The NLIHC-led United for Homes (UFH) campaign, calling for rebalanced federal housing investments through mortgage interest deduction (MID) reform, will relaunch on January 11. President-elect Trump and Republican Congressional leadership have indicated that tax reform will be one of its highest priorities in the 115th Congress.
Despite the growing need, affordable housing programs like the national Housing Trust Fund, Housing Choice Voucher program, public housing and project-based rental assistance are grossly underfunded and may be at risk under President-elect Trump’s proposed yearly 1% reductions to non-defense discretionary spending and other threats. The affordable housing crisis for the lowest income people can be alleviated through investments to expand proven solutions and, through smart reforms to the MID, these investments need not increase costs to the federal government.
Currently the federal government spends approximately $200 billion each year to help Americans buy and rent their homes. Three-quarters of those resources go to subsidize higher income homeowners—most of whom would be stably housed without the government’s help—through the MID and other homeownership tax breaks. Just one quarter of federal housing subsidies are left to assist the poorest families with the greatest needs. In fact, each year, we spend more to subsidize the homes of 7 million of the highest income households than we do to assist the more than 55 million of the lowest income households, those far more likely to struggle to afford housing.
The MID is our nation’s largest housing subsidy, but it is poorly targeted. According to the Congressional Budget Office, the nation’s top 20% wealthiest households receive 75% of the benefits of the MID and the top 1% get 15% of the benefits. Four out of every 10 dollars spent on the MID benefit families earning more than $200,000 a year, and 8 out of every 10 dollars go to families making more than $100,000. Three-fourths of all taxpayers - households who rent and approximately half of all homeowners, those who take the standard deduction on their taxes - do not benefit from the MID. Moreover, economists agree that the MID does little to promote homeownership: those who benefit from the MID would choose to buy a home whether or not they were receiving the tax benefit.
The UHF campaign calls for lowering the amount of a mortgage eligible for tax relief from $1 million to $500,000 and converting the deduction to a nonrefundable credit. These two changes would a) give tax relief to 15 million low and moderate income homeowners who do not currently benefit from the MID because they do not itemize on their tax returns and b) generate approximately $240 billion in savings over ten years to invest in affordable housing programs serving the lowest income families with the greatest needs. It should be noted that just 5% of mortgages nationwide are over $500,000, and under the UHF proposals households with larger mortgages would continue to receive tax relief on the first $500,000 of their mortgages.
More than 2,300 organizations and elected officials have already endorsed the UFH campaign. The campaign relaunch will build on this strong support and increase endorsements from a broad array of stakeholders for this common sense rebalancing of federal housing expenditures. With tax reform on the near horizon and leaders like House Speaker Paul Ryan (R-WI) on record recognizing the logic of lowering the MID cap, NLIHC and the UFH campaign will advocate forcefully that any savings from MID reform be kept in the housing sector to benefit extremely low income households.
NLIHC will host a webinar at 2pm ET on January 11 for current UHF endorsers to preview the new website and advocacy tools. We urge all of our endorsers to join the webinar and to help us promote this campaign broadly. An additional webinar will be scheduled in February for other affordable housing advocates who wish to learn more about the UFH campaign.
The road ahead will be challenging, but our commitment is unwavering.
If you are a current UFH endorser, register for the webinar at: http://bit.ly/2hbONus
If you are not already a UHF endorser, please join the campaign at: http://nlihc.org/unitedforhomes/support