Maintaining the Federal Historic Tax Credit
Since H.R. 1—the Tax Cuts & Jobs Act—was introduced, I have worked tirelessly with my colleagues in Congress to include language that would preserve the Federal Historic Tax Credit (HTC). In addition to incentivizing preservation of our nation’s past, the federal HTC contributes significantly to the American economy. This nonrefundable tax credit, available to individuals and corporations rehabilitating certain income-producing properties, increases employment opportunities in a variety of sectors, encourages responsible use of resources, and generates a net financial benefit to the U.S. Treasury.
As President Ronald Reagan said regarding HTCs, “Our tax credits have made the preservation of our older buildings not only a matter of respect for beauty and history, but of economic good sense.” That economic good sense has been around since Reagan made his remarks and the data supports him. The HTC should be viewed as a strategic investment. Though $25.2 billion in tax credits have been given over nearly four decades, projects undertaken by investors claiming the credits have produced $29.8 billion in federal tax receipts. Treasury accounts are thus seeing a return of more than $1.20 for every dollar credited.
Since the inception of HTCs, investors have spent approximately $131.8 billion on the restoration of historic properties. Effects of their contributions include the creation of more than 2.4 million jobs across the construction, manufacturing, retail, and service industries. Indirect benefits extend to agriculture, transportation, and public utility organizations.
Job growth is not the only way in which communities profit from HTC projects. More than 42,000 structures have undergone restoration, resulting in aesthetic as well as practical improvements. Nearly 550,000 residential units have been created, many of which are used to provide affordable or low-income housing.
Clearly, the positive economic impact of the HTC far outweighs its cost to the federal government. The United States has realized a cumulative $291.7 billion in output, $106.6 billion in income, and $144.9 billion in GDP growth as a result of HTCs.
The tax relief bill passed Tuesday maintains the federal HTC, establishing a 20 percent credit for qualified rehabilitation structures over a five year period beginning in the tax year the structure is placed in service. The tax credits will continue to drive rehabilitation of historic downtowns across the Fourth Congressional District, from Hot Springs to El Dorado, Texarkana to Pine Bluff. I was proud to support this tax credit and this important tax bill, which will provide tax relief to hundreds of thousands of hardworking Arkansas families.
Congressman Bruce Westerman of Hot Springs has represented the Fourth District in the U.S. House of Representatives since 2015. He serves on the House Budget, Natural Resources, and Transportation and Infrastructure Committees.