It’s almost the first of the month, and that means rent’s due. That rent or mortgage check is the single biggest expense in most Americans’ budgets, so it’s no wonder that Congress directs a ton of federal dollars to housing. But what should be surprising—and infuriating—is that a lot of this support goes to housing the wealthy, while very little goes to those who need help landing a stable home. These policies aren’t accidents—they’re bad choices that we should simply stop making.
We’re in the middle of an affordable-housing crisis
The United States is in the midst of an affordable-housing crisis. Nearly 1 in 3 households with a mortgage devotes more than 30 percent of their income to their home. The situation is even worse for renters—more than half of America’s 38 million rental households are shouldering a cost burden.
Some of this crisis is fallout from the Great Recession, which brought homeownership rates to historic lows. African-American and Latino households were hit particularly hard, because of predatory-lending practices that targeted racially segregated communities.
Congress spends a lot on housing, mostly through tax programs
Given these crises in housing affordability and homeownership, congressional strategies to support housing deserve special scrutiny.
Congress supports housing in two main ways: rental assistance programs and homeownership tax programs. In 2015, the price tag for federal rental-assistance programs—which includes Section 8 housing vouchers, public housing, Homeless Assistance Grants, and other programs—was $51 billion. In contrast, two of the largest homeownership tax programs—the Mortgage Interest Deduction and the Property Tax Deduction—cost $90 billion in 2015. That’s nearly double the amount spent on public-benefit housing programs.
The biggest beneficiary of the billions spent on homeownership tax programs? The wealthy.
There’s nothing wrong with providing support through the tax code—benefits are benefits, whether you get them from your local HUD office or on your tax return. The important question is: Who benefits? Rental-assistance programs are designed to help those who will benefit most—primarily individuals and families with less income and less stable housing. But this isn’t the how Congress designed homeownership tax programs. All told, households making over $100,000 a year received nearly 90 percent of the $90 billion spent on the two tax programs discussed above. Households making less than $50,000 got a little more than 1 percent of those benefits.