From renting to homeownership: Using tax incentives to encourage homeownership among renters

Harvard Journal on Legislation

Volumn 44, Issue 1, 2007, Pages 97-116

  Covington, Kenya ^a   Harrell, Rodney ^b  

^a CALIFORNIA STATE UNIVERSITY   (United States)

^b UNIVERSITY OF MARYLAND   (United States)

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EID: 34247616086     PISSN: 0017808X     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (172)

1. See PRES. GEORGE W. BUSH, A HOME OF YOUR OWN: EXPANDING OPPORTUNITIES FOR ALL AMERICANS 1 (2002), available at http://www.whitehouse.gov/infocus/homeownership/homeownership-policy-book-whole. pdf [hereinafter BUSH].
2. See ERIC BELSKY & JOEL PRAKEN, HOUSING WEALTH EFFECTS: HOUSING'S IMPACT ON WEALTH ACCUMULATION, WEALTH DISTRIBUTION AND CONSUMER SPENDING 2 (2004), available at http://www.realtor.org/libweb.nsf/pages/fg302 (follow second hyperlink under "Wealth Effect" heading).
3. See id.
4. See HUDUSER.ORG, URBAN POLICY BRIEF NO. 2, HOMEOWNERSHIP AND ITS BENEFITS (1995), available at http://www.huduser.org/ publications/txt/hdbrf2.txt.
5. See FANNIE MAE, UNDERSTANDING AMERICA'S HOMEOWNERSHIP GAPS: 2003 FANNIE MAE NATIONAL HOUSING SURVEY 4 (2004), available at http://www.fanniemae.com/global/pdf/media/survey/survey2003. pdf.
6. See William M. Rohe & Leslie S. Stewart, Homeownership and Neighborhood Stability, 7 HOUS. POL'Y DEBATE 37, 71 (1996).
7. See FANNIE MAE, supra note 5, at 6.
8. See generally Rohe & Stewart, supra note 6, at 37-82 (analyzing the impact of homeownership on property values and other benefits to neighborhoods).
9. See BUSH, supra note 1, at 4;
10. Rohe & Stewart, supra note 6, at 71.
11. See Rohe & Stewart, supra note 6, at 70.
12. See id. at 72.
13. See U.S. CENSUS BUREAU, TABLE 20: HOMEOWNERSHIP RATES BY RACE AND ETHNICITY OF HOUSEHOLDER: 1994 TO 2005, in HOUSING VACANCIES AND HOMEOWNERSHIP, ANNUAL STATISTICS: 2005 (2006), available at http://www.census.gov/hhes/www/housing/hvs/annual05/ ann05t20.html [hereinafter U.S. CENSUS BUREAU, TABLE 20].
14. See id.
15. See U.S. CENSUS BUREAU, SERIES NO. H-150-05, AMERICAN HOUSING SURVEY FOR THE UNITED STATES:; 2005, at 42 tb1.2-1 (2006), available at http://www.census.gov/prod/2006pubs/h150-05.pdf [hereinafter U.S. CENSUS BUREAU, AMERICAN HOUSING SURVEY 2005].
16. See id. at 42 tbl.2-1.
17. In this Article, "whites" refers to non-Hispanic whites.
18. See U.S. CENSUS BUREAU, AMERICAN HOUSING SURVEY 2005, supra note 14, at 42 tbl.2-1.
19. See FANNIE MAE, supra note 5, at 6-11;
20. BUSH, supra note 1, at 1.
21. See FANNIE MAE, supra note 5, at 8;
22. BUSH, supra note 1, at 18.
23. See Cynthia Angell, Housing Bubble Concerns and the Outlook for Mortgage Credit Quality, FDIC OUTLOOK, Spring 2004, at 3, available at http://www.fdic.gov/bank/analytical/regional/ro20041q/na/ t1q2004.pdf ("Strong demand for housing, facilitated by low interest rates, has pushed home prices to their highest rates of appreciation in more than a decade. But this sturdy price appreciation has not been accompanied by equally strong personal income growth. Since 2000, annual home price appreciation has averaged roughly 7%, while disposable per capita personal income gained 4% per year, on average.");
24. Nicolas P. Retsinas, Priced Out of the American Dream, BOSTON GLOBE, Feb. 27, 2005, at D12 ("Last year, the median sales price of an existing home in Boston was $445,000 up 7% from last year. While home prices are likely to moderate, job growth and constraints on supply are likely to keep home prices beyond the reach of young families.").
