Attempting to distinguish himself in an overcrowded Democratic primary, New Jersey Sen. Cory Booker came out with a plan that he claims will address housing affordability. He’s wrong — it will only make the problem worse.Booker’s plan involves offering a tax credit to any American who pays more than 30 percent of their before-tax income in rent, the value of which would equal the difference between the fair-market rate for the area and the amount that the renter actually pays.
What is especially bizarre about Booker’s plan is that the solution to sky-high rent and housing rates is blissfully simple — build more housing!
Housing crises arise largely from a straightforward application of supply and demand concepts economists learned back in high school. When the demand outstrips the supply, and supply is constrained by artificial factors such as zoning and land-use regulations, prices will rise. Yet primary candidates in the Democratic field such as Booker, Massachusetts Sen. Elizabeth Warren, and California Sen. Kamala Harris have all felt the need to invent Rube Goldberg-esque plans to try to tackle housing affordability differently.