Home Builders Urge Congress to Provide Certainty and Permanency in Tax Code

April 20, 2012 - Maryland home builder Marty Mitchell on April 18 called on Congress to simplify the tax code as part of a comprehensive tax reform effort in order to help small businesses to continue to serve as an engine of economic growth.

Testifying on behalf of NAHB before the House Small Business Committee, Mitchell said that given the huge complexities in tax law, today’s complicated federal tax system acts as a burden and hindrance on small businesses.

“The home building community supports simplifying the tax code as part of a comprehensive tax reform process,” said Mitchell. “Such an effort should only occur after a thoughtful and deliberate vetting process that examines proposed changes, necessary transition rules and economic impacts.”

Discussing several tax issues, Mitchell called on lawmakers to extend the 2001 and 2003 income tax cuts now scheduled to expire at the end of 2012. Absent congressional action, the top marginal individual income tax rate, which many businesses now pay, will jump from 35% to 39.6%, along with rate increases at the lower tax brackets. He also urged Congress to extend the current 15% rate on dividends and capital gains and said that present law estate tax rules should also be extended or the tax itself eliminated.

Mitchell also stressed that it is critical that the mortgage interest deduction, which has been part of the tax system since 1913 and plays an indispensible role in promoting homeownership, should not be curtailed or eliminated as part of any tax reform effort.

To help small businesses to continue to create jobs and generate economic growth, Mitchell called on Congress to provide a tax exclusion for business debt forgiveness and allow this exclusion to continue until the business economic climate substantially improves.

For more details, see NAHB’s testimony and press release, or contact J.P. Delmore at 800-368-5242 x8412.

NAHB, Diverse Groups Urge Broad QM Rule to Keep Home Loans Available and Affordable

As the Consumer Financial Protection Bureau (CFPB) works to finalize the qualified mortgage rules within the Dodd-Frank legislation passed in 2010, NAHB this week joined with 32 other consumer, housing, banking and civil rights groups to urge the agency to establish a broad, common-sense definition to avoid disruptions to the housing finance system and ensure consumers have access to affordable home loans.

At issue is a new ability-to-repay standard which stipulates that borrowers must be able to repay home loans issued to them. While a qualified mortgage (QM) standard will enable lenders to comply with this requirement, how the rule is constructed is critical to the future health of the housing finance system.

NAHB and its coalition partners are calling on the CFPB to create a broad, common-sense QM standard that contains strong consumer protections, promotes mortgage liquidity in the marketplace and provides lenders proper incentives to make home loans to creditworthy borrowers.

A narrowly defined QM would put many of today’s sound loans and creditworthy borrowers into the non-QM market, which would undermine prospects for a housing recovery and threaten the redevelopment of a sound mortgage market. Loans that fail to qualify as QMs would be less available and far costlier because lenders and investors would face a much greater risk of violating the terms of the new ability-to-repay requirement.

In other words, banks would further restrict home lending in what is already a tight lending environment because they would be fearful of the risks of litigation if consumers are unable to repay a mortgage.

Loans that support a QM definition would provide lenders with a safe harbor that reduces litigation exposure.

NAHB strongly believes that the ability-to-repay standards must balance both consumer and industry interests. Consumers must have access to affordable credit and responsible lenders should be able to operate in an environment without excessive litigation. This will help ensure revival of the home lending market.

This is essentially the message that NAHB and its diverse group of partners issued on April 16 in a joint press release and joint letter to CFPB Director Richard Cordray.

For more information, email Steve Linville at NAHB or call him at 800-368-5242 x8597.

Court Blocks Implementation of NLRB Poster Rule

A controversial rule requiring employers to prominently display a poster advising workers of their right to unionize will NOT go into effect on its planned implementation date of April 30.

On Friday, April 13, 2012, the U.S. District Court for South Carolina, in a case brought by the U.S. Chamber of Commerce, ruled that the National Labor Relations Board (NLRB) exceeded its authority in adopting a rule requiring employers to post an employee notice of collective bargaining rights.

Judge David C. Norton held that the NLRB’s authority is limited to adjudicating unfair labor practices, and that Congress did not impart the agency with authority to compel employers to post labor rights notices.

This decision has created a split among jurisdictions, as just last month, the U.S. District Court for the District of Columbia ruled in a case brought by the National Association of Manufacturers (NAM) that the NLRB had the authority to promulgate the rule, but that failure to comply with the rule did not by itself constitute an unfair labor practice or serve to toll the statute of limitations for filing an unfair labor practice complaint. NAM has filed for appeal in this case.

Following on the heels of the South Carolina decision, on Tuesday, April 17, the United States Court of Appeals for the District of Columbia granted a temporary injunction blocking implementation of the rule pending the appeal filed by NAM. The poster rule had been scheduled to go into effect on April 30, 2012, but this is no longer the case.

The injunction stays the implementation, and employers nationwide will not have to post the collective bargaining rights poster, pending the outcome of this appeal.

Going forward, NAHB will continue to monitor all events concerning the poster rule and will provide notification to our members regarding future rulings.

For more information, visit http://www.nlrb.gov/poster or contact David Crump at 800-368-5242 x8491.

House Approves Small Business Tax Cut Bill, White House Threatens Veto

The House on April 19 approved the Small Business Tax Cut Act (H.R. 9) by a vote of 235-to-173. Introduced by House Majority Leader Eric Cantor (R-Va.), the legislation would allow small businesses with fewer than 500 employees to deduct 20% of their active business income. However, the actual amount businesses could deduct would be limited to 50% of certain W-2 wages. In addition, businesses claiming this deduction would be unable to claim the current Section 199 deduction.

Earlier in the week, NAHB sent a letter to House members expressing support for the bill, noting that most NAHB members are small entrepreneurs who employ fewer than 10 workers and report less than $1 million in gross receipts annually. The legislation would provide small business owners with additional financial resources to invest in their companies.

"As the home building industry emerges from the current housing depression, every additional dollar saved will be a critical factor in the industry’s—and nation’s—future economic growth," the letter said. "Because housing plays such a central role in the economy, a rebound in the housing market will have a broad impact on the economy as a whole."

Though the bill passed the House, the Senate is not expected to act on it and the White House has threatened to veto the measure if it reaches the president’s desk.

Democrats oppose the measure because they argue the benefits would go disproportionately to wealthier businesses.

To view the legislation, click here and type the bill number in the box in the center screen.

For more information, email J.P. Delmore or call him at 800-368-5242 x8412.