NLIHC is relaunching the United for Homes (UFH) campaign calling for a rebalancing of federal housing investments through mortgage interest deduction (MID) reform. NLIHC will host a webinar at 2 pm ET on January 11 for current UFH endorsers to preview a new website and an array of advocacy tools. An additional webinar will be scheduled in February for other affordable housing advocates who wish to learn more about the UFH campaign.
President-elect Trump and Republican Congressional leadership have indicated that tax reform will be one of the highest priorities in the 115th Congress. Comprehensive tax reform creates an opportunity for modest reforms to the MID, saving billions of dollars to be reinvested in affordable housing for millions of low income families without adding any additional costs to the federal government.
The federal government spends approximately $200 billion each year to help Americans buy and rent their homes. Three-quarters of those resources goes 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 is left to assist the poorest families with the greatest needs. Each year, we spend more to subsidize the homes of 7 million households with incomes of $200,000 than we do to the more than 55 million households with incomes of $50,000 or less, those far more likely to struggle to afford housing.
The MID is our nation’s largest housing subsidy, but it is poorly targeted, primarily benefitting America’s wealthiest families. 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 goes 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 portion 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 $241 billion in savings over ten years to invest in affordable housing programs serving the lowest income families with the greatest needs. Just 6% of mortgages nationwide are over $500,000, and under the UFH 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 garner many more endorsers from a broad array of constituents 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 work to ensure that any savings from MID reform be kept in the housing sector to benefit extremely low income households.
We urge all UFH endorsers to join the January 11 webinar and to help us promote this campaign broadly.
If you are a current UFH endorser, register for the webinar at: http://bit.ly/2hbONus
If you are not already a UFH endorser, please join the campaign at: http://nlihc.org/unitedforhomes/support