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As explained in Appendix 2, this paper refines that proposal by improving the treatment of tenant-paid utilities, excluding the credit from taxable income, allowing more flexible credit transfers, and deepening income targeting.

In addition, it outlines a credit that states would allocate only to owners or developers for use in particular housing developments (a “project-based” renters’ credit).

In some cases, these initiatives could generate substantial savings in health care, child welfare, and other state-administered programs.

States could also use the new credit to provide low-income families with access to housing in a wider range of communities.

The federal government spends close to 0 billion a year to help Americans buy or rent homes, but much of that spending benefits homeowners who could afford a home without help.

About 60 percent of federal housing expenditures for which data are available go toward tax benefits for homeowners with incomes of 0,000 or more, and 30 percent go to those with incomes of 0,000 or more.

For example, a credit with an annual cost of billion once fully phased in could enable about 720,000 poor families to live in a stable home at per-family cost of ,300, close to the same as the cost of a housing voucher.

The credit could help a sizable number of poor families to afford housing at a relatively modest overall cost.When rental assistance has allowed low-income children to attend well performing, economically integrated schools over the long term, their math and reading test scores are significantly better than comparable children who attended higher-poverty schools.States could opt to prioritize allocation of credits for developments in neighborhoods with low poverty rates, low crime, and strong schools, and federal policy could provide incentives to encourage this.It could also help address an imbalance in current federal housing policy: counting tax benefits, federal housing assistance overwhelmingly goes to high-income homeowners, even though low-income renters have the most acute housing needs.More than 11 million renter households, most with incomes below the poverty line, pay more than half their income for housing.

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