Comment on Michael A. Stegman, Walter R. Davis, and Roberto Quercia's “The Earned Income Tax Credit as an instrument of housing policy”

Abstract

In their discussion of the relationship between the Earned Income Tax Credit (EITC) and housing cost burdens for lower‐income families, Stegman, Davis, and Quercia propose to significantly modify the EITC's benefit structure based on housing cost burdens. But leveraging the EITC to better address housing cost burdens does not require that EITC become housing policy, that its legislative authority be substantially rewritten, or that its funding be increased by billions of dollars. Moreover, substantially shifting policy justification and rationale for the EITC could undermine its broad‐based political popularity while further marginalizing the authority of the U.S. Department of Housing and Urban Development over lower‐income housing programs. A first step toward better leveraging the EITC to improve housing opportunities is to increase the program's claims rate while helping taxpayers to access lower cost tax preparation assistance. In addition, the manner in which households claim the EITC can be better managed to allow them to more effectively offset rent or mortgage payments. Finally, the EITC can serve as an important financial resource that could help many families establish banking relationships that lead to asset development and homeownership.