[Occupymendocino] Cancelling Rent

[Richard Karch]

They are sitting on at least $470 billion in handouts and billions in 
income collectively.

The COVID-19 crisis has both exposed and exacerbated racial and wealth 
inequality in the United States.

As unemployment skyrockets and tens of millions of Americans struggle 
with a sudden loss of income, many will be unable to pay rents or 
mortgages, and face eviction or foreclosure, and possible homelessness. 
Latinx and Black workers have been hit hardest by job losses; recent 
figures show the Latinx unemployment rate at 18.9%, and the Black 
unemployment rate at 16.7%, compared to a 14.2% for white Americans.1 
These job losses, in addition to historic housing segregation and 
environmental racism, have contributed to greater risk from COVID-19 for 
communities of color.2

While so many of us struggle to survive, some of the richest 
billionaires in the world dominate the residential real estate industry 
in the United States. These corporate landlords are companies owned by 
extremely wealthy individuals, Wall Street entities like private equity 
firms and hedge funds, and institutional investors.

Corporate landlords include many well-known entities like Kushner 
Companies, Mosser Capital, Equity Residential, Related, Essex, Starwood 
Capital, CBRE, Blackstone, and Irvine Company. Across the country, from 
New York and California to Arizona, Georgia, and Florida, these 
companies own large apartment complexes, office buildings, hotels, 
single-family homes, and a significant chunk of our mortgage debt.

Corporate landlords do not pay their fair share in taxes at the local, 
state, or federal level. Here’s why: for decades, they have successfully 
lobbied City Halls, state legislatures, and Congress to put their needs 
first, to create loopholes, special statuses, corporate welfare 
programs, and other schemes to avoid taxes and regulation and boost 
their profits.

Amid the current crisis, some of these obscenely wealthy companies and 
individuals, many of whom profited immensely during the Great Recession, 
are lobbying aggressively for taxpayer-funded assistance programs and 
making plans to exploit the pain of so many to grow even wealthier.
It’s time to make them pay

With millions of tenants, homeowners, and small property owners 
struggling to survive during the COVID19 pandemic, Congress and state 
governments should require corporate landlords to pay for the 
cancellation of rent, mortgages, and utilities, and to provide financial 
relief to small property owners facing foreclosure.

These corporations are sitting on billions of dollars and will keep 
getting richer through tax breaks and giveaways, including in the most 
recent stimulus packages, as we show below. They can easily afford to 
cancel monthly housing-related expenses and debts for millions of 
Americans whose jobs and incomes have been destroyed by COVID-19. Making 
them pay will help stabilize the housing market, the national economy, 
and communities across the country.

This is the fairest and most pragmatic way to address the financial 
crisis that so many households face right now.3 It’s likely that many 
Americans will have no ability to pay rent, mortgages, and utilities for 
the duration of the COVID-19 pandemic. Those who can’t afford 
housing-related costs today won’t be able to afford them for the 
foreseeable future.

Well before the COVID-19 crisis hit, many American households, 
especially households of color, ere spending huge proportions of their 
income on housing, leaving little left over for other necessities, and 
nothing for savings. For example, one in four Black households spent 
more than half their income on housing (compared to one in ten white 
households).4 Many cities were already experiencing housing 
affordability crises, with renters and owners struggling to pay rents 
and mortgages and homelessness skyrocketing, while corporate landlords 
and lenders prospered.

The pandemic threatens to turn the housing affordability crisis into a 
national catastrophe.

That’s why the full cancellation of housing-related expenses and debt is 
so important. Everyone is told to stay home to “flatten the curve” but 
low-income Americans without resources to pay for housing can’t afford 
to do that unless their rent, mortgages, and utilities are canceled. And 
if low income and unemployed people lose their homes to eviction or 
foreclosure, they will not be able to “stay home” at all.
Corporate landlords must provide the relief millions need

Extending current moratoriums on evictions is not enough. Those 
moratoriums do not alleviate the growing financial burden of unpaid 
rent, mortgage, utility, and other housing-related bills that will come 
due in the near future. Millions of Americans won’t be able to pay 
months of housing expenses after eviction moratoriums expire and the 
economy reopens. That’s the harsh reality.

