[Congressional Record Volume 153, Number 54 (Wednesday, March 28, 2007)]
[Extensions of Remarks]
[Pages E675-E676]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 KATRINA HOUSING TAX RELIEF ACT OF 2007

                                 ______
                                 

                               speech of

                            HON. JOHN LEWIS

                               of georgia

                    in the house of representatives

                        Tuesday, March 27, 2007

  Mr. LEWIS of Georgia. Mr. Speaker, I'm submitting the CBO cost 
estimate on H.R. 1562, the Katrina Housing Tax Relief Act of 2007.
                                                    U.S. Congress,


                                  Congressional Budget Office,

                                   Washington, DC, March 23, 2007.
     Hon. Charles B. Rangel,
     Chairman, Committee on Ways and Means, House of 
         Representatives, Washington, DC.
       Dear Mr. Chairman: The Congressional Budget Office has 
     prepared the enclosed cost estimate for H.R. 1562, the 
     Katrina Housing Tax Relief Act of 2007.
       If you wish further details on this estimate, we will be 
     pleased to provide them. The CBO staff contact is Emily 
     Schlect.
           Sincerely,
                                                  Peter R. Orszag.
       Enclosure.

[[Page E676]]

     H.R. 1562--Katrina Housing Tax Relief Act
       Summary: H.R. 1562 would extend and expand certain tax laws 
     specific to areas affected by Hurricane Katrina, which were 
     enacted in the Gulf Opportunity Zone Act of 2005. The bill 
     would also raise revenue by changing the collection due 
     process procedures for employment taxes.
       The Joint Committee on Taxation (JCT) estimates that 
     enacting H.R. 1562 would decrease revenues by $1 million in 
     2007 and increase revenues by $42 million over the 2007-2012 
     period and by $4 million over the 2007-2017 period. The 
     Congressional Budget Office estimates that implementing H.R 
     1562 would have discretionary costs of less than $500,000 in 
     2007 and 2008, subject to the availability of appropriated 
     funds.
       JCT has determined that the tax provisions of the bill 
     contain no private-sector or intergovernmental mandates as 
     defined in the Unfunded Mandates Reform Act (UMRA). CBO has 
     determined that the non-tax provisions (section 4) contain no 
     private-sector or intergovernmental mandates as defined in 
     UMRA and would impose no costs .on state, local, or tribal 
     governments.
       Estimated cost to the Federal Government: The estimated 
     budgetary impact of the bill over the 2007-2017 period is 
     shown in the following table.

 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              By fiscal year, in millions of dollars--
                                          --------------------------------------------------------------------------------------------------------------
                                            2007    2008    2009    2010    2011    2012     2013    2014    2015    2016    2017   2007-2012  2007-2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 CHANGES IN REVENUES \1\
 
Low-Income Housing Provisions............       0       0     -61     -97     -53     -10        0       0       0       0       0      -221       -221
Treatment of Repairs for Bond Purposes...      -1      -4      -7      -4       0       0        0       0       0       0       0       -16        -16
Modification of Collection Due Process...       0      53      54      28      20      17       20      23      26       0       0       172        241
Corporate Estimated Tax Payments.........       0       0       0       0       0     107     -107       0       0       0       0       107          0
Tota1 Changes............................      -1      49     -14     -73     -33     114      -87      23      26       0       0        42          4
    On-Budget............................      -1       6     -58     -96     -49     100     -103       4       5       0       0       -97       -191
    Off-Budget...........................       0      43      44      23      16      14       16      19      21       0       0       139       195
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Assuming availability of appropriated funds, the cost of the Government Accountability Office report required by the bill would be less than
  $500,000.
 
 Note: Numbers may not sum to totals because of rounding.

