As a part of our Fair Share campaign to ensure that our elected officials support an economy that works for everyone, the Maine People’s Alliance is getting involved in the fight to reform the mortgage interest deduction (MID), a program that was designed to assist middle-class families, but has been twisted to disproportionately help the wealthy.
The MID will cost the government at least $71.1 billion in 2014. That’s a huge amount of money, especially when it’s going to benefit such a small subset of the population.
To qualify for the deduction, a tax filer must own a home, and itemize their taxes when they file. On top of that, the formula used to determine the size of one’s deduction helps people with larger mortgages and higher income brackets more than it does middle-class families with more typical mortgage rates and more standard annual wages.
Many economists and housing policy experts note that this deduction, intended to increase the rate of home ownership, does little to move that figure upward and instead only increases the average size and cost of a home purchased. Disproportionately subsidizing wealthy families for purchasing larger homes is not the kind of fair share housing policy that MPA supports.
Fortunately, in a year where federal tax reform is one of the hottest topics in Washington, Congress is considering a proposal to lower the mortgage eligible for tax breaks from $1.1 million to $500,000. This conversion would allocate revenue saved to the National Housing Trust Fund and convert the MID to a tax credit, benefitting both families looking for affordable housing to rent as well as families with modest incomes interested in purchasing a home –without giving an unnecessary tax break to the wealthiest homeowners.
We’re looking forward to continuing this conversation with members in next chapter meetings this summer and fall. In the meantime, please visit http://nlihc.org/unitedforhomes/proposal/calculator to see how your taxes might be affected by this proposal!