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My Personal Windfall - America's Regressive Housing Policy


I just took $15,000 from a homeless person, perhaps even a child.

It was all indirect, clean, and perfectly legal. To understand how I was able to do so, you need to know a little bit about housing policy, the tax code, and the state of homelessness in America.

Here are some basic facts: At any point in time, there are currently over 530,000 Americans who are homeless on a given night. The vast majority of these are single individuals, but about a third are families with children. The average age of a homeless person is approximately nine years old.

How do people get to the point of homelessness? Reasons vary, but common ones include domestic violence, loss of a job, or a deteriorating medical condition. Currently, about 41% of the homeless population are non-Hispanic whites (compared to 76% of the general population), 40% are African Americans (compared to 11% of the general population) 11% are Hispanic (compared to 9% of the general population) and 8% percent are Native American (compared to 1% of the general population).

This breakdown reveals two things: First, housing insecurity clearly affects people of all races and backgrounds, and a large number of homeless individuals are white. At the same time, the fact that homelessness among African Americans is so largely disproportionate to their population reveals the systemic nature of discriminatory housing in this country.

I alluded to some of these factors in my previous post. In short, federal housing policies dating from World War I deliberately segregated African Americans, built segregated housing communities, denied mortgages to people of color, and failed to enforce anti-discriminatory measures taken by state and local governments.

As a result of such policies, people of limited means have historically found themselves living in some of the most impoverished communities, with poorer resources, under-funded schools, and higher levels of crime. These all lead to more precariousness in one’s own housing. Many people living on the edge are working, yet the loss of a job or reduction of hours might be enough to push people off the edge and unable to afford basic rent.

A good window into this situation is provided by The Eviction Lab. As its Director, Matthew Desmond has found, the story is not so much that poverty leads to evictions, but that eviction leads to poverty. Often, people are evicted because they are behind by just a few hundred dollars in rent. Once they are evicted, this leads to a host of problems. Children are forced to attend new schools and are often late or absent. It is harder to hold down a job when someone has no place to live. Add to this the stress of being forced onto the streets with one’s belongings and having to double up with family members, and it should be easy to see how eviction can lead to a deteriorating cycle of poverty.

Ideally, government policy would address this situation by providing benefits for distressed individuals and families. Indeed, if a few hundred dollars could keep a family from being dispossessed, this would pay for itself many times over by avoiding more dire situations, which often lead to greater burdens on local, state, and federal policy.

Yet who received the greatest benefit, in terms of housing assistance? That would be me. And you. And most, if not all, of your family and friends,

You see, the mortgage interest deduction, which all of us homeowners claim on our annual tax return, provides about $71 billion in total economic benefits to middle class and wealthy families. This amount dwarfs any funding support for people who rent, as well as for people at risk of losing their homes. When people of my class, and higher, complain about social programs as “throwing money away”, we should be honest and understand that we too benefit from federal largesse, but at a far larger amount than poor people can dream of.

Moreover, implementing programs that reduce poverty has been proven to be a wise investment. Doing so has multiple benefits, by ameliorating the toll that poverty itself imposes on people, avoiding costs such as health expenses that burden society as well as individuals, and leading to greater economic productivity as a whole.

Being honest about U.S. housing policy requires us to acknowledge all these facts. Hundreds of thousands, even millions, of people are at risk of losing their homes. Many of them have already become homeless and are living on the streets, with family members, or in shelters. Policy makers are loath to provide support to such families and individuals that might avoid this situation, but they have not touched the historical mortgage interest deduction, which costs the government far more.

I know the reality. At tax time, I am happy with any deduction I can get. And the political clout of the real estate and home building lobbies, as well as millions of middle class taxpayers, make it unlikely that Congress would ever consider doing away with this feature of the tax code. But where is the will to provide support in equal measure to people who are far more in need of housing assistance?

I have singled out the mortgage interest deduction because it fits logically in a discussion of housing policy; it is an indirect housing subsidy to people who don’t necessarily need it rather than support to those who do. But I could mention many other examples. The recent federal tax bill provides a significant windfall to the rich. And our country spends hundreds of billions of dollars on the military, far beyond the level of threats we face. The point is that we have consistently chosen regressive fiscal and tax policy, and have intentionally transferred wealth up the income charts. It is what I have consistently called the War on the Poor. It is part of our country’s past and current history.

Last week, I finalized our family’s tax return. $15,000 worth of deductions came because I am fortunate enough to own a home. That’s $15,000 not going to a homeless, or potentially homeless family. Is this fair? I leave you to judge.

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