City Taxes, City Spending

City Taxes, City Spending

Essays in Honor of Dick Netzer

Studies in Fiscal Federalism and State–local Finance series

Edited by Amy Ellen Schwartz

An illustrious group of economists contribute to this volume honoring Dick Netzer, the public finance economist well-known for his research on state and local taxation, the provision of urban public services, and non-profit organizations. Following in his tradition, the contributors apply microeconomics to real world problems facing urban areas and use statistical analysis to gain insight into practical solutions.

Chapter 5: The role of cities in providing housing assistance: a New York perspective

Ingrid Gould Ellen, Michael H. Schill and Amy Ellen Schwartz

Subjects: economics and finance, public finance, geography, cities, politics and public policy, public policy, urban and regional studies, cities

Extract

Ingrid Gould Ellen*, Michael H. Schill, Amy Ellen Schwartz and Ioan Voicu The current debate over housing policy in the United States takes place against a backdrop of devolution. In recent years, the federal government has increasingly relied upon states and cities to create and administer social policy. Thus, as this devolution continues, it is useful to consider how the responsibility for housing programs and policies should be divided among federal, state and local governments and, given the severity of urban housing problems, city governments in particular. This chapter examines available theory and evidence regarding the appropriate role of different levels of government, focusing in particular on the role of cities. Studying the case of New York City, we also offer new evidence on the extent to which investments in affordable housing can help to eliminate externalities and rebuild inner city communities. The chapter is organized as follows. In the first section we review relevant theoretical and empirical literature to distill an understanding of whether and under what conditions cities are the appropriate level of government to fund and/or administer housing subsidy programs.1 In brief, we conclude that, although cities should play a major role in administering housing programs, they should be wary about actually funding them. Redistribution of income, a major objective of most housing subsidy programs, should generally be paid for by the federal government, not cities. In contrast, cities should consider funding housing production programs when they are part of a comprehensive strategy either...

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