WASHINGTON, D.C.- The tax reform legislation proposed by House Republican leaders takes a historic step in directly revising the mortgage interest deduction (MID), a $70 billion annual tax expenditure that primarily benefits higher income households—including the top 1% of earners in the country. The Republican tax proposal makes sensible reforms in lowering the amount of a mortgage against which the MID can be claimed to $500,000 for new home loans and doubling the standard deduction. This change to the MID would impact fewer than 6% of mortgages nationwide and would save an estimated $95.5 billion over the first decade.
However, the legislation uses the savings generated by the MID reform to pay for lower tax rates for billionaires and corporations without addressing the affordable housing crisis in America. This proposal is a non-starter.
Instead, Congress should reinvest the savings from the MID reform into affordable housing solutions, like the national Housing Trust Fund, rental assistance, or a renter’s credit, that would help the lowest income people in America—including seniors, people with disabilities, families with children, and other vulnerable populations—who too often struggle to pay the rent and make ends meet.
The National Low Income Housing Coalition-led United for Homes campaign calls on the president and Congress to embrace smart reforms to the MID. These include 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 wealthy individuals 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 of modest means and to help end homelessness and housing poverty in the U.S. once and for all.
The National Low Income Housing Coalition has significant concerns with other provisions in the overall tax bill and further analysis is needed to determine the impact. We will continue to work with our members and partners to ensure that tax reform efforts do not enrich corporations and wealthy Americans at the expense of people with the lowest incomes.