Congress Should Work towards Greater Balance
Michael J. Novogradac, CPA recently blogged about an analysis the Joint Committee on Taxation (JCT) predicts that home ownership tax subsidies will outpace rental tax subsidies by approximately 11 to 1 for the five-year period 2014-2018.
If these expenditures were balanced based on the ratio of homeowner households to renter households, there would be about $2 in home ownership subsidies to every $1 in rental subsidies.
If these subsidies were distributed in a progressive manner based on income levels, then the ratio of homeownership to renter would be even less than 2 to 1.
To reach a 64 percent/36 percent proportionate allocation of tax subsidies, rental tax subsidies would need to be allocated an additional $350 billion over the five-year time frame. If you keep the total amount of tax expenditures constant, thus keeping the impact of housing tax subsidies revenue-neutral on the federal budget, $224 billion would need to be allocated away from home ownership and directed instead to rental subsidies over the five-year time frame.
The U.S. Department of Housing and Urban Development’s (HUD’s) recent Worst Case Needs Report found that in 2013, 7.7 million renter households made less than 50% of the area median income and didn’t receive government housing assistance, paid more than 50% of their income on rent.
And unfortunately, the federal tax code remains unbalanced favoring homeowners over renters.
Congress should keep these imbalances and the need for increasing funding for affordable housing in mind when considering budget resolutions, tax reform and appropriations bills.
Click here for the full post from Novogradac.