Tenant Tax Credit Would Boost Low-Income Renters

by Randy Shaw on December 6, 2012

The December 4 New York Times lead editorial (“The Affordable Housing Crisis”) should be read by all concerned about the nation’s long ignored rental housing crisis. Among its policy prescriptions was a version of something I have long championed as a politically powerful strategy for helping tenants pay rent: a low-income tenant tax credit. According to the Center on Budget and Policy Priorities, “even a modest renters’ credit capped at $5 billion would lift 250,000 renters out of poverty, help 1.2 million of the lowest income renters and cut the number of poor households that spend more than half their incomes on rent by 700,000.” A renters’ tax credit is the only form of new affordable housing assistance House Republicans are likely to support. And Democratic states can pass their own version. In California, the Legislature can at least fund the senior and disabled low-income tenant tax credit enacted by John Burton in 1999 that has been unfunded for several years.

Thanks to the New York Times for getting a renters tax credit back in the public debate. While this policy would not solve the nation’s affordable housing crisis, it is likely the most politically strategic way to get any new money to low-income tenants in the 2013 political environment.

Opposition to Renters Credit

While getting House Republicans to support a tax credit for low-income people is challenging enough, there may be enough libertarian Republicans to get such a measure through. When I was pushing for restoration of the California Renters Tax Credit starting in 1997, one of our strongest supporters was Republican Tom McClintock, widely described as among the most conservative GOP members. McClintock told us it would be hypocritical for him to only support tax breaks for homeowners, and felt so strongly about the issue he held up a floor vote on the state budget insisting that the renters credit be restored (we didn’t have the votes).

It would take less than thirty House Republicans who share McClintock’s views to potentially get a federal renters credit enacted. That assumes unanimous Democratic support, which has been a problem in the past.

When current Los Angeles Mayor Antonio Villaraigosa was Assembly Speaker, he told me that he preferred expanding the earned income tax credit to creating a separate renters credit. Our view was that the homeowner tax deduction was in addition to other credits, so renters should also get benefits from more than one program.

Other progressive groups felt it better to get money for programs than to send money to individual tenants. We argued that building a tenant base required people to see concrete benefits from their activism. This argument should not be a problem in Congress because Republicans will not support increased funding for affordable housing programs.

A federal renters’ tax credit faces long odds in 2013, but getting the issue out there could make it a permanent part of the national political debate. It certainly is an issue that activists can organize and mobilize around. It puts politicians backing large mortgage deductions for the 1% on the defensive, and echoes calls by the Occupy Movement for greater economic fairness.

A California Opportunity?

Governor Brown does not want to use Prop 30 as an excuse to start spending money, but let’s not forget that California’s renters’ tax credit of $60 for individuals was suspended over twenty years ago and never restored Only the political genius of former State Senate leader John Burton got the renters credit partially restored in 1999 in the form of checks (in amounts of around $300.00) sent annually to senior and disabled tenants.

Tough fiscal times caused the state to stop issuing checks, and the Democratic-controlled Legislature returned the money in the 2008 state budget, but Governor Schwarzenegger redlined the amount out.

California tenants have not seen a dime in tax credits or rebates since.

Ideally, the California Legislature would restore funding to the Senior and Disabled Tax Credit in 2013. If accepted by Brown, this could lead to an effort in 2014 to expand the renters’ credit to other low-income tenants. The Governor may be reluctant to create a program that sends rebate checks to working tenants, so the benefit could take the form of a tax rebate or credit that operates like the earned income tax credit.

It’s always hard to predict what Governor Brown will support, but activists need to put together a tenant tax credit plan that goes beyond low-income disabled and senior tenants.
As we have argued since the late 1990’s, all of these benefits are quickly spent in the local economy, so a tenants’ credit furthers economic justice and is an effective economic stimulus strategy.

Randy Shaw is the author of The Activist’s Handbook and Beyond the Fields: Cesar Chavez, the UFW and the Struggle for Justice in the 21st Century.

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