Reforming the Low-Income Housing Tax Credit (LIHTC) and providing neutral cost recovery for residential structures would tackle the problem of housing affordability in a complementary fashion.
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Congressional lawmakers are putting together a reconciliation bill to enact much of President Biden’s Build Back Better agenda. Many lawmakers including Senate Finance Committee Chair Ron Wyden (D-OR), however, want to make their own mark on the legislation.
To tackle problems of homelessness and housing costs, Senator Ron Wyden (D-OR) has released a major tax proposal, the Decent Affordable Safe Housing (DASH) For All Act. Several of Wyden’s proposals are also components of the Biden administration’s infrastructure agenda, with a large focus on tax credits designed to either incentivize new housing or directly reduce rent burdens.
While President Biden has many proposals aimed at increasing the supply of affordable housing, including tax credits, his plans to raise business taxes could hinder that goal.
Housing affordability was a major issue even before the COVID-19 crisis, but the current economic situation has made it more salient. Immediate support for people struggling makes sense now, but lawmakers should also consider long-term solutions to the problem of high rents, namely by expanding the supply of housing.
Improving cost recovery for residential structures, while not a silver bullet for solving the housing crisis, would on the margin encourage more construction that would help push rents down across the board.