June 30, 1997 - From the June, 1997 issue

Rep. Lazio’s Proposal to End Public Housing as We Know It—Critiqued

Peter Dreier, formerly Boston Deputy Mayor, is professor of politics & director of the Public Policy Program at Occidental College in Los Angeles. 

By Peter Dreier


Peter Dreier: “While some people argue that requiring people who get housing subsidies to perform community service is a form of indentured servitude, Lazio claims that it will ‘remind people to give of themselves.'”

Rep. Rick Lazio (R-NY), Chair of the Subcommittee on Housing, and his Republican colleagues recently pushed legislation through the House of Representatives requiring Americans who receive housing subsidies to perform eight hours of community service a month

In theory, this is a good idea. But if Lazio is serious, and really wants to encourage the spirit of voluntarism, then he won't limit his plan to the poor people who live in public housing or receive housing vouchers. They represent only a tiny proportion of people who get housing assistance from Washington. Most beneficiaries of federal housing subsidies are wealthy or at least upper middle class. And they get their subsidies not from the Department of Housing and Urban Development (HUD) but from the Internal Revenue Service, in the form of tax breaks. 

The current HUD budget is about $20 billion. Subsidized housing for the poor is essentially a lottery, not an entitlement. HUD provides housing subsidies for about 4 million low-income households. This is only about one quarter of the families who are eligible for federal housing assistance. 

In contrast, a key tax break for homeowners—the deduction of mortgage interest—cost the federal government over $58 billion last year. About 27 million homeowners took advantage of this tax break last year. That would be OK if most of it helped the middle class. But it doesn't. Those with the highest incomes and the most expensive homes (including second homes) get the largest subsidy. 

About one-half (49.7%) of the $58.3 billion homeowner subsidy goes to the richest 5.6% of taxpayers with incomes over $100,000. (This alone is bigger than the entire HUD budget.) The 1.2% of taxpayers with incomes over $200,000 received $12.6 billion in mortgage interest deductions—21.6% of the entire amount. 

Even tax breaks for homeowners are an entitlement only for the well-off. Only 21.3% of all taxpayers take the mortgage interest deduction, but this varies significantly with income. For example, 82.5% of taxpayers with incomes over $200,000 took the mortgage interest deduction, with an average benefit of $9,763. In contrast, only about one-quarter (28.1 %) of those in the $40,000-50,000 bracket took the deduction; those who did so saved an average of $952 on their taxes. Among those in the $20,000-30,000 income category, only 6.6% took the deduction; those who did so received an average benefit of only $502. 

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While some people argue that requiring people who get housing subsidies to perform community service is a form of indentured servitude, Lazio claims that it will "remind people to give of themselves." Why not follow Lazio's logic and asked Americans to perform community service based on the size of their federal housing subsidy? If we did, the wealthy folks in Beverly Hills, Grosse Point, and Darien would be spending a lot more of their time doing good work.

Of course, when Lazio explains that "we are asking people to help their own neighborhood," we have to be careful. There aren't many soup kitchens and Head Start programs in the nation's wealthy suburbs. So if we want the people who get tax breaks for living in mansions to "give back" to their communities, we ought to define that term broadly, so that they wind up tutoring young people and working in homeless shelters, not selling tickets to the art auction to benefit the symphony orchestra.

Wouldn't it be great to see the CEOs of the nation's big corporations, not to mention the many millionaires in the Congress—the folks who receive mansion-size tax breaks—tutoring our troubled youth and fixing up abandoned homes? Perhaps some of country's social policies would improve if America's moneyed class could learn first-hand about the problems of the poor.

That way, when America's superrich mail in their income tax forms with those huge deductions for their year-round mansions and their vacation homes, they'll look forward to volunteering their free time to make America a better place to live for everyone.

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