For all the mewling states like California and New York do about “subsidizing” Red States, we are now seeing how their little socialist ghettos are actually funded by the federal government, which means by you and me. Right now New York and New Jersey have filed a lawsuit alleging the Trump tax plan is unconstitutional because it caps property tax deductions. It probably isn’t going anywhere after the district court judge inevitably rules against the Trump administration but it shows the way those high tax states are able to keep fires of discontent tamped down is by making extravagant state and local taxes a federal tax deduction.
Now Democrat presidential hopeful Kamala Harris is floating a new scam. She says if your rent is too high, then the federal government should pitch in.
Harris’s bill, which expands on a measure that Rep. Joseph Crowley (D-N.Y.) has introduced in the House, calls for the federal government to give tax credits to renters who earn less than $100,000 a year and spend more than 30 percent of their income on rent (which includes utilities) — a widely used gauge of housing affordability. (The credit would be refundable, meaning taxpayers can receive payments even if their tax liability is $0, and those in particularly expensive areas could earn up to $125,000 and still receive the credit.) The size of the benefit increases for poorer families and decreases higher up the income distribution.
Harris will submit the legislation with endorsements from Democratic Sens. Dianne Feinstein (Calif.), Richard Blumenthal (Conn.) and Maggie Hassan (N.H.), as well as backing by the Democratic mayors of Los Angeles, Oakland, Sacramento and San Francisco and sociologist Matthew Desmond, author of a Pulitzer Prize-winning book on the housing crisis.
Harris’s bill was influenced by a similar though smaller plan written by the Terner Center for Housing Innovation at University of California at Berkeley that was estimated to cost $76 billion and would “potentially bring an end to homelessness” by giving renters the money they need to avoid eviction, the center said.
Correctly viewed, this is a scam designed less to benefit people on the edge of homelessness than it is a political payoff to Harris’s main constituency in high-rent Democrat enclaves. At the bottom end of the rent assistance scale we already have Section 8 housing vouchers and, in most areas of the country, there is a mostly robust network of charitable groups that work to prevent eviction.
Not only is the stated reason for Harris’s bill patently dishonest, the effect will be pernicious. The bill encourages the exact same vices that fueled the mortgage meltdown in 2007 to be transferred to the rental housing sector. Tenants will take on larger leases than they can really afford because of the tax credit. Landlords will be encouraged to inflate rents and use the tax credit as a marketing ploy. Affordable housing will actually become more scarce.
The only saving grace here is that the bill will never see the light of day. Harris knows that. What she’s doing is setting the stage to run a presidential campaign to the left of Bernie Sanders.