Tax Incentives for Affordable Housing: The Low Income Housing Tax Credit
NBER Working Paper No. 14149
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.
Published: Tax Incentives for Affordable Housing: The Low Income Housing Tax Credit, Mihir Desai, Dhammika Dharmapala, Monica Singhal, in Tax Policy and the Economy, Volume 24 (2010), The University of Chicago Press
This paper was revised on December 5, 2011