Kamala Harris, the junior Democratic senator from California, has announced an economic policy plan that has Republicans scratching their heads.
Harris, who is likely to challenge the likes of Elizabeth Warren and Bernie Sanders to be the Democratic Party’s nominee for president in 2020, wrote the following tweet on Friday:
“Under the Rent Relief Act, anyone who spends more than 30% of their income on rent would be eligible for a federal tax credit. What would you do with that extra money in your pocket?”
This comes after Harris’s July 20 tweet telling voters about her policy proposal:
“Nationally, over 21M Americans spend more than 30% of their paychecks on rent. That’s absurd,” she tweeted. “I introduced the #RentReliefAct to help ease the burden. This equals more money in people’s pockets at the end of the year.”
As The Daily Wire founder Ben Shapiro puts it, “This is stupid.”
Shapiro correctly identifies the logical fallacy in an example where someone earning $10,000 a year gets a 30 percent tax credit.
As the laws of supply and demand hold, supply remains the same but demand for housing increases because it is supposedly cheaper. So, what do the landlords do? They increase rent. Probably by 30 percent, since that’s how much more everyone would be willing to pay.
Kamala Harris’s 30 percent government subsidy would be a horrible policy idea, one that would drive up the cost of rent and would cost the government millions in supposedly subsidizing it.
Based on the policy-outcome Harris would undoubtedly advocate for rent control to force landlords to stop raising rent even though demand increase. And that’s an entirely different debate.
As Shapiro notes, the same thing happens with every subsidy.
So, the answer to Harris’s question, “What would you do with that extra money in your pocket?” would sadly be, “Spend it on rent.”