The potential reduction of corporate taxes from 21 percent to 15 percent may lead to a significant loss in funding for California's affordable housing sector, totaling around $250 million. This decrease stems from the impact on Low Income Housing Tax Credits, which help finance low-income housing projects. As corporate tax liabilities diminish, corporations may purchase fewer credits, causing their market value to decline. Though the loss may not entirely halt affordable housing production, it would likely slow down projects, particularly in cities like San Francisco that rely heavily on these credits for funding.
"Although it seems less likely to be part of this year's tax and spending cut package, President Trump's promise to lower corporate taxes could reduce the value of Low Income Housing Tax Credits [in California] by roughly 5 percent, or $250 million," said Matt Schwartz, the president and CEO of the California Housing Partnership, which helps affordable housing developers across the state.
"But if corporate taxes go down, so does the value of the credits - corporations are less likely to buy them when the government has already cut their taxes. Credits worth $1 could see their value drop to 90 cents or less on the open market."
"It would not be fatal. It would by no means end San Francisco's affordable housing production," said Schwartz. "But it would likely slow it down as the city would be forced to spend 5 percent more of its scarce subsidy dollars on each new development."
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