The Homeless Epidemic: From Sidewalks to Manors America’s Wealth Gap

One of the most tragic issues facing the U.S. and major American cities is homelessness. Between 700,000 and 800,000 people live on the streets and struggle to find somewhere warm to stay and something to eat (Clark, 2016). About 1.2 million adolescents are homeless and struggling with mental health disorders (Perlman et al., 2014). The U.S. is one of the wealthiest countries, but it has extreme poverty rates and a homeless epidemic. How is this possible? Medical debt is America's leading cause of bankruptcy (Shah, 2024). One of the highest forms of debt is a mortgage (Clark, 2016). America is the only first-world country that does not have universal healthcare, and the average middle-class family has to pay a higher percentage of taxes than the wealthiest billionaire and their companies (Scheuer & Slemrod, 2021). Taxing the wealthiest people in America would contribute to more funds being used for affordable housing and universal healthcare.

A significant and most obvious fact contributing to the homeless epidemic is that many individuals and families can barely afford rent and view owning a house as a fantasy. In 2015, the Joint Center of Housing reported that 43 million families and individuals live in rental housing, about half of all renters pay 30 percent or more of their income to housing, and more than a quarter of renters pay about half or more of their income to housing (Clark, 2016). With millions of renters and homeowners paying most of their wages to afford a living space, this impacts how much they can spend on food and basic health needs. While affordable government housing exists, not everyone can afford it, and America should invest in building more affordable houses for low-income families. By taxing the wealthiest people in America, many of the funds collected could be used to build more affordable housing, which contributes to lessening the homeless population and the overall homeless epidemic. In 2013, 18.5 million very low-income households qualified for such subsidies, but only 26 percent received any housing subsidy that year (Clark, 2016). While low-income families and individuals may not receive subsidies, households with an income of over $100,000 received 77 percent of the benefits from the mortgage interest deduction, but families below $50,000 only received 3 percent of the benefits (Clark, 2016). Not only would taxing the wealthier Americans contribute funds to build more affordable housing, but a portion of the funds could also be used for housing subsidies. It is highly unjust that people who need help the least get the most from the government. The simple reason is that there is not much money in helping low-income individuals avoid homelessness in America. Poverty does not lobby the government; wealth does, and it is time for the tax system to be re-evaluated to minimize or prevent further homelessness.

Fewer medical bills would lead to fewer individuals becoming homeless. As mentioned in the first paragraph, medical debt is America's leading cause of bankruptcy (Ahmadi et al., 2023). Many people in this country, as mentioned before, struggle to get by as it is, but add a car accident into the equation, for example, then that person would go into debt paying those bills and then not be able to work for a certain period. Then you would have to sell your home to afford the bills, and now you are stuck in a limbo of trying to find an affordable house, which there are few of. Alternatively, people who are struggling with addiction and/or mental health disorders and who can not afford treatment or the therapy they need might lose friends, family, or a job. Especially when it comes to the adolescent homeless population, with nearly half of all homeless children being diagnosed with a mood disorder like PTSD, depression, and/or anxiety (Perlman et al., 2014); if the wealthiest Americans just paid a little of their fair share, more people would see therapists, and getting an injury would not cost someone their house. These types of scenarios oftentimes contribute to a generational cycle of poverty in America and show the interconnected reality of social problems such as poverty, homelessness, and lack of affordable and quality healthcare. By taxing the wealthier Americans, a portion of the funds could be used to fund Universal Healthcare. While getting Universal Healthcare is a whole feat, a focus point is how the government would fund it. The taxation of wealthier Americans is a direct way that it could be financed and goes back into taking care of Americans themselves. This serves the greater purpose of limiting medical debt, homelessness, poverty, and various other social problems.

The first and the easiest to implement would be to end the Tax Reform Act of 1986, cutting the corporate tax rate from 46 percent down to 34 percent, and the 2017 Jobs Act, put in place by Donald Trump, which lowered the corporate tax rate even lower to 21 percent (Slemrod, 2018). One of the main reasons for these tax cuts was to raise how businesses could pay their employees; however, this had little effect on wages (Slemrod, 2018). These acts were put in place in the interest of prominent corporations, helping out the workers as a second thought; if government officials wanted to raise wages, they would force large organizations (Amazon, McDonald's, Walmart, etc.) to pay employees livable wages. These liveable wages would cut down the homeless epidemic as employee wages would begin to go further and make an actual difference rather than just keeping these employees in the poverty cycle. 

The more complicated part is attempting to tax the individual owners of these mega-corporations. The most prominent example of a wealth tax is Switzerland, where they do not just tax income but rather overall net worth. In short, taxing net worth would place taxes on all the following: stocks, real estate, cars, or anything of value. The tax rate is very small from region to region, but roughly .1 percent to 1 percent (Scheuer & Slemrod, 2021). The tax rate is just low enough not to scare away billionaires but also high enough to put that money to good use, like healthcare, schools, homeless shelters, affordable housing, and even better roads, potentially fewer potholes to ruin your tires and go into debt trying to fix. For example, if Jeff Bezos bought a $500,000 luxury car in a country with a wealth tax of .5 percent, he would pay $2,500 a year in taxes on that car alone, not to mention his other assets, such as his house, stocks, cars, etc. Recent presidential candidates and current political figures such as Bernie Sanders and Elizabeth Warren are currently advocating for a wealth tax in this country; it is not a foreign idea to America; it has been debated and is still debated (Scheuer & Slemrod, 2021).

In summary, if a national wealth tax were implemented and the top 1 percent paid their share, those funds could be allocated towards affordable housing and universal health care for U.S. citizens. The critical part of balancing is not to tax them enough and, in turn, the companies selling out, but just enough to ensure that the cost-burdened American people do not have to worry about being homeless due to the lack of affordable housing and healthcare. A small 1 percent tax on America’s wealthiest individual’s net worth, like Jeff Bezos or Elon Musk, could help build more affordable houses, rehabilitation centers, and shelters, which would lessen the homeless epidemic as well as a portion of the funds contributing to universal healthcare minimizing medical debt and preventing one of the leading causes to the homeless epidemic. At the core of humanity, everyone must recognize that fewer people should worry about whether they or their kids will have a place to sleep, food to eat, or receive the proper healthcare they need. Housing and healthcare are not commodities but human rights.

References

Ahmadi, L., Kendall, D., Murdock, K., & Kessler, J. (2023). End Medical Debt. Third Way. http://www.jstor.org/stable/resrep46919 

Clark, A. M. (2016). Homelessness and the crisis of affordable housing: The abandonment of a federal affordable housing policy. Journal of Affordable Housing & Community Development Law, 25(1), 85–102. http://www.jstor.org/stable/26427325

Perlman, S., Willard, J., Herbers, J. E., Cutuli, J. J., & Eyrich Garg, K. M. (2014). Youth Homelessness: Prevalence and Mental Health Correlates. Journal of the Society for Social Work and Research, 5(3), 361–377. https://doi.org/10.1086/677757 

Scheuer, F., & Slemrod, J. (2021). Taxing our wealth. The Journal of Economic Perspectives, 35(1), 207–230. https://www.jstor.org/stable/27008021 

Slemrod, J. (2018). Is this tax reform, or just confusion? The Journal of Economic Perspectives, 32(4), 73–96. https://www.jstor.org/stable/26513497 

Shah, A. (n.d.). Pros, cons, and the barriers to implementing a universal healthcare system in the United States. Rowan Digital Works. https://rdw.rowan.edu/stratford_research_day/2024/may2/190/