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The future of the 20% rehab tax credit

If you’re like me, you’ve probably got a favorite Oscar Wilde quote. One of his memorable thoughts that has stuck with me through the years is this one, defining a cynic as someone “who knows the price of everything and the value of nothing.” So today, I want to do just a little gentle revision to Wilde’s quote to read:

Beware the politician who knows the price of everything and the value of nothing.

And why am I picking on politicians as a group (and specifically our Congressional body)? Because the 20% rehab tax credit is on the chopping block, courtesy of those men and women in Congress.

Why? Not because it’s an overly onerous regulation (it’s a voluntary tax incentive), not because it’s a drain on the federal treasury (in fact, the latest NPS report on the credit states the credit has generated 29.8 billion dollars in federal tax revenue, against 25.2 billion dollars paid out, over the course of the credit’s existence), not because it’s a job killer (when $1,000,000 spent on rehab creates more jobs than $1,000,000 spent on new construction), and not because Republicans today are trying to do right by the legacy of Reagan (indeed, Reagan talks up the tax credit in a clip, jazzed up with some National Trust commentary, here). And not because new construction is such a boon to payroll tax receipts. The opposite is true, but you’d think keeping an incentive that boosts payroll tax, creates jobs, and does our collective heritage right would be a no-brainer.

The rehab tax credit? It’s a great program! I’m afraid we’ll have to kill it.

No, I think it’s on the chopping block because we, as regular citizens, need another reason to plant our collective face in our palms while we mutter about the utter lack of common sense in DC. When it comes to tax credits at the federal level, the fewer the better, whether or not they help inject serious capital into worthwhile redevelopment projects, whether or not they bring more net dollars into the treasury than they cost, whether or not they help save a bit of our collective history here and there. It’s enough to make me want to beat my head against a wall at the sheer lack of thoughtfulness, or careful evaluation to determine where tax credits actually make sense for the greater good, and to keep those tax credits in place, much like the administration and Congress have done with the affordable housing tax credit.

So, while I’d like to think that politicians can be brought back to reality, and that if enough people explain the benefits of an incentive program that they’ve obviously missed or glossed over, the 20% rehab tax credit will be inserted with haste back into the tax bill, my personal outlook on this happening is very gloomy. I’m guessing that the people in power made up their minds long ago on who wins and who loses in the incentives game, and no amount of good information is going to change the outcome.

I think we’re right, as preservationists. I think we’re on the right side, and we’re going to lose anyway. And that reality of the political process just ups my level of pessimism when it comes to politics, making me into that cynic that Wilde was warning you about.

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Comments

One Response to “The future of the 20% rehab tax credit”
  1. frank says:

    Not a big surprise, but here’s the bill text as drafted:

    21 SEC. 3403. REPEAL OF REHABILITATION CREDIT.
    22 (a) IN GENERAL.—Subpart E of part IV of sub-
    23 chapter A of chapter 1 is amended by striking section 47
    24 (and by striking the item relating to such section in the
    25 table of sections for such subpart).

    We have our work cut out for us.

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