Of 212 Tax Expenditures, LIHTC, ITC, PTC, NMTC and HTC Don’t Crack Top 30 Most Costly

Published by Michael Novogradac on Wednesday, October 8, 2014 - 12:00am

The Joint Committee on Taxation recently released its annual report on tax expenditures that highlights once again how relatively inexpensive the low-income housing tax credit (LIHTC), historic tax credit (HTC), renewable energy production tax credit (PTC), renewable energy investment tax credit (ITC), and new markets tax credit (NMTC) are in in the context of other tax expenditures. This assessment is particularly meaningful in the context of tax reform, as lawmakers consider the role and cost of tax expenditures. For example, in his draft proposal, House Ways and Means Committee Chairman David Camp, R-Mich., suggests eliminating the HTC, PTC, and ITC, as well as significantly altering the LIHTC in the name of reducing costs in the tax code. (While the draft does not explicitly address the NMTC, it also does not include a provision for renewal.) However, not only do these programs provide considerable benefits for affordable housingpoverty reduction, environmental protectionhistoric preservation, they are also inexpensive relative to other tax expenditures, and savings from eliminating them would not allow for significant corporate or individual tax rate reductions.

Out of the 212 tax expenditures measured by the JCT, the LIHTC, accelerated depreciation for rental housing, tax-exempt multifamily housing bonds, ITC, PTC, NMTC and HTC don’t crack the largest 30 in terms of cost. The home mortgage interest tax expenditure will cost more than 10 times what the LIHTC will cost over the next five years, assuming they each remain unchanged. The largest tax expenditure, the exclusion of employer contributions for healthcare and insurance premiums, will cost roughly eight times the cost of the LIHTC, PTC, NMTC, HTC and ITC combined.

The list below illustrates how the costs of the LIHTC, PTC, NMTC, HTC and ITC stack up against some of the largest tax expenditures.

(Corporate indicates the tax expenditures that were primarily or exclusively claimed by corporations; individual indicates the tax expenditures that were primarily or exclusively claimed by individuals.)

 

Blog Chart Big Ticket Expenditures (2014-2018)
Click to Enlarge