The Earned Income Tax Credit as an Instrument of Housing Policy
High housing costs present by far the most formidable barrier to safe, decent and affordable housing, vastly outweighing substandard or overcrowded conditions. Frequently these high costs frustrate efforts to bolster working families and ease the transition from welfare-to-work.
And yet, housing costs—the biggest chunk of a working family’s budget—have received short shrift in efforts to smooth the transition from welfare to work and to provide additional support to families who are working but earning low wages.
The federal Earned Income Tax Credit (EITC), designed to aid low-income working families and individuals, already plays a role beyond that of an income support. In an era of declining availability of affordable housing, the EITC provides significant relief to households burdened by severe housing costs that consume at least 50 percent of gross income.
Adding to the importance of this relief is the lackluster supply of federal housing aid: Less than one in four qualified households actually receives housing assistance administered by the U.S. Department of Housing and Urban Development, such as Section 8 vouchers.
This paper examines the effect of the EITC on housing-cost burdens currently and analyzes and contrasts three proposals to increase its impact as a housing tool. (Authors)
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