ABSTRACT
Th e federal government subsidizes housing through direct expenditures and “tax expendi tures.” Th e latter term refers to tax revenue not collected because of deductions, exemp tions, and credits connected to housing-related expenditures and investments. Direct subsidies receive more attention in policy circles and in the mass media than do tax expen ditures;1 however, tax expenditures are far larger, as illustrated in Figure 1.2. In 2008, the federal government spent $40.2 billion on public housing, rental vouchers, and other direct housing subsidies. However, it provided more than four times more money, $171.9 billion, in tax breaks to homeowners and investors in rental housing and mortgage revenue bonds. Th is chapter will examine the scope of federal tax expenditures for housing, comparing the major types of tax expenditures and assessing the extent to which they benefi t diff erent income groups. It will also discuss the strengths and weaknesses of using the tax code to subsidize housing.
