Cspans washington journal, live everyday with new some policy issues that impact too. Coming up on tuesday morning, a look at the future of the Affordable Care act of than the federal budget, and ongoing after negotiation. An issue that meredith talks about regulating as a social media platform. Watch washington journal, live at 7 00 a. M. Eastern. Join the discussion. Tomorrow, remarks from the house ways and means chair on tax reform. Hell speak at an event and that starts live at 8 00 a. M. Eastern on cspan2. Also a hearing on u. S. Public Health Preparedness during hurricane season. Witnessed testify and it starts live 10 00 a. M. Eastern on cspan three. You can listen online at cspan. Org were on the free cspan radio at. Each week we take a look at how your money is at work in a different federal program. This week were joined by chris, housing economist. Well talk about major housing and section rental programs for renters. Chris before get to that, explain what Apartment List is a what you do there. Hello. Apartment list is the nations fastestgrowing apartment rental marketplace. We serve over 3 million renters every month. Theres over 110 million renters in the united states. For trying to help by reducing the stress and difficulty involved in finding a place to live. We hope to turn that into an enjoyment experience. We produce monthly rent estimates for cities across the nation and also in depth reports on housing related topics such as one were discussing. That as we go through the specifics, its available at that website. Lines in the segment for homeowners, renters and all others can call in as well. If you want to share your stories the phone lines are open. Were talking about the universe of Housing Assistance, where this mortgage interest reduction section a fit into that . How much of the house and he does that represent . We really focus on these two programs the section eight rental assistant for renters. In terms of total federal expenditure these are by far the two largest programs. So on the homeowner side the total expenditure in 2015 was 71 billion which is over double the amount spent. Remind viewers with section eight is. Guest the mortgage interest reduction also known as mid is a tax benefit that allows homeowners with mortgages to reduce taxable income by total amount of interest they pay a mortgage debt, up to 1 million. Thats a benefit that can be claimed by any homeowner with mortgage interest at. Section eight is a rental program for lowincome renters. Its targeted for lowincome households. Section eight programs are not an entitlement. Even if youre eligible for the benefits youre not guaranteed to receive them. Only a small share of households to receive sexually benefits. Host talk about the history of the programs and how we got to the numbers in terms of the tens of billions of dollars. The history of the programs is interesting. Particularly on the set a mortgage interest reduction. Mid has its roots in the 16th amendment which establish the income tax in 1913. All forms of interest at that time were deductible. At that time it was extremely rare to purchase a home with a mortgage. Most homeowners were purchasing and cash. The main exception was farmers. By all indications congress made interested doctor there think of it as a business expense. No indication this was intended as a benefit for homeowners. It wasnt until the 50s when it expanded after world war ii that this came to be taken advantage of by homeowners. Over time it was seen as crucial to the housing market, making mid the political third rail that it is today. Over time the expenditure has ballooned as the debt has grown substantially. In terms of section eight, the benefits for subsidizing low income rental housing go back to the housing act of 1937. The modern section eight programs didnt begin until 1974. Over time that program is grown as well. As section eight vouchers have grown spend in tandem with the change in mix of how those benefits are distributed. So other programs such as Public Housing has decreased. Host the a reports, theres a map and several maps but one shows spending per household on federal housing expenditures, you can see the darker households where you can see some of the reports. You recommend reforming morgan interest reduction in expanding section eight. Why . Guest let me go into more details on the findings to explain where the conclusion comes from. The total federal expenditure is more than double the amount that goes to section eight. Beyond that its more striking is the discrepancy in how the spending is allocated against different income levels. Sexually benefits or programs targeted toward low income records. By definition, 100 of that money is going to households that really need the help. The mortgage interest is a regressive benefit. 85 of mid benefits going to highincome households with middle and low income households receiving nine and 6 of those respectively. The reason why high income households own more homes but secondly because it is set up as a deduction the amount of benefit you receive is directly proportional to the marginal tax rate. Because i high income households have higher tax rates they see a larger reduction in the tax bill for every dollar of interest they deduct. Many middle and low income homeowners will find it in their best interest to find the standard deduction. Mid is only available to those who itemize. Households who take the standard deduction dont see any benefit at all. The focus on our look at housing aid will talk about it until 10 00 oclock today. Call in with questions or comments. We will put the line numbers on your screen. Caller i have a couple of things to say. On the mortgage, what about