Achieving Our Country: Geographic Desegregation and the Low-Income Housing Tax Credit

Abstract

This Article, which blends educational policy, housing policy, and tax policy, argues that one path down the precipice of racial inequality is to reverse a path that led us to where this problem began; namely, the racial segregation of the places where we live. This Article examines the country’s most important subsidy for creating affordable housing, the Federal Low-Income Housing Tax Credit (“LIHTC”), and considers whether the tax credit program has served as a tool for desegregating metropolitan neighborhoods. After concluding that the LIHTC program has not been an effective tool for reducing or eliminating continuing patterns of racial segregation and poverty concentration, this Article proposes numerous programmatic changes that could allow the tax credit program to promote greater geographic desegregation. Others have considered the impact of fair-housing laws on the LIHTC program. This Article contributes to that literature by going beyond fair housing to examine both the “cooperative federalism” concepts embedded in the program and the economic structure of tax credits, and by making practical suggestions on how the program can be improved to obtain racial integration. It takes a two-prong approach: First, this Article encourages more robust national guidance in order to encourage states to use credits to foster desegregation. Second, this Article considers changes to the economic structure of the program to provide incentives to developers and investors who undertake to provide affordable housing that results in desegregation.

Keywords: low income housing tax credit, affordable housing, neighborhood desegregation, geographic desegregation