Joint Committee on Taxation Estimates Cost of Administration’s FY 2017 Tax Proposals

Published by Peter Lawrence on Wednesday, March 30, 2016 - 12:00am

On March 24, the congressional Joint Committee on Taxation (JCT) released its estimates of the cost of the administration’s fiscal year (FY) 2017 tax proposals. While of some of the JCT estimates of tax credit proposals largely match that of the U.S. Office of Management and Budget (OMB), there are a few notable differences. And when it comes to consideration of tax legislation, the JCT estimates are the ones that count.

Blog Chart OMB vs. JCT: Estimated Costs of Select 2017 Administration Tax Proposals
Click to Enlarge

 

Affordable Rental Housing

For the low-income housing tax credit (LIHTC) proposals, JCT and OMB largely agree. The proposals to add a new furthering fair housing qualified allocation plan (QAP) preference, a new preservation QAP selection criterion, and domestic violence protections in LIHTC properties are estimated to have a negligible cost. The estimated cost of the proposal to remove the qualified census tract basis boost population cap is essentially the same: $151 million over 10 years per JCT and $150 million over 10 years per OMB. The private activity bond conversion proposal is also largely similar: $9 billion per JCT and $9.44 billion per OMB.

The most significant difference in LIHTC proposal cost estimates between JCT and OMB is on the cost of the income averaging proposal. OMB estimated that the proposal would have a negligible cost, while JCT estimated a cost of $92 million over 10 years.

Community Development

On community development, there are also significant differences. JCT estimates the cost of the administration’s proposal to make the new markets tax credit (NMTC) permanent and allow qualified equity investments to be taken against alternative minimum tax liability to be $2.6 billion over 10 years, while OMB estimated it to be $5.3 billion over 10 years. The manufacturing communities tax credit (MCTC), which could be modelled on the NMTC, is estimated to cost $2.1 billion over 10 years per JCT and $4.9 billion over 10 years per OMB.

Renewable Energy

On energy-related tax incentives, JCT and OMB agree on the cost of the section 48C renewable energy manufacturing tax credit proposal: $2.2 billion over 10 years. The cost estimates of the proposal to extend and modify the section 45L new energy efficient homes tax credit are roughly similar: it costs $2.5 billion over 10 years per JCT and $2.8 billion over 10 years per OMB.

Otherwise, they mostly disagree on energy. On the proposal to make permanent and modify the renewable energy production (PTC) and investment tax credits (ITC), JCT estimates a $19.8 billion over 10 year cost, while OMB estimates a $24.1 billion over 10 year cost. The cost of the proposal to increase, modify, and permanently extend the section 179D commercial buildings energy efficiency deduction, which can also be used in multifamily housing, is $6.7 billion over 10 years per JCT and $2.6 billion over 10 years per OMB.

Conclusion

Again, while the OMB figures are certainly worth noting, the JCT estimates have the most relevance if and when these proposals are considered as part of tax legislation. As such, it makes most sense to refer to JCT figures when considering the president’s budget proposals.