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How Will the U.S. Presidential Election Affect This Critical Housing Tax Credit?
Franco Faraudo & Nicholas Pipitone
October 10, 2024
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During the 1992 presidential campaign, one slogan that soon became famous was, “It’s the economy, stupid.” Coined by Democratic strategist James Carville, the phrase became the de facto motto for Bill Clinton’s successful bid to unseat incumbent President George H.W. Bush.
As we enter the final, grueling stretch of the 2024 presidential campaign, one might say, “It’s the housing, stupid.”
Affordable housing has become a prominent issue in the U.S. presidential election, driven by soaring home prices in recent years. Numerous surveys show that a majority of Americans - both Republican, Democratic, and Independent voters - believe the federal government should play a more significant role in addressing the housing crisis. Voters say they are increasingly evaluating candidates based on their housing plans.
The two leading candidates, Vice President Kamala Harris and former President Donald Trump, have both made affordable housing a central theme, though their proposed solutions differ significantly. While voters are concerned about plenty of other pressing issues, housing affordability is a huge worry.
One primary tool in addressing the housing shortage that isn’t mentioned as much on the campaign trail is the Low-Income Housing Tax Credit (LIHTC), which has supported affordable housing construction for decades since its inception during the Reagan administration.
Housing production through the LIHTC has decreased in recent years, and trade organizations like the National Association of Home Builders are advocating for its expansion.
Despite its success, the LIHTC has limitations, especially for extremely low-income households, many of whom still spend more than half their income on rent. Advocates are pushing for reforms such as the ELI basis boost, which would provide more tax credits if developers reserve a portion of units for extremely low-income tenants.
Regardless of the election outcome, the LIHTC will remain a vital component of the national strategy to address the affordable housing crisis. As the need for affordable housing continues to grow, further reforms to the program are likely. How those reforms look will differ depending on who wins the election next month and takes control of the White House.
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