Evidence Builds Against the Low ‐​Income Housing Tax Credit

Vanessa Brown CalderThe Low ‐​Income Housing Tax Credit (LIHTC) is a federal housing subsidy that allocates tax benefits to the states for constructing apartment buildings and other projects. The states hand out the benefits to developers, who are required to cap rents for the units they set aside for low ‐​income tenants.Chris Edwards and I reviewed the program in 2017here. We found that the program is very complex and greatly inflates the cost of housing projects. Since then, new research has bolstered our findings.Economists Edgar Olsen and Bree Lang are soon to publishThe Hidden Subsidies of Low ‐​Income Housing Tax Credit Projects.The paper finds:“the taxpayer cost of providing housing in tax credit projects is three times the most widely cited figure, the taxpayer cost per unit exceeds the median value of owner ‐​occupied houses in California, andthe total taxpayer cost is at least a third greater than the cost of assisting the same households with standard housing vouchers. ”Housing vouchers are paid directly by government housing authorities to landlords on behalf of low ‐​income beneficiaries. By contrast, LIHTC dollars change hands between a wide range of housing industry intermediaries before the funds materialize in a rent ‐​capped housing unit. So it is not surprising that Olsen and Lang found that costs of the LIHTC are much higher than for the vouchers.In line with this, a GAO study that found LIHTC unit...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs