It’s our turn now
What worked for homebuilders and car manufacturers is now being proposed for the home improvement industry, which is seeking a government tax break for consumers who spend money on new flooring, paint, cabinets and other home interior upgrades. The Home Improvements Revitalize the Economy (HIRE) Act of 2009 would provide a tax deduction of up to $2,000 per family, or a tax credit of $500, for the purchase of certain buildings materials and home furnishings.
Although there are certain exclusions—major appliances, home decor items, or building materials used in renovations like decks or room additions—the proposed tax deduction doubles for products that meet LEED, Green Globes or other widely recognized green standards.
Retailers that sell certain building materials or home furishings qualify for a tax credit of 10% of their annual purchased inventory, up to $10,000.
The lead sponsors of the HIRE Act are Rep. Henry “Hank” Johnson (D) and Rep. Nathan Deal (R), two Georgia congressmen from opposite sides of the aisle. But credit really goes to four flooring trade groups that began lobbying months ago. The Resilient Floor Covering Institute, the National Wood Flooring Association, the World Floor Covering Association, and the Carpet and Rug Institute have used their mailing lists and Websites to drum up more support, and sponsors, for the HIRE Act, which was introduced to the 111th Congress as H.R. 3382 on July 29.
H.R. 3382 has picked up 11 additional co-sponsors since then, including congressmen from North and South Carolina, Missouri, New Jersey, Michigan, Mississippi and Ohio. Other trade associations have also joined the cause: the Adhesive and Sealant Council, the International Wood Products Association, Kitchen Cabinet Manufacturers Association, National Paint and Coatings Association, and several others.
“Just about everybody has taken an interest in this bill,” said Werner Braun, president of the Carpet and Rug Institute.
A spokesman for Home Depot said the Atlanta retailer was following the bill. “We support legislation that encourages people to make investments in their homes,” commented Stephen Holmes.
Although the HIRE Act is somewhat vague on what constitutes “qualified building products and home furnishings,” H.R. 3382 is a young piece of legislation that still needs to make it through the House Committee on Ways and Means. Also to be determined: which retailers or “resellers” would qualify for the $10,000 tax credit.
Citing data from Decision Metrics and Mediamark (MRI) Research, H.R. 3382 notes that the building products and home furnishings industry markets suffered a $67 billion loss because of the recession in 2007 to 2008. During the same time period, 273,000 Americans who worked in these sectors lost their jobs. By the end of 2009, additional losses in the neighborhood of $74 billion and 299,000 jobs are expected.
REMODELING STIMULUSIn Canada, a new Home Renovation Tax Credit (HRTC) that went into effect this year has been credited with stimulating sales in the home improvement industry. The program, which started Jan. 27, 2009, and expires Feb. 1, 2010, offers a 15% tax credit on home remodeling expenses exceeding $1,000. The maximum credit is C$1,350. The Canadian government embarked on a massive advertising campaign to promote the program, and a recent survey indicated that one in three Canadians were planning to take advantage of the incentive. But the renovation tax credit was never officially approved by Parliament and passed into law, and citizen angst over the rebates was threatening to trigger a nationwide election at press time.
With numbers like those, it would seem like H.R. 3382 has a good shot at making it into the U.S. Senate, where several senators have already agreed to act as co-sponsors, according to Braun. But the Carpet and Rug Institute president is worried that the imbroglio over President Obama’s healthcare plan will preoccupy Capitol Hill in the weeks to come. “The healthcare debate is going to suck all the light and energy out of the Congress in the foreseeable future,” he lamented.
But H.R. 3382 could possibly pass as a rider on another bill, Braun noted. Or the HIRE Act may provide a welcome diversion to the legislative morass over health care. “They may be seen as something they can pass quickly,” Braun said. To keep hope alive, a Website with information on the bill and links to legislative offices has been set up at wfca-pro.org.
