Being a homeowner comes with a lot of advantages. One of them is preferential treatment on tax returns, which allow homeowners to claim a number of tax credits depending on their exact situation and state — certainly maintenance and mortgage servicing on a primary property qualify for deductions, and landlords can also deduct expenses related to their rental properties, as these amount to business expenses. This may be intended to incentivise homeownership (and penalise renters) but it also creates fundamental inequalities, because not everyone can afford to buy a house, but everyone needs a place to live, and some renters pay highly for their housing.
In some states, and in some settings, people may qualify for certain tax credits or deductions (my home office qualifies as a deduction, for example). In most cases, though, renters pay their landlords’ mortgages for them or just generate profits, and it’s money down the drain, rather than an investment in home equity. With class issues a rising problem across the country, and more interest among a frustrated public in leveling out the playing field, there have been some little whispering rumblings of the possibility of a broader renter’s tax credit.
That sure sounds nice. I certainly wouldn’t mind being able to directly credit my entire rent against my tax liability (or, for that matter, to deduct it from my income). On the surface, it sounds an awful lot like something that I should support, and I do to the extent that the unfair balance between renters and homeowners must be remedied, and this could be a component of the process. It’s not going to fix huge social divides, but it may allow renters to retain a little more of their income to manage costs of living or even, potentially, to start saving up for down payments on houses of their own, if that’s something they want to do.
But the thing is that this is another example of distraction, misdirection, and sleight of hand. Politicians and prominent figures suggesting this kind of thing are counting on poor, working class, and lower middle class people to jump on it, because it sounds so appealing, and like such a natural thing. Finally, we get some parity with people who own real estate, rather than being treated as lesser because we rent, whether we are forced to do so or opt to do it because we aren’t interested in buying for whatever reason.
This is an example of the kind of tactics that have so effectively maintained social inequality in the United States, though. With a cake sitting on the windowsill, someone throws us a few crumbs, and we’re supposed to be excited and grateful. Thank you so much for thinking of the downtrodden! Your generosity is commendable! Without you, we would surely be lost and rudderless! We aren’t offered a seat at the table, but it sure is nice of them to let us into the building, isn’t it? Be sure not to touch anything, though, because your dirty hands might smear the nice fixtures.
Sure, a renters’ tax credit would be nice. But more substantively, changing the tax code would be better. Addressing loopholes and exploits would be better. Shifting the balance from income to capital gains would be better. Holding people and corporations accountable for vast profits that aren’t taxable or are easily shifted around to conceal or reduce tax liability would be better. Creating a better tax structure would be better. Raising the poverty line would be better. Raising the minimum wage would be better. Doing something about skyrocketing housing prices would be better.
Confronting the fact that the vast majority of people in the US have no money in savings would be better. Tackling financial illiteracy would be better. There’s a whole host of things that should be coming before a renters’ tax credit, things which would make a broad, substantive difference and improve quality of life for people in the United States. Saving money on taxes would certainly be nice, but that’s not where it ends, and base appeals that use taxes as an instrument are transparently awful.
Look at the Bush “tax refund” which was designed to get poor people all excited so they’d go out and spend money, the “refund” that miraculously turned into a “penalty” once it ended, for example. Rather than addressing the economic problems that were contributing to the inability to afford the basic costs of living, the Bush Administration pushed through a relatively small tax refund that would increase returns for a single year. It turned out to be especially damaging for taxpayers who weren’t familiar with the situation and counted on the same refund the following year, only to be confused when they got less than they were expecting from a grudging Treasury already moaning about the national debt.
It’s an election year, so I expect to see a lot of bold promises that are also made with really transparent and often gross motivations. I’m used to that sort of thing, and so are many other observers. But it makes me twinge with irritation when people try to take advantage of voters who are desperate, who are less able to interrogate and fact check information, who are stressed and busy, who see a dangling piece of fruit and grab at it because their lives are so constricted and difficult. A politician who says she’ll give renters a tax credit gives people something concrete and easy to hang on to — a politician who says she’ll fix the broken financial system is less interesting.
Image: corner for rent, Anjan Chatterjee, Flickr