25. See FANNIE MAE, supra note 5, at 8.
26. See Eric S. Belsky & Mark Duda, The Anatomy of the Low-Income Homeownership Boom in the 1990s, in LOW-INCOME HOMEOWNERSHIP: EXAMINING THE UNEXAMINED GOAL 15, 21 (Nicolas P. Retsinas & Eric S. Belsky eds., 2002) (describing factors such as the Community Reinvestment Act, a revitalized Federal Housing Administration, and the Justice Department's enforcement of fair housing laws).
27. See infra Part II.
28. See STAFF OF J. COMM. ON TAXATION, 109TH CONG., ESTIMATES OF FEDERAL TAX EXPENDITURES FOR FISCAL YEARS 2005-2009, at 33 (Comm. Print 2005), available at http://www.house.gov/jct/s-1-05. pdf [hereinafter STAFF OF J. COMM. ON TAXATION].
29. See id.; U.S. CENSUS BUREAU, AMERICAN HOUSING SURVEY 2005, supra note 14, at 42 tbl.2-1.
30. See U.S. CENSUS BUREAU, TABLE 20, supra note 12.
31. See U.S. CENSUS BUREAU, AMERICAN HOUSING SURVEY 2005, supra note 14, at 42 tbl.2-1.
32. See U.S. CENSUS BUREAU, TABLE 20, supra note 12.
33. See U.S. CENSUS BUREAU, AMERICAN HOUSING SURVEY 2005, supra note 14, at 42 tbl.2-1.
34. See id.
35. See U.S. CENSUS BUREAU, TABLE 20, supra note 12 (source of data from 1994-2004);
36. U.S. CENSUS BUREAU, AMERICAN HOUSING SURVEY 2005, supra note 14 (source of data from 2005).
37. See U.S. CENSUS BUREAU, AMERICAN HOUSING SURVEY 2005, supra note 14, at 78 tbl.2-12, 286 tbl.5-12.
38. See id.
39. See id.; U.S. CENSUS BUREAU, SERIES NO. H-150-03, AMERICAN HOUSING SURVEY FOR THE UNITED STATES: 2003, at 74 tbl.2-12, 272 tbl.5-12 (2004), available at http://www. census.gov/prod/2004pubs/h150-03.pdf [hereinafter U.S. CENSUS BUREAU, AMERICAN HOUSING SURVEY 2003];
40. U.S. CENSUS BUREAU, SERIES NO. H-150-99RV, AMERICAN HOUSING SURVEY FOR THE UNITED STATES: 1999, 72 tbl.2-12, 268 tbl.5-12 (2003), available at http://www.census.gov/prod/2000pubs/h150-99.pdf [hereinafter U.S. CENSUS BUREAU, AMERICAN HOUSING SURVEY 1999];
41. U.S. CENSUS BUREAU, SERIES NO. H-150-01, AMERICAN HOUSING SURVEY FOR THE UNITED STATES: 2001, 74 tbl.2-12, 272 tbl.5-12 (2002), available at http://www.census.gov/prod/2002pubs/h150-01.pdf [hereinafter U.S. CENSUS BUREAU, AMERICAN HOUSING SURVEY 2001].