people that didnt pay cash for their homes that they worked all their lives and paid for their home and finally got it paid for. Youre not allowed to take your property taxes for deduction. Thats going to put me on the street somewhere. Because the state of North Carolina just like the federal government, they screw the people. They steal the money. Obama took 750 million from medicare, and social security. Before he went out he took the dabs money for arts. The people are worth more than stupid art. Guest thank you sylvia for sharing your thoughts on that. What i would want to point out is a way talk about reforming the mid, were not trying to take that program away, were trying to make it more equitable and the reforms of the report that i put out recommend would make sure a greater share of that spending is going to low and middle income homeowners. We found that 85 of mortgage interest reduction benefits go to highincome households. By restructuring the mid is a tax credit instead of deduction, you can ensure those who take the standard deduction are still able to see a benefit. That would go a long way making sure the market interest reduction does a better job of targeting benefits towards lower and middle income homeowners. The savings you get from reducing benefits from the wealthiest americans would be enough that we could expand section eight programs for lowincome renters. Host we havent seen the tax reform plan and details that the administration, republicans want to move before the end of the year. Your understanding of this goes to where the mortgage interest reduction stands. While happen to . Guest the initial trump tax form thats been released, two key features is doubling the amount of the standard deduction and eliminate most forms of itemized reductions. That includes state and local taxes, medical expenses, Investment Income and others. The initial plan stated mid will be kept in place. They havent described changes of how it will be implemented. Keeping it in its current form with changes ive described, doubling the standard deduction, what that does would make it so that virtually all middleincome homeowners find it in their best interest to take the standard deduction. That would leave the mid a benefit that would only be claimed by the wealthiest americans. Do you see where this is a regressive benefit with most of the spending going to high income households, the trump plan would exacerbate that issue and make it a more regressive benefit. What people are realizing that and realizes benefit if its only going to the wealthiest segments of the population becomes harder to justify in the way that its been justify which is that its an engine for middleclass homeownership. Theres some likelihood that before tax changes go through there it be change and how theyre handling the mid. The main alternative being proposed is to convert the deduction into housing tax credit. Those folks were taken the standard reduction would be able to claim this benefit. It would do a better job of targeting benefits towards lower middle income owners. Host should point those to the mortgage interest reduction section eight with chris of that group, be about 15 minutes left. Well get through his many calls. Nancy crawford from nebraska. Caller yes, im calling to thank you for the journal she had an earlier there were talking about licensing journalism. My experience is a small town newspaper in red states located in rural areas focus on Public Relations and not properly informing the public about predator industries. Host okay, were trying to stay focused on housing aid in the time we have left. Victor is a homeowner in flori florida, go ahead. Caller good morning. I have a question on the homeowners, the original value of the house, is it in the forecast to be transferred to the present value of the house at this time . Im sorry im not sure if i follow that. What im saying is the original value of the house is that in the forecast soon go ahead. Caller what im trying to say is if in any time the original value of the house would be switched to the present value of the house at this moment. Host did you get that christopher . Guest think what im getting out is that youre asking about what happens if the value of your price changes in how that would impact the benefits in relation to the original price you pay. The mortgage interest adduction will be related to what youre paying on your actual mortgage. So the amount you pay for your house if theres any restructuring in the loan that no amount of mortgage that you have would be reflected in the benefit you receive. Host how many low income homeowners exist . Isnt that group shrinking daily . Let answer that question is i show a chart from your report but with us deductions are targeted. The column here showing both the low income homeowners and blue just about 4. 2 billion of the total over 70 billion of spent. You bring up a great point which is that has become increasingly difficult for low and middle income americans to achieve homeownership. So the pool of low income home owners is one that has been shrinking. That gets back to another motivation for some of these reforms were talking about witches that the mid really in some sense putting undue focus on homeownership. The fact that the spending is going to a benefit only available to homeowners with the renter population has been growing that outpaces the growth of the homeownership population, the points to the idea that we might want to rethink that and try to provide more assistance for renters. In addition to expanding benefits another idea thats proposed as a renter tax credit. That would function in a way that similar to the mid. Benefit you can claim when