Working Paper: NBER ID: w31824
Authors: Kelly Bishop; Jakob Dowling; Nicolai V. Kuminoff; Alvin Murphy
Abstract: The real economic cost of homeownership depends on an intricate system of taxes and subsides that vary over time and across the United States. We incorporate the key features of this system into a framework for measuring the annual user-cost of housing and we use it to document how housing costs and subsidies varied over time, across space, and with household demographics in 2016-2017. Then we examine how the Tax Cuts and Jobs Act of 2017 subsequently reduced subsidies and increased the relative cost of housing. We report how these changes varied by geography, homeownership, race, and voting behavior.
Keywords: Tax Policy; Homeownership; Heterogeneous Costs; Tax Subsidies; Housing Economics
JEL Codes: H2; R2; R3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| TCJA's provisions expiring in 2025 (H26) | potential reversal of disparities (I14) |
| TCJA (K34) | housing costs (R21) |
| TCJA (K34) | housing affordability (R31) |
| affluent areas (R20) | reductions in subsidies (H23) |
| Democrat-voting areas (K16) | average subsidy loss (H23) |
| Republican-voting areas (K16) | average subsidy loss (H23) |
| TCJA (K34) | federal tax subsidy for homeowners (H20) |
| decrease in federal tax subsidy for homeowners (H20) | real cost of homeownership (R21) |
| TCJA (K34) | real cost of homeownership (R21) |