The EITC as a Housing Affordability Tool
By Kate Skochdopole
Across the nation millions of workers employed in full-time, minimum-wage jobs can’t afford to pay the rent on a one-bedroom apartment in their communities. In response, some experts are turning to the EITC as a solution to recent increases in rents and to help more low-income workers gain access to safe and affordable housing.
Peter Dreier, a professor at Occidental College, wrote that the EITC, which enjoys bipartisan support in Congress, could be expanded to include a housing supplement that would help more low- and middle-income families afford rent. The supplement would vary according to rental costs in a particular location. For example, although everyone who collects the credit would see an increase in their check, an EITC recipient living in San Francisco where rents are very high might receive a larger refund increase than a family in Memphis.
With at least 25 percent of families spending more than half their monthly income on rent, millions of Americans could use an extra boost to make ends meet. Using the EITC to increase housing affordability requires little bureaucracy and could help lessen the burden on the Department of Housing and Urban Development (HUD) and allow more workers to get the benefits they’ve earned. Currently, HUD’s biggest programs—housing projects and Section 8 vouchers—require so much oversight and upkeep that only one in four families who qualify for housing assistance are able to receive it. Also, more families collect the EITC than qualify for HUD assistance, meaning millions more low- and middle-income families would be eligible to receive assistance under a tweaked EITC.
The vast majority of federal housing subsidies come in the form of tax breaks for homeowners, like the mortgage interest deduction, which overwhelmingly benefit the wealthiest Americans. The richest 20 percent of families receive about $50 billion a year through this deduction, or 73 percent of the deduction’s budget. Conversely, those with incomes between $10,000 and $20,000 receive on average $294 per year to help offset their housing costs. Although reworking the EITC to help families afford housing is not a perfect solution, it would help move towards equity in housing assistance, Drier says.