       Basis of estimate: For this estimate, JCT assumes that the 
     bill will be enacted by July 1, 2007.
     Revenues
       The legislation would reduce revenues through two 
     provisions related to areas affected by Hurricane Katrina, 
     and it would also raise revenues by changing collection due 
     process procedures for employment tax liabilities and making 
     other changes. All in all, JCT estimates that the bill would 
     increase revenues by $42 million over the 2007-2012 period 
     and by $4 million over the 2007-2017 period.
       First, H.R. 1562 would decrease revenues by extending and 
     expanding low-income housing credit rules that were enacted 
     in response to damage caused by Hurricane Katrina. Generally, 
     low-income housing credits are subject to a cap. In response 
     to Hurricane Katrina, this ceiling amount was increased for 
     the states affected, for the years 2006 through 2008. 
     This bill would extend the higher cap for two years 
     (through December 31, 2010). It would also make changes to 
     the carryover allocation rules that specifies the time by 
     which the housing must be completed to still qualify for 
     the credit. This provision, JCT estimates, would reduce 
     revenues by $221 million over the 2009-2012 period.
       Second, the bill would reduce revenues by treating certain 
     repairs in the Gulf Opportunity Zone (composed of areas 
     affected by the hurricane) as qualified rehabilitation for 
     purposes of certain bond rules. In general, qualified 
     mortgage bonds are tax-exempt and must be used for new 
     mortgages. Qualified rehabilitation loans, on the other hand, 
     may be used for replacing existing mortgages. Since the 
     hurricane, states in the Gulf Opportunity Zone have been 
     allowed to issue Gulf Opportunity Zone Bonds for construction 
     and rehabilitation of property. This bill would allow loans 
     financed with qualified mortgage bonds and Gulf Opportunity 
     Zone Bonds to be used for existing mortgages, regardless of 
     certain rules in place for normal qualified rehabilitation 
     loans. JCT estimates that this provision would reduce 
     revenues by $1 million in 2007 and by $16 million over the 
     2007-2012 period.
       H.R. 1562 would raise revenue by changing collection due 
     process procedures with regards to employment tax 
     liabilities. Currently, the Internal Revenue Service (IRS) 
     may seize a taxpayer's property given a federal tax lien. 
     Prior to seizing the property, the IRS must notify taxpayers 
     that they have a right to a collection due process hearing. 
     This bill would enable the IRS to seize property without 
     first having a hearing. JCT estimates that this provision 
     would increase revenues by $172 million over the 2007-2012 
     period and by $241 million over the 2007-2017 period. Of the 
     revenue gain, JCT estimates that a portion would be off-
     budget--totaling $195 million over the 2007-2017 period.
       Finally, one provision would shift revenues between 2012 
     and 2013. For corporations with at least $1 billion in assets 
     in 2012, the bill would increase the portion of corporate 
     estimated tax payments due in July through September of that 
     year. This change would increase revenues by $107 million in 
     2012 and decrease revenues by $107 million in 2013.
     Spending Subject to Appropriation
       Section 4 would require the Government Accountability 
     Office to report recommendations to the Congress on the use 
     of federal tax incentives provided to state and local 
     governments affected by Hurricanes Katrina, Rita, and Wilma. 
     Based on similar reports, CBO estimates that preparing and 
     distributing the report would cost less than $500,000 in any 
     one fiscal year.
       Intergovernmental and private-sector impact: JCT has 
     determined that the tax provisions of the bill contain no 
     private-sector or intergovernmental mandates as defined in 
     the UMRA. CBO has determined that the non-tax provisions 
     (section 4) contain no private-sector or intergovernmental 
     mandates as defined in UMRA and would impose no costs on 
     state. local, or tribal governments.
       Estimate prepared by: Federal revenues: Emily Schlect. 
     Federal spending: Matthew Pickford. Impact on state, local, 
     and tribal governments: Melissa Merrell. Impact on the 
     private sector: Nabeel Alsalam.
       Estimate approved by: G. Thomas Woodward, Assistant 
     Director for Tax Analysis. Peter H. Fontaine, Deputy 
     Assistant Director for Budget Analysis.

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