Mortgage Revenue Bonds: Tax Exemption with a Vengeance

32 Pages Posted: 19 Jun 2004 Last revised: 24 Mar 2021

See all articles by Patric H. Hendershott

Patric H. Hendershott

University of Aberdeen - Centre for Property Research; National Bureau of Economic Research (NBER)

Date Written: February 1980

Abstract

This paper presents calculations of the impacts of two levels of mortgage revenue bonds (MRBs) on: (1) yields on home mortgages, tax-exempt bonds and taxable bonds, (2) the allocation of the American fixed capital stock among residential (by three tax brackets), business, and state and local capital, (3) the productivity of this aggregate stock, and (4) the federal deficit. The levels of MRBs analyzed are $40 billion and the maxi-mum permitted by the realities of the market place. The latter is estimated to be $440 billion or over half of regular home mortgages outstanding. Limited levels of MRBs directed solely at "lower" income housing would not have any clear impact on productivity. An unlimited volume would generate an estimated annual productivity loss of $3 billion. Assuming a 4 percent discount rate, the present value of this stream is $75 billion.

Suggested Citation

Hendershott, Patric H., Mortgage Revenue Bonds: Tax Exemption with a Vengeance (February 1980). NBER Working Paper No. w0447, Available at SSRN: https://ssrn.com/abstract=262069

Patric H. Hendershott (Contact Author)

University of Aberdeen - Centre for Property Research ( email )

Aberdeen AB24 2UF
Scotland

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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