From HVAC to roofing products, the American Recovery and Reinvestment and Act (ARRA) initiated tax credits for a range of energy-efficient home improvements, mostly related to a home’s mechanicals or building envelope. With the legislation focusing on reducing the biggest aspects of a home’s energy use, other product categories were not addressed in the Act, despite being classified as sustainable products.
One such area is kitchen cabinetry, which the Kitchen Cabinet Manufacturers Association (KCMA) has worked hard to “green” with its Environmental Stewardship Program (ESP). But with the proposed legislation, cabinetry, carpeting, countertops, flooring, and other home furnishings may also become eligible for tax deductions and credits.
About the Legislation
In bipartisan legislation, congressmen Henry Johnson (D-GA) and Nathan Deal (R-GA) are sponsoring the Home Improvements Revitalize the Economy (HIRE) Act to provide tax deductions and credits designed to stimulate the purchase of kitchen cabinets and other remodeling and home furnishing improvements. The products would have to be installed in the taxpayer's primary residence, and the credits would apply to existing homes, not new construction.
“Not only would this help stimulate the manufacturing market for home furnishings and building products, it would save retail jobs, generate billions in revenue, and increase home values at the time when we really need a boost,” Johnson said in a press release. “By creating this tax deduction, we will offer incentives for consumers who would otherwise forego spending in 2009 and 2010. We will encourage environmentally sound practices by doubling the benefits for the purchase of building products and home furnishings that meet nationally recognized environmental standards.”
Under the proposed HIRE Act, individual consumers and joint filers would receive $1,000 or $2,000, respectively, for purchasing products in the categories outlined by the legislation. If those products meet recognized environmental standards, such as from LEED, NAHB, Green Globes, the Sustainable Forestry Initiative/Forest Stewardship Council, or the ESP, the incentives double to $2,000 and $4,000. Further incentives are proposed for retailers, contractors, and other building product resellers, who could receive up to $10,000 for covered purchases, or $20,000 for purchases certified by recognized "green" programs.
Building Awareness
Currently, the HIRE Act is in the preliminary legislative phases. A coalition that includes 14 associations representing kitchen cabinets, home furnishings, flooring, paint and coatings, carpeting and rugs, and other interests has been formed to support passage of the legislation.
“This bill would help everyone in our industry -- manufacturing, retail, design, and suppliers," says KCMA executive vice president Dick Titus. "The costs would be more than offset by increased economic activity and saved jobs. The incentives cease after three years, so this definitely is a pump-priming effort of limited duration and near-immediate payback.”
Titus says that KCMA and the other organizations involved in promoting this legislation have drafted letters that industry professionals can personalize and send to their members of Congress. The extra support will help earn the bill co-sponsors, creating a stronger front when the bill is ultimately introduced to Congress.
"Right now, there's so much under consideration -- climate change, health care, the budgets, the whole nine yards," Titus says. "To get attention on our issue is very difficult with all of this ahead of us. We're attempting to get a sizeable group of co-sponsors to give it more impact, so that when the bill is introduced, it will help get us farther down that trail."
The HIRE Act is expected to be attached to a larger piece of legislation, whether it be a second stimulus package or part of a tax bill that might make its way through Congress. The timing of the bill's introduction is up in the air, but Titus says that sooner is better than later. "Right now, Congress is very much responsive to ideas that they think will help stimulate industry and the economy and help get things going," he says. "It is unlikely that the Act will pass as-is -- there will be a lot of tweaking as it moves further along, but if we can communicate the essentials, we feel this can bring an additional boost to the remodeling industry."
A short, easy-to-read copy of the HIRE Act can be viewed here. Supporters are encouraged to contact their congressmen and ask that they co-sponsor the bill. --Lauren Hunter, associate editor, REMODELING.
