As a senator, Kamala Harris sponsored the Rent Relief Act of 2018. Now a version of that legislation is part of her nascent campaign for president. Both measures make the same mistake: trying to help renters while really handing money to landlords.
Harris’s idea seems pretty simple. Rent is high, so why not subsidize people who are struggling to afford it?
The plan, generally, would be to give that subsidy in the form of refundable tax credits to families making under $100,000 and spending more than 30 percent of their income on rent plus utilities.
But economics are complicated, and her solution wouldn’t work out as cleanly as she hopes. Simply giving people more money to spend in tight housing markets will only make prices higher across the board. Unless the subsidy increased the housing supply (not likely) the only change would be the ability of renters to pay. Same supply. Higher demand. Landlords would meet new demand at a higher price, pocketing the extra revenue.
Moreover, since the proposed subsidy only starts when rent plus utilities hits more than 30 percent of income, renters in eligible income brackets would likely be incentive to pick more expensive properties — again, an incentive landlords would be only too happy to meet with higher rates.
More simply put, the real winners of rent subsidies are landlords.
That’s not to say that Harris isn’t trying to fix a real problem. In cities across the country — particularly California — there is a lack of affordable housing that really has left many Americans struggling to make ends meet. Rent subsidies are simply the wrong fix.
The good news for Harris is that there is a solution to the problem she clearly wants to solve: building more units. Rent is high when demand outpaces supply. If you want more affordable housing, you need more housing across the board.
Although that’s not as simple as simply handing out money, more units will drive down prices across the board, making rent more affordable.
Hopefully Harris’ campaign will figure that out before Democrats latch on to the poor economic logic of rent subsidies.