42. See U.S. CENSUS BUREAU, AMERICAN HOUSING SURVEY 2005, supra note 14, at 78 tbl.2-12, 286 tbl.5-12;
43. U.S. CENSUS BUREAU, AMERICAN HOUSING SURVEY 2003, supra note 34, at 74 tbl.2-12, 272 tbl.5-12;
44. U.S. CENSUS BUREAU, AMERICAN HOUSING SURVEY 1999, supra note 34, at 72 tbl.2-12, 268 tbl.5-12;
45. U.S. CENSUS BUREAU, AMERICAN HOUSING SURVEY 2001, supra note 34, at 74 tbl.2-12, 272 tbl.5-12.
46. In 1999, the median net worth for whites was $82,400, while the median net worth for blacks was $7000. See Michael A. Stoll, African Americans and the Color Line, in THE AMERICAN PEOPLE: CENSUS 2000, at 380, 397 (Reynolds Parley & John Haaga eds., 2005). Whites' wealth is disproportionately held in financial assets, while blacks' wealth is disproportionately held in the value of their homes and in savings and checking accounts.
47. See id. at 397-98.
48. See Stoll, supra note 36, at 396 (explaining that wealth accumulation enables individuals and families to purchase homes);
49. ZHU XIO DI & XIAODONG LIU, THE IMPORTANCE OF WEALTH AND INCOME IN THE TRANSITION TO HOMEOWNERSHIP 1 (2004), available at http://www.huduser.org/Publications/pdf/ TheImportanceOfWealthAndIncome.pdf (describing studies that have found wealth constraints to be more important than income constraints in restricting access to homeownership).
50. See Stoll, supra note 36, at 397 (explaining the current and historical barriers that may keep many blacks from accumulating wealth).
51. See generally MELVIN L. OLIVER & THOMAS M. SHAPIRO, BLACK WEALTH, WHITE WEALTH: A NEW PERSPECTIVE ON RACIAL INEQUALITY (1997) (analyzing the impact of racial inequality on wealth acquisition in the United States).
52. For example, there is evidence that blacks are among the first to be laid off in periods of economic hardship, see ANDREW HACKER, TWO NATIONS: BLACK AND WHITE, SEPARATE, HOSTILE, UNEQUAL 108 (Ballantine Books 199S) (1992), and that blacks are disproprotionately affected by climate change,
53. see CONG. BLACK CAUCUS FOUND., AFRICAN AMERICANS AND CLIMATE CHANGE: AN UNEQUAL BURDEN (2004), available at http://www.redefiningprogress.org/publications/2004/CBCF_REPORT_F.pdf (showing that the adverse effects of climate change, including heat waves, air pollution, extreme weather, disease, and economic damage, are disproportionately borne by blacks).
54. See U.S. CENSUS BUREAU, AMERICAN HOUSING SURVEY 2005, supra note 14, at 42 tbl.2-1.
55. See I.R.C. § 163(h) (2000).
56. See id. § 164(a)(1).
57. See id. § 121 (2000 & Supp. III 2003), amended by Pub. L. No. 109-135, §§ 402(a)(3), 403(ee), 119 Stat. 2577, 2610, 2631; Pub. L. No. 108-357, § 840(a), 118 Stat. 1418, 1597.
58. See INTERNAL REVENUE SERV., PUBL'N NO. 936: HOME MORTGAGE INTEREST DEDUCTION 2 (2005), available at http://www.irs.gov/pub/irs-pdf/p936.pdf [hereinafter INTERNAL REVENUE SERV. HOME MORTGAGE INTEREST DEDUCTION GUIDE].
59. See id. at 5.
60. See id. at 2.
61. See I.R.C. § 163(h) (2000) (stating that the limits are $1,000,000 ($500,000 if married filing separately) for "acquisition indebtedness" and $100,000 ($100,000 if married filing separately) for "home equity indebtedness"); INTERNAL REVENUE SERV. HOME MORTGAGE INTEREST DEDUCTION GUIDE, supra note 44, at 8-12.
62. See I.R.C. ¥ 164(a)(1).
63. See INTERNAL REVENUE SERV., PUBL'N NO. 17: YOUR FEDERAL INCOME TAX 142 (2005), available at http://www.irs.gov/pub/irs-pdf/p17. pdf.
64. See I.R.C. § 121(a).
65. See id. § 121(a)-(b)(2).
66. In contrast, before 1997, a homeowner benefited from this tax deduction only if he or she bought another home of equal or greater value within two years of the sale. See I.R.C. § 1034 (1994) (repealed 1997).
