Landlords have to pay income tax on the rent. If owner-occupiers didn’t pay tax on the imputed rent, then the owner-occupier would pay a lower income tax than the landlord+renter. In effect, the implicit tax deduction that owner-occupiers get on imputed rent in US Income Taxes is a regressive tax on the renter+landlord. See also this explanation: https://www.vox.com/2016/4/15/11432676/imputed-rent-taxation