President Bush, during his State of the Union Address on Wednesday, noted that home ownership levels have been elevated “to the highest level in history,” and said that his plan for federal tax reform will be simple, fair and “pro-growth.”
His speech was welcomed by the home-building industry. The National Association of Home Builders issued a statement today expressing support for several housing-related issues that Bush highlighted in the annual address.
David Wilson, president for the association, said the association supports Bush administration plans to “eliminate unnecessary regulatory barriers that impede economic and job growth; to pass class action tort reform to curb the number of frivolous lawsuits that unnecessarily drive up the cost of housing; to enact association health plan legislation so that small businesses are able to provide quality, cost-effective healthcare to their employees; and to make tax relief permanent.”
While the president cited a record-high home ownership rate, the association “is urging the administration to renew its support for home ownership tax credit legislation that would increase the supply of affordable homes.”
The administration has earlier expressed support for a tax credit that is designed to increase the supply of affordable homes built in low-income communities, and dozens of housing and community development groups rallied around the plan to implement this credit.
“The tax credit received majority support in each chamber of Congress last year, and (the association) will work with lawmakers to move this proposal forward in the year ahead,” the association announced today. NAHB has about 220,000 members, and its members are expected to construct about 80 percent of the 1.84 million new housing units that are projected this year.
Wilson said the proposed initiative could spur the production of 50,000 new or rehabilitated homes each year.
During his speech, Bush said, “we must free small business from needless regulation” and rid the legal system of “irresponsible class actions and frivolous asbestos claims.”
The association agreed with this directive and also with Bush’s plans to create “associate health plans for small businesses and their employees.”
Bush said that the federal tax code is “archaic,” “incoherent,” and a burden, and he has appointed a bipartisan panel to examine the code “from top to bottom,” while ensuring that it is “pro-growth, easy to understand, and fair to all.”
When Bush established the advisory panel on tax reform earlier this month, the executive order states that the commission shall recognize “the importance of home ownership.”
The National Association of Realtors welcomed Bush’s declared support of association health plans in his address – such plans have been promoted as a major priority for association members. The Realtor association has more than 1 million members.
While there were some pre-election jitters in the housing industry about possible plans to reduce or eliminate a mortgage interest tax deduction, a tax benefit for home buyers, Bush made no reference to this tax benefit in his address.
And he affirmed support for this deduction during an October campaign stop in Ohio. At that time, during a meeting with the National Association of Home Builders’ board of directors, Bush said, “I believe that the mortgage interest deduction enables more Americans to achieve the goal of home ownership. It is an important part of our tax code.”
The National Association of Realtors also supports this tax incentive. “Deductions for mortgage interest and property tax expenses encourage home ownership and stimulate home-building, which creates jobs both directly and indirectly, fuels our economy and benefits growth at all government levels with increased taxes and revenues,” according to an association position statement.
Also according to this statement, “Further restriction would decrease home ownership, depress housing values and reduce home construction.”
Linda Goold, tax counsel for the Realtors association, said there doesn’t appear to be any imminent threat to real estate tax law that would negatively affect the housing market.
But, she said, “You can never stop being vigilant.” She said that if there were to be changes to the mortgage interest tax deduction, “that would be the primary issue of the association – period. I cannot imagine an issue that would even trump that.”
Many Americans are familiar with the basic premise of the mortgage interest tax deduction, and it would likely incite a negative response if legislators messed with this deduction, she added.
The Mortgage Bankers Association, which represents an industry with about 400,000 professionals, is also a firm supporter of preserving the mortgage interest tax deduction. The association, in its legislative agenda for 2005, announced that it will “advocate for tax reforms that will preserve the mortgage interest tax deduction to promote the continued expansion of home ownership opportunities for more Americans.”
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