Kamala Harris’s latest campaign ad pledges to “end America’s housing shortage by building 3 million new homes and rentals.” However, her plan is unlikely to significantly increase the overall housing supply. The cornerstone of her proposal is an expansion of the Low-Income Housing Tax Credit (LIHTC)—a program plagued by the Five Cs:

• Crowding Out: LIHTC developments often displace other housing that would have been built by the private market without subsidies. Studies show that for every 100 LIHTC units built, private construction falls by up to the same amount.
• Cost: The average LIHTC unit costs taxpayers an estimated $450,000, compared to $0 for a private development that it displaces, making it an expensive solution for affordable housing.
• Complexity: As Chris Edwards highlights, “This single tax credit requires 2,060 pages of federal rules to implement, in addition to masses of state-level regulations. The real winners? The lawyers.”
• Corruption: A 2023 GAO report revealed minimal federal oversight of the LIHTC program, creating opportunities for fraud to flourish nationwide.
• Cartel: A small group of specialized developers and non-profits have mastered navigating LIHTC’s complexities, profiting handsomely while crowding out competition.

Rather than expanding the LIHTC program, we should first evaluate it for its effectiveness.

For more, click here to read the last article in this series.