WASHINGTON, D.C.- The National Low Income Housing Coalition (NLIHC) applauds the decision made by the National Association of Home Builders (NAHB) yesterday to take a constructive approach to reforming the mortgage interest deduction (MID) – a $70 billion tax expenditure that primarily benefits higher income homeowners and diverts nearly $11 billion to the top 1% of earners in the country.
The NAHB joins a growing chorus of experts from across the ideological spectrum that are increasingly calling for reforms to the MID. Research shows that the MID does not promote homeownership, increases income inequality, and fuels the racial wealth gap. At a time when our nation’s affordable rental housing crisis is reaching new heights and is impacting every state and community, Congress should embrace smart, modest reforms to the MID to ensure that more low and moderate income homeowners receive a much-needed tax break, reinvesting the savings into affordable rental homes for people with the greatest needs.
The Republican tax plan calls for indirect changes to the MID by raising the standard tax deduction. Without further MID reforms, however, the tax break would become even more regressive than it is today – only some of the highest income Americans with the largest mortgages would benefit.
The NLIHC-led United for Homes campaign calls on the president and Congress to embrace direct reforms to the MID. This includes reducing the amount of a mortgage eligible for a tax break from $1 million to $500,000 – impacting fewer than 6% of mortgages nationally – and converting the deduction into a credit, providing a greater tax break to 25 million low and moderate income homeowners, including 15 million mortgage holders who currently do not benefit from the MID. These reforms would generate $241 billion in savings over 10 years that should be reinvested into critical rental housing solutions, like the national Housing Trust Fund and rental assistance, for families with the greatest needs – not used to pay for lowered tax rates for billionaires and corporations.
Tax reform is a once-in-a-generation opportunity to address one of the biggest barriers to economic success for families struggling to get by: the lack of decent, accessible and affordable homes for the lowest income people. We urge Congress and the administration to seize this opportunity to make the MID fairer to homeowners with modest means and to help end homelessness and housing poverty in the U.S. once and for all.
Established in 1974 by Cushing N. Dolbeare, the National Low Income Housing Coalition is dedicated solely to achieving socially just public policy that assures people with the lowest incomes in the United States have affordable and decent homes.