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Indiana Law Journal

Document Type

Article

Publication Date

Winter 2018

Publication Citation

93 Indiana Law Journal 915 (2018)

Abstract

INTRODUCTION

I. THE SPATIAL DISTRIBUTION OF TAX-BASED HOUSING SUBSIDIES

A.WHY THE SPATIAL DISTRIBUTION OF TAX-BASED HOUSING SUBSIDIES MATTERS

B. THE LOCATION OF TAX-SUBSIDIZED HOUSING IN AMERICA

1. THE SPATIAL DISTRIBUTION OF MORTGAGE INTEREST DEDUCTION BENEFITS

2. THE SPATIAL DISTRIBUTION OF LOW-INCOME HOUSING TAX CREDIT PROJECTS

II. VISUALIZING THE SPATIAL DISTRIBUTION OF TAX-BASED HOUSING SUBSIDIES

A. THE BIG PICTURE: MAPPING TAX-BASED HOUSING SUBSIDIES

B. A CLOSER LOOK: DESCRIBING TAX-SUBSIDIZED NEIGHBORHOODS

1. NEIGHBORHOODS WITH HIGH SHARES OF MORTGAGE INTEREST DEDUCTION BENEFITS AND FEW LIHTC PROPERTIES

2. NEIGHBORHOODS WITH HIGH NUMBERS OF LIHTC PROPERTIES AND LITTLE MORTGAGE INTEREST DEDUCTION BENEFIT

3. NEIGHBORHOODS IN ZIP CODES WITH BOTH LIHTC PROPERTIES AND HIGH MORTGAGE INTEREST DEDUCTION BENEFIT

III. HOW TAX-BASED HOUSING SUBSIDIES REINFORCE AND REWARD SEGREGATION

A. THE MORTGAGE INTEREST DEDUCTION REWARDS SEGREGATION AND RESTRICTS LOW- AND MIDDLE-INCOME HOUSING CHOICE

1. THE MORTGAGE INTEREST DEDUCTION REDUCES WEALTHY HOMEBUYERS’ COST OF MOVING TO HIGH QUALITY OF LIFE AREAS

2. CAPITALIZATION OF THE MORTGAGE INTEREST DEDUCTION REDUCES AFFORDABLE HOUSING OPTIONS FOR LOWER-INCOME HOMEBUYERS

B. THE LIHTC PROGRAM REWARDS SEGREGATION AND RESTRICTS LOWINCOME TENANTS’ RENTAL OPTIONS

1. FEDERAL TAX LAW AND STATE ADMINISTRATIVE PROCEDURES REWARD DEVELOPMENT OF LIHTC PROPERTIES IN SEGREGATED NEIGHBORHOODS

2. THE LIHTC PROGRAM LIMITS LOW-INCOME TENANTS’ HOUSING CHOICE

IV. EVALUATING THE SPATIAL DISTRIBUTION OF TAX-BASED HOUSING SUBSIDIES: WEIGHING THE COSTS AND BENEFITS OF REFORM

A. THE LIHTC PROGRAM’S EFFECTS ON SUPPLY AND EXTERNALITIES ARE UNCERTAIN

1. THE LIHTC PROGRAM SUFFERS FROM HIGH CROWD-OUT RATES 953 2. SOCIAL COSTS OUTWEIGH GAINS IN PROPERTY VALUE

B. INVESTING IN HIGH-INCOME NEIGHBORHOODS THROUGH THE MORTGAGE INTEREST DEDUCTION

1. POSITIVE EXTERNALITIES FROM HOMEOWNERSHIP DECLINE AT HIGH INCOME LEVELS

2. NEGATIVE EXTERNALITIES OUTWEIGH POSITIVE EXTERNALITIES ASSOCIATED WITH HOME CONSUMPTION

V. REFORMING TAX-BASED HOUSING SUBSIDIES

A. NEW REASONS TO REFORM TAX-BASED HOUSING SUBSIDIES

B. REFORM THE LIHTC PROGRAM THROUGH QUALIFIED ALLOCATION PLAN AMENDMENTS

1. UNCERTAIN EFFECT OF SCALING BACK THE BASIS BOOST PROVISIONS

2. PROMOTING INTEGRATION THROUGH QUALIFIED ALLOCATION PLANS

C. REPLACE THE MORTGAGE INTEREST DEDUCTION WITH A REFUNDABLE TAX CREDIT

1. UNCERTAIN IMPACT OF A PARTIAL REPEAL OF THE MORTGAGE INTEREST DEDUCTION

2. BENEFITS OF REFUNDABLE HOUSING TAX CREDITS

D. ISSUES RAISED BY REFORM PROPOSALS

CONCLUSION

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