[Congressional Record Volume 141, Number 33 (Wednesday, February 22, 1995)]
[Extensions of Remarks]
[Pages E405-E406]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                 FEDERAL HOUSING TRUST FUND ACT OF 1995

                                 ______


                          HON. MAJOR R. OWENS

                              of new york

                    in the house of representatives

                      Wednesday, February 22, 1995
  Mr. OWENS. Mr. Speaker, I rise to introduce the Federal Housing Trust 
Fund Act of 1995, a significant piece of legislation which would offer 
every family in this country the opportunity to live in decent, safe, 
and affordable housing.
  In 1949, Congress enacted a comprehensive housing bill setting the 
national goal of a decent home and a suitable living environment for 
every American family. Today, we are further from that goal than ever 
before. The VA-HUD-Independent Agencies appropriations bill which 
finally passed the Senate last week does not even keep pace with the 
problem of low-income housing. Recently, the Department of Housing and 
Urban Development [HUD] released its worst case housing needs report, 
based on 1991 American Housing Survey data. It shows that the number of 
very low-income renter households with worst case housing needs is 
increasing at the rate of 100,000 per year. But the 1995 HUD 
appropriation provides money for only 88,000 additional households.
  Low-income people have faced a housing crisis for many years, and 
each year it gets worse. The 1990 Census, which does not even count 
deteriorated or dilapidated housing, found that over 30 percent of 
American households have significant problems with housing costs, 
overcrowding, or lack of kitchens or complete plumbing facilities. 
These problems affect an estimated 70 million people.
  Although this Nation has had federally subsidized housing programs 
for low-income people since the mid-1930's, the scope of the programs 
has been limited. In recent years, HUD has consistently found that 
there are over 5 million very low-income, unsubsidized renter 
households with worst case housing needs. These households are 
homeless; or they live in seriously inadequate units; or they must pay 
more than half of their meager incomes for housing costs, forcing them 
to forego other basic necessities.
  Just meeting the most basic housing needs requires more than doubling 
the present number of households receiving housing assistance. 
Moreover, for each household with a worst case need, there are four 
more households--27 million in all--which are overcrowded, lack 
kitchens or bathrooms, or must pay more than they can afford for 
housing.
  While low-income housing programs have failed to meet the needs of 
their target population, special tax benefits have provided significant 
assistance for millions of higher-income Americans who already can 
afford a home. Official estimates of the Office of Management and 
Budget [OMB] indicate that the cost of these special benefits to the 
Federal Treasury has risen from $10 billion in 1976 to $84 billion in 
1994.
  A large majority of this cost to the Government is due to the 
deduction of home mortgage interest and real property taxes. While 
these tax deductions have helped millions of higher-income Americans 
achieve financial stability, they represent too high a proportion of 
Federal housing expenditures. For every dollar the Federal Government 
spends to provide housing assistance to a low-income family, a family 
in the top fifth of the income distribution receives $3 in benefits 
from homeowner deductions, primarily for mortgage interest and property 
taxes.
  The sad fact is that this Nation's housing subsidy system is upside 
down. While Congress restricts budget authority and outlays for low-
income housing to help reduce the Federal budget deficit, higher-income 
people continue to receive their entitlement to benefits through 
homeowner deductions. Administration projections show that the cost of 
the mortgage interest deduction alone will amount to almost one-third 
of the deficit in fiscal year 1995.
  One result of the gross imbalance in Federal housing benefits has 
been the growing segregation of different aspects of American society: 
rich and poor, white and people of color, urban and suburban. This 
trend poses a threat to the Nation's general welfare, family and 
community life, and economic stability. It has even led to increased 
drug use and crime. It therefore is in the interest of all Americans to 
address the housing problem effectively.
  To reset the balance of Federal housing expenditures, I am 
introducing the Federal Housing Trust Fund Act of 1995. This bill would 
take only a fraction of mortgage interest and property tax deductions 
enjoyed by taxpayers in the top eighth of the income distribution\1\ 
and place it in a Federal Housing Trust Fund for low-income families 
who lack decent, safe, and affordable housing. To raise additional 
revenue for the trust fund, the bill also would eliminate a huge tax 
loophole--the favorable tax treatment of inherited property. This 
loophole permits wealthy American families to pass their property to 
their children and grandchildren and completely escape any income taxes 
on huge capital gains that have accumulated over a period of decades.
     \1\The Joint Tax Committee estimates for 1994 are that 10.6% 
     of all ``returns'' have incomes above $75,000. ``Returns'' 
     includes filers with and without taxes due, and estimated 
     numbers of non-filers. About 80-90% of filers in the above-
     $75,000 income bracket claim homeowner deductions.
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  Taxpayers with incomes up to $75,000 would keep all of their current 
mortgage interest and property tax deductions. Above $75,000, taxpayers 
would lose 3 percent of these deductions for each additional thousand 
dollars of income, down to a floor of 50 percent. So, all taxpayers, no 
matter how high their incomes, would keep at least half of their 
current mortgage interest and property tax benefits, and only 1 
household in 10 would pay higher taxes as a result of this bill. 
Moreover, these changes would be phased in over 5 years to reduce their 
immediate impact.
  Thus, the bill would drastically reduce the cost to the Treasury for 
homeowner tax benefits for taxpayers with incomes above $75,000, 
generating tens of billions of dollars for the trust fund. The 
Government then would be able to provide the money needed for a 
comprehensive and flexible program of housing grants to eligible State 
and local entities. In turn, such entities would provide housing costs 
assistance for owners and renters, increase and improve the supply of 
affordable housing, increase the capacity of the nonprofit sector, and 
improve fair housing efforts.
  Specifically, two-thirds of the money in the trust fund would be 
designated for a housing costs assistance program, which would pay the 
difference between 30 percent of adjusted income and the fair market 
rent for a unit of the size needed in the area where the family resides 
or wishes to reside. Although the subsidy amount would be based on 
rental housing costs, the assistance could be used either to rent or 
purchase. The funds would be distributed by formula to cities, States, 
and Indian tribes, based on the number of households with severe 
affordability problems and the cost of housing.
  The remaining one-third of the funds would be used to expand the 
housing supply and provide related services, including fair housing and 
capacity-building. All housing and related services provided through 
this program, except for emergency repairs and hazard abatement, would 
be subject to permanent restrictions on housing affordability. Like the 
housing costs program, these trust fund dollars would be distributed by 
formula, but the formula would be developed by HUD based on the 
relative need for improving and expanding the housing stock.
  By limiting tax benefits for individuals who do not need them to be 
able to live in decent, affordable housing, the bill would provide the 
funding needed to attack the critical housing problems facing low- and 
moderate-income people, and contribute to family security, 
cohesiveness, and economic self-sufficiency.
  This bill is the kind of bold measure we need to solve the low-income 
housing crisis. It provides the resources to address the full range of 
problems--not only worst case needs, but also the needs of young 
families without enough income to have realistic prospects of moving 
into decent neighborhoods or owning their own homes.
  Within 10 years of passage of this bill, we could expect the same 
enhanced opportunities for low-income people to obtain housing as young 
families had after the end of World War II when, thanks to low-housing 
costs, an expanding economy, and Veterans Administration [VA] and 
Federal Housing Administration [FHA] mortgages, millions of Americans 
were 
 [[Page E406]] able to put roofs over their heads. Without passage of 
this bill, we will inevitably see more homelessness, more broken 
families, and more communities without hope, cutoff from the American 
dream.
  Mr. Speaker, I urge my colleagues to support and cosponsor this bill 
and help me to put the Nation's housing problems on the front burner.


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