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Earned Income Tax Credit Plus: A New Way to House the Working Poor

Author

Listed:
  • Peter Dreier

    (Urban & Environmental Policy Department, Occidental College, USA)

  • Seva Rodnyansky

    (Urban & Environmental Policy Department, Occidental College, USA)

Abstract

The housing affordability crisis is one of the defining features of the US today. The demand for housing subsidies outstrips supply by a factor of at least 4 to 1. Moreover, housing affordability varies greatly between and within metropolitan areas. This article proposes a new federal policy—the Earned Income Tax Credit (EITC) Plus—to decrease housing cost burdens for working households by combining aspects of two major federal programs, the EITC, a tax-based subsidy for low-income working households, and the Housing Choice Voucher, a subsidy that pays the difference between 30% of household income and rent. We propose an EITC housing supplement via the tax code for markets where income and current EITC benefits are below 30% of rent levels. It will reduce the housing affordability crisis and reduce the geographic disparities of the Housing Choice Voucher. We simulate the cost at $101 billion nationally (based on 2021 figures). Varying program rules and parameters can significantly reduce costs. Piggybacking on the EITC simplifies the proposal’s implementation and increases its political palatability.

Suggested Citation

  • Peter Dreier & Seva Rodnyansky, 2024. "Earned Income Tax Credit Plus: A New Way to House the Working Poor," Urban Planning, Cogitatio Press, vol. 9.
    • Handle: RePEc:cog:urbpla:v9:y:2024:a:8526
    DOI: 10.17645/up.8526
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