Bloomberg View

The poor need mo­bil­ity to pros­per • Enough with all the tax havens

Bloomberg Businessweek (Europe) - - CONTENTS -

Imag­ine hav­ing no ac­cess to good ed­u­ca­tion, health care, or job op­por­tu­ni­ties—imag­ine not even know­ing any­body who does. Poor chil­dren do bet­ter when they move to places with less poverty, less crime, higher-per­form­ing schools, and more two-par­ent fam­i­lies. That’s just com­mon sense, but if you’re skep­ti­cal, the re­search con­firms it. One re­cent study found that liv­ing in a sig­nif­i­cantly bet­ter neigh­bor­hood from birth raises adult in­come on av­er­age by about 10 per­cent.

Yet it’s harder and harder for many poor fam­i­lies to im­prove their op­por­tu­ni­ties by mov­ing. One rea­son: Peo­ple in de­sir­able neigh­bor­hoods aren’t ea­ger to have them. Land­lords set source-of-in­come re­quire­ments that dis­qual­ify peo­ple who re­ceive fed­eral hous­ing sub­si­dies. Zon­ing rules stip­u­late min­i­mum lot sizes or max­i­mum build­ing heights to pre­vent the con­struc­tion of af­ford­able hous­ing. Such restric­tions can in­crease hous­ing costs in thriv­ing lo­cal economies by 50 per­cent or more.

An­other ob­sta­cle is the de­sign of many gov­ern­ment pro­grams. Med­i­caid, food stamps, and tem­po­rary as­sis­tance are all tied to the states where re­cip­i­ents re­side. Peo­ple who move have to reap­ply and man­age with­out sup­port in the mean­time. Even fed­eral hous­ing sub­si­dies, which are tech­ni­cally portable, are ad­min­is­tered in such a way that mov­ing is dis­cour­aged.

On zon­ing, a 2015 U.S. Supreme Court de­ci­sion may point the way: It ruled that the Fair Hous­ing Act pro­hibits policies that dis­crim­i­nate, even un­in­ten­tion­ally, against mi­nor­ity groups, which typ­i­cally find it hard­est to move. This gives the fed­eral gov­ern­ment lever­age to in­sist that states and mu­nic­i­pal­i­ties im­prove mo­bil­ity. In turn, this could help re­store the mar­ket’s abil­ity to pro­vide hous­ing in places where it’s most needed, which could boost the coun­try’s out­put by al­most 10 per­cent.

Hous­ing sub­si­dies need to be gen­uinely portable. A Baltimore ex­per­i­ment showed that mod­i­fi­ca­tions—ad­min­is­ter­ing sub­si­dies re­gion­ally in­stead of lo­cally, set­ting rent pay­ments at lo­cal mar­ket lev­els, and help­ing fam­i­lies find homes in new ar­eas—can make hous­ing-voucher pro­grams more ef­fec­tive.

Some of this will re­quire money, so fund­ing pri­or­i­ties must also change. As of 2014, U.S. house­holds with an in­come of $200,000 or more re­ceived an av­er­age an­nual sub­sidy (largely through the tax de­duc­tion on mort­gage in­ter­est) of more than $6,000. House­holds with an in­come be­low $20,000 re­ceived less than $1,500. And only a quar­ter of the house­holds that qual­ify for hous­ing vouch­ers ac­tu­ally re­ceive them.

The U.S. needs to re­new its com­mit­ment to mo­bil­ity and op­por­tu­nity. That will re­quire greater tol­er­ance of di­ver­sity— in­clud­ing eco­nomic di­ver­sity—in ar­eas that are pros­per­ing. And it means smarter policies, too. In the past, mo­bil­ity and dy­namism have been the keys to wider pros­per­ity in Amer­ica. They can be again.

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