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Tax Incentives for Affordable Housing: The Low Income Housing Tax Credit

In: Tax Policy and the Economy, Volume 24

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  • Mihir Desai
  • Dhammika Dharmapala
  • Monica Singhal

Abstract

The Low Income Housing Tax Credit (LIHTC) represents a novel tax expenditure program that employs “investable†tax credits to spur production of low-income rental housing. While it has grown into the largest source of new affordable housing in the U.S. and its structure is now being replicated in other programs, the LIHTC has also drawn skepticism and calls for its repeal. We provide estimates of tax expenditures under this program and discuss pricing, efficiency, and distributional effects of the program. We also consider the impacts of the recent financial crisis on the LIHTC program and explore implications of resulting policy changes and proposals.

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This chapter was published in:

  • Jeffrey R. Brown, 2010. "Tax Policy and the Economy, Volume 24," NBER Books, National Bureau of Economic Research, Inc, number brow09-1, October.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 11971.

    Handle: RePEc:nbr:nberch:11971

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    1. Gibbons, Stephen & Manning, Alan, 2006. "The incidence of UK housing benefit: Evidence from the 1990s reforms," Journal of Public Economics, Elsevier, Elsevier, vol. 90(4-5), pages 799-822, May.
    2. Eriksen, Michael D. & Rosenthal, Stuart S., 2010. "Crowd out effects of place-based subsidized rental housing: New evidence from the LIHTC program," Journal of Public Economics, Elsevier, Elsevier, vol. 94(11-12), pages 953-966, December.
    3. Usowski, Kurt & Hollar, Mike, 2008. "Social Policy and the U.S. Tax Code: The Curious Case of the Low-Income Housing Tax Credit," National Tax Journal, National Tax Association, vol. 61(3), pages 519-29, September.
    4. Nathaniel Baum-Snow & Justin Marion, 2007. "The Effects of Low Income Housing Developments on Neighborhoods," Working Papers 2007-5, Brown University, Department of Economics.
    5. Coate, Stephen & Johnson, Stephen & Zeckhauser, Richard, 1994. "Pecuniary redistribution through in-kind programs," Journal of Public Economics, Elsevier, Elsevier, vol. 55(1), pages 19-40, September.
    6. Edgar O. Olsen, 2003. "Housing Programs for Low-Income Households," NBER Chapters, in: Means-Tested Transfer Programs in the United States, pages 365-442 National Bureau of Economic Research, Inc.
    7. Malpezzi, Stephen & Vandell, Kerry, 2002. "Does the low-income housing tax credit increase the supply of housing?," Journal of Housing Economics, Elsevier, Elsevier, vol. 11(4), pages 360-380, December.
    8. Sinai, Todd & Waldfogel, Joel, 2005. "Do low-income housing subsidies increase the occupied housing stock?," Journal of Public Economics, Elsevier, Elsevier, vol. 89(11-12), pages 2137-2164, December.
    9. Eriksen, Michael D., 2009. "The market price of Low-Income Housing Tax Credits," Journal of Urban Economics, Elsevier, vol. 66(2), pages 141-149, September.
    10. Dharmapala, Dhammika, 1999. "Comparing tax expenditures and direct subsidies: the role of legislative committee structure," Journal of Public Economics, Elsevier, Elsevier, vol. 72(3), pages 421-454, June.
    11. Susin, Scott, 2002. "Rent vouchers and the price of low-income housing," Journal of Public Economics, Elsevier, Elsevier, vol. 83(1), pages 109-152, January.
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    Cited by:
    1. Carlson, Curtis & Metcalf, Gilbert E., 2008. "Energy Tax Incentives and the Alternative Minimum Tax," National Tax Journal, National Tax Association, vol. 61(3), pages 477-91, September.
    2. Welch, Timothy F., 2013. "Equity in transport: The distribution of transit access and connectivity among affordable housing units," Transport Policy, Elsevier, vol. 30(C), pages 283-293.

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