67. See STAFF OF J. COMM. ON TAXATION, supra note 24, at 33. This figure represents the cost of tax benefits which apply specifically to owner-occupied housing, rather than to property owned for rental purposes. For an outline of tax benefits for owners of rental property,
68. see INTERNAL REVENUE SERV., PUBL'N NO. 527: RESIDENTIAL RENTAL PROPERTY (2005), available at http://www.irs.gov/pub/irs-pdf/ p527.pdf. Like owner-occupiers, such owners can also deduct mortgage interest and property taxes.
69. See id. at 3.
70. See STAFF OF J. COMM. ON TAXATION, supra note 24, at 33;
71. U.S. CENSUS BUREAU, AMERICAN HOUSING SURVEY 2005, supra note 14, at 42 tbl.2-1.
72. See STAFF OF J. COMM. ON TAXATION, supra note 24, at 33.
73. See J. Michael Collins et al., Towards a Targeted Homeownership Tax Credit 6 (Joint Ctr. for Hous. Studies, Working Paper No. W98-5, 1998), available at http://www.jchs.harvard.edu/publications/homeownership/ belsky _collins_retsinas_W98-5.pdf ("As a result of the progressive nature of federal income tax rates, even if lower income owners do itemize their deductions, they receive a smaller deduction as a percentage of income than more affluent buyers.").
74. See U.S. CENSUS BUREAU, INCOME, EARNINGS, AND POVERTY FROM THE 2004 AMERICAN COMMUNITY SURVEY 10 (2005), available at http://www.census.gov/prod/2005pubs/acs-01.pdf. In 2004, the median income was $32,686 for black men, $42,707 for white men, $28,581 for black women, and $32,034 for white women. See id.
75. Tax Reform Act of 1986, Pub. L. No. 99-514, § 511(b), 100 Stat. 2085, 2246-48 (codified as amended in scattered sections of 26 U.S.C.).
76. See U.S. GEN. ACCOUNTING OFFICE, SERIES NO. GGD-93-63, TAX POLICY: MANY FACTORS CONTRIBUTED TO THE GROWTH IN HOME EQUITY FINANCING IN THE 1980s 3-4 (1993), available at http://archive.gao.gov/t2pbat6/149073.pdf;
77. Charles E. McLure, Jr. & George R. Zodrow, Treasury I and the Tax Reform Act of 1986: The Economics and Politics of Tax Reform, 1 J. ECON. PERSP. 37, 46 (1987);
78. see also Sue Kirchhoff et al., Reagan Had Lasting Impact on World's Economic Future, USA TODAY, June 11, 2004, at A1 (describing the 1986 Act's main provisions and its long-term effects).
79. See McLure & Zodrow, supra note 59, at 37.
80. See id. at 46.
81. See U.S. CENSUS BUREAU, AMERICAN HOUSING SURVEY 2005, supra note 14, at 42 tbl.2-1.
82. See Beverly I. Moran & William Whitford, A Black Critique of the Internal Revenue Code, 1996 WIS. L. REV. 751 (1996).
83. See id. at 799. Moran and Whitford suggested that this disparate impact results because "black life" is largely unknown to most legislators, and consequently, legislators are largely unaware of the impact of the tax code on blacks.
84. See id. at 758 (arguing that because the vast majority of federal legislators are not black and have not experienced "black life," they are less aware of the effects of economic policies on blacks and that "this ignorance is one of the reasons for structural racial subordination in America").
85. See supra Part II.
86. See Marcus T. Allen et al., Implicit Pricing Across Residential Rental Submarkets, 11 J. REAL EST. FIN. & ECON. 137, 138-39 (1995);
87. G. Stacy Sirmans & John D. Benjamin, Determinants of Market Rent, 6 J. REAL EST. RES. 357, 359 (1991) (reviewing studies of the effect of location on market rent).
88. See Richard Goode, Imputed Rent of Owner-Occupied Dwellings Under the Income Tax, 15 J. FIN. 505, 505-506 (1960);
89. see also Donald Krueckeberg, The Grapes of Rent: A History of Renting in a Country of Owners, 10 HOUS. POL'Y DEBATE 9, 9-12 (1999) (discussing the historical origins of the bias against renters).
