Lack of affordable housing in tax bill is a ticking time bomb

There is a time bomb in the tax bill. So far, it has largely escaped comment, but if either the House or Senate version becomes law, we should brace ourselves for a completely preventable, self-inflicted jump in crime, disorder, and despair over the next decade.

It all comes down to the basic human need for quality, affordable housing.

In this country, we need dramatically more affordable housing than we’ve got. According to a 2017 analysis by the National Low Income Housing Coalition, there are nearly 11.5 million families in this country struggling to survive on incomes either at or below the poverty line, or at less than 30 percent of the median family income in their area. Yet we have only about 4 million units available to these families. That leaves a gap of about 7.5 million units.

{mosads}Put another way, the wealthiest country in the world has only 35 affordable and available units for every 100 of the poorest renter households. Every state in the country has a shortage of affordable housing for the most needy among us.

We have developed a number of programs to help bridge the gap between supply and demand. They don’t do enough, but without them the affordable housing crisis would be even more dire. Contrary to what most people think, the best weapon in our policy arsenal is not public housing. It’s in the tax code, and the most important tool in the code is the Low Income Housing Tax Credit (LIHTC).

As the Congressional Research Service describes, the LIHTC awards housing developers a stream of tax credits in exchange for constructing affordable housing. The developer can sell these credits to investors and use the money to fund its projects and manage its property. Since its creation in 1986, the LIHTC has helped finance the construction of over 2.5 million affordable units across the country. Tax credit housing now accommodates about twice as many households as public housing.  

Importantly, the investors lose the tax credits if the buildings are not built and maintained to a high standard, which helps guarantee that LIHTC housing will not only be affordable, it will be safe. For that reason, LIHTC housing has become an important part of community revitalization in distressed neighborhoods. The LIHTC is a win-win: Some of the poor get quality, affordable housing while investors get a tax credit.

Yet important elements of the LIHTC are in the GOP crosshairs. According to a careful analysis by the Tax Reform Resource Center, the House version of the tax bill would cut the program in a way that would lead to nearly 1 million fewer units of affordable housing over the next decade, while the Senate version would reduce production by about 300,000 units. Even without these changes, the LIHTC cannot do enough to meet our needs. The thought that Republicans would hobble it even more is horrifying.

Leave aside the moral bankruptcy of a bill that all-but-guarantees some of our neediest neighbors will be pushed into homelessness. It is the possible rippling effects that are truly appalling. Consider what will happen to the poorest Americans if we do not build this housing. To begin with, there is the simple challenge of staying healthy. An impressive body of research demonstrates that if you live in substandard housing, you’re more apt to get sick. Go figure. Poor housing can contribute to higher rates of asthma, lead and other environmental poisoning, and mental health problems.

Likewise, when a family lives in unaffordable housing, they tend to cut corners that need to be square. Families are more likely to go hungry or forgo medical care. One study found that working families paying 30 percent or less of their income on housing costs spent twice as much of their income on health care and insurance than did families paying 50 percent or more of their income for housing.

How about education? Unsurprisingly, a child in a safe, stable home tends to get more out of school. The research suggests that high quality, affordable housing can promote the educational success of low-income children “by supporting family financial stability, reducing mobility, providing safe, nurturing living environments, and providing a platform for community development.”

Then there is the matter of crime, about which the president seems so vexed. Once again, recent research has shown that LIHTC housing units can lead to significantly lower crime rates. Another study found that LIHTC units led to “significant reductions in violent crime.” This too should not be surprising. After all, LIHTC housing units frequently replace dilapidated buildings and abandoned lots that are a magnet for crime. Combine this with the regulations that require LIHTC units be well maintained and you predictably increase the likelihood of a safe, vibrant neighborhood.

There is a lot of chatter nowadays about who will benefit the most from the tax bill. I leave that debate to others. I care more about who will suffer the most, and suffer needlessly. About that, there can be little doubt. It is the most vulnerable.

Joseph Margulies is a professor of Law and Government at Cornell University.