neighborhoods are and where the housing projects are located. And I cannot imagine that there are authorities administering leased project programs in existing housing that don't know where those units are. Maybe they do not know where every last one of them is, but certainly they know where they are concentrated. HUD should insist on getting this data, and HUD should be analyzing this data. HUD should be making this data available. I would like now to turn to the second half of our concern. The first half was enforcement. The next half is access. You have already pointed out in your questioning of Dr. Weaver the impact of the absence of Federal programs on housing patterns. They certainly, I think, are the major cause of increasing segregation by race and income in urban and suburban areas. In fact, if we had set out after World War II to design a series of housing programs which would lead to racial segregation, I doubt we would have done much better than we did more or less by accident. Overt discrimination often is not necessary to create racial separation, because cost very often does. Suburban exclusion through zoning and building codes is one aspect of that and an important aspect. But an equally important aspect, in our view, is a lack of sufficient subsidies for new housing. Our chief criticism of HUD's present reliance on the existing housing stock is that it tends to perpetuate segregation. When Secretary Hill says, "look we can get more subsidized housing units if we use the existing subsidized housing stock," what she is really saying-whether she knows it or not— is that we can provide more subsidies by providing minority people with subsidized housing in the ghetto than we could if we provided them with housing alternatives outside the ghetto. In 1937, Congress responded to a recession by passing public housing legislation, creating jobs by providing a low-income housing program. In 1975, Congress responded to another recession by creating jobs through making the Tandem plan semipermanent. I think that is a commentary on our awareness of civil rights implications, because the Tandem plan benefits middle and upper-income peoplepredominately white people-and low-income housing is needed by minority people. The latest statistics I have on poverty show that 9 percent of the whites have incomes below the poverty line and 23 percent of Spanish-heritage Americans, and 31 percent of blacks. Moreover, the portion of the existing housing stock that is available for poor households at costs that they can afford, is shrinking because of inflation and rising costs. Whereas, the number of poor households, after declining for a number of years, is now starting to increase. So the housing problems of low-income people are becoming exacerbated. In this situation, HUD proposes to meet only a fraction of the national housing goal established in the 1968 act and reaffirmed very specifically in the 1974 act. HUD is proposing less than one-third of the 600,000 new subsidized units that were the national housing goal for each year. We now have a housing subsidy pattern which is badly skewed to benefit people with high incomes who don't need subsidies. The myth was created-beginning really in an organized way with a moratorium on subsidized programs that we had massive lowincome programs in this country that were straining our economic capacity and straining our Federal resources. Well, in fact we do have fairly substantial housing subsidy programs in this country. But 80 percent of our housing subsidies are provided through the tax system rather than through HUD's programs. I did an analysis last year which showed that if you look at the tax expenditures and direct subsidies as one comprehensive housing subsidy program— that is, in the manner which is proposed in the Budget Act-then the 1 percent of households in this country with incomes above $50,000 gets 10 percent of all housing subsidies. Incidentally, only one in eight of those households is black. And 14 percent of households with incomes below $3,000 gets only 7 percent of all housing subsidies. And one in five of those households is black. So, I think we need to address both the scale and priorities of our housing subsidy programs and also the administration of equal opportunity programs, if we are indeed going to do an adequate job of measuring what needs to be done to provide equal opportunity in housing. Mr. EDWARDS. Would you provide that study for us, also? [The information follows:] COMMITTEE OF Hen. James Abourezk Harry 8. Ashmore Hen. Lee Aspin George Ballis Rev. Earl Rodman Barr Randolph Blackwell Tom Bonar Hon. Julian Bond Marvin Caplan Eric Carlson Harry Caudill Han. John Conyera, Jr. Tony Dechant Rev. Norman E. Dewire Hon. Paul Douglas Ronnie Dugger Marian Wright Edelman Rev. Albert E. Erickson John Henry Faulk Jake Frank James L. Grahl Themes A. Hannigan Hen. William