90. See supra text accopmanying notes 1-11.
91. See FANNIE MAE, supra note 5, at 8;
92. BUSH, supra note 1, at 18.
93. See U.S. CENSUS BUREAU, AMERICAN HOUSING SURVEY 2005, supra note 14, at 78 tbl.2-12.
94. See Retsinas, supra note 20, at D12 (discussing the problems everyday people making less than $40,000 have purchasing a home).
95. See FANNIE MAE, supra note 5, at 8.
96. See Patric H. Hendershott & Michael White, The Rise and Fall of Housing's Favored Investment Status, 11 J. HOUS. RES. 257, 264-66 (2000) (describing programs in Australia, Canada, Sweden, and the United States providing loans and subsidies for potential first-time homeowners);
97. Steven C. Bourassa et al., Independent Living and Home Ownership: An Analysis of Australian Youth, AUSTL. ECON. REV., 3d Quarter 1994, at 29, 33, 38 (describing a successful Australian program that partially subsidized first-time home purchases and resulted in a homeownership rate increase from 28.5% to 37.1% among 21-to-25-year-olds).
98. See Atrayee Ghosh Roy et al., Housing Tax Deductions and Single-Family Housing Demand, INT'L J. APPLIED ECON., Mar, 2006, at 48, 56 (showing that for all years from 1994 to 2003, the mortgage interest and state and local property tax deductions increased the quantity of housing purchased moderately, by about ten to twelve percent).
99. See U.S. CENSUS BUREAU, AMERICAN HOUSING SURVEY 2005, supra note 14, at 286 tbl.5-12.
100. See id. at 288 tbl.5-13.
101. See id. at 286 tbl.5-12.
102. See id.
103. See Stoll, supra note 36, at 397;
104. see also OLIVER & SHAPIRO, supra note 38. Racial groups other than blacks that continue to suffer the effects of economic injustices could also benefit from such an initiative.
105. See generally WEALTH ACCUMULATION IN COMMUNITIES OF COLOR IN THE UNITED STATES (Jessica Gordon Nembhard & Ngina Chiteji, Eds., forthcoming 2006) (examining asset accumulation and the connection between wealth and well-being among American minority groups, including blacks, Asian Americans and Pacific Islanders, Native Americans, and Latinos);
106. Rebecca Adamson, Land Rich and Dirt Poor: The Story of Native Assets, NATIVE AMS., Summer 2003, at 26 (highlighting the effect of lack of control over assets on the economic well-being of Native Americans).
107. See United States Housing Act of 1937 § 8(y), 42 U.S.C. § 1437f(y) (2000);
108. see also 24 C.F.R. § 982.625-642 (2005).
109. See 42 U.S.C. § 1437f(y).
110. See id. § 1437f(y)(2);
111. see also 24 C.F.R. §5.611 (adjusting income for dependents and certain permitted medical and child care expenses); 24 C.F.R. §982.635 (limiting subsidized homeownership expenses to a payment standard defined by a public housing authority).
112. See 24 C.F.R. § 982.635(c)(2).
113. See id. § 982.631.
114. See id. § 982.630.
115. See id. § 982.627(d) (requiring an adult to have averaged thirty hours per week of employment over the previous year before receiving benefits).
116. See id. § 982.627(c)(1)(ii).
117. See 29 U.S.C. § 206(a)(1) (2000).
118. See 24 C.F.R. § 982.629 (allowing local public housing authorities to establish a maximum time to locate and purchase a home and to require progress reports on those tasks).
119. See id. § 982.634(a).
120. See Office of Pub. and Indian Hous., U.S. Dep't of Hous. and Urban Dev., Housing Authorities with a Voucher Homeownership Program, http://www.hud.gov/offices/pih/pro grams/hcv/homeownership/publiclist_vhosites. xls (last visited Nov. 21, 2006).
