News From the
Committee on Small Business
Nydia M. Velázquez, Chairwoman

CONTACT: Jaime Zapata

Committee Examines Tax Incentives for Housing Sector
Proposed Measures would Help Address the Housing Crisis
While Strengthening Nation’s Small Business Economy

WASHINGTON, D.C. —Almost 10% of Gross Domestic Product (GDP) in the U.S. is generated by the housing industry, and—in recent years—residential investment has accounted for as much as 75% of all job growth. That makes the success of entrepreneurs in housing-related fields critical to the health of the economy. Unfortunately, this sector has been hit especially hard by the current financial downturn. Today, the House Committee on Small Business heard testimony from realtors, homebuilders and other small business representatives. The Congressional panel also examined how specific tax incentives could bring relief to small firms while helping them get the economy back on track.

“Self employed entrepreneurs and small companies have always been America’s economic drivers. The housing sector is no exception,” said Chairwoman Nydia M. Velázquez. “Homebuilding, realty, community banks and other related small businesses are proven job creators. It’s not just a question of how they are impacted by a downturn in the housing market. When these firms suffer, the effects ripple throughout our economy.”

Since 2006, the number of home buyers has declined sharply. As a result, housing starts are down more than 60%. There is also an 11-month supply of newly constructed homes on the market—almost double the normal amount. Witnesses explained these conditions are placing enormous pressures on their firms. Many are being forced to lay off workers or leave the industry altogether. In fact, since February 2006, this sector of the economy has lost almost 500,000 jobs. Meanwhile, the number of individuals seeking new employment as housing professionals is virtually zero.

“This is a multifaceted problem with effects that extend to everyone in our society,” said Chairwoman Velázquez. “We need to look at all the angles. That’s the only way to identify viable policy solutions that will help both consumers and businesses while revitalizing the economy.”

Several tax reform provisions addressing these challenges have been included in legislation passed by the House and Senate. They range from a first-time homebuyer’s tax incentive, increasing the low-income housing tax credit, and extending the number of years companies can carry back-losses. Witnesses explained that such measures would spur renewed economic activity in their respective industries, allowing them to maintain and create new jobs.

“There’s a surefire way to get through this crisis—give small businesses a real chance do create jobs and grow our economy,” said Chairwoman Velázquez. “Targeted tax incentives for affected industries would provide immediate benefits to millions of small firms. Just as importantly, they would help them jumpstart our way to economic recovery.”

Click here to view witness testimony.