Quartz: Kamala Harris wants US renters to get a tax break. Is it a good idea?
Quartz, August 2, 2018: Kamala Harris wants US renters to get a tax break. Is it a good idea?
The US has a housing affordability problem. Of the nearly 43 million households that rent their homes, almost two fifths spend over 30% of their income on housing, and about 17% pay more than half (pdf). Rental costs are rising faster than household incomes, and taking up an increasing part of people’s paychecks. Low-income households in the largest Americans cities are facing the toughest crunch—52% of the average janitor’s income goes to housing in New York, versus only 21% of a lawyer’s pay.
So what to do?
California senator Kamala Harris, currently the slight favorite to take on Donald Trump in the 2020 presidential election, has an idea. Along with three other Democrats, Harris has proposed the Rent Relief Act, a bill that would put a ton of money back into the hands of low-income renters, and some middle-class ones.
Here is how it works: If you make less than $100,000 (or $125,000 in certain more-expensive areas), pay more than 30% of your pre-tax income on rent, and live in an apartment that costs less than 150% of the typical place in your area, you would get some money back when you pay your taxes. How much you get back would be dependent on your income.
Consider a family living in Chicago with household income of $60,000. Thirty percent of their income is $1,500 a month, so if that family spent $2,000 in rent on a two-bedroom apartment, they would be paying $500 a month above the 30% threshold. At their income level, they would get half of that money back in a tax credit of $3,000 ($250 times 12 months).