Tax Cuts for Housing

In response to the post below quoting The Economist, Wendy Waters observed:

… the solution must be find a way to encourage more housing in Gotham.  But anytime a significant change to density is suggested on any site, the opposition is overwhelming, often from life-long renters struggling to stay in the city (who if they were a “class” would most benefit from additional supply). 

Is there a point when the city has to approach increasing density in many neighbourhoods as they have with the bike lanes:  just push it though?  (for the greater good of the city).

No better illustration than the STIR program implemented by the current council – and the pushback from West Enders.  (Backstory here.)   In other neighbourhoods, the reception was moderately better, but the truism holds: “As the rate of change slows down, residents’ anxiety about change increases” – to the point where they will oppose short-term impacts with long-term benefits, especially for those who are not yet present.

I expect change will occur in Vancouver because of a combination of demographic shifts (immigrants and younger people with different attitudes), but it will not have any immediate impact so long as the cost of building rental housing doesn’t change much, even if the opportunities to build it are expanded.  And in Vancouver, those numbers don’t add up because of the overall scarcity of land and an elevated cost of construction.

What’s needed?

The newly formed Rental Housing Supply Coalition is working on it.  UDI executive director Maureen Enser and New Westminster Mayor Wayne Wright  made a presentation at a Metro Sustainability Community Breakfast on March 3, listing a few things the federal government could do:

– Allow the rollover of capital gains if reinvested in rental housing

– Allow the offset of rental losses against other income

– Reintroduce a modified MURB-style program as part of a National Housing Strategy

If MURB isn’t familiar to you, it was a 70s initiative (with disputed results) that encouraged rental housing construction through tax shelters.  Indeed, all of these recommendations have a ‘Back to the Seventies’ feel to them. 

And why were they – along with the co-op program – stopped?   Because they’re basically ‘tax expenditures’ that result in a loss of revenue to the government – and were killed when the feds needed to cut deficits.

Which is another way of saying that they were essentially a kind of tax cut – a lot sexier term than ‘tax expenditures,’  and a far better way to frame the issue in the current ideological climate. 

The American Right has learned one big thing: always talk tax cuts, never policies.    And whenever there’s the opportunity,  cut taxes and ignore the consequences – until such time as the cuts result in deficits.  And then cut programs – at least the programs that you don’t particularly like but have lots of defenders.  In the name of balanced budgets, all kinds of ideological victories can be won.

So if housing advocates want to win this one, the mantra should be Tax Cuts for Housing!   Tax Cuts for Jobs!  Tax Cuts for the Housing Industry!  Just make sure you have the right policies that actually deliver more affordable housing.

Which is a rather critical qualifier.