Authors: Renee Tapp*, Harvard University
Topics: Urban Geography, Economic Geography, United States
Keywords: tax, fiscal geography, crisis, shell companies, rent, property
Session Type: Paper
Start / End Time: 9:55 AM / 11:35 AM
Room: Capitol Room, Omni, East
Presentation File: No File Uploaded
Historic, low-income, and new markets tax credits are a multi-billion dollar a year industry that has doubled since the 2008 global financial crisis. Tax credits attract investors to real estate projects on the promise they will reduce their effective tax rate, thereby increasing shareholder values while delivering socially beneficial goods like affordable housing and historic preservation. This paper draws on Marxist rent theory to examine how investors extract shareholder profits from real estate tax credits, focusing particularly on the divisibility of property rights under financialization. Using interviews with key actors in the tax credit industry in the United States, this paper demonstrates that (i) limited liability companies provide new forms of ownership within buildings that are crucial to distributing profits to shareholders, (ii) rent-maximizing within tax credits puts a premium on large buildings, and (iii) shifting geographies of finance are guided by tax liabilities. As such, tax credits represent a new form of rent based on sheltering—rather than generating—value.