Homeowner subsidies dwarf low-income aid
U.S. mortgage interest deduction costs double funding for Section 8.
Federal housing benefits are disproportionately enriching wealthy households, according to a study by Apartment List.
The San Francisco-based company, which runs an apartment listings search engine, analyzed Internal Revenue Service and Housing and Urban Development data. It found a popular tax break, the mortgage interest deduction (MID), cost the federal government $71 billion in 2015, more than double the amount spent on Section 8 funding for low-income renters ($29.9 billion).
Both programs provide housing assistance, but the MID primarily benefits people who are well-off enough to purchase a home and who can profit from the wealth-building aspect of homeownership. Section 8 helps low-income renters such as disadvantaged families, the elderly and disabled. These renters pay the difference between the rent and the subsidy.
“It really just shows how poor of a job we are doing of allocating these benefits to people who need them,” said Chris Salviati, a housing economist at Apartment List and author of the study.
More than half of high-income households claim MID, but only 11 percent of low-income households receive help with their housing costs. Low-income households are those earning less than 80 percent of the median income in the area where they live. Households earning above 120 percent of area median income are considered high income.
Because their housing situation is less certain, renters are more likely to need assistance. According to census data, 62 percent of all renter households nationwide and 93 percent of low-income renter households are cost burdened (meaning they spend more than 30 percent of their income on housing).
Yet, federal housing benefits flow more freely to homeowners. High-income earners make up only 11 percent of cost-burdened households but receive 60 percent of federal housing assistance. Only 34 percent of total federal housing assistance goes to low-income households.