Misdirected Investments: How the Mortgage Interest Deduction Drives Inequality and the Racial Wealth Gap
Reforming The Mortgage Interest Deduction
Build a Strong Foundation
How Homeownership Became the Engine of American Inequality
Yet the vast majority of federal housing dollars go to subsidize housing for the wealthiest households. It’s time to change this.
Let’s make sure that scarce federal resources are targeted towards those who need it the most.
There’s a shortage of more than 7 million affordable rental housing units for extremely low income families.
More than half a million people are experiencing homelessness on any given night.
Approximately 71% of all extremely low income households pay more than half their income on rent.
Only 1 in 4 extremely low income households who need rental housing assistance receive it.
Less than 25% of federal housing dollars benefit low income renters.
Rebalance federal housing expenditures through modest reforms to the mortgage interest deduction, a tax write-off that largely benefits America’s highest income families.
By enacting modest reforms to the mortgage interest deduction and reinvesting the savings in highly targeted rental housing programs–such as the national Housing Trust Fund and rental assistance programs that serve people with the greatest needs–our nation can make the investments to end homelessness and housing poverty. All without increasing costs for the federal government.
Drag sliders to see how simple changes to the Mortgage Interest Deduction can make a big impact.
Reduce the portion of a mortgage eligible for a tax break. Homeowners would continue to get tax relief on the first $500,000 of their mortgage.$500K $1M
Convert from a tax deduction to a 15% tax creditTax deduction 15% Tax Credit
Investing 100% of the savings in affordable rental housing for those with the greatest need could create:
New Affordable Homes(Created through the national Housing Trust Fund)
New Rental Assistance(Such as housing choice vouchers)
Additional Homeowners Receiving
a Tax Benefit
Source: Tax Policy Center, 2016