Tax Foundation's video: Tax Policy s Role in Expanding Affordable Housing Senate Finance Committee Hearing

Garrett Watson, Senior Policy Analyst and Modeling Manager at the Tax Foundation, testified before the Senate Finance Committee to recommend vital steps that policymakers can take to expand affordable housing in America, notably reforming the Low-Income Housing Tax Credit (LIHTC) and improving cost recovery for residential structures. 𝗥𝗲𝗳𝗼𝗿𝗺𝗶𝗻𝗴 𝗟𝗜𝗛𝗧𝗖 𝘁𝗼 𝗵𝗲𝗹𝗽 𝘃𝘂𝗹𝗻𝗲𝗿𝗮𝗯𝗹𝗲 𝗔𝗺𝗲𝗿𝗶𝗰𝗮𝗻𝘀: LIHTC, the largest source of affordable housing financing in the U.S., has supported the construction of more than 3 million housing units since its creation in 1986. We recommended, among other things, ways to improve LIHTC’s administration, oversight, and efficiency. 𝗣𝗿𝗼-𝗴𝗿𝗼𝘄𝘁𝗵 𝘁𝗮𝘅 𝗽𝗼𝗹𝗶𝗰𝘆 𝗮𝘀 𝗮 𝘁𝗼𝗼𝗹 𝘁𝗼 𝗲𝘅𝗽𝗮𝗻𝗱 𝘀𝘂𝗽𝗽𝗹𝘆: A supplementary approach to expanding the supply of affordable housing is to provide neutral cost recovery, which we estimate would lead to the construction of up to 2.3 million housing units in the long run while also lowering construction costs by about 11 percent. 𝗖𝗼𝗺𝗽𝗹𝗲𝗺𝗲𝗻𝘁𝗮𝗿𝘆 𝘁𝗮𝘅 𝗿𝗲𝗳𝗼𝗿𝗺𝘀: Reforming LIHTC and providing neutral cost recovery for residential structures would tackle the problem of housing affordability in a complementary fashion. Neutral cost recovery expands the housing supply and lowers the costs of construction and rents, which can help LIHTC fund more below-market-rate projects. 𝗥𝗲𝗮𝗱 𝗚𝗮𝗿𝗿𝗲𝘁𝘁'𝘀 𝗳𝘂𝗹𝗹 𝘄𝗿𝗶𝘁𝘁𝗲𝗻 𝘁𝗲𝘀𝘁𝗶𝗺𝗼𝗻𝘆: https://taxfoundation.org/expanding-affordable-housing/ Want to learn more? Subscribe to our channel and weekly email newsletters at TaxFoundation.org!