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In full transparency, the following is a media release from Sen. Elizabeth Warren’s office. She was elected by voters in the Commonwealth of Massachusetts to serve the state in Washington DC in the US Senate. She is a Democrat. (stock photo)


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WASHINGTON DC – At a hearing of the Senate Finance Committee, U.S. Senator Elizabeth Warren (D-Mass.) called out Wall Street real estate investors for exploiting tax breaks to buy up affordable housing, raise fees and rents, and evict families across the country. 

Real estate investors, including giant corporate landlords have bought up one-quarter of all single-family homes sold in 2021, and often with the help of government financing and tax breaks. Senator Warren called out Wall Street investors for exploiting tax breaks to pad their profits, including: 

  • Using real estate investment trusts (REITs) that are not subject to corporate income taxes.
  • Receiving a $29 billion tax handout from President Trump’s 2017 Tax Cuts and Jobs Act, which allows them to deduct 20% of their pass-through business income, such as dividends they might receive from an REIT.
  • The CARES Act, which allowed all business losses to be carried back for five years, resulting in $170 billion in tax benefits that will largely go to the wealthiest in the country, including Wall Street real estate investors.  
  • “Like-kind exchanges”, where investors avoid paying taxes on profits from the sale of a property if those profits are used to buy another, which is estimated to provide investors with a $134 billion tax break over 10 years. 

Senator Warren called for all taxpayer money spent on housing to be used to fix the housing crisis in the United States – not to enrich Wall Street funds. 


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Transcript: Tax Policy’s Role in Increasing Affordable Housing Supply for Working Families
U.S. Senate Committee on Banking, Housing, and Urban Affairs Subcommittee on Economic Policy 
Tuesday, March 7, 2023

Senator Elizabeth Warren: Thank you, Mr. Chairman. 

So I’m going to pick up actually where Senator Cantwell left off, and that is for decades, the federal government has underinvested in our country’s housing supply. And the data I see suggests we’re now facing a shortage of as many as 7 million affordable homes. But the bottom line is that we need to build more housing for everyone – for renters, and first-time home buyers, and veterans, and people living with disabilities, and families experiencing homelessness, you name it, we need more housing. 

So tax policies can be a tool to address housing shortages. The Low-Income Housing Tax Credit is not perfect, but it helps drive the development of affordable rental homes. 

But some of our tax policies may actually make housing problems worse. Wall Street money managers have fanned out across the country, buying and converting what little supply of affordable homes remain – and they get tax breaks to do that. 

Ms. Scott, you are an expert on community development, so let me start by asking you about the impact of more Wall Street investors moving into the housing market. Big corporate landlords, often acting through investment vehicles known as real estate investment trusts, or REITs have bought up hundreds of thousands of homes across the country over the past decade. Now, some of these folks argue that REITs and other investors encourage investment in supply and neighborhood quality. Is that what you’ve seen?

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Denise Scott, President, Local Initiatives Support Corporation (LISC): Thank you senator for this focus and your question. We’re not opposed to REITs per se, but we are very concerned about the institutional investors in housing markets and in our communities. We did, LISC did a research paper focusing in on New York City that you may have seen, that in certain instances, when these investors acquire properties, they refinance them, so they’re extracting money from the real estate and taking it out of the community, rather than reinvesting it in the housing that they purchased. 

Oftentimes we find that the housing that has been purchased, the rents are increased, and there is, the existing tenants may lose their housing, they may be evicted. We see that maintenance, the quality of maintenance goes down, and overall there aren’t those capital improvements. 

On the single-family side, we see something similar happening where these investors are snapping up homes to rent at much higher rates than the market has generally supported, so you see less opportunities for first-time homebuyers. So the community is being denied wealth – wealth is coming out of the community, and oftentimes the institutional investors are not easily identified, so it’s not clear who the players are, where their money’s coming from, and it’s changing the face of many of our communities. 

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Senator Warren: So that’s a pretty grim picture about what’s going on, and it’s particularly alarming because in 2021, investors bought up one-quarter of all single-family homes that were on the market. And no surprise, the places where the biggest of these investors went – those that own thousands of properties – have been the places where home prices have increased the most.

Now these same big investors are collecting record profits while they are subsidized by government financing and tax breaks. So I just want to take a quick look at these tax breaks. 

Mr. Watson, we’re going to be limited on time, so let’s see if we can do these as true-falses. You are an expert on federal tax policy at the Tax Foundation, so let’s talk about just a few of the tax breaks Wall Street investors have exploited to hoover up homes, make the supply crisis worse, and drive up costs for families. 

True or false, many REITS are billion-dollar companies, including some of the biggest corporate landlords in the United States: Invitation Homes, American Homes 4 Rent, and Mid America Apartments, but they generally do not pay corporate income tax if they meet certain conditions.  Is that right, true or false?

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Garrett Watson, Senior Policy Analyst And Modeling Manager, Tax Foundation: If they deduct from their income, they would not. 

Senator Warren: True. Okay, let’s do another. The 2017 Tax Cuts and Jobs Act allows investors to deduct 20% of their pass-through business income, such as dividends they might receive from REITs. True or false?

Mr. Watson: True. 

Senator Warren: True, alright let’s keep going here. I like the way you’re doing this. The CARES Act allowed all business losses to be carried back for five years.  True or false?

Mr. Watson:  That’s true. 

Senator Warren: That’s true. And that change resulted in billions of dollars in tax benefits that largely went to the wealthiest in the country, including Wall Street real estate investors.

So let’s do one more: real-estate investors can avoid paying taxes on profits from the sale of a property if those profits are used to buy another, a process known as like-kind exchanges. True or false?

Mr. Watson: That’s true. 

Senator Warren: Okay. This loophole is expected to provide investors with a $134 billion tax break over ten years. I just want to say here, our tax policies reward giant real estate investors who raise fees, jack up rents, and evict families. Americans are already suffering from a severe lack of affordable homes. And any taxpayer money spent on housing should go towards fixing the problem, not making it worse. 

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By editor

Susan Petroni is the former editor for SOURCE. She is the founder of the former news site, which as of May 1, 2023, is now a self-publishing community bulletin board. The website no longer has a journalist but a webmaster.