Fannie Mae Foundation
Using data from the 1999 American Housing Survey, the authors of this study looked at the current impact of the Earned Income Tax Credit on the housing cost burdens of working families. When the EITC is included in income, the number of U.S. households with severe housing costs drops by 15 percent, and it would drop by 18 percent if everyone who was eligible for the credit applied for it. Severe housing costs are defined as paying more than half of household gross income before taxes for housing. The EITC is a tax credit for low- and moderate-income workers, particularly those with children. Going on to examine three proposed ways to connect the EITC to housing policy, the authors find that each would significantly reduce the number of working households with severe housing costs. However, they say that their own proposal, tying the EITC to median housing costs, would provide the most relief of the three. This article is of particular interest to policy-makers and analysts interested in the potential connections between EITC and housing cost burdens.
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