The recommendation by the Bipartisan Fiscal Commission to convert the mortgage interest deduction (MID) to a 12% credit and lower the cap on mortgages for which the credit can be applied from $1,100,000 to $500,000 (see Memo,12/3/2010) has generated considerable attention to the future of the MID. Traditional defenders of the MID in the housing industry are calling on Congress to protect and preserve the MID, while economists across the political spectrum object to its expense to the federal treasury ($104 billion for FY11 according to OMB) and the incentive it creates to overinvest in expensive single family housing.
On January 6, Representative Gary Miller (R-CA) introduced H. Res. 25 “expressing the sense of the Congress that the current Federal income tax deduction for interest paid on debt secured by a first or second home should not be further restricted.” As of February 10, the resolution had 30 bipartisan co-sponsors.
In its report on the future of the housing finance (see article above), the Obama Administration did not propose reform of the mortgage interest deduction, but does point out that the “mortgage interest deduction and other tax credits can encourage investment in housing over other sectors of the economy.” The President’s FY12 budget proposal is expected to include a scaling back of the top rate at which all deductions, including MID, can be valued to 28%.
The National Low Income Housing Coalition has long called for reform of the MID and redirection of savings to address the housing needs of the lowest income people. NLIHC’s 2011-2012 policy agenda calls for converting the MID into a credit, lowering the cap, and directing at least $30 billion a year in savings into the National Housing Trust Fund and doubling the number of housing vouchers.
On Thursday, February 17 from 12:00 to 3:00 pm, the Hudson Institute will host a discussion titled, “The Mortgage Interest Deduction: Sacred Cow or Sound Policy?” NLIHC President Sheila Crowley will be one of the speakers.
Held at the Hudson Institute offices, the forum will seek to answer questions raised by the recommendation of the National Commission on Fiscal Responsibility and Reform to repeal the mortgage interest deduction. Representative Ruben Hinojosa (D-TX) will speak, followed by a panel discussion. In addition to Crowley, the panel members will be James R. Follain of the Nelson A. Rockefeller Institute of Government, Donald R. Haurin of The Ohio State University, and John C. Weicher of the Hudson Institute, and will be moderated by Hanns Kuttner, also of the Hudson Institute.
The public is invited to attend. Lunch will be served. To RSVP, please email email@example.com with “Mortgage” in the subject line.