Rebalance deduction to help those who struggle to pay rent
Threats to critical affordable-housing programs that serve the poorest households are real and significant, but so, too, are the opportunities to solve housing instability. If Congress would rebalance and better prioritize our current federal housing spending, it would be possible to increase investments in housing programs that could end homelessness and housing poverty once and for all.
The mortgage-interest deduction is the nation’s largest housing subsidy, but it is primarily targeted to benefit America’s highest-income households. The federal government spends approximately $200 billion each year to help Americans buy and rent their homes. Threequarters of those resources go to subsidize higherincome homeowners — most of whom would be stably housed without the government’s help — through the mortgage-interest deduction and other tax breaks for homeowners. Lobbyists claim the mortgage-interest deduction expands homeownership and increases opportunity, but the reality is that 82 percent of the program’s benefit goes to households earning more than $100,000 a year. Just one-quarter of federal housing investment remains to assist the poorest families with the greatest needs. Because of a lack of investment in federal rental housing, these families — many of whom work full time — struggle to pay rent and often live in near-constant risk of eviction and homelessness.
Each year, the federal government spends more to subsidize the homes of 7 million households with incomes greater than $200,000 than the more than 55 million households with incomes of $50,000 or less — those far more likely to struggle to afford housing. Our federal investment in housing is out of balance.
The National Low Income Housing Coalition’s United for Homes campaign identifies strong solutions to rebalance our federal housing expenditures. The campaign proposes lowering the cap on the portion of a mortgage eligible for tax relief from $1 million to $500,000 and converting the deduction to a 15 percent nonrefundable credit. Doing so would allow homeowners whose income is not enough to justify itemizing their taxes to receive a tax benefit, thereby helping low- and moderate-income Americans to afford a home. Over 10 years, these two changes would give a muchneeded tax break to 25 million low- and moderate-income homeowners and would generate more than $241 billion in savings to be redirected to critical affordable-housing programs like the National Housing Trust Fund and rental-assistance programs that serve people with the greatest need.
United for Homes is endorsed by 2,344 organizations nationwide, including 99 state and local supporting groups here in Florida.
There is an urgent need for a national investment in homes affordable for those living in poverty. Federal housing programs serve approximately 5 million low-income households, but the needs of many more families go unmet. Only one of every four families eligible for housing assistance and in dire need actually receives the help it needs. This is why we need to target our resources better and use the opportunity of comprehensive tax reform to invest in affordable-housing programs. We can do that by reforming the mortgage-interest deduction and putting the savings into programs that make homes affordable for the lowest-income people — programs like the National Housing Trust Fund, Housing Choice Vouchers and a renters’ tax credit.
Now is the time to prevent and end homelessness and strengthen communities with support from an array of constituents who believe in common-sense rebalancing of federal housing expenditures. We must unite and work to ensure that any savings from mortgage-interestdeduction reform go toward affordable-housing programs that benefit low-income households. Federal housing assistance should ensure all Americans have homes they can afford, not allow the wealthy to write off portions of the cost of their million-dollar homes. Our federal investment in housing is out of balance. Congress can fix that.