Former Missouri Sen. Jeff Smith wrote in an op/ed published in the St. Louis Post-Dispatch last week that the “conventional wisdom” about the Low Income Housing Tax Credit (LIHTC) is wrong — that the LIHTC is not in fact a wasteful state boondoggle, but a “solid investment for taxpayers.” I have written about the LIHTC, and suffice to say, I disagree with him.
Of course, as the executive director of the Missouri Workforce Housing Association, Smith certainly has an interest in pumping up the program. According to the MOWHA website (emphasis mine):
The mission of the Missouri Workforce Housing Association (MOWHA) is to have a sustained effort influencing positive workforce housing policy at the federal, state, and local levels. We work with the Missouri Housing Development Commission (MHDC), the Affordable Housing Assistance Program (AHAP), Low Income Housing Tax Credits (LIHTC) . . .
The concern about tax credits such as the LIHTC is not just their potential for growth, but their costs and benefits. The LIHTC regularly clears more than $100 million from the state’s budget each year. The taxpayer benefit? Eleven cents on the dollar — a massive net loss to the state with every LIHTC project it subsidizes. If that is a “solid investment,” what isn’t?
Missourians would be better served with state policies that benefit all businesses through low, stable tax rates. It would be best served by the elimination of taxes on businesses entirely, a reform other states are already pursuing. That is a solid investment worth pursuing.