Meanwhile, the nation’s lowest-income renters are far likelier to struggle to pay for housing — and their affordability problems are growing.
A renters’ credit, administered by states and capped at $5 billion a year, could:
- Assist about 1.2 million of the lowest-income renter households;
- Reduce each household’s rent by an average of $400; and
- Lift 250,000 families out of poverty and lift four of five of the poorest families it assists out of deep poverty (defined as having income below half of the federal poverty guidelines).
It’s the right time to consider such a credit, as policymakers consider restructuring tax expenditures as part of tax reform. Proposed changes to the mortgage interest deduction (such as converting it to a credit) could make homeownership-related tax expenditures more efficient and raise added revenues to reduce the deficit. And, by directing a modest share of the savings from these or other tax reforms to the renters’ credit, policymakers could make the nation’s housing dollars fairer and more effective.