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DESCRIPTION OF THE STRATEGY
One approach to funding lead hazard control outside of general fund appropriations is for governments to offer a credit on federal, state, or local income taxes to property owners who expend funds for eligible activities. A tax credit’s advantage of extremely low administrative costs is balanced against the problem that tax credits are difficult to target and frequently provide little or no benefit for very low-income properties that generate little or no tax liability.
BENEFITS
Immediate/Direct
Results:
A tax credit is a way to finance the cost of lead hazard control, subject to cost limitations and other operational requirements such as the use of certified contractors. Although income tax credits provide dollar-for-dollar reduction in tax liability at the end of a tax year, up to the maximum amount specified, the funds are not available to pay for the cost of abatement at the time the work is performed.
Public Health
Benefits:
Additional lead-safe houses will expose fewer children to lead hazards.
Other
Indirect/Collateral Benefits:
Ease of administration.
Scope of Potential Impact
Statewide City - or - County - Wide
PRIMARY ACTOR(S)
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KEY PARTNER(S)
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Property Taxation Agency
| Property Owners
Contractors
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CRITICAL ELEMENTS
Staff
requirements:
The staffing requirements to implement a tax credit for abatement are minimal. There is the initial need to draft regulations to incorporate the credit into a state’s tax code as well as explanatory materials to foster general public understanding. Once the tax credit is implemented, it becomes just another line item on a tax return.
Other resource requirements:
There must be a mechanism for verifying that a property for which a credit is claimed has lead hazards and that the work has addressed the lead hazards (through either abatement or interim controls), leaving the property or work area lead-safe at the end of the job. Jurisdictions should specify that the hazard control and hazard determination/clearance work be performed by appropriate trained or certified personnel. There must be a sufficient supply of qualified personnel available to property owners.
Institutional
capacity required:
A tax structure and administrative agency that can fairly administer a tax credit as part of an income tax system.
Cost
considerations:
It is very difficult to estimate the financial impact of a tax credit for lead paint abatement on a jurisdiction’s tax revenue, since it is impossible to predict how many taxpayers will take advantage of this opportunity.
Timing issues:
None.
Feasibility of
Implementation:
Extremely easy to implement, but difficult to enact when state and local revenues are constrained.
Potential Obstacles/Barriers
Successfully amending a complex tax code may be daunting for people and organizations normally dedicated to health and housing issues. The tax credit must be large enough to create an incentive for property owners to spend their own money for lead hazard control or abatement. At the same time, the cost must be reasonable enough that it can be borne by the state.
Additional Resources
1. | Federal income tax credit legislation for lead abatement is now pending. |
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