121. See 1 ABT ASSOCS., VOUCHER HOMEOWNERSHIP ASSESSMENT, at xi (2003), available at http://www.huduser.org/Publications/PDF/MSD_Book_VOL1.pdf. Abt contracted with HUD in 2001 to conduct a study of the early implementation of the Homeownership Voucher Program.
122. See id. at iii.
123. See Office of Pub. and Indian Hous., U.S. Dep't of Hous. and Urban Dev., Homeownership Vouchers, http://www.hud.gov/offices/pih/programs/hcv/ homeownership/index.cfm (last visited Nov. 21, 2006) (noting that the waiting time to receive a voucher "can vary between several months and several years"). Many public housing authorities in geographic areas that face grave affordable housing problems have stopped taking applicants because their waiting lists are so long. See id.
124. See ABT ASSOCS., supra note 92, at 6-3.
125. See id. at 6-5.
126. See United States Housing Act of 1937 § 32, 42 U.S.C. § 1437z-4 (2000);
127. see also 24 C.F.R. §906 (2005).
128. See 42 U.S.C. § 1437z-4(a).
129. See 24 C.F.R. § 906.13(a).
130. See id § 906.5.
131. The Capital Fund provides annual funding to PHAs "for the development, financing, and modernization of public housing developments and for management improvements." Office of Pub. and Indian Hous., U.S. Dep't of Hous. and Urban Dev., Office of Capital Improvements, http://www.hud.gov/ offices/pih/programs/ph/capfund/(last visited Nov. 21, 2006).
132. See Office of Pub. and Indian Hous., U.S. Dep't of Hous. and Urban Dev., Homeownership, http://www.hud.gov/offices/pih/centers/sac/homeownership/ index.cfm (last visited Nov. 21, 2006) [hereinafter Office of Pub. and Indian Hous. Section 32 Guide].
133. See 24 C.F.R. § 906.31(a).
134. See Office of Pub. and Indian Hous., U.S. Dep't of Hous. and Urban Dev., Section 5(h) Homeownership, http://www.hud.gov/progdesc/sect5(h).cfm (last visited Nov. 21, 2006). This statistic refers to the program that section 32 replaced, section 5(h).
135. See Office of Pub. and Indian Hous. Section 32 Guide, supra note 101 ("[T]he final Section 32 rule replaces the Section 5(h) rule.").
136. See CAL. REV. & TAX. CODE § 17053.5 (West Supp. 2005).
137. See id. § 17053.5(a)(1)(A), (B).
138. See id. § 17053.5(a)-(d), The current maximum adjusted gross income for a recipient of the benefit is $30,794 if single or married and filing a separate return; or $61,588 if married and filing jointly, filing as the head of a household, or as a qualified widow or widower. See Franchise Tax Bd. of Cal., Nonrefundable Renter Credit, http://www.ftb.ca.gov/ individuals/faq/ivr/203.html (last visited Nov. 21, 2006) [hereinafter Franchise Tax Bd. of Cal. Renter Credit Website]. In addition to the income limits, a recipient: (1) must rent and occupy a principal residence in California for at least half of the taxable year; (2) must not live with another person, such as a parent, as a dependent for more than half the taxable year; (3) must not be a minor living with and under the care of a parent, foster parent, or legal guardian; and (4) must rent property for more than half the taxable year that was not exempt from California property tax. Additionally, if married, the applicant's spouse must not have been granted a homeowner's property tax exemption during 2005, unless both the applicant and spouse each maintained a separate residence for the entire taxable year.
139. See CAL. REV. & TAX. CODE § 17053.5.
140. See Franchise Tax Bd. of Cal. Renter Credit Website, supra note 106.
141. See Klehs-Alquist Tax Conformity Act of 1991, 1991 Cal. Stat. 117, § 12.5 (repealed 1998).
142. See Franchise Tax Bd. of Cal. Renter Credit Website, supra note 106.
143. See CAL. REV. & TAX. CODE §§ 20501-20564 (West 2004). These provisions also provide specific benefits to senior citizen homeowners, but for present purposes, this Article focuses on the portion that aids renters.
