate tax rate from 35 percent to 20 percent. What is the broader impact of such a move?
Law360 investigated and their findings suggest that if the tax rate drop is realized, corporations who currently invest in low-income housing tax credits would have less incentive to do so. Low income housing investments typically go on the books as losses, and the lower tax rate would make such “investments” less attractive. Although the tax-cut has not gone into effect, the market is already responding.
The following is an excerpt from the original article published by Law360:
The uncertainty over Trump’s next moves in Washington is playing out in various guises. On the one hand, investors are pulling back because they are worried they won’t reap the same benefits if the corporate tax rate drops.
That, in return, has forced developers to go on the hunt for cash, or scale back size or amenities — or even call off projects.
McCalla said he's seen projects on hold, and Keith M. Poliakoff of Arnstein & Lehr LLP said the credit markets for affordable housing have tightened.
“My clients are not bullish about the future of the affordable housing deals under the present system,” Poliakoff said. “The uncertainty of the tax reform has frozen the credit markets and developments that were tight financially are being shelved for now.”
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