Nov042016

Should we subsidize renters like we do homeowners?

Both homeowners and renters face high housing costs, but only homeowners enjoy government bailouts, loan modifications, and protections to “keep their homes.”

no loan owner left behind copyWhy don’t renters get bailed out like homeowners? It seems fairly obvious that homeowners think renters are degenerates and losers, and even the government robs working renters to subsidize unemployed homedebtors. But does that mean it’s acceptable to favor one group over another? What happens when renters lose their jobs? Does anyone step forward to pay their rent or allow them to squat like homeowners? Why not?

Renters are no better or worse in the eyes of politicians; both renters and homeowners vote. And even if renters were a degenerate sub-species of humans, reporters and homeowners would be apt to show them at least as much compassion as they show a stray dog or cat. Perhaps we need a new advocacy group? PETR: People for the Ethical Treatment of Renters.

When you think about it, the only reason reporters treat us with stories to generate sympathy for homeowner bailouts is to cover for a stealth bailout of the banks; bailing out homeowners requires sending money to bankers, and since that isn’t politically palatable, it must be cloaked as helping poor, hard-working, honest homeowners who’ve fallen on hard times.

Since the housing recovery and numerous loan modification programs bailed out homeowners in most of the country, the only people still struggling to make their housing payments are renters. While many very low-income renters qualify for section 8 subsidies, like any subsidy program, it benefits one group at the expense of those who barely miss qualifying for the program, many of whom pay 50% or more of their income for rent.

Is there a better solution to this problem?

Housing thinktank proposes bold renter tax credit

Seeks to provide relief to cost-burdened renters

Kelsey Ramírez, November 3, 2016pay_mortgage_or_children_rental

A newly proposed tax credit could bring relief to cost-burdened renters if they meet certain requirements.

The proposal, put out by the Terner Center for Housing Innovation, is called the Federal Assistance in Rental Credit, and would be a national tax credit. It could provide relief for up to 15.1 million families, according to the foundation.

The FAIR tax credit is a policy proposal that seeks to give renters the same kind of tax credit that homeowners receive. The tax credit proposal suggests three potential structure:

A rental affordability option which all renters could receive if they meet certain requirements such as earning less than 80% of the local median income and paying more than 30% of their income in rent

A rent reduction option which targets the same population but provides more calibrated relief, depending on the severity of the family’s financial situation.

A composite option which combines the reduction option and provides additional relief for very low-income families.

The foundation estimates that the cost for this proposal would range from $41 to $76 billion depending on the structure.

 

The problem of renters paying too much for housing can’t be overcome with rent control laws or government subsidies. In my opinion, A larger supply of housing is the best form of rent control. It would also eliminate the need for expensive subsidies, subsidies that would merely cause rents to rise further placing additional pressure on families not receiving the subsidy.

“As we look ahead to a new administration and transitions in political leadership across the country, we have the opportunity to elevate the importance of housing stability for children, workers, and the U.S. economy, and promote more meaningful action,” the foundation stated.

Part of Democratic presidential candidate Hillary Clinton and her running mate Tim Kaine recently announced a plan that includes low income housing tax credits for homeowners and an increased rental assistance plan if she becomes president.

As of Nov. 3, Republican presidential candidate Donald Trump’s economic plan doesn’t say anything about housing, low-income or otherwise.

I like the idea of treating renters and homeowners equally: Fairness dictates no less. However, I would rather see homeowner subsidies eliminated than I would see a renter subsidy enacted.

When I reflect on homeowner subsidies, I find it appalling that our government takes from renters to subsidize homeowners. Renters don’t speak with a coherent political voice, so their views are rarely considered. Why should working renters subsidize loan owners? And why isn’t anyone upset about renters getting kicked out of their homes?

If bailout money is doled out to the unemployed, it should show no preference toward homeowners. Renters have bills just like homeowners do, and if a renter is evicted, it’s just as painful as if a homeowner is foreclosed on. The only difference between the two is that bailing out homeowners also bails out the banks, which is probably why the subsidy exists at all.

California_Debtor