Sen. Kamala Harris, 2020 presidential candidate, presented a plan— Rent Relief Act— in April to aid those Americans who are striving to go on with towering rents. The act will make possible monthly refundable tax credit for households having more than 30% housing costs of their income, including utilities and rent. The aim is to aid low-income citizens across the country to manage their rent.
Supporters of the Rent Relief Act by Harris include the National Alliance to End Homelessness, the National Housing Law Project, the National Low-Income Housing Coalition, and Fair Housing of California. But there are some experts, like Caroline Danielson and Jenny Schuetz, who warn that Harris’ plan could have an unplanned effect of an increase in rents for everybody in California, where the housing shortage is creating an affordability crisis, and the plan would not be enough to tackle California housing crisis.
Harris stated on April 29, “Nationally, 21 million Americans pay 30 percent or more of their income on rent and utilities, and in Iowa, there are 90,000 extremely low-income renter households facing this reality, that’s an unacceptable number of families left with no options for how to put a roof over their heads.”
Diane Yentel, the President of National Low-Income Housing California, said when the bill was presented, “A new tax credit for renters … could transform lives, providing millions of the lowest income people with the breadth of opportunities that start with an affordable home.”
While Caroline Danielson opined that Harris’ tax credit plan is a sensible policy in Iowa and other parts of America where housing supply is parallel to the demand. But, he said, “in a place like California, where we have a housing supply crunch, it seems to me like we would get ourselves into a vicious cycle and not solve our problems.”
Jenny Schuetz, a housing policy expert, agreed. With the housing crisis in the state, “Landlords collectively are likely to increase their asking rents for all apartments if they expect that some group of people in the city will have more money to spend on rent,” Schuetz said, “This just gives more money to landlords without fixing the underlying problem.”
Both experts proposed that California can cool down housing crisis— housing prices and rent— by building housing, especially affordable housing. Jenny Schuetz said, “Most of California’s most populous cities and most affluent suburbs are just not building up housing, they’ve been under-building housing for about 30 years now.”
Thus, Caroline Danielson suggests that Harris’ tax credit plan could ease housing issues of thousands of low-income Californians, but its effect would be short-lived. To have long-term effective consequences, it needs to go along with other necessary efforts to escape from pushing up rents over time.