Introduction
The American Housing and Economic Mobility Act of 2024, presented by U.S Representative Emanuel Cleaver (D-Mo.), is a daring piece of legislation that seeks to address the critical issues of housing affordability and economic inequality in America. The bill encompasses measures that purport to solve the housing crisis, reduce rental expenses, develop home ownership capacities, and implement substantial tax reforms.
Key Provisions
- Encouraging New Housing Construction
The bill promotes new housing units development especially in areas with extreme scarcity. This measure aims at redressing the imbalance between supply and demand in the housing market for stabilization of prices.
- Reducing Costs for Renters and Homebuyers
Various measures have been introduced to ease the burden on renters as well as expand opportunities for first-time home buyers like veterans in the housing market. These initiatives seek to make homes available at an affordable rate to many Americans.
- Tax Reforms
Fundamental to this bill are proposed changes in taxation including major adjustments to estate tax system. Such changes are aimed at increasing federal revenues and creating fairer internal revenue systems through these reforms.
- Incentives for Local Governments
This act urges local governments to abolish land use regulations that limit affordable housing provision due to artificial inflation of real property costs. By encouraging more affordable building projects, the law intends to eliminate one root cause of unavailability of homes.
- Limiting Private Equity Influence
The act recognizes increased influence private equity companies have had within the real estate sector by introducing provisions which would curtail their involvement. This section is designed at tackling fears over higher prices and limited supply which occur when these firms buy massive amounts of properties.
- Expanding Access To Credit
With regards to financial institutions, particularly those serving underserved communities, access has been expanded under this legislation through credit. The measure broadens financing facilities leading towards homeownership, thereby enhancing mobility within economies, benefiting potential house buyers’ population cohort.
Estate and Tax Reforms
Among the most significant provisions of the bill are changes proposed in the estate tax system. The Act aims to bring estate tax thresholds back to the levels they were at in 2009, towards the end of George W. Bush’s administration.
Key Features of the Estate Tax Reforms:
- Progressive Tax Rates: The law proposes taxing estates at 55% on those valued up to $13 million, 60% on amounts above that, but not exceeding $93 million, and 65% for anything over $93 million.
- Lowered Exemption Threshold: The estate tax exemption threshold would be reduced to $3.5 million, a level last seen in 2009. This reduction seeks to increase estates covered by estate taxation as well as raise additional revenue for the national government budget.
- Surcharge on High-Income Estates and Trusts: A new surcharge has been introduced which consists of a five percent tax on Modified Adjusted Gross Income (MAGI) over two hundred thousand dollars and an additional three percent for MAGI between five hundred thousand dollars and beyond this figure; this surcharge does not apply to charitable trusts.
- Limitations on Foreign Tax Credit: The bill suggests amendments that limit foreign tax credits applicable to trusts and estates based on maximum rates of taxes chargeable thereon.
- Option to Elect Corporate Rates: Individuals could elect corporate rates with corresponding adjustments made in the tax code as provided under section.
- Deferment Interest: The proposal concerns interest on deferred tax liabilities for estates and trusts, to be adjusted for prevailing economic conditions.
Prospective Effect on Estates
The American Housing and Economic Mobility Act of 2024, if passed into law, will greatly impact estate planning and wealth transfer techniques. The number of estates subject to federal estate taxes is projected to increase significantly due to the reduction in the threshold for exemption from estate tax to $3.5 million.
Presently, only 0.2% (1 in every 500) of estates pay federal estate taxes as per the IRS figures. When at $3.5 million last in 2009, only about 0.7% (1 in every 140) paid taxes out of their estates. Given that median values of single-family homes went up from $185,000 in 2009 to $420,000 in 2024 according to data from National Association of Realtors, it could lead to material increases in estate tax liabilities both among high net worth individuals and middle class families alike.
If implemented these modifications would necessitate more sophisticated and perhaps expensive devices with respect to avoiding or at least mitigating one’s exposure to tax risks. This can be particularly critical regarding ownership stakes in companies and farms or similar illiquid assets since nine months following a death fatal are given by the Internal Revenue Service within which an executor must make payment of this levy or otherwise borrowings may have to be made or alternatively such assets may need selling off.
Historical Context
There is precedent for returning estate tax thresholds back towards their pre-2010 levels with progressive rates being introduced. Since it was first enacted by Congress almost a century ago, the taxation has been an object of acrimonious dispute during several presidential administrations starting from George W. Bush through Barack Obama’s era.
Under President Bush’s tenure there was a gradual incrementation of the estate tax exemption amount until it reached $5 million per person in 2010. The Tax Cuts and Jobs Act of 2017, on the other hand, increased the exemption to $11.7 million per individual thereby reducing even more estates subject to this levy.
The current bill aims at reversing these changes in order to increase national tax revenues and address income distribution issues that have led to a move towards progressive taxations.
Political Landscape and Prospects for Passage
A number of non-profit organizations and advocacy groups have shown strong support for the American Housing and Economic Mobility Act of 2024 as well as prominent senators like Elizabeth Warren and Raphael Warnock. However, its passage is contingent upon successful negotiations within the Democratic controlled Senate and Republican controlled House.
If integrated into broader legislations, such as a possible future Harris Administration’s American Jobs Plan, this would likely improve chances for the bill’s success. Broad political backing for it must be built if Act is to succeed alongside effectively selling its benefits out there to America.
Conclusion
The legislation known as the American Housing and Economic Mobility Act of 2024 is a brave attempt at addressing housing crisis as well as economic inequality through house building programs and remodification of taxation regime. In particular, proposed estate tax reforms would have significant implications for estate planning strategies or wealth management in the United States.
As it goes through legislative process, broad political support will determine how well this bill does while being considered within wider policy frameworks. Therefore, should they pass it into law, then the Act could reconfigure the housing plus taxation landscape, sweeping over generations ahead from now.
The proposed legislation emphasizes the continuing disagreement on the sharing of wealth, affordable housing, and how the government can intervene to handle these problems. Although it is still uncertain whether this act will be passed, it has raised significant discussions on the tax reform and future housing policy in America.
Acknowledgment: This article was inspired by and includes information from "The American Housing and Economic Mobility Act of 2024 Explained" published on Wealthmanagement.com. For more detailed insights, you can read the full article here.
