As the details emerge from the Congressional Republican tax cut plan, housing is one area where there appears to be considerable bi-partisan anger. The home construction industry and affordable housing advocates both adamantly oppose to the plan, but for wildly different reasons. However, the former is vastly more powerful than the later and has much more of a chance to extract compromises from the final tax plan, which it surly will.
This is because the affordable housing community continues to accept the broken premise that the market is the best way to supply affordable housing. It isn’t. Until housing advocates rally around housing as a right as an organizing principle, tax plan after tax plan will chip away at even the limited market-based programs mildly supporting ‘affordable housing’ - and Democrats will keep allowing it. Only by changing the debate can we change the underlying fundamentals causing the affordable housing ever-crisis.
Housers are stuck defending an already failed market-based policy
I don’t make a lot of friends shitting on the Low-Income Housing Tax Credit. The truth is, it’s just not a great policy and allows Congress to gaslight Americans on the affordable housing crisis. Formed after the last big tax policy change in 1986, the LIHTC works by giving tax credits to developers who build a certain percentage of affordable housing units (which is a dubious term to begin with) who then pass them on to investors (mainly banks) who fund the projects.
The program has maintained popularity with both parties because Republicans see it as a market-based solution (it isn’t) and Democrats see it as an affordable housing solution (it isn’t). Defenders of the program on either side of the aisle will point to the 3 million units created under the program (which represent 90% of all affordable housing units built in the US over the last 30 years) as a point of success. Some will cite the number of jobs supported in the construction industry or the estimated $100 billion injected into the economy through the program. On the face of it, these are entirely fair points to make.
But none of these arguments hold up to the other glaring numbers to consider:
- In 99.9% of US counties, someone making minimum wage can’t afford the cost of a 1-bedroom house.
- 75% of American households who qualify for housing assistance don’t get any
- 11.2 million Americans are severely rent burdened
- We are missing 7.4 million needed affordable housing units
Many thoughtful housers with good intentions will argue that LIHTC and associated private activity bonds are good programs and shouldn’t be blamed for these complex issues. They are all working very hard at protecting LIHTC, which is under threat if corporate tax rates go down (offsetting the incentives for the program.) The feeling is, “this is the best we’ve got, we must protect it.” I get it.
But when you only have one program designated to create affordable housing and the country is mired in a devastating affordable housing crisis, how can you not question LIHTC? How can you not question the underlying premise that allows LIHTC to retain bi-partisan support in the first place? Who actually cares about actual affordable housing in Congress? What the hell did $100 billion over 30 years actually get us?
Even the one potentially cool, progressive change in this tax plan suuuuux
Many housing advocates and conservatives agree that the mortgage interest deduction (MID) is a terrible policy that unfairly favors wealthy homeowners. They are right.
- Through MID, the American people spend $134 billion a year (remember, LIHTC did less than that in 30 years) on subsidizing middle class and upper middle class homes
- 60% of all federal dollars spent on housing policies goes to homeowners making over $100,000.
- 7 million American households that make over $200,000 receive more federal funding for housing than the 50 million who make less than $50,000
Getting rid of the MID would undoubtedly correct a lot of injustice in the tax system (and in our disastrous support of a homeownership society). But that’s not why Republicans are limiting the deduction from $1m to $500k. They are doing it to offset lower corporate and estate taxes.
That’s right. This plan takes money from wealthy homeowners and gives it to even wealthier corporations and rich heirs. The only way something as egregious as the MID was even on the table was because Republicans want to give tax cuts to wealthier, more powerful donors. When confronted with this giveaway, few Americans seem to support this plan, but Democrats are fighting it because its Trump - not because they have ever supported transferring MID revenue to affordable housing.
Reject the premise, change the debate, and make housing a right
I would also argue that few Americans would support the MID in the first place, since it effects so few of us (which is one of the defenses given by Republicans for the plan.) This goes to show how warped the conversation on housing is in this country. We have been fine subsidizing wealthy housing for generations, but refuse to assist the poor and working class secure affordable housing.
Much of that blame lies with housers letting the Democratic Party off the hook. By accepting the premise that market-based programs are the only viable solutions at the federal level (this in the face of a massive effort to subsidize the top end anyway), they have surrendered the intellectual and moral weight that would otherwise frame the debate on housing as a basic human right.
It must also be said that the Democratic Party implicitly fake-fights the far-reaching racism that has underpinned this “market approach” for 80 years. When public housing and vouchers became synonymous with urban poor brown and black people, the party abandoned the solid and still-relevant arguments for public housing and housing assistance that defined the New Deal and Great Society eras.
Rather than fight for these ideas because they are right, because they work, and because they breakdown racial injustice, the party focused on homeownership. The fear of alienating white homeowners was too strong to fight for principles that would still ultimately benefit them too. Housers have nowhere to go, but haven’t kept Dems honest.
It’s not radical to question the virtue of giving away $135 billion a year on wealthy homes when so many Americans are suffering to afford one (whether they own or rent). It’s not radical to question the virtue of LIHTC when nearly all of the country is mired in a never-ending affordability crisis. It’s not radical to question why 75% of Americans who need help affording basic shelter aren’t getting anything.
There is enough wealth and there are enough good ideas to guarantee affordable shelter for every American in this country if we want it. There are enough Americans from every age, race, and region who are suffering and will continue to suffer to change the political landscape if we want to do it. And there are enough good people in housing who have the knowledge and passion to lead the way if they want to. Frankly, we need them to.