Working Paper: NBER ID: w14149
Authors: Mihir A. 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.
Keywords: Low Income Housing Tax Credit; affordable housing; tax incentives
JEL Codes: H2; H76; R31; R51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Tax credits allocated to developers (H29) | Housing units produced (R31) |
| LIHTC program (R38) | Housing availability (R21) |
| Financial crisis (G01) | Ability of developers to finance new projects (O16) |
| Market conditions (D49) | Availability of affordable housing (R31) |