Fixing one driver of inequality may hit close to home for some progressives
Instead, the tax code’s main effect is to help people who already could afford a home buy a bigger one, as a team of economists led by Marquette University’s Andrew Hanson has shown in a new study for the free- market think tank R Street Institute.
Using Zip code-level Internal Revenue Service data on tax filers’ use of housing breaks, as well as local housing market data from the American Housing Survey, Hanson and his colleagues calculated that tax-code subsidies increase the average home size 11 percent to 18 percent above what it would have been without them, depending on location.
In the District and its suburbs, the average home size would have been 1,424 square feet smaller without these subsidies, the Hanson study estimates.
Hanson and his team report that the dollar benefits from housing tax breaks are distributed unevenly across the nation, reflecting differences in local home values and property taxes. In the D.C. area, the tax breaks save an average homeowner more than $9,000 per year; in metropolitan Atlanta, by contrast, the savings are only $1,628.
Within these regions, of course, high-priced suburbs and gentrified city neighborhoods benefit the most.
Another clear, if unstated, implication of Hanson’s study is that housing tax breaks disproportionately subsidize Blue America.