New Majority Leader Could Mean Changes for Renewable Energy, New Markets and Low-Income Housing Tax Credits

Published by Michael Novogradac on Wednesday, June 25, 2014 - 12:00am

Rep. Kevin McCarthy, R-Calif., on June 19 was elected to replace Majority Leader Eric Cantor, R-Va., following Cantor’s recent primary loss. An examination of McCarthy’s record and recent comments suggests that his ascension to the leadership could be good news for the low-income housing tax credit (LIHTC) and new markets tax credit (NMTC) but bad news for the renewable energy production tax credit (PTC) and investment tax credit (ITC). Because the PTC and NMTC have expired, the ITC is set to expire in 2016, and the nine percent floor for LIHTC could return, understanding the record of the new House leadership could be helpful in anticipating the direction of House Republican policy.

While McCarthy has been a supporter of both the PTC and the ITC in the past, he has recently reversed his position on the PTC. The congressman declared that he would no longer support extending the PTC, stating, “I think they’ve had their time.” In the past, he has sponsored, cosponsored and voted for several pieces of legislation that would bolster or extend the PTC or ITC. In his second year in Congress, McCarthy sponsored H.R. 1743, the WIND Energy Act, which would have extended the PTC through 2019. He has also cosponsored several other pieces of ITC/PTC related legislation, including H.R 2846, H.R. 6709, H.R. 6566, H.R. 6133, and H.R. 5984, all of which would have either extended or modified the ITC and/or the PTC. McCarthy hasn’t made any policy shifts on the ITC since his election to majority leader, leaving some hope that he may support ITC extension if not PTC extension.

McCarthy has voted in favor of several pieces of LIHTC legislation. He voted for H.R. 8, a bill that would have extended the 9 percent floor for the tax credit rate, and H.R. 4853, which would have increased LIHTC in Gulf Opportunity Zones. However, he also voted against H.R. 1H.R. 3221, and H.R. 1424, all of which included boosts to the LIHTC program. His comments about the legislation suggest his opposition was based on the other provisions of the bills and not on the presence of LIHTC related changes.

The majority leader elect has voted in favor of one piece of NMTC legislation. He voted in support of H.R. 4853, which extended the NMTC. However, he has also voted against H.R. 1, and H.R. 1424, both of which would have extended the NMTC. However, none of McCarthy’s remarks at the time indicated his opposition was specific to the NMTC itself.

To hear some initial information the key role the House majority leader plays in the legislative process, tune in to the June 17 Tax Credit Tuesday podcast. To hear more about what the new majority leader will mean for affordable housing, community development, historic preservation, renewable energy and tax reform, you can subscribe to the Tax Credit Tuesday podcast and automatically download this week’s episode where I discuss this topic in more detail.