Mortgage Interest Deductions Threatenedby Tim Manni
Existing and mounting federal deficits have changed the way many lawmakers and economists feel about mortgage interest deductions. The once sacred and holy tax break for homeowners is now at risk of being eliminated, at least for some.
Proponents of mortgage interest deductions are of the opinion that the tax break increases homeownership, and thus enriches communities. The feeling is that the deduction is an added benefit that allows homeowners to relieve some of the financial stress of owning a home; homeowners depend on it:
The conventional wisdom says these tax breaks are important because A) they increase home ownership and B) homeowners are more engaged in their communities than renters.
The Christian Science Monitor defends that not only have neither of the above-mentioned points been proven true, mortgage interest deductions are also inefficient:
We do know, however, that the deduction is not a very efficient way to encourage home ownership. Most benefits go to high-income households that would probably buy a house with or without the deduction. Since non-itemizers get no benefit from the deduction, it is not surprising that most of the subsidy goes to upper-bracket taxpayers.
Recent threats in Washington to eliminate the deduction have centered on the country’s wealthier homeowners. While the proposed elimination was included in the White House’s 2009 budget (but later rejected by Congress), it was included once more in their 2010 budget, claiming that it could save over $20 billion a year.
Forgetting what the government, the analysts and the writers think about mortgage interest deductions, we want to know what you think: How important is your mortgage interest deduction? Did it influence your decision to buy a home? How will you feel if they are eliminated for wealthier homeowners?