144. See also Franchise Tax Bd. of Cal., Homeowner and Renter Assistance, http://www.ftb.ca.gov/individuals/hra/index.html (last visited Nov. 21, 2006) (describing the renter assistance program) [hereinafter Franchise Tax Bd. of Cal. Renter Assistance Program Website].
145. See Franchise Tax Bd. of Cal. Renter Assistance Program Website, supra note 110.
146. See id.
147. See id.
148. See id.
149. See id.
150. See Franchise Tax Bd. of Cal. Renter Assistance Program Website, supra note 110.
151. See MASS. GEN. LAWS ch. 62, § 6(k)(2) (Supp. 2006).
152. See id.
153. See Mass. Dep't of Revenue, Guide to Taxes, http://www.dor.state. ma.us/help/guides/abate_amend/personal/issues/realestate.htm (last visited Nov. 21, 2006) [hereinafter Mass. Dep't of Revenue].
154. See MASS. GEN. LAWS ch. 62, §6(k)(2).
155. See id. Twenty-five percent is used because in Massachusetts, the tax authorities estimate that twenty-five percent of rent goes toward property tax. See Mass. Dep't of Revenue, supra note 119.
156. See MASS. GEN. LAWS ch. 62, § 6(k)(2), (4).
157. See Mass. Dep't of Revenue, supra note 119. The income limits are currently $46,000 if the taxpayer is single and not the head of a household, $58,000 if single and the head of a household, and $70,000 for a married couple filing jointly. See id. The Department of Revenue adjusts the income thresholds to reflect inflation. See MASS. GEN. LAWS ch. 62, § 6(k)(4). In addition, the following requirements apply: (1) the taxpayer must pay rent on property in Massachusetts under a good faith rental agreement for the right of occupancy of the principal residence during the taxable year or for a portion of the taxable year, see id. § 6(k)(1); (2) the housing in which the taxpayer lives must be subject to real estate taxes for the taxable year, see id.; (3) the taxpayer may not receive a federal or state rent subsidy for the property, see id. § 6(k)(9); (4) the taxpayer may not be the dependent of another taxpayer, see id. § 6(k)(2); and (5) married taxpayers must file a joint return, see id. § 6(k)(5).
158. See MASS. GEN. LAWS ch. 62, § 6(k)(8).
159. This program incorporates the Massachusetts estimate that twenty-five percent of rental payments go towards property taxes. See Mass. Dep't of Revenue, supra note 119. An additional four percent is added to estimate cost of living increases over the next five years.
160. See U.S. CENSUS BUREAU, AMERICAN HOUSING SURVEY 2005, supra note 14, at 9 tbl.1A-7.
161. See supra Part III.A.
162. See Michael K. Brown, Ghettos, Fiscal Federalism, and Welfare Reform, in RACE AND THE POLITICS OF WELFARE REFORM 47-61 (Sanford F. Schram et al. eds., 2003) (explaining the impact of racial policies in public asistance programs on the development of welfare reform); Kathryn M. Neckerman et al., Family Structure, Black Unemployment, and American Social Policy, in THE POLITICS OF SOCIAL POLICY IN THE UNITED STATES 397, 418 (Margaret Weir et al. eds., 1988) (noting that most voters do not identify with programs focused on low-income populations).
163. See supra text accompanying notes 1-11.
164. See Stoll, supra note 36, at 397;
165. see also OLIVER & SHAPIRO, supra note 38.
166. See, e.g., 24 C.F.R. § 982.630 (2005).
167. See FANNIE MAE, supra note 5, at 6-8 (discussing the knowledge gap).
168. The credit suggested here corresponds only to state and local property taxes. Homeowners' deductions for state and local property taxes constitute less than twenty percent of their federal tax deductions, See STAFF OF J. COMM. ON TAXATION, supra note 24, at 33. Given that there are more homeowners than renters,
169. see U.S. CENSUS BUREAU, AMERICAN HOUSING SURVEY 2005, supra note 14, at 42 tbl.2-1, and that renters can only claim the proposed credit once, the cost of the credit suggested here will be significantly less than the cost of homeowners' benefits.
170. See supra Part II.B.
171. See supra Part II.
172. See supra text accompanying notes 1-11.