Is America a better country because close to two-thirds of our people own their own homes?
Or to put it another way, does that special combination of rootedness and obligation — planting your flag and paying off your mortgage — that comes with home ownership encourage personal behaviors that benefit citizens, families, communities and the nation?
The answer to both questions has, for most Americans since this country’s beginnings, been yes.
This has been expressed in Federal tax policy since the introduction of the income tax in 1913. For more than 100 years, home buying was officially encouraged by federal subsidy. The Trump GOP tax reform will not end this entirely, but it will reduce the tax benefits of home ownership drastically.
The Great Tax Robbery of 2017 will, in general, take services from the poor and vulnerable and money from the middle class and redirect benefits to the richest corporations and the richest Americans who own them.
But specifically, it will deal a double blow to the 64% of Americans who own homes. First, of course, the cutbacks on tax deductions for mortgage interest and for state and local taxes are going to kick holes in tens of millions of household budgets.
I’m going to bet that for the majority of those millions of American families, this is going to force significant reductions in other once-routine expenditures. The ripple effects across the middle and lower reaches of the retail and service economies, where these dollars will not be spent, could be dire. Maybe even worse are the projected effects on the home-building and home-selling sectors of the economy.
But there’s another devastating hit that will be concentrated on homeowners who can least afford it. For Americans who do not own stocks or bonds, or have access to huge stashes of cash or easy credit to invest, the American path to middle-class wealth-enhancement has been through the equity produced by home ownership.
Rising prices are what grow equity value. By increasing the overhead costs of home ownership, the Trump – GOP tax plan will depress prices across much of the housing market, most sharply in the short-term, but continuously over a much longer-term. The middle-class wealth escalator will slow down markedly for at least a generation.
The elevator to the top floors, the penthouse 1%, 0.1%, .01% of the American income pyramid will only get faster, and will continue to carry fewer passengers up from the lower floors.
But back to housing. People gotta live somewhere, and those who can’t buy, must rent. As the Trump tax deform chills the home buying market, it superheats the rental market, putting a fresh squeeze on that 36% of the population who are tenants and further enriching their landlords.
Who might benefit from this radical reorientation of American tax and housing policies? Here are two guys you might have heard of.
Treasury Secretary Steven Mnuchin reportedly pocketed a billion dollars or more from buying and selling banks after the real estate crash of 2007-9. His method? He would buy, often with Federal financial assistance, banks that were in hock because of their out-of-control mortgage-selling practices, and sell their successor banks who wound up in clover after aggressively foreclosing distressed borrowers out of their homes. A lot of the profit came from turning these houses into rental properties.
Wanna bet that Mnuchin still might have a few bucks in real estate for rent?
And then there’s the Fast Shuffler himself. The “developer” Donald J. Trump has dumped more piles of rental housing along city sidewalks than an overfed pit bull constructs towers of poop. Trump-built single-family homes? Not so much.
Shoving millions of Americans out of home-ownership and into renting underscores the message of today’s Republican Party to its leading funders and to its leader: “Help yourself; plunder. No one will stop you.”
Unless voters do in 2018 and thereafter.