The topic before us is an important one. The federal government - through the tax code - has been involved in promoting homeownership for over a century.
Let’s be clear. There are many egregious loopholes in the tax code. But the main provisions incentivizing home ownership are policies, not loopholes.
The failure to differentiate which is which - between policies and real loopholes - has led to facile proposals. Among them are proposals that begin without the mortgage interest or any other deductions or proposals that simply pick a much lower top tax rate then present law without any suggestions as to how to fill the trillions in lost revenue that would result.
Such proposals have failed to take into account some basic facts, including the growing income gap. And they have failed to consider whether policies are significant for a strong middle class or mainly for very wealthy families.
According to the Joint Committee on Taxation, two-thirds (70%) of the benefit of the mortgage interest deduction goes to households earning less than $200,000 a year. Less than a third of the benefit (30%) goes to those who make more than that.
By comparison, the reduced rate for capital gains almost exclusively benefits the very wealthy. More than 70% of the benefit of that lower rate flows to people making more than $1 million a year. Just 12% goes to those making less than $200,000.
These tax policies deserve serious consideration, beyond the easy rhetoric about simply broadening the base and reducing rates.
I hope that the hearing today will be a step in that direction.