filing your taxes but is targeted at lowincome renters. The Turner Center put out a detailed proposal for this they called the fair tax credit. Think thats an interesting idea. Its a great point that the share of homeowners that are low and middle income has been shrinking. Host to patrick in new york city. Caller hello. I would like to know whether your guests this morning has ever read progress in poverty by henry george . Caller i have not read that one. Host why do you ask . Caller because i think he makes a substantial argument that the problem is never between capital and labor, actually labor produces wealth and the person youre talking about who has a house improve the land. Who owns the land . The land cannot be recreated as labor can recreate and produce and well. Well. Guest im not sure exactly how that relates to the discussion were having now, but it does feel a little bit into the pointers make and before that we do want to make sure we are distributing these benefits equitably amongst all segments of the population. So homeowners, owning a home is the primary form of Wealth Creation for most americans. There is some argument to be made that we want to promote that through benefits such as the mid. At the same time we dont want to be giving benefits to high income households that dont need the assistance when theres so many low income renters out there who need them. I dont own a home, but im in subsidized housing with hud. Is about 25 of us we have fairly nice appointment apartments, the pay for heating. I paid in taxes and my wife died a few years back so i had to sell the house and move in here three years ago. When i moved in hud increase the rent by 48. That was her request from this Royalty Company. So now theyre asking for another 25 rent increase. Slick 73 in three years. Weve drafted letters and we wonder what we can do to talk to hud and find out. We just dont want this rubberstamped by this Royalty Company asking them. So what can we do . You want to give any advice on that . Guest glad youre able to access these benefits and receive help through subsidized housing. Its unfortunate youve experienced those rent increases. In terms of specific courses of action for you personally, im not sure am an expert enough of the inner workings that i can provide much help. So what i will say is that the issue you raise is important in the billy goes back to what ive seen earlier about these programs being so severely underfunded. Another important thing to note that a lot of people when they think of section eight vouchers think of these as free rent programs. Thats not the case. Households who receive section eight how are still expected to pay a portion of their income toward their rent any reduction that we see in the hud budget will only make it more difficult for households who are receiving benefits. Host to that point, is there any concern that expanding section eight benefits would discourage people from getting of section eight housing and into a home theyll . Guest i guess i can be a concern that people would have. But these programs have proved quite effective in helping lowincome households. Its an important tool that would have for fighting homelessness and making sure lowincome households are able to maintain safe and stable housing. These households that receive these incomes, theyre more so targeted towards making sure theyre not overburdened by the housing cost. Host what is the goal of section eight housing . To get them off section eight housing to help them for a limited amount of time . Or expand it to as many people . What is it in your mind . Guest i think it is probably the latter. Theres only a small share of low income renters eligible for these benefits that are able to receive them. In contrast to a program like snapper food stamps, if you apply for them you get them. Their millions of low income renters out there struggling and are not able to access the benefits. The main thing we want people to take away his were already spending the money on Housing Assistance at the federal level, were not doing a good job of allocating it in an equitable manner. Most of the spending goes to high income households. If we were to eliminate the mid only for households earning over 100,000, the savings would be enough that we could expand section eight benefits for all low income households with less than 50 of income will having enough left over to expand mid benefits for low and middle income homeowners. The money is being spent, its just a matter of making sure were spending that in a fair way. Theres a report if you want to read it. Its available on the Apartment List website. Apartment list. Com. We appreciate your time this morning. Guest thank you john. The cspan buses traveling across the country on the 50 capital store. We recently stopped in kentucky asking folks whats the most important issue in their state. I live here frankfort, kentucky. One of the issues going on is public pensions. Legislators are ready to call a special session to try to fund our special our pensions. Its important all the publicsector workers and their families. We have a coalition which includes firefighters, police officers, state workers and various other members that have joined us. Its important in our coalition is trying to make sure legislators do the right thing and find a find a source. My name is jerry, one of the biggest issues is the drug problem, even in role kentucky the drug problem is rampant. Thats one of the biggest issues. My name is dede, i work for the commonwealth of kentucky. Most pressing issue right now in the commonwealth is the employees retirement. Voices from the states on cspan
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