Congress and state governments must do more to help eliminate those 
expenses. They must make corporate landlords pay for the cancellation of 
all housing-related expenses incurred during this pandemic, so 
households—and the economy more generally—can begin to recover 
financially. That’s the real policy response and solution to the current 
crisis. Anything short of full cancellation will trigger mass evictions 
and an explosion in predatory debt, both of which hit communities of 
color hardest before COVID-19, and will only be compounded.5 And wealthy 
corporate landlords can afford it.

Anything short of full cancellation will trigger mass evictions and an 
explosion in predatory debt

Over 200,000 in our communities are taking action to demand what they 
need

In recent weeks, tenants and homeowners have taken to the streets, Zoom, 
and social media to call for the cancellation of rent, mortgages, and 
utilities. Indeed, organizers identified more than 200,000 people who 
engaged in rent strikes on May 1 across the country, from California to 
New York, to pressure elected officials to #CancelRent. In a strong, 
unified voice, they said: We Strike Together. Many of these rent strikes 
were organized and led by low-income people of color fighting for their 
lives and communities.

Looking ahead to June, struggling tenants, homeowners, small property 
owners, and communities will again take action. Expect to hear a clear, 
resounding message directed at corporate landlords: #MakeThemPay for the 
cancellation of the housing expenses and debts we cannot afford to pay 
for the duration of the COVID-19 pandemic.
Overview of Federal Handouts and Giveaways to Corporate Landlords

The largest corporate landlords have siphoned money out of public 
budgets at all levels of government and are using COVID-19 as an 
opportunity to expand their riches even further.

    CARES Act gives $170 billion in immediate tax benefits to real 
estate and millionairesThe CARES Act permits all businesses’ losses to 
be carried back — which allows immediate tax refunds — for five years 
from 2018, 2019, and 2020.6 Losses carried back to years before 2018 
will generate refunds of already paid income taxes at the older, higher 
rates— previously 35% maximum for corporations (compared to current 21%) 
and 39.6% maximum for individuals (37% today).7The Congressional Joint 
Committee on Taxation (JCT) estimates that owners of pass-through 
businesses will receive $170 billion in tax benefits over the next 10 
years.8 For 2020, the JCT estimates that roughly 43,000 taxpayers with 
at least $1 million in annual income will reap 82% of the benefits, with 
an average tax cut of more than $1.6 million.9 Which millionaires will 
come out on top? According to the Tax Policy Center, the key groups 
include real estate professionals and hedge fund investors, including 
developers10—in other words, corporate landlords.11

    2017 Tax Cuts and Jobs Act gave nearly $50 billion to real estateThe 
Tax Cuts and Jobs Act (TCJA) allowed real estate investors to deduct 20% 
of pass-through business income to lower the effective tax rate on 
income if they have sufficient real estate assets—this benefits real 
estate companies as well as those investing in Real Estate Investment 
Trusts (REITs). Experts estimate this is worth $29 billion over the next 
10 years.12

    ‘Millionaires will reap 82% of the benefits, with an average tax cut 
of more than $1.6 million’

The TCJA created “opportunity zones”—zip codes where one can invest 
capital gains in real estate and businesses through designated 
opportunity funds and receive huge tax breaks. The tax cut was 
purportedly aimed at fostering economic rejuvenation of lower-income 
areas but was so poorly designed and implemented that it provides tax 
breaks for developments that were already underway or in rapidly 
gentrifying areas, including corporate landlords like Related Companies 
and Stephen Ross.13 Real estate firms and developers are raising up to 
$5 billion for each opportunity fund14 and the JCT estimates opportunity 
zones will cost $3.5 billion a year from 2019 through 2022, for a total 
of $14 billion over those 4 years.15

The TJCA also allowed real estate investors to deduct all of their 
interest payments on buildings from their income while other large 
businesses could only deduct 30% of their interest payments. Experts 
estimate this tax break is worth $16 billion over the next 10 years.16

    Pre-2017 the federal tax code already included real estate industry 
tax benefits that are worth nearly $250B over the next 10 yearsReal 
estate investors have a special loophole, “like-kind exchanges,” to 
avoid paying capital gains taxes on profits from the sale of assets as 
long as these profits were reinvested in comparable assets. Essentially, 
profits from the sale of a building can be used to buy another building 
without paying any taxes.  Experts believe this tax break is worth 
almost $134 billion over the next 10 years.17In 1986, tax reform 
prohibited businesses from investing in a business that generated losses 
in order to reduce their income for tax purposes. But in 1993, the real 
estate industry lobbied to exempt rental income from these passive loss 
rules, creating a tax benefit for these “money-losing” real estate 
investments. The Treasury estimates this tax break is worth $79 billion 
over 10 years.18

