UCLA

The Low-Income Housing Tax Credit program is by far the largest federal subsidy for affordable housing production in America. There are two types of tax credits in this program and the research typically does not differentiate. The “non-competitive” 4% credit, as opposed to the “competitive” 9% credit, is flying under the radar of researchers and policymakers. Prioritization towards siting in neighborhoods with higher opportunities are often optional, unclear, and unenforceable in the 4% program. The results from this project show that both credits do very little to reduce the patterns of poverty concentration and racial segregation in the United States. Moving into any type of new tax credit unit may notably reduce a subsidized household’s experiences and undermine its ability in translating stable rents into economic mobility. During the most recent decade, some states started to incentivize siting more 9% developments in areas with lower poverty and higher opportunities through the use of Qualified Allocation Plans. State legislators and housing authorities have yet to carry out meaningful oversight and guidance for the 4% program. The finding points to that the tax credit program, particularly with the 4% tax credit, has some unleashed potentials to increase our ability to create housing and neighborhood opportunities for all and advance fair housing goals.