Hathaway NATIONAL HOUSING Dupont Circle Building 1346 Connecticut Avenue, N.W. COALITION Telephone: (202) 296-4944 TAX SHELTERS AND TAX SUBSIDIES IN HOUSING: Aaron E. Henry, Chairman William Powers, Vice-Chairman STATEMENT OF CUSHING N. DOLBEARE, EXECUTIVE SECRETARY, NATIONAL RURAL My name is Cushing Niles Dolbeare. I reside at 517 Westview Street, Philadelphia, Pa. I am a consultant in housing policies and programs. In that capacity, I am the author of a study tax shelters for subsidized, limited dividend housing for the Rural Housing Alliance, "Federal Tax Rip-offs: Housing Subsidies for the Rich," published in 1972. I also chaired a special task force on taxation and the distribution of wealth and income in the U. S. of the American Friends Service Committee and the Friends Committee on National Legislation. I appear today as Executive Secretary of the National Rural Housing Coalition, a Mrs. Martin Luther King, Jr. public interest organization concerned with the urgent housing needs of people who reside in small towns and rural areas. Dr. Vivian Henderson Anthony Henry Father Theodore Heeburgh M. Cart Holman Kenneth G. Holum Mon. Hubert Humphrey John Lewis Dr. J. Oscar McCloud Hon. George McGovern Father A. J. McKnight Hon. Parron Mitchell Hon. Walter Mondale Hon. Gaylord Nelson Hon. Charlie Rose Henry Santiestovan Hon. Patricia Schroeder Hon. Adlai Stevenson 111 Hon. Morris Udall Dr. Raymond Wheeler Hon. Ralph Yarborough Tax expenditures for housing dwarf direct federal expenditures In 1949, Congress adopted the goal of the achievement "as soon as Tax expenditures for housing will total almost $15 billion in Fiscal 71-095 O-76-6 (Source: Table F-1, Special Analyses: Budget for Fiscal Year 1976, except figure for tax credit as amended which is from Tax Notes, Vol. III, No. 27, July 7, 1975.) The Budget for FY 1976 shows that tax expenditures for mortgage interest and property tax deductions have increased to an estimated $11.8 billion, and direct housing subsidies to $2.6 billion. The increase in these tax expenditures since 1973 is one and one-half times the total amount for direct expenditures. In 1973, 25.3 million taxpayers deducted mortgage interest and property taxes, at a cost to the Treasury of $7.9 billion. The total housing subsidy system is perverse and regressive because of the impact of tax expenditures Tables 1 and 2, attached to this statement, are an effort, necessarily crude because adequate data are not available, to analyze the impact and equity of major housing subsidy programs for this fiscal year. While the data are less than ideal, the methodology used tends to understate the regressive nature of our total housing subsidy system. The results, wholly due to the impact of tax subsidies, are shocking: - The top 1% of the income distribution $50,000 -- gets more than 10% of all housing all families and individuals with incomes at subsidies through the tax system. people with incomes above subsidies. At least 90% of this level receivs housing with Only 7% of all housing subsidies go the 14% of the population incomes below $3,000 -- although they have the most desperate housing needs. Less than one household in ten in this income range receives any housing subsidy, either directly or through the tax system. The lower half of the income distribution gets only one quarter of all housing subsidies. One basic reason for the inequity and perversity of the total housing subsidy system is that tax subsidies (credits, income exclusions, or deductions) may be claimed by all who qualify. In contrast, HUD estimated in 1975 that over 15 million households had incomes lov enough to qualify for subsidized housing, but such housing was not available. Moreover, tax subsidies continue indefinitely, whereas direct subsidies have been curtailed by both Congress and the Administration. Recently the Treasury Department, at the request of Senator Mondale, estimated the distribution of tax expenditures by income class. These figures, for 1974, appear in the June 2, 1975 Congressional Record at pages $9173–77. Table 3, showing housing-related tax expenditures in 1974, is drawn from this source. Briefly, it shows that housing-related tax expenditures totalled $9.7 billion, or 16.6% of all tax expenditures ($58.2 billion). Housing-related tax expenditures benefit low and moderate income people even less than over-all tax expenditures. The 1974 figures show that 16.6% of all tax expenditures went to taxpayers with incomes below $10,000, but this income group received only 6.9% of the housing-related expenditures. Selected housing-related tax expenditures are particularly perverse. People with incomes above $50,000 received more than one-third of the benefits of excess depreciation, more than three quarters of the benefits of rapid rehab amortization and almost nine-tenths of the benefits of exclusion of interest on state and local bonds. |