(DNAINFO Emily Badger — The primary purpose of housing subsidies is, well, to house people. But by doing so, they serve another end: They effectively boost the incomes of many poor Americans, narrowing inequality.
A new Urban Institute analysis quantifies exactly how much housing aid helps the needy. Gregory Acs and Paul Johnson looked at the post-tax, post-transfer incomes of American households (adjusted for household size). If you take housing policy out of that picture, households at the 90th percentile have about 9.4 times as much income as those at the 10th percentile. Add in housing subsidies — which cost the government about $36 billion in 2012 — and that ratio falls to 8.6.
But here is the rub: While housing subsidies to the poor help narrow inequality, housing benefits for the rich — the mortgage interest and real estate tax deductions — wipe out some of the effect. Add in those benefits ($70 billion for the mortgage deduction, $28 billion for real estate taxes), and the ratio inches back up to 8.8.