    Businesses can depreciate assets that lose value over time as the 
assets age, reflecting the declining value of things like machinery or 
vehicles. Real estate investors can depreciate their assets and reduce 
their taxes even though real estate values often rise over time, 
especially in more expensive or rising markets, AND this depreciation is 
counted against the value of the property when it is sold, reducing the 
capital gains taxes. The JCT estimates rental and other real estate at 
$21 billion over 5 years.19

    Preferential Tax StatusNearly all real estate operations are run 
through limited liability corporations (LLCs).20 With a standard 
corporate structure, the government levies taxes twice—on the 
corporation’s profits and on employees’ incomes. LLCs are allowed to 
pass profits to the owners who then pay income taxes on the money, while 
the corporation does not pay any taxes on the money at all.21Another 
special status, Real Estate Investment Trusts (REITs), were created in 
the 1980s to encourage investment in real estate. REITs, like LLCs, are 
treated as pass-through entities for tax purposes, which means they pay 
no corporate taxes in exchange for playing 90% of their taxable income 
to shareholders as dividends.22 As described above, the TCJA also 
allowed those who do have to pay tax on this “income” to deduct 20%.

State and Local Giveaways to Corporate Landlords

    State Conformity to Federal Taxes Often Maximizes Benefits for 
Billions MoreBecause of the linkages between state and federal tax 
codes, many of these tax breaks have already been or will be enacted at 
the state level as well. For example, the Center for Budget and Policy 
Priorities (CBPP) describes how, because nearly all states piggyback on 
the federal tax code’s definition of “gross income,” the opportunity 
zone tax breaks outlined above will automatically flow through to state 
individual and corporate income taxes unless states proactively 
“decouple” their law from these provisions.23 Corporate landlords and 
real estate investors are likely to see billions more at the state level 
from the giveaways described above, as well as others they have lobbied 
to create in each state.

    Local Tax Break Schemes for DevelopmentCorporate landlords 
frequently also benefit from Tax Increment Financing (TIF), Payment in 
Lieu of Taxes (PILOT), bonding, and other schemes at the municipal and 
local level connected both to single projects and broader development 
work. One example of this is Related Companies’ Hudson Yards in New York 
City, where research shows that Related’s project cost NYC $2.2 billion, 
as a combination of a PILOT, bonding, property tax abatement and other 
approaches; this includes over $350 million in property tax breaks for 
residential developers.24

The tax breaks and schemes described above are just the tip of the 
iceberg in terms of the myriad ways that corporate landlords, real 
estate investors, private equity and financial actors are and will 
continue to profit off the rental housing market in the U.S. Debt and 
mortgages are other key areas the industry exploits, including through 
government-financed agencies and programs, to maximize profit margins.
Using COVID-19 as an Opportunity to Seek Billions More in Tax Breaks and 
Giveaways for Corporate Landlords

On top of these many handouts, the National Multifamily Housing Council 
and National Apartment Association are using COVID-19 as an opportunity 
to ask for even more support, financial and otherwise. The Association 
and Council, which corporate landlords dominate, is pushing elected 
officials to pass their wish-list of measures, including taxpayer-funded 
rental assistance, narrowing the already limited eviction moratorium 
criteria, expanding Payment Protection Program eligibility to all 
multifamily businesses, including the largest corporate landlords, and 
increasing tax relief for all multifamily residential businesses, which 
could go to corporate landlords that clearly don’t need it.

