The Wall Street Journal
January 16, 2017
The mortgage-interest deduction is our nation’s largest housing subsidy, but it is poorly targeted, primarily benefiting America’s highest-income households.
The mortgage-interest deduction is our nation’s largest housing subsidy, but it is poorly targeted, primarily benefiting America’s highest-income households. The Congressional Budget Office says the top 20% wealthiest households receive 75% of the benefits and the top 1% of earners get 15% of the benefits. Each year the federal government spends more to subsidize the homes of seven million of the highest-income households, concentrated primarily in New York and California, than it does to help the more than 55 million families with incomes of $50,000 or less, those far more likely to struggle to afford housing. Three-fourths of all taxpayers—households who rent and approximately half of all homeowners—receive no mortgage-interest benefit.
Economists agree that the deduction does little to promote homeownership. Most of those who benefit would choose to buy a home whether or not they were receiving the tax benefit. Instead, it incentivizes existing homeowners to purchase larger homes, taking on more debt, increasing the size of their tax deduction.
The United for Homes campaign calls for lowering the portion of a mortgage that can be used for tax relief and converting the deduction to a credit. The result: 16 million lower-income homeowners eligible for a new tax benefit and $240 billion in savings over 10 years that can instead be reinvested to address the housing needs of the lowest-income households.
With the political will to rebalance federal housing policy we can end the affordable housing crisis in America with no additional spending.
Diane Yentel, President and CEO
National Low Income Housing Coalition
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