Bill Overview
Title: Rent Relief Act of 2022
Description: This bill allows a refundable income tax credit for individuals who pay rent for a principal residence that exceeds 30% of their adjusted gross income for the taxable year. The amount of the credit ranges from 25% to 100% of the excess rent, depending on the adjusted gross income of the taxpayer. The credit is not available for taxpayers with adjusted gross incomes that exceed $100,000. Rent that exceeds 100% of the small area fair market rent (including the utility allowance) for the residence may not be taken into account in determining the amount of the credit. The Department of the Treasury must establish a program for making advance payments of the credit on a monthly basis.
Sponsors: Rep. Davis, Danny K. [D-IL-7]
Target Audience
Population: Renters who pay more than 30% of their income on rent
Estimated Size: 25000000
- The bill targets individuals who pay more than 30% of their income on rent, which is a common situation among low-to-middle-income renters.
- Only individuals whose adjusted gross income does not exceed $100,000 are eligible, focusing the target on low to moderate income earners.
- The bill provides a tax credit, suggesting it is aimed at those filing income tax returns, which likely includes a majority of working adults.
- Rent burden (paying over 30% income on rent) is more common in urban areas where rent prices are higher, impacting urban populations significantly.
Reasoning
- The Rent Relief Act targets low to moderate income renters who spend more than 30% of their income on housing costs. This is a substantial issue in many urban areas where housing costs have risen sharply.
- The policy should most significantly impact individuals with household incomes well below $100,000, particularly those who are currently rent burdened.
- A total budget of $12 billion USD in the first year means the policy must be efficient in distributing benefits to those most in need.
- Due to the limitation on adjusted gross incomes, significant portions of renters in urban and suburban areas with lower- or middle-income jobs could be highly influenced by this policy.
- While rural renters also face housing affordability issues, the policy is likely less impactful in these areas due to generally lower rent costs.
Simulated Interviews
Software Engineer (San Francisco, CA)
Age: 28 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 3/20
Statement of Opinion:
- The rent burden in cities like San Francisco is huge, so any support relief sounds good.
- This policy could provide me with more disposable income or savings.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 5 |
High School Teacher (Chicago, IL)
Age: 45 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 15.0 years
Commonness: 4/20
Statement of Opinion:
- Spending more on rent has always been a struggle; this tax credit could provide some much-needed breathing room.
- Education salaries don’t always match the cost of living, so every bit helps.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 4 |
| Year 10 | 7 | 4 |
| Year 20 | 6 | 4 |
Freelance Graphic Designer (Austin, TX)
Age: 34 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- Freelancers often have periods of financial insecurity; a rent relief program could really alleviate some stress.
- Having more certainty about finances helps with other areas too, such as healthcare and education.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 4 |
| Year 20 | 5 | 3 |
Restaurant Manager (New York, NY)
Age: 29 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 4/20
Statement of Opinion:
- The high rent in New York is stressful; a policy like this could help families stay afloat.
- Rent takes up a big chunk of income, and this relief could help with savings.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 5 |
| Year 3 | 8 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 7 | 4 |
| Year 20 | 6 | 3 |
Retired (Columbus, OH)
Age: 50 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 3/20
Statement of Opinion:
- At a retired age, every bit of financial help counts since rent prices rarely align with fixed incomes.
- This policy could make retirement more affordable without relocating.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 4 |
| Year 3 | 6 | 4 |
| Year 5 | 5 | 4 |
| Year 10 | 4 | 3 |
| Year 20 | 4 | 3 |
Nurse (Phoenix, AZ)
Age: 61 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 4/20
Statement of Opinion:
- Healthcare workers have faced additional stress with costs, and rent support is always welcome.
- Supplementing rent expenses can provide greater focus on personal health and wellness.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 4 |
| Year 5 | 6 | 4 |
| Year 10 | 5 | 4 |
| Year 20 | 5 | 3 |
Plumber (Miami, FL)
Age: 37 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 15.0 years
Commonness: 4/20
Statement of Opinion:
- Carrying a high rent isn't easy while supporting a family, especially in Miami.
- Reducing expenses could mean more savings for emergencies and children’s education.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 4 |
| Year 2 | 7 | 4 |
| Year 3 | 8 | 4 |
| Year 5 | 8 | 4 |
| Year 10 | 7 | 3 |
| Year 20 | 6 | 3 |
IT Specialist (Denver, CO)
Age: 27 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 5/20
Statement of Opinion:
- Trying to balance rent and loans is tough; any relief in rent expenses is beneficial.
- This policy may allow redirecting funds to pay off student debt faster.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
Truck Driver (Rural Georgia)
Age: 54 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 2/20
Statement of Opinion:
- Mostly stable housing cost, but any potential support is good in hard times.
- Rent changes aren't dramatic here, so the impacts may be less noticeable.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 5 |
Waitress (Los Angeles, CA)
Age: 32 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 10.0 years
Commonness: 3/20
Statement of Opinion:
- Struggling to pay rent takes a toll, and any assistance could substantially reduce stress.
- The policy might help focus on other goals like education and career advancement.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 4 |
| Year 2 | 7 | 4 |
| Year 3 | 7 | 4 |
| Year 5 | 6 | 3 |
| Year 10 | 6 | 3 |
| Year 20 | 5 | 3 |
Cost Estimates
Year 1: $12000000000 (Low: $9500000000, High: $14000000000)
Year 2: $12250000000 (Low: $9600000000, High: $14300000000)
Year 3: $12500000000 (Low: $9700000000, High: $14600000000)
Year 5: $13000000000 (Low: $10000000000, High: $15000000000)
Year 10: $14000000000 (Low: $10500000000, High: $16000000000)
Year 100: $0 (Low: $0, High: $0)
Key Considerations
- The Rent Relief Act could relieve financial pressure on a significant segment of the population, potentially mitigating homelessness and housing instability.
- The administrative complexity of implementing advance monthly payments and managing fluctuating eligibility based on income thresholds.
- Potential regional disparities depending on local rent markets and income distributions, impacting the efficacy and fairness of the credit system.
- Long-term fiscal implications for government revenues, necessitating balanced budget measures to offset increased expenditures.