Their pitch also calls for expanding low-income housing tax credits, 
creating middle-income housing tax credits, increasing the breadth of 
opportunity zones, and enacting legislation to clear regulatory barriers 
for construction of more multi-family housing irrespective of cost. All 
of these would be immensely lucrative for the industry overall and 
corporate landlords in particular. They are examples of the broken 
“trickle-down” housing models that enrich those dominating residential 
real estate while exploiting our racialized housing system, hurting 
workers and families, and putting communities at risk across the 
country.25
Examples of Wealthy Corporate Landlords Who Should Be Made to Pay

Individual leaders and founders of many corporate landlord companies 
have amassed extravagant wealth. Figure 1 lists examples of the types of 
companies, their leadership and the money they are making. Many of these 
companies are part of larger umbrella organizations that move hundreds 
of billions across multiple real estate subsectors, as well as other 
industries, and have enormous resources at their disposal. While these 
are some of the largest companies, there are hundreds, if not thousands, 
built in this same model that are active in and profiting off of the 
residential housing market.
How Corporate Landlords Are Planning to Capitalize on COVID-19

Corporate landlords amassed enormous fortunes during the Great Recession 
and are now expressing excitement about the potential for profiteering 
post-pandemic. The president of a division of Fortress Investment Group 
has said of the coming pain, “It’s kind of exciting times. I
mean, this is what you live for.”26 These landlords certainly have the 
resources to exploit this new crisis—according to the Wall Street 
Journal, at the end of December 2019, real estate investment funds had 
$142 billion ready to spend on distressed and opportunistic real estate 
investments.27

The Blackstone Group, Inc., Brookfield Asset Management and Starwood 
Capital Group are “sitting on billions of dollars in cash and capital 
commitments they have raised from pensions, sovereign wealth funds and 
other big institutions” as the industry eyes hotels, retail properties, 
mortgage-backed securities, and defaulting borrowers.46 On a 2020 Q1 
Earnings call, Starwood Capital CEO Barry Stenlicht was quoted as saying 
“when it’s really ugly, it’s a good time to invest.”47 Blackstone raised 
the largest commercial real estate fund ever in September with $20.5 
billion, and as of December 2019 Brookfield held $15 billion.48

People within the industry are saying “many [real estate investors] have 
been waiting for this for a decade.”49 The Kushner family also recently 
announced they are putting together a fund through Cadre, their real 
estate investment vehicle, to take advantage of “opportunities” during 
the pandemic.50 While Jared Kushner himself formally divested from the 
fund in February of 2020, it’s clear that a prominent corporate landlord 
with very close ties to the White House is gearing up to profit from the 
crisis and its effect on the real estate market.
Making Corporate Landlords Pay Will Help Millions of Struggling Tenants, 
Homeowners, and Small Property Owners

The U.S. real estate industry is led by some of the richest, most 
powerful people in the world. They have profited handsomely from the 
last foreclosure crisis, the commodification of housing, and decades of 
racist housing policy, while actively lobbying to avoid paying their 
fair share in taxes for decades. The COVID-19 pandemic has magnified 
what we already knew: Corporate landlords’ bill is long past due. It’s 
time to make them pay for the cancellation of rent, mortgages, and 
utilities for the duration of the COVID-19 pandemic. Making them pay 
will help millions of tenants, homeowners, and struggling property 
owners who are struggling to survive. “When it’s really ugly, it’s a 
good time to invest.”  Blackstone raised the largest commercial real 
estate fund ever in September with $20.5 billion, and as of December 
2019 Brookfield held $15 billion.48

People within the industry are saying “many [real estate investors] have 
been waiting for this for a decade.”49 The Kushner family also recently 
announced they are putting together a fund through Cadre, their real 
estate investment vehicle, to take advantage of “opportunities” during 
the pandemic.50 While Jared Kushner himself formally divested from the 
fund in February of 2020, it’s clear that a prominent corporate landlord 
with very close ties to the White House is gearing up to profit from the 
crisis and its effect on the real estate market.

The U.S. real estate industry is led by some of the richest, most 
powerful people in the world. They have profited handsomely from the 
last foreclosure crisis, the commodification of housing, and decades of 
racist housing policy, while actively lobbying to avoid paying their 
fair share in taxes for decades. The COVID-19 pandemic has magnified 
what we already knew: Corporate landlords’ bill is long past due. It’s 
time to make them pay for the cancellation of rent, mortgages, and 
utilities for the duration of the COVID-19 pandemic. Making them pay 
will help millions of tenants, homeowners, and struggling property 
owners who are struggling to survive.

https://popularresistance.org/corporate-landlords-should-cancel-rent-mortgages-and-utlities-during-covid-19/ <https://popularresistance.org/corporate-landlords-should-cancel-rent-mortgages-and-utlities-during-covid-19/>
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