Commentary: A Capitalist’s View of Affordable Housing via Affordable Housing Finance

True confession: I’m an unabashed free-market capitalist. I have a bachelor of science degree in economics. And most people who know me are well aware of my conservative tendencies. Yet I’m a huge supporter of affordable housing. I’ve heard the conventional wisdom that affordable housing tends to be advocated by those on the liberal side of the political spectrum. So what gives? How can such a conservative free-market guy have strong positive beliefs about affordable housing?

For purposes of this discussion, I want to focus on the Sec. 42 low-income housing tax credit (LIHTC) program. The Department of Housing and Urban Development is a different story and one to tackle in another article. For starters I’d like to offer some gentle criticism of Congress for its choice of nomenclature when establishing the program as a part of the Tax Reform Act of 1986. Why couldn’t it have been called the Sec. 42 affordable housing tax credit? Using the term “low-income” triggers negative connotations in many quarters. We’ve been stuck with this moniker from the beginning, and it can be a tough sell in smaller and rural communities. Still, the program has been able to garner bipartisan support.

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