Illiterate Economic Policies
As President Joe Biden’s reelection chances grow more dire, he is embracing increasingly radical policies, scolds the editorial board of the WSJ. Joe Biden’s latest announcement is a nationwide rent-control plan, coupled with a “classic White House policy contradiction:” try this on for size: Subsidize housing, then discourage its development.”
If higher mortgage rates and home prices are pushing Americans out of the home-buying market, is this not contributing to higher demand for rental housing? Well, yes, it is.
Rents on average nationwide have risen 30% over the last four years and even more in Sun Belt states with fast-growing populations. Evictions are also increasing in many markets.
The Moral Campus of a Weathervane
Enter President Joe Biden, bless his little heart, with valuable tax breaks. The President’s pitch (or whomever is running the WH): would allow “valuable federal tax breaks” on landlords capping rent increases at 5% annually.
The White House says its plan would apply to “corporate” landlords with more than 50 units, covering more than 20 million units, or roughly half the country’s rental stock.
Please explain what “lucrative tax breaks” the President is referring to? The White House’s press release refers to “fast depreciation write-offs.”
Under the current tax code, residential rental property owners can depreciate a building’s value over 27.5 years, rather than 39 as for other types of commercial real estate. A shorter depreciation schedule increases the incentive to invest in rental housing.
Just Who’s Running the Show
Would not this condition for tax breaks do the opposite?
Yesireee Bob, concurs the WSJ. It would reduce, if not eliminate, the return on rental housing investments. Inflation isn’t just in the grocery aisles. Inflation has driven up insurance, construction, and maintenance costs (painfully clear to any homeowner):
Investors will have to pay higher taxes or accept a lower return. The Administration wants to increase subsidies for affordable housing even as it promotes policies to make such projects less financially attractive.
Why will the rent-control ultimatum discourage new housing, if, according to the White House, it would apply only to existing units?
… developers will rightly anticipate that the policy will eventually be extended to newer units, which will factor into their investment calculus. Reducing the return on completed projects also reduces the capital available to invest in new ones.
HUD to the Rescue?
As we all know, tax depreciation schedules are set by statute, and Congress would have to enact Mr. Biden’s new national rent-control plan.
But the expiration of the Trump tax cuts at the end of 2025 will provide him with negotiating leverage if he is re-elected with Republican control of one or both chambers of Congress. There is also bipartisan support in Congress for increasing housing tax subsidies.
This is also what the Department of Housing and Urban Development (HUD) did in March when it capped annual rent increases at 10% for rental units that benefit from the low-income housing tax credit. The ceiling was previously set at twice the annual increase in the median household income, which would have been 14.8% this year.
And they Call Trump a Dictator?
It would be hard to come up with a worse idea than to impose rent control through the tax code, worries the WSJ.
It would reduce investment in new supply and drive-up rents in units not subject to government caps.
Look at New York City where nearly half of units are “rent stabilized,” and the average one-bedroom apartment costs $4,300 a month.
A Presidency Birthed in Lies and Media-Assisted Coverups
Joe Biden’s fuzzy thinking:
- Student loan forgiveness
- Rent control
- Free Obamacare
- Kabul humiliating withdrawal
- Disparage businesses for price increases
- Greedy energy companies
- Further drain the petroleum reserves
- Mendacity about Republican plans for SS and Medicare
- “Fat,” “Lying dog-faced pony soldier,” etc. slurs
- “Cannibals eating my uncle” yarns
Don’t forget, advises Victor Davis Hanson, that the concern of Democrats is winning back the White House. They have shown little or no concern that they and the media suppressed real evidence of Biden dementia.
Realistically, continues VDH, President Joe Biden is “far more cognitively challenged than FDR was in 1944.”
The chances that he will stay cogent for the next five months and win the election are quickly vanishing. Even the Biden-inspired, now discredited lawfare campaign against Trump has not just failed but boomeranged by increasing Trump’s popularity.