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There are certain programs in NYC like CityFHEPs and HUD housing throughout the US for people in a homeless shelter on cash assistance and/or some other conditions, making it possible, but quite difficult, for the average person to get a housing voucher (that allows the client to pay only 1/3rd of his or her income).

I was just going through the economics in my head as well as going through the breakdown of the annual US budget, and was trying to calculate how many tax payer dollars would it actually cost for the US government to give similar vouchers (paying most of the rent if an apartment/mini house or room up to $2400 allowing the client to pay one third of his or her income), to all Americans making within 40k per year, let's say.

How much would such an operation cost annually? We would need statistics on how many Americans make less than 40k per year.

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  • $\begingroup$ Think like a landlord: the obvious choice would be to increase the cost of rent to 2400 a month, knowing the government would pay the difference for someone only truly able to afford 800 a month. Potential tenants are now from a much larger range of incomes. Ultimately, I think the biggest problem with this plan would be people like the one described above gaming the system, unless rent amounts were modified/capped by the government as well. And I am confident that would not sit well in the minds of many Americans :) $\endgroup$
    – Flats
    Sep 1, 2023 at 21:58
  • $\begingroup$ @Flats what about tax breaks for landlords lowering the rent below market value? Is it true that the biggest obstacle causing rent to go so high is high property tax? I realize that's not a federal level, but still maybe something can be done about it. Also was considering maybe only half or a third of the rent child be subsidized for different income brackets, like <20k gov posts 2/3rds, 20-30k half, 30-40k 1/3rd $\endgroup$
    – Yackov L
    Sep 3, 2023 at 7:24
  • $\begingroup$ What would you do if you earned 41k annually? $\endgroup$
    – jbuddy_13
    Sep 5, 2023 at 4:54
  • $\begingroup$ @jbuddy_13 rent a place $\endgroup$
    – Yackov L
    Sep 5, 2023 at 6:03

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If we ignore all the effects this would have on the market price and quantity (which are too difficult and time consuming to estimate for an SE answer) it would cost about \$398.376bn or almost half a trillion.

Average 1 bedroom apartment rent is according to Statista about \$1200. Moreover, according to Our World in Data, little bit less than 50% Americans earn 40k or less per year. Putting the two together gives you the back of the envelope calculation.

Important caveat is that the above ignores the effects of such subsidy on rent and quantity of rental units, as well as the effects of taxes or borrowing or seignorage or some combination of thereof needed to get the funds. Such effects are difficult to compute, they would probably make the policy more expensive since all else equal more demand should lead to higher price, and rising the funds in either way will cause some deadweight loss. There could also be positive effect if the policy improves people's productivity.

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  • $\begingroup$ if i wanted to make a similar question of what would be the general economic effects if a tier system of the gov paying 2/3rds if one is earning 20k and less and half if 20k-30 and 1/3 to 30k to 40k, should i edit this one or ask a new question? $\endgroup$
    – Yackov L
    Sep 5, 2023 at 6:03
  • $\begingroup$ @YackovL if a question already has an answer you should ask a new one $\endgroup$
    – 1muflon1
    Sep 5, 